Understand the EU Taxonomy module
How the EU Taxonomy classification works and what the EU Taxonomy module calculates.
The EU Taxonomy is a classification system that defines what counts as environmentally sustainable economic activity. The EU Taxonomy module calculates taxonomy alignment for your portfolio holdings and surfaces the results across three KPIs, broken down by company and environmental objective.
The three alignment conditions
For an activity to count as taxonomy-aligned, it must meet all three of the following conditions:
- Substantial Contribution (SC) — the activity makes a significant positive contribution to at least one of the six environmental objectives
- Do No Significant Harm (DNSH) — the activity does not significantly harm any of the other five objectives
- Minimum Safeguards (MS) — the company respects the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights
The six environmental objectives
- Climate change mitigation
- Climate change adaptation
- Water and marine resources
- Circular economy
- Pollution prevention and control
- Biodiversity and ecosystems
Eligible vs aligned
There is an important distinction between these two terms:
- Taxonomy-eligible — the company operates in a sector that is covered by the taxonomy. It could in principle be assessed, but has not necessarily been.
- Taxonomy-aligned — the company has been assessed and meets all three conditions above.
A company can be eligible but not aligned — for example, it operates in renewable energy but has not fully documented its DNSH compliance. In practice, many companies report 0% alignment even if eligible, either because the alignment criteria are not met or because completing the assessment is burdensome.
The three KPIs
Companies report taxonomy alignment across three financial KPIs:
- Turnover — percentage of revenue from taxonomy-aligned activities. This is the primary metric for fund-level reporting and the figure used in the EET.
- CapEx — percentage of capital expenditure that is aligned
- OpEx — percentage of operational expenditure that is aligned
All three are shown in the product. Where a disclosure asks for "the reported share of taxonomy-aligned investments", this refers to the Turnover figure.
Self-declared vs revenue alignment
Some companies self-declare their taxonomy alignment without full technical screening. Others report alignment based on audited revenue data. The EU Taxonomy module shows both where available and flags the data source. Self-declared figures may not have been independently verified.
Common questions
How do I see a company's taxonomy data? Navigate to Taxonomy in the fund view, then click on an individual holding to see company-level taxonomy data — eligible and aligned percentages by KPI and objective.
What is the difference between self-declared and revenue alignment? Self-declared alignment is a figure the company has stated without completing the full technical screening process. Revenue-based alignment is derived from audited financials. The product flags which type is being shown.