EU Taxonomy and Circular Economy

The EU Taxonomy is a classification system for environmentally sustainable economic activities that was developed by the European Union as a way to promote sustainable finance and investments. One of the six environmental objectives of the EU Taxonomy is the transition to a circular economy. The circular economy is an economic model in which resources are kept in use for as long as possible, extracting the maximum value from them before recovering and regenerating products and materials at the end of each service life.

The circular economy objective of the EU Taxonomy includes technical screening criteria that must be met in order for an economic activity to be considered environmentally sustainable. These criteria include the use of secondary raw materials, the design for circularity, the prevention of waste and the use of renewable energy. Each of these criteria is designed to promote the circular economy by reducing the use of finite resources, extending the lifetime of products and materials, and closing material loops.

The EU Taxonomy aims to provide a common framework for classifying and assessing the environmental performance of economic activities and to ensure that they meet a minimum set of environmental objectives, including the transition to a circular economy. This will help real estate companies, investors and other actors to better understand and communicate the environmental performance of their assets, products, services and investments. Additionally, the EU Taxonomy will also help companies to identify opportunities for improving their environmental performance and to access new markets and investors who are looking for sustainable and responsible investments.

The implementation of the circular economy objective of the EU Taxonomy can bring significant benefits to the economy and the environment. The circular economy reduces the use of finite resources, extends the lifetime of products and materials, and closes material loops. This leads to a reduction in waste, pollution and the use of raw materials, and an increase in resource efficiency and productivity. Additionally, it can also create new business opportunities and jobs, particularly in the recycling and refurbishment sectors.

However, the implementation of the EU Taxonomy and its circular economy objective also poses some challenges. One of the main challenges is the lack of knowledge and expertise in the circular economy among companies and investors. This can make it difficult for companies to understand and implement the technical screening criteria and for investors to understand and assess the environmental performance of economic activities. Additionally, the lack of infrastructure and systems in place to support the circular economy can also pose a challenge. This includes the lack of recycling and refurbishment facilities, as well as the lack of regulations and policies to support the transition to a circular economy.

Another challenge is the lack of incentives and support for companies to transition to a circular economy. This includes a lack of financial incentives and subsidies to support the development of circular economy projects, as well as a lack of regulations and policies to support the transition to a circular economy. In conclusion, the EU Taxonomy is a classification system for environmentally sustainable economic activities that was developed by the European Union as a way to promote sustainable finance and investments. One of its objectives is the transition to a circular economy, which is an economic model in which resources are kept in use for as long as possible, extracting the maximum value from them before recovering and regenerating products and materials at the end of each service life. The EU Taxonomy aims to provide a common framework for classifying and assessing the environmental performance of economic activities and to ensure that they meet a minimum set of environmental objectives, including the transition to a circular economy. The implementation of the circular economy objective of the EU Taxonomy can bring significant benefits to the economy and the environment but also poses some challenges.