What Does EU Taxonomy Reported Data for 2023 Tell Us?

Last year was an important one for sustainable finance and the EU Taxonomy for sustainable activities.¹ For the first time, non-financial companies reported on alignment with the Taxonomy’s first two environmental objectives: climate mitigation and adaptation. In addition, financial companies disclosed how much of their assets were eligible for Taxonomy alignment.

We analyzed the data reported by non-financial companies and found that:

1. The average Taxonomy-aligned turnover was just above 10%.
2. On average, less than half of the turnover from activities eligible² under the EU Taxonomy was aligned,³ showing the potential to further enhance alignment over time.
3. The average Taxonomy-aligned capital expenditure (capex) of around 14% was higher than the average aligned turnover, which is promising because it shows that companies are actually investing in green initiatives.

For financial companies that reported on eligible assets, the average eligible turnover and average eligible capex were both just above 20%.

We note that capex alignment was higher than that of turnover, on average. This relationship suggests that transition finance, commonly seen as moving out of brown and into green(er) activities, could be an important driver of Taxonomy-aligned activities.

Data quality and comparability were a key issue in 2023, the first year that non-financial companies reported on Taxonomy alignment. In particular, we found that some companies appeared not to adhere to the regulatory templates and were not able to classify activities as per the Taxonomy regulation.