Taxonomy Eligibility
Taxonomy eligibility describes the assignment of an economic activity to an activity defined in the EU Taxonomy, regardless of whether that activity already meets the relevant technical screening criteria.
Taxonomy eligibility is the first assessment step under the EU Taxonomy Regulation (Regulation (EU) 2020/852). An economic activity is considered taxonomy-eligible if it can be matched to one of the activities concretely described in the delegated acts, such as electricity generation from wind power or the renovation of buildings. What matters is solely whether the activity falls, by its nature, within the Taxonomy's catalogue of activities, not whether it is already carried out in an environmentally sustainable manner.
Taxonomy eligibility must be clearly distinguished from taxonomy alignment. An eligible activity only becomes aligned once it additionally meets the technical screening criteria for a substantial contribution to at least one of the six environmental objectives, does no significant harm to any other objective (the DNSH principle) and complies with the minimum safeguards for human rights and labour standards. Eligibility is therefore a necessary but not a sufficient condition for alignment.
Companies within the scope of the CSRD must disclose, for the key performance indicators turnover, capital expenditure (CapEx) and operating expenditure (OpEx), the share of taxonomy-eligible and taxonomy-aligned activities. Reporting the eligible share separately allows investors and stakeholders to gauge a company's transformation potential, even where the alignment criteria are not yet fully met.
Legal Basis
Art. 1 and Art. 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation); Delegated Regulation (EU) 2021/2178 (disclosure); CSRD (Directive (EU) 2022/2464)
Practical Example
A compliance officer at a mid-sized machinery manufacturer analyses turnover by product line. She maps the production of heat-pump components to the Taxonomy activity 'manufacture of energy efficiency equipment for buildings' and flags this share of turnover as taxonomy-eligible. Only in a second step does she check, using the technical screening criteria and the DNSH evidence, whether the turnover may also be reported as taxonomy-aligned, documenting both ratios separately for the sustainability report.