Think ahead like Kasparov: Mastering your EU Taxonomy data

Do you operate in the EU and need to report on EU Taxonomy transactions? Many companies collect their data only after the fact. But there’s a better way. Like in chess, thinking multiple moves ahead leads to success. But how? In this blog, we’ll show you how to track your EU Taxonomy activities efficiently and effectively.

Green mountains with wind turbines under a hazy sky

Before we dive in, let’s start with the basics – what is the EU Taxonomy?

The EU Taxonomy is a classification system of economic activities that contributes to the EU’s six environmental objectives, including the goal of climate neutrality by 2050. It serves as a framework for sustainable investments.

The activities listed in the EU Taxonomy are scientifically validated to determine whether they prevent or mitigate climate change. Payroll transactions, for example, are not on the list. However, investing in circular packaging is. With the EU Taxonomy, greenwashing becomes a thing of the past.

If your company is subject to CSRD, the EU Taxonomy applies to you. You must disclose in your annual report what percentage of your costs, investments, and revenue qualify as sustainable according to the Taxonomy.

Your green percentages

Which activities do you need to report on? Those that:

Are listed in the EU Taxonomy.
Meet the corresponding green criteria set by the EU Taxonomy.

Once you have identified the relevant business activities, you sum up the relevant transactions to determine what percentage of your expenditures and revenue is sustainable. It sounds straightforward – but this is where the real strategy begins.

Finding your sustainable transactions

How do you track transactions related to green business activities in a way that allows for fast and efficient reporting? For many companies, this is the biggest challenge. Searching for green transactions in your ERP system after the fact is impractical and time-consuming. A winning chess game requires strategy – you can’t afford to always be one move behind.

Think like a grandmaster to optimize EU Taxonomy tracking

To get ahead, you need a strategy in place beforehand. Define how you will label Taxonomy-aligned activities in your ERP. The specific data objects to mark depend on the Taxonomy activities relevant to your company. You may have already discussed this with your accountant or sought our support. Either way, it’s wise to align with your auditor as well.

Add extra fields to these objects and expand your system’s functionality to ensure you can quickly identify and enrich labeled activities. Next, incorporate information on whether the activity is “aligned” and at what percentage, and provide space for additional comments. With a pragmatic reporting structure in place, you’ll be able to supply the required information swiftly.

It’s also critical to determine who will fill in these fields. Just as important as upgrading your system is embedding this classification process into your daily operations – through communication, training, and clear instructions. This structured approach is key to achieving compliance.

By optimizing your financial setup, you can efficiently and effectively report on the EU Taxonomy – saving both time and effort.

Looking to gain even more control over the reporting process? We can help you devise a strategy. We’ve developed a simple assessment that ensures compliance with the EU Taxonomy. We also help you extract taxonomy data from your system with minimal effort. Together, we’ll determine the best solution for your specific processes and context—no matter how complex to make sure you think and act strategically.

Schedule a no-obligation consultation with your local NTT DATA experts and take your first step towards becoming an EU Taxonomy grandmaster!

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