Are you ready for the EU taxonomy?

In commercial real estate, the taxonomy applies to new construction, renovation projects, investments in new solutions, and property transactions – where all or part of the investment can be classified as sustainable.

"In order to meet the EU’s climate and energy targets for 2030 and reach the objectives of the European green deal, it is vital that we direct investments towards sustainable projects and activities."

 

From the European Comission's description

To qualify as sustainable, a building or investment must meet the taxonomy’s strict criteria. Everything else is automatically classified as “gray”.

Sustainable activities are already receiving preferential financing, and the taxonomy is expected to make this advantage even more pronounced. Securing loans for gray investments – or selling gray buildings – will become increasingly difficult. The goal? To accelerate green investments, create financial predictability, and eliminate greenwashing.

How the taxonomy works

The EU Taxonomy is built around six environmental objectives, each with specific criteria that must be met to claim a positive contribution. While contributing positive to one of more of these objectives, a sustainable activity cannot have a significant negative impact ("do no harm") on any of the other objectives.

Illustration: The EU taxonomy's environmental goals

Stricter energy efficiency requirements

Buildings account for a significant share of global emissions, both directly and indirectly through energy consumption, and energy efficiency is a key focus area in the EU taxonomy.

• New buildings (after January 2021) must have an energy demand at least 10% lower than a nearly zero-energy building (nZEB). Note that NZEB requirements vary by country but typically demand very high energy efficiency with most energy sourced from renewables.
  
  
• Existing buildings must have an Energy Performance Certificate (EPC) of class A, or be in the top 15% of the national or regional market in terms of energy efficiency.
  
  
• Renovation projects must either comply with with the EU Energy Performance of Buildings Directive (EPBD), or achieve a minimum 30% reduction in energy consumption.

For commercial buildings with an effective heating, cooling, and ventilation capacity above 290 kW, the taxonomy requires an energy monitoring system (EMS) or a Building Management System (BMS).

What's at risk?

Companies subject to the Corporate Sustainability Reporting Directive (CSRD) must report on their alignment with the taxonomy, including the energy efficiency of their real estate assets.

Non-compliant buildings do not only lose access to green financing, but risk becoming stranded assets.

🔎 Read more about CSRD and energy consumption data