# EU taxonomy {% hint style="info" %} This document describes **what** EU taxonomy metrics Upright provides. Upright's methodology on producing EU taxonomy metrics is detailed[ here](https://docs.uprightplatform.com/methodology/eu-taxonomy). {% endhint %} ## The EU taxonomy for sustainable activities The [EU taxonomy for sustainable activities](https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en) (often called just the EU taxonomy) is a classification system developed by the EU, establishing a list of environmentally sustainable economic activities. *As described by the EU*, the goal of the EU taxonomy is to provide companies, investors and policymakers with definitions for which economic activities can be considered environmentally sustainable. In this way, it seeks to: * Create security for investors * Protect private investors from greenwashing * Help companies to become more climate-friendly * Mitigate market fragmentation * Help shift investments where they are most needed The EU taxonomy defines environmentally sustainable activities based on the following six objectives: 1. Climate change mitigation 2. Climate change adaptation 3. The sustainable use and protection of water and marine resources 4. The transition to a circular economy 5. Pollution prevention and control 6. The protection and restoration of biodiversity and ecosystems [The European Commission website](https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en) provides more information on the EU taxonomy, including its motivation, associated legislation and frequently asked questions. ## Upright's EU taxonomy metrics {% hint style="info" %} The below content assumes basic familiarity with the EU taxonomy regulation. Most importantly, the reader should be familiar with **eligibility**, **alignment**, **transitional activities**, and **enabling activities**. These terms are defined in the [FAQ document](https://finance.ec.europa.eu/system/files/2021-04/sustainable-finance-taxonomy-faq_en.pdf) published by the European Commission. {% endhint %} ### Company-level metrics Upright provides the EU taxonomy metrics listed in this chapter. Estimated metrics are provided for all companies within [**Upright's coverage**](https://app.gitbook.com/o/0vfP0uXnrNI9xT33PorH/s/crk2LeOoszEbPWlkKNws/coverage/off-the-shelf-coverage)**.** Reported metrics are provided for all companies within Upright's coverage for which reporting is available. #### Topline metrics (Metric ID in API in parentheses) | Metric | Reported | Estimated | | ------------------------------------------------------------------------ | -------- | --------- | | Turnover of environmentally sustainable activities (TTOT\_alignment) | ✅ | ✅ | | CapEx of environmentally sustainable activities (TTOT\_alignment\_capex) | ✅ | - | | OpEx of environmentally sustainable activities (TTOT\_alignment\_opex) | ✅ | - | | Turnover of taxonomy-aligible activities (TTOT\_eligibility) | ✅ | ✅ | | CapEx of taxonomy-eligibile activities (TTOT\_alignment\_capex) | ✅ | - | | OpEx of taxonomy-eligible activities (TTOT\_alignment\_opex) | ✅ | - | #### Enabling and transitional (Metric ID in API in parentheses) | Metric | Reported | Estimated | | --------------------------------------------------------------------------------------------------------- | -------- | --------- | | Turnover of ***enabling*** environmentally sustainable activities (TTOT\_alignment\_enabling) | ✅ | ✅ | | CapEx of ***enabling*** environmentally sustainable activities (TTOT\_alignment\_enabling\_capex) | ✅ | - | | OpEx of ***enabling*** environmentally sustainable activities (TTOT\_alignment\_enabling\_capex) | ✅ | - | | Turnover of ***transitional*** environmentally sustainable activities (TTOT\_alignment\_transitional) | ✅ | ✅ | | CapEx of ***transitional*** environmentally sustainable activities (TTOT\_alignment\_transitional\_capex) | ✅ | - | | OpEx of ***enabling*** environmentally sustainable activities (TTOT\_alignment\_transitional\_opex) | ✅ | - | **Objective-level metrics, provided separately for all six objectives** Objective-level metrics are provided for the following six EU taxonomy objectives: | API ID | Objective | | ------ | ---------------------------------------------------------------- | | TCCM | Climate change mitigation | | TCCA | Climate change adaptation | | TWTR | The sustainable use and protection of water and marine