EU taxonomy
The EU taxonomy is the EU's common classification system for what counts as economically sustainable activity. It defines technical criteria that an activity must meet to be called "green", and it is used as a reference in financing, reporting and investment decisions. The legal basis is Regulation 2020/852 (the taxonomy regulation), supplemented by delegated acts that set the detailed technical requirements. In Norway, the regulation has been incorporated into Norwegian law through the act on sustainable finance, and it is binding on large undertakings through the reporting directive CSRD.
The taxonomy has six environmental objectives: greenhouse gas reduction, climate adaptation, sustainable water management, the circular economy, pollution prevention and biodiversity. An activity is taxonomy-aligned when it (1) contributes substantially to at least one objective, (2) does "no significant harm" to the other five (the DNSH principle), and (3) meets minimum safeguards for workers' rights and human rights. Only then can it be labelled as green in financial reporting.
For commercial property, the most relevant activities are 7.1 (construction of new buildings), 7.2 (renovation), 7.3 (installation of energy and water measures), 7.4 (charging and metering installations) and 7.7 (acquisition and ownership of property). For new buildings, the main requirement is that primary energy demand is about 10% below the national nearly zero-energy level, which in Norway corresponds to a considerably stricter energy level than TEK17. For acquisition and ownership, the main requirement is that the building either has an energy performance certificate in class A, or belongs to the top 15% most energy-efficient buildings in its segment of the national building stock, a level for which Enova SF and Multiconsult publish annual threshold values. The DNSH requirements cover, among other things, climate risk assessment (flood zone, landslide hazard zone), waste management, material documentation and water consumption.
The consequences for the property industry are significant. Banks subject to CSRD and taxonomy reporting must state how large a share of their lending portfolio is taxonomy-aligned. That pushes banks to favour "green" properties when financing, often through interest margin discounts of 10 to 25 basis points. Investors in commercial property are required to report the taxonomy share to their own investors, and tenants subject to CSRD actively look for taxonomy-aligned space. The result is a clear price gap between properties that document alignment and properties that do not.
The documentation is demanding. A building must be able to show energy labelling, climate risk assessment, material information (EPD), waste plans, water consumption figures and transition plans. BREEAM-NOR Excellent or Outstanding covers large parts of the DNSH requirements, but not automatically the whole taxonomy; the energy level must be assessed separately. For existing buildings, the 15% threshold is often decisive: in the office segment in Oslo, the threshold for primary energy demand sits at levels that require a class B rating or better, while for retail and industry it can be more generous. The figures are updated annually and must be checked per building category and per region.
The taxonomy is not a requirement for environmentally friendly operation, but a requirement for what can be classified and reported as green. Buildings that are not taxonomy-aligned can still be operated, let and sold, but they lose access to the green capital pool and risk becoming "stranded assets" as capital moves to where the documentation is in place.
From Placepoint's glossary: EU taxonomy
More information: EU-Lex: Regulation 2020/852, European Commission: EU taxonomy for sustainable activities, Finanstilsynet: Sustainable finance
English: EU Taxonomy (sustainable finance regulation classifying environmentally sustainable economic activities).
Frequently asked questions
What is the EU taxonomy?
The EU's classification system for what counts as sustainable economic activity. It defines technical criteria across six environmental objectives and is used for financial reporting and investment decisions.
What requirements apply to existing commercial buildings?
The main requirement is that the building either has an energy performance certificate in class A, or belongs to the top 15% most energy-efficient buildings in its segment of the national building stock. In addition come the DNSH requirements on climate risk, materials, water and waste.
What is the difference between the taxonomy and BREEAM-NOR?
BREEAM-NOR is a voluntary environmental certification that assesses many dimensions of a building's environmental performance. The EU taxonomy is a regulatory classification that requires specific technical criteria in the taxonomy regulation to be met. Excellent covers a lot, but not everything.
Who must report under the taxonomy?
Undertakings subject to CSRD: large companies and listed companies above certain thresholds, and their material subsidiaries. Banks and financial institutions also report the taxonomy share of loans and investments.
What is DNSH?
"Do no significant harm", the principle that an activity contributing to one environmental objective must not significantly harm the other five objectives.