Enabling economic activities are a sub-category of environmentally sustainable economic activities under the Taxonomy Regulation, which do not substantially contribute to climate change mitigation through their own performance.
Article 1 point 4 of Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation
‘enabling economic activity’ means an economic activity that complies with the requirements laid down in Article 16 of the Taxonomy Regulation
Such activities play a crucial role in the decarbonisation of the economy by directly enabling other activities to be carried out at a low carbon level of environmental performance.
Enabling activities directly enable other activities to make a substantial contribution to an environmental objective (ESA’s Final report of 22 October 2021 on taxonomy-related product disclosure RTS with regard to the content and presentation of disclosures pursuant to Article 8(4), 9(6) and 11(5) of Regulation (EU) 2019/2088, JC 2021 50, p. 38).
As was noted in the said Final report of 22 October 2021, the taxonomy is based on three categories, i.e. enabling, transitional and “green”, but, by defining only two of these categories, the third category will not be visible to the customer.
It was doubted that it would be feasible for products committing to a certain share of sustainable investments in line with the taxonomy to specify minimum proportions of transitional and enabling activities in the pre-contractual documents.
The commitment to a minimum share of taxonomy-aligned investments that would need to be met and monitored on a continuous basis was considered a challenge in itself and only a few products were believed to be able to make commitments on a more granular level.
Therefore, it was expected that it would be possible to disclose a zero minimum share of transitional and enabling activities in the pre-contractual documents and to explain to investors that this is due to the lack of feasibility to make binding commitments, but that the actual share of investments in transitional and enabling activities would be disclosed in the periodic report.
Enabling activities are defined in Article 16 of the Taxonomy Regulation - see below.
Taxonomy Regulation
Article 10
Substantial contribution to climate change mitigation
1. An economic activity shall qualify as contributing substantially to climate change mitigation where that activity contributes substantially to the stabilisation of greenhouse gas concentrations in the atmosphere at a level which prevents dangerous anthropogenic interference with the climate system consistent with the long-term temperature goal of the Paris Agreement through the avoidance or reduction of greenhouse gas emissions or the increase of greenhouse gas removals, including through process innovations or product innovations, by:
(a) generating, transmitting, storing, distributing or using renewable energy in line with Directive (EU) 2018/2001, including through using innovative technology with a potential for significant future savings or through necessary reinforcement or extension of the grid;
(b) improving energy efficiency, except for power generation activities as referred to in Article 19(3);
(c) increasing clean or climate-neutral mobility;
(d) switching to the use of sustainably sourced renewable materials;
(e) increasing the use of environmentally safe carbon capture and utilisation (CCU) and carbon capture and storage (CCS) technologies that deliver a net reduction in greenhouse gas emissions;
(f) strengthening land carbon sinks, including through avoiding deforestation and forest degradation, restoration of forests, sustainable management and restoration of croplands, grasslands and wetlands, afforestation, and regenerative agriculture;
(g) establishing energy infrastructure required for enabling the decarbonisation of energy systems;
(h) producing clean and efficient fuels from renewable or carbon-neutral sources; or
(i) enabling any of the activities listed in points (a) to (h) of this paragraph in accordance with Article 16.
Article 16
Enabling activities
An economic activity shall qualify as contributing substantially to one or more of the environmental objectives set out in Article 9 by directly enabling other activities to make a substantial contribution to one or more of those objectives, provided that such economic activity:
(a) does not lead to a lock-in of assets that undermine long-term environmental goals, considering the economic lifetime of those assets; and
(b) has a substantial positive environmental impact, on the basis of life-cycle considerations.
Recital 42
An economic activity should qualify as contributing substantially to one or more of the environmental objectives set out in this Regulation where it directly enables other activities to make a substantial contribution to one or more of those objectives. Such enabling activities should not lead to a lock-in of assets that undermine long-term environmental goals, considering the economic lifetime of those assets, and should have a substantial positive environmental impact, on the basis of life-cycle considerations.
Commission Delegated Regulation of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives
Recital 12
Enabling economic activities as referred to in Article 10(1), point (i), of Regulation (EU) 2020/852 do not substantially contribute to climate change mitigation through their own performance. Such activities play a crucial role in the decarbonisation of the economy by directly enabling other activities to be carried out at a low carbon level of environmental performance. Technical screening criteria should therefore be established for those economic activities which play an essential role in enabling the target activities to become low-carbon or to lead to greenhouse gas reductions. Those technical screening criteria should ensure that an activity complying with them respects the safeguards of Article 16 of Regulation (EU) 2020/852, in particular that the activity does not lead to a lock-in of assets and has a substantial positive environmental impact.
Documentation
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (Taxonomy Regulation), Recital 42, Article 10, Article 16
Commission Delegated Regulation of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives, Recital 12
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