L 174/40
EN
Official Journal of the European Union
7.7.2023
5.2.
The Taxonomy as a transition tool
By defining environmentally sustainable economic activities, not undertakings, the Taxonomy enables undertakings to transition by gradually increasing their share of environmentally sustainable activities.
Figure 5 illustrates how an undertaking can gradually transition its activities, here activities performed in factories, and invest into their upgrades to increase the share of green activities in the future.
Activity-based transition plans can be the key part of an entity level transition strategy.
5.3.
Options for using the Taxonomy to specify transition finance needs
Undertakings can use the Taxonomy to define their transition finance needs at activity level.
The Taxonomy does not prescribe the timeline by which an undertaking should align its activities with any of its criteria.
Instead, it leaves flexibility to market actors to use the timetables of their own science-based transition paths.
Undertakings can reference taxonomy criteria in their climate and environmental target setting and where those targets are aligned with the transition and their achievement is credible, they can raise transition finance for their implementation.
Figure 6 illustrates how the Taxonomy can be used for this purpose, providing options that can be considered in the given sequence, considering the feasibility of the more ambitious options first.