EU Taxonomy: How to Align Your Capital Expenditure

The EU Taxonomy provides a common language for defining which economic activities are environmentally sustainable — and increasingly drives access to green financing.

How alignment works

An activity is Taxonomy-aligned when it makes a substantial contribution to at least one of the six environmental objectives, does no significant harm (DNSH) to the others, and complies with minimum social safeguards. Substantial contribution and DNSH are tested against technical screening criteria set out in delegated acts.

Why CapEx matters

For most companies, the share of revenue and operating expenses that is Taxonomy-aligned today is fairly low. Capital expenditure tells a more forward-looking story: it shows how much of your investment is going into activities that meet the criteria, including credible plans to make existing activities aligned over time.

Practical steps

• Map activities to the Taxonomy. Identify the NACE codes and Taxonomy activities that match your business — both eligible and aligned.
• Apply the technical screening criteria. Check substantial contribution thresholds and run a structured DNSH assessment for each material activity.
• Document a CapEx plan. For activities not yet aligned, a credible CapEx plan can still count towards alignment if it shows how the activity will meet the criteria within a defined period.
• Watch the safeguards. Minimum safeguards on human rights, labour, anti-corruption and taxation must be met at the company level.

A well-structured Taxonomy alignment exercise pays back twice: once in your sustainability disclosures, and a second time when the same data is used to access green loans, sustainability-linked finance and EU funding instruments.