What exactly is a taxonomy?
The EU “Taxonomy” is a classification framework that determines whether an economic activity is environmentally sustainable.
Under EU law, ‘large’ EU companies will soon have to report on the ‘alignment’ of their taxonomy as part of their mandatory sustainability disclosure. This means, at the risk of oversimplifying, reporting on the extent to which their company’s activities align with what the EU considers “environmentally sustainable”.
This affects many large subsidiaries of US and other international companies. For many companies it will likely be a complicated exercise that they have not had to undertake before.
Read more on Mayerbrown.com.