EU Taxonomy: 6 Environmental Objectives & What They Mean for Startups

What is the EU Taxonomy?

The EU Taxonomy Regulation (Regulation 2020/852) is the European Union's classification system for environmentally sustainable economic activities. It establishes a common language — a "green list" — that defines what qualifies as a sustainable investment or business activity under EU law.

Effective from 2022, the EU Taxonomy is a cornerstone of the EU's Sustainable Finance Action Plan and the European Green Deal. It's designed to direct private capital toward genuinely green activities by providing investors, companies, and regulators with a shared definition of "sustainable."

The 6 Environmental Objectives

The EU Taxonomy is built around six environmental objectives. An economic activity must contribute substantially to at least one objective and do no significant harm (DNSH) to any of the others:

1. Climate Change Mitigation

Activities that reduce or avoid greenhouse gas emissions — renewable energy, zero-emission transport, low-carbon buildings, sustainable agriculture.

2. Climate Change Adaptation

Activities that reduce vulnerability to current or expected future climate impacts — flood resilience infrastructure, drought-resistant agriculture, climate risk management systems.

3. Sustainable Use and Protection of Water and Marine Resources

Activities that protect water quality, reduce water consumption, and support marine ecosystem health — water recycling systems, sustainable fisheries, wastewater treatment.

4. Transition to a Circular Economy

Activities that reduce waste and support reuse, repair, remanufacturing, and recycling — product-as-a-service models, waste recovery facilities, sustainable packaging.

5. Pollution Prevention and Control

Activities that prevent or reduce pollution to air, water, and soil — emissions control technologies, contaminated land remediation, non-toxic product design.

6. Protection and Restoration of Biodiversity and Ecosystems

Activities that conserve biodiversity and restore degraded ecosystems — rewilding, sustainable forestry, biodiversity impact assessment tools.

Technical Screening Criteria (TSC)

Each objective has Technical Screening Criteria (TSC) — quantitative thresholds that define whether an activity "substantially contributes." For example, a building must achieve a certain energy performance level to qualify as climate-change-mitigation aligned.

Do No Significant Harm (DNSH)

An activity that contributes to one objective must not significantly harm the other five. This is assessed using the same TSC methodology.

Social Minimum Safeguards

Activities must also comply with minimum social safeguards — aligned with OECD Guidelines on Multinational Enterprises and UN Guiding Principles on Business and Human Rights.

Why It Matters for Startups

Fintech and Sustainable Finance

If you're building investment platforms, ESG scoring tools, or green bond tracking systems, EU Taxonomy alignment is essential product knowledge. Financial institutions must disclose what % of their assets are taxonomy-aligned.

Climate Tech and GreenTech

Startups in clean energy, circular economy, water tech, and biodiversity spaces can use taxonomy alignment to demonstrate their investability to EU-focused impact investors.

Enterprise Reporting Requirements

Under the CSRD, large companies must disclose their taxonomy-aligned revenue, capex, and opex. They need software to collect and calculate this data — a significant market opportunity.

Fundraising in Europe

EU investors increasingly screen for taxonomy-aligned business activities. Knowing where your product fits in the taxonomy taxonomy can accelerate fundraising conversations.

How 100x Helps

100x Engineering builds EU Taxonomy assessment and reporting tools in 3 weeks:

Activity classification engines that map business activities to taxonomy categories
DNSH assessment workflows covering all six objectives
KPI calculators for taxonomy-aligned revenue, capex, and opex
CSRD-ready reporting dashboards with audit trails