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.
3.6.2021
EU Taxonomy Regulation a Step Towards Achieving Sustainability Objectives
Minna Korhonen
Related services
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 insights
Article published 21.5.2025 – Banking & Finance
Sustainable finance reimagined: What you need to know about the 2025 updates to green, social, and sustainability-linked loan principles
Article published 20.1.2025 – Banking & Finance
The LMA’s new model provisions for green loans and green loan terms promote sustainable finance
Article published 2.10.2024 – Banking & Finance
Sustainable finance is vital for achieving the objectives of the green transition
Article published 16.9.2024 – Banking & Finance
Private credit – an alternative to bank financing
Minna Korhonen & Anna-Sofia Alahuita
Minna Korhonen & Anna-Sofia Alahuita
Minna Korhonen
Tero Tuomisto, Minna Korhonen & Jenny Shahnovskij
Latest references
Brookfield – EUR 1 billion holdco financing for DayOne Data Centers
We advised a leading global investment firm Brookfield, alongside a global sovereign wealth investor, on the Finnish law aspects of a EUR 1 billion holdco financing for DayOne Data Centers, a Singapore-headquartered developer and operator of hyperscale data centres. Structured as a seven-year secured holdco financing facility of €500 million, expandable to €1 billion – and secured by DayOne’s Finland platform – the financing will support the rollout of hyperscale developments in Lahti and Kouvola, providing nearly 300MW of planned capacity across Finland. The proceeds will also support DayOne’s global expansion across the EU and APAC, with flexibility to allocate to other key growth markets as required.
Case published 29.1.2026
OP Corporate Bank and SEB – EUR 200 million financing of Sello Shopping Centre
We advised OP Corporate Bank and Skandinaviska Enskilda Banken (SEB) in the EUR 200 million financing of Sello Shopping Centre, one of the Nordic countries’ largest and most diverse shopping centres. The shopping centre is owned by Finnish pension insurance companies Keva, Elo and Ilmarinen. Sello is a pioneer in sustainable development, featuring an intelligent energy system and 2,300 solar panels. The shopping centre holds the highest LEED Platinum environmental certification, becoming the first shopping centre in Europe to achieve this distinction. Sello has demonstrated outstanding operational performance throughout 2025, achieving record visitor numbers and sales figures.
Case published 29.1.2026
Urban Partners – Financing of EUR 100 million construction project in Herttoniemi, Helsinki
We advised the real estate investor and developer Urban Partners in the financing of a EUR 100 million construction project in Helsinki, which combines build-to-rent housing and care homes within one scheme. A fund managed by Urban Partners (NSF V) purchased the plot of land in Herttoniemi, Helsinki and subsequently secured planning consent to deliver a hybrid living scheme. The modern complex will offer high-quality housing and care facilities for the elderly alongside rental accommodation. A total of 425 apartments and 108 care homes will be delivered across four buildings on the site. The project will be implemented in accordance with Urban Partners’ sustainability targets. All buildings will be constructed to energy class A, and the project will aim for the highest Platinum level of the international LEED environmental certification and will be implemented in accordance with the EU taxonomy criteria.
Case published 5.1.2026
Ålandsbanken – Consent solicitation process regarding T2 instruments and issue of SEK 350 million AT1 notes
We advised Ålandsbanken Abp in the consent solicitation process regarding its SEK 150,000,000 Tier 2 notes due December 2041 and SEK 200,000,000 Tier 2 notes due March 2043. The terms and conditions of the aforementioned instruments were amended by removing the write-down mechanisms in the consent solicitation process. In addition, we advised Ålandsbanken Abp on the issue of SEK 350 million Additional Tier 1 notes. The notes bear floating interest at the rate of STIBOR three months plus a margin of 3.35 per cent per annum. The AT1 notes were issued on 20 November 2025, and admitted to trading on the official list of Nasdaq Helsinki Ltd. The instrument has no maturity date and qualifies as Additional Tier 1 capital in accordance with the EU Capital Requirements Regulation. The issue strengthens Ålandsbanken’s capital structure by taking advantage of favourable market conditions.
Case published 10.12.2025