EU Taxonomy for sustainable activities
EU classification system that uses precise technical criteria to define which economic activities may be labeled environmentally sustainable.
Regulation (EU) 2020/852 of 18 June 2020: an activity counts as sustainable in the EU sense only if it makes a substantial contribution to one of six environmental objectives while doing no significant harm to the other five (the DNSH test of Article 17), and clears the sector-by-sector technical screening criteria set in delegated acts. An agency ESG score with its house methodology is a different animal. The Taxonomy is a single, binding text, which strips out subjectivity but pushes the analysis down to activity level inside one company, where the agency hands out one overall score. Carriers use it twice. It governs how they classify their own investments and underwritten premiums as eligible since fiscal 2021 and as aligned since fiscal 2023, reported in 2024; and it gives them a common vocabulary with the insured when the client talks up the sustainability of its business, instead of a statement of intent nobody can check. Published ratios are still low at most large European insurers, a fair measure of the gap between books in force and the technical criteria. The usual complaints are the implementation burden and the whole sectors the Taxonomy leaves out.
Since 2024, starting with fiscal 2023, major European insurers have published every year the share of their underwritten premiums and investments aligned with the green Taxonomy; in 2022 and 2023 they reported eligibility only. For most of them the figure is still low, and it gives a fair measure of the gap between existing portfolios and the regulation's technical criteria.
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