European Taxonomy: “Circular Economy” Objective EGF and OID publish interpretation notes

They co-publish three notices to inform the operational implementation of technical criteria to meet the objective of "transition to a circular economy" of the European taxonomy.

The objective of "transition towards a circular economy", which is one of the 6 objectives of the European Taxonomy, particularly concerns the building sector since it includes the reduction of waste, the use of sustainable materials, as well as the integration of recycling principles in construction (3.1), renovation (3.2) and demolition (3.3) projects.

EGF and the OID therefore worked to analyze the texts in force and jointly draft three notices explaining how to apply this objective in the real estate and construction sector.

These notices, resulting from pioneering work, will naturally be updated based on regulatory developments as well as sector feedback. To this end, an OID taxonomy committee will be organized on Thursday, June 5, 2025, to incorporate stakeholder feedback. Stakeholders wishing to participate can inform the OID by registering using the following link: here

This work is part of the OID program on taxonomy (Guides, notices, indicator notices, studies).

As a reminder, the taxonomy (*), a central pillar of the European Green Deal and the European Union's Sustainable Finance Action Plan, defines what sustainable economic activities are by classifying their environmental impacts. The objective is to guide economic actors towards practices that better respond to ecological, social, and economic challenges, while promoting the evolution of business models. The taxonomy is based on two main criteria: criteria of substantial contribution (SCC) to one or more environmental objectives (**), and no significant harm (NSDH) to any of its other objectives (**). This regulatory framework affects a large number of economic sectors, including the construction industry, particularly in its activities of new construction, renovation of existing buildings, demolition, operation of real estate assets, etc.

(**) These 6 objectives are: Climate change mitigation / Adaptation to climate change / Sustainable use and protection of aquatic and marine resources / Transition to a circular economy / Prevention and reduction of pollution / Protection and restoration of biodiversity and ecosystems.

Applicable texts

Regulation (EU) 2020/852 defines what sustainable economic activities are.

Delegated Regulation (EU) 2023/2486 specifies the technical screening criteria for determining under what conditions an economic activity contributes substantially to the following 4 environmental objectives and whether this activity does not cause significant harm to any other environmental objective:

• Sustainable use and protection of aquatic and marine resources;
• the transition to a circular economy;
• prevention and reduction of pollution;
• the protection and restoration of biodiversity and ecosystems.

It also amends Delegated Regulation (EU) 2021/2178 on the modalities for presenting the information that companies must publish on their sustainable economic activities.

Reporting obligations

• Since 2022, companies subject to the thresholds of the Extra-Financial Performance Declaration (DPEF) must publish their eligibility for the 2 climate objectives (mitigation and adaptation to climate change) for the 2021 financial year.
• In 2023, the first alignment declarations for these objectives were made by non-financial companies for the 2022 financial year.
• In 2024, financial companies were due to publish their indicators for the 2023 financial year.
• By 2025, all relevant companies will have to publish their alignment with the 6 environmental objectives.