Taxonomy Regulation Outline

Taxonomy regulation is the term used to describe the framework put in place by governments to categorise economic activities in accordance with how environmentally sustainable they are. The main goal is to develop a uniform methodology for designating environmentally responsible investments and easing the shift to a low-carbon economy. With the creation of the EU Taxonomy Regulation serving as a notable example, the European Union (EU) has played a key role in developing taxonomy regulation.

In 2020, the EU's Sustainable Finance Action Plan included the official adoption of the EU Taxonomy Regulation. Setting specific requirements for sustainable economic actions aims to tackle "greenwashing" by providing investors with the information they need to make decisions about environmentally responsible investments.