EU taxonomy
This page provides information on how Upright produces data for metrics related to EU taxonomy of sustainable activities (EU regulation 2020/852)
Upright seeks to produce all its impact data based on the best available information. Upright's EU taxonomy metrics are either:
Based directly on a company's reporting of taxonomy metrics or
Estimated by Upright based on other available information
Used definitions
The EU taxonomy metrics reflect the proportion of companies' turnover, CapEx or OpEx that relates to each sustainability objective defined by the EU. The EU has defined 6 environmental objectives:
Climate change mitigation
Climate change adaptation
The sustainable use and protection of water and marine resources
The transition to a circular economy
Pollution prevention and control
Protection and restoration of biodiversity and ecosystems.
Upright provides disclosed metrics for turnover-, CapEx- and OpEx-based figures when they are available. For turnover-based figures, Upright additionally provides estimated figures. Estimates are based on the following specifications:
For the last four objectives: Specification published in June 2023 (in this Enviromental Delegated Act from the European Commission)
For the first two objectives: Specification published on June 2021 (as part of the Climate Delegated Act)
Estimation of EU taxonomy metrics
Data sources used for producing taxonomy metrics include companies' annual reports, companies' sustainability reports, companies' reporting to the U.S. Security and Exchange Commission (SEC), company websites, market statistics, market research, and environmental research. Additionally, some companies disclose supporting information directly to Upright.
Estimation of taxonomy eligibility
Production of estimated turnover-based EU taxonomy eligibility figures requires:
The classification of each company's activities in line with the economic activities covered by the EU taxonomy regulation
Determination of the revenue shares relating to each activity
Most companies report their revenue only with a coarse subdivision (or no subdivision at all) that is insufficiently granular to allow for direct determination of revenue shares related to each EU taxonomy activity. Upright produces estimated revenue breakdowns by activity by using the revenue subdivisions reported by the company as a starting point and refining it based on market statistics, other market research, and quantitative metrics produced from company publications (websites, annual reports, regulatory filings) that correlate with the revenue shares being estimated. More information is available in this article.
Estimation of taxonomy alignment
In the general case, companies that don't report taxonomy alignment also do not publish sufficient information for a definite assessment of compliance with:
The substantial contribution criteria
The activity-specific DNSH criteria
The minimum safeguards
Therefore, these criteria are considered in a probabilistic manner, assessing the likelihood at which each of a company's products linked to an EU taxonomy activity meets each criterion.
In situations where specific information pertaining to the satisfaction of DNSH or minimum safeguards criteria is available (such as information on human rights violations), such information takes priority over the probabilistic assessment.
The probabilities are calibrated to reflect most likely alignment (rather than, for example, minimum alignment).
As required by the EU taxonomy regulation, minimum safeguards are considered on activity-level, rather than company-level. For this reason, a company with norm violations may still have taxonomy-aligned activities, as long as those norm violations are not related to the aligned activities.
Limited accuracy
The accuracy of the taxonomy indicators is primarily limited by available information. Upright continuously seeks to improve the accuracy of its indicators by using the best available information and statistical methods for integrating information from different sources.
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