3.6.2021

EU Taxonomy Regulation a Step Towards Achieving Sustainability Objectives

The EU will need 180 billion euros of private investments into sustainable business in order to meet the targets of the Paris climate agreement. In order to accelerate this development, the European Parliament and Council  issued the Regulation on the establishment of a framework to facilitate sustainable investment, known as the Taxonomy Regulation, in the summer of 2020.

What is the Taxonomy Regulation?

The regulation makes it possible to offer financial products that pursue environmentally sustainable objectives and channel private investments into sustainable activities. In practice, the regulation is an amendment of the rules of the EU’s financial system that links financing to the EU’s climate goals.

The Taxonomy Regulation applies to, for example, Member States, listed companies employing over 500 people, financial market operators and insurance companies. The regulation encourages companies to make their businesses more environmentally sustainable.

What Kinds of Economic Activity are Considered Sustainable?

The regulation has six environmental objectives:

The regulation will enter into force at the start of 2022 with respect to the climate change mitigation and adaptation objectives and on 1 January 2023 with respect to the other environmental objectives.

According to the regulation, economic activities are sustainable if they make a substantial contribution to one or more of these environmental objectives and do not significantly harm the objectives. The regulation specifies characteristics for each objective for determining when an economic activity is considered to cause significant harm to the objective. For example, an activity is considered to harm the objective of climate change mitigation if it leads to significant greenhouse gas emissions.

An economic activity also qualifies as contributing substantially to the environmental objectives if it directly enables other activities to make a substantial contribution to one or more of those objectives. In such cases, life-cycle considerations must also be taken into account.

An economic activity is considered environmentally sustainable when carried out in compliance with certain minimum safeguards. It must also comply with technical screening criteria that will be established by the Commission for each objective.

How Will the Regulation Impact Notification Obligations?

In addition to environmental objectives, the Taxonomy Regulation sets disclosure obligations on companies relating to, among other things, financial products, that are divided into three classes:

When offering environmentally sustainable investments or financial products promoting environmental characteristics, companies must disclose information on the environmental objectives to which the investment underlying the financial product contributes, as well as how and to what extent the investments underlying the financial product fund economic activities that are considered environmentally sustainable in accordance with the taxonomy. If a financial product does not fulfil the above criteria, the information disclosed on its must state that the financial product does not take the criteria for environmentally sustainable economic activities into account.

How Does the Regulation Benefit Investors

The Taxonomy Regulation unifies the definition of environmentally sustainable economic activity throughout the EU. A uniform classification enhances investor confidence and awareness of the environmental impact of financial products and addresses concerns about ‘greenwashing’. Greenwashing is the marketing of products as environmentally friendly despite the claimed environmental requirements not being met.

A uniform system also helps investors compare investment opportunities across borders.

Taxonomy and Green Financing Frameworks

In addition to disclosure obligations, the Taxonomy Regulation also sets a new type of pressure on companies to put environmentally sustainable activities directly into practice in activities that companies engage in through a green finance framework.

A green finance framework is designed to support the financing or refinancing sustainable development projects that comply with the framework. The allocation of funds and the environmental impacts of projects funded through a framework are reported annually.

Green financing frameworks and their quality must always be confirmed by an external assessment provider (such as CICERO Shades of Green).

Latest references

We acted as the Finnish legal counsel for the funders to Nevel Oy in a EUR 665 million refinancing arrangement through a mix of multicurrency bank loans and private placement notes. Nevel is a utility infrastructure company offering advanced industrial and real estate infrastructure solutions that are fit-for-purpose and future-proof. The transaction supports Nevel’s growth strategy and its goal to help customers to achieve climate goals.
Case published 20.8.2025
We advised Triton Partners and Habeo Group in a leveraged financing arrangement with Danske Bank A/S, Nordea Bank Abp and Skandinaviska Enskilda Banken AB. The financing included facilities amounting to EUR 80 million for refinancing, acquisitions and other general corporate purposes. Habeo Group is a comprehensive service provider in the technical building services sector, cultivating the value of buildings throughout their lifecycle. The group employs some 600 technical building services professionals. In 2023, we advised Triton in its platform investment, the formation of Habeo Group, through its acquisition and financing of eight Finnish companies.  
Case published 7.8.2025
We advised The Mortgage Society of Finland in the update of a EUR 2,5 billion bond programme under which the Mortgage Society of Finland may issue senior preferred and unsecured Tier 2 notes, and covered bonds. The notes under the programme may be listed on the official list of Nasdaq Helsinki Ltd.  The Mortgage Society of Finland is the only nationwide credit institution in Finland that focuses on housing. It provides customers with the full range of home financing services such as granting mortgage and consumer loans for all stages of home owning including purchasing and renovating. The Mortgage Society of Finland carries out this activity in accordance with the Act on Credit Institutions and the Act on Mortgage Societies.
Case published 5.8.2025
We advised Nevel Oy in its acquisition of the business of Labio Oy. Lahti Aqua Oy and Salpakierto Oy sold their entire shareholdings in Labio to Nevel, expanding Nevel’s already significant biogas portfolio. The transaction will have no impact on Lahti Aqua’s water utility operations or Salpakierto’s municipal waste management responsibilities. Labio’s operations and customer relationships will continue as before. ‘This partnership is a natural next step for us as we continue investing in sustainable material efficiency and renewable energy solutions. By integrating Labio’s comprehensive offerings and expertise, we can provide customers with a strong platform for material circularity. We are also strengthening our market position as one of Finland’s leading material efficiency solution providers,’ says Ville Koikkalainen, Director of Industrial and Biogas Business at Nevel. Nevel is an energy infrastructure company offering advanced, climate-positive solutions for industry and real estate. It operates more than 130 energy production plants and manages over 40 district heating networks. Nevel’s annual turnover is EUR 150 million, and it employs 190 experts in Finland, Sweden and Estonia.
Case published 16.7.2025