resources | | TCIR | Transition to a Circular economy | | TBIO | Protection and restoration of biodiversity and ecosystems | | TPOL | Pollution prevention and control | List of metrics, replace "X" with the objective: | Metric | Reported | Estimated | | --------------------------------------------------------------------------------- | -------- | --------- | | Proportion of **turnover** aligned with objective X (X\_alignment\_enabling) | ✅ | ✅ | | Proportion of **CapEx** aligned with objective X (X\_alignment\_enabling\_capex) | ✅ | - | | Proportion of **OpEx** aligned with objective X (X\_alignment\_capex) | ✅ | - | | Proportion of **turnover** eligibile for objective X (X\_eligibility\_enabling) | ✅ | ✅ | | Proportion of **CapEx** eligible for objective X (X\_eligibility\_capex) | ✅ | - | | Proportion of **OpEx** eligible for objective X (X\_eligibility\_opex) | ✅ | - | **Nuclear and natural gas** As required by the [Regulatory Technical Standards (RTS)](https://www.esma.europa.eu/sites/default/files/2023-04/JC_2023_09_Joint_consultation_paper_on_review_of_SFDR_Delegated_Regulation.pdf) published by the European Supervisory Authorities in September 2023. (Metric ID in API in parentheses) | Metric | Reported | Estimated | | ----------------------------------------------------------------------------------------------------------- | ----------- | --------- | | Proportion of **turnover** aligned with taxonomy objectives concerning nuclear energy (TCCN\_alignment) | Coming soon | ✅ | | Proportion of **CapEx** aligned with taxonomy objectives concerning nuclear energy (TCCN\_alignment\_capex) | Coming soon | - | | Proportion of **CapEx** aligned with taxonomy objectives concerning nuclear energy (TCCN\_alignment\_opex) | Coming soon | - | | Proportion of **turnover** aligned with taxonomy objectives concerning fossil fuels (TCCF\_alignment) | Coming soon | ✅ | | Proportion of **CapEx** aligned with taxonomy objectives concerning fossil fuels (TCCF\_alignment\_capex) | Coming soon | - | | Proportion of **CapEx** aligned with taxonomy objectives concerning fossil fuels (TCCF\_alignment\_opex) | Coming soon | - | {% hint style="info" %} **Legacy union of the 2 climate change objectives** The EU had a phased rollout of the definitions of the EU taxonomy objectives, in which initially only the two climate-change related objectives were defined, instead of all six. As a result, companies initially reported the union of the two climate change objectives as a "total". For that reason, Upright also provides a union metric for the two climate-change related objectives. In the Upright API, these metrics are available in the fields starting with `TCCT_`. Since the reporting year 2023, companies have been consistently reporting totals for all six objectives, and are no more reporting values representing an union for the two climate-change related objectives. Therefore, no additional reported figures will be added to the climate change union figures. {% endhint %} ### Portfolio-level metrics The company-level metrics are provided also aggregated to portfolio-level. All portfolio metrics can be broken down to companies in each portfolio. {% hint style="info" %} **Unrecognized assets in portfolio-level EU taxonomy aggregation** The weight of unrecognized assets **is included** in the denominator in portfolio-level EU taxonomy eligibility and alignment aggregation. In other words, unrecognized assets will be assumed to not qualify as taxonomy eligible or aligned. This interpretation follows the guidance laid out in the [European Commission's Q\&A](https://www.esma.europa.eu/sites/default/files/library/c_2022_3051_f1_annex_en_v3_p1_1930070.pdf) dated 25 May 2022. Unrecognized assets may include assets like currencies, government bonds or unrecognized company bonds. {% endhint %} ## EU taxonomy metrics in the Upright API In addition to the Upright Platform UI, all metrics listed above are available from the [regulatory metrics](https://api.uprightproject.com/documentation#operation/getMetricsRegulatory) endpoint in the Upright API. {% hint style="info" %} **Note on portfolio coverage aggregates in the API** The portfolio coverage aggregates provided under the field with suffix `_modelled` reflect the weight of investments in the portfolio for which a disclosure is not available, rather than the share of companies with modelled values. {% endhint %}