(1)

Regulation (EU) 2020/852 establishes the general framework for determining whether an economic activity qualifies as environmentally sustainable for the purposes of establishing the degree to which an investment is environmentally sustainable. That Regulation applies to measures adopted by the Union or by Member States that set out requirements for financial market participants or issuers in respect of financial products or corporate bonds that are made available as environmentally sustainable, to financial market participants that make available financial products, and to undertakings that are subject to the obligation to publish a non-financial statement pursuant to Article 19a of Directive 2013/34/EU of the European Parliament and of the Council (2) or a consolidated non-financial statement pursuant to Article 29a of that Directive. Economic operators or public authorities that are not covered by Regulation (EU) 2020/852 may also apply that Regulation on a voluntary basis.

(2)

Articles 12(2), 13(2), 14(2) and 15(2) of Regulation (EU) 2020/852 require the Commission to adopt delegated acts establishing the technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control or to the protection and restoration of biodiversity and ecosystems, respectively, and to establish, for each relevant environmental objective laid down in Article 9 of that Regulation, technical screening criteria for determining whether that economic activity causes no significant harm to one or more of those environmental objectives.

(3)

The Communication from the Commission of 6 July 2021‘Strategy for Financing the Transition to a Sustainable Economy’ (3) announced the establishment of technical screening criteria for environmental objectives covering the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, and to the protection and restoration of biodiversity and ecosystems. Those technical screening criteria should be adopted in addition to the technical screening criteria established in Commission Delegated Regulation (EU) 2021/2139 (4).

(4)

The technical screening criteria for environmental objectives covering the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems, should, like the technical screening criteria established in Delegated Regulation (EU) 2021/2139, where possible, follow the classification of economic activities laid down in the NACE Revision 2 classification system of economic activities established by Regulation (EC) No 1893/2006 of the European Parliament and of the Council (5). To facilitate the identification by undertakings and financial market participants of the relevant economic activities for which technical screening criteria should be established, the specific description of an economic activity should also include indicative references to NACE codes that can be associated with that activity. Those references should be understood as indicative and should not prevail over the specific definition of the economic activity provided in its description.

(5)

The technical screening criteria for economic activities that contribute substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, and to the protection and restoration of biodiversity and ecosystems should ensure that the economic activity concerned has a positive impact on one of those objectives. Those technical screening criteria should therefore refer to thresholds or performance levels that the economic activity should achieve to qualify as contributing substantially to one of those objectives. The technical screening criteria for ‘do no significant harm’ (DNSH) should ensure that the economic activity has no significant negative environmental impacts, including climate-related impacts. Consequently, those technical screening criteria should specify the minimum requirements that the economic activity should meet to qualify as environmentally sustainable.

(6)

The technical screening criteria for determining whether an economic activity contributes substantially to one of the environmental objectives laid down in Article 9 of Regulation (EU) 2020/852 and does no significant harm to any of the other environmental objectives should, where relevant build, on existing Union law, best practices, standards and methodologies, and well-established standards, practices and methodologies developed by internationally reputed public entities. Where those standards, practices and methodologies are not available for a specific policy area, the technical screening criteria should build on well-established standards developed by internationally reputed private bodies.

(7)

Pursuant to Article 19(1), point (h), of Regulation (EU) 2020/852, the technical screening criteria should take into account the nature and the scale of the economic activity and sector that they refer to, and whether the economic activity is an enabling activity as referred to in Article 16 of that Regulation. For the technical screening criteria to meet the requirements of Article 19 of Regulation (EU) 2020/852 in an effective and balanced way, those technical screening criteria should be set as a quantitative threshold or minimum requirement, a relative improvement, a set of qualitative performance requirements, process or practice-based requirements, or a precise description of the nature of the economic activity itself where that activity by its nature can contribute substantially to the environmental objectives.

(8)

The technical screening criteria for determining under which conditions an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources should reflect the need to achieve good status for all water bodies and good environmental status for marine waters, and to prevent the deterioration of water bodies that already have good status or marine waters that are already in good environmental status. It is therefore appropriate to focus first on those economic activities and sectors that have the greatest potential to achieve those aims.

(9)

The Union framework for water protection (6) ensures an integrated approach to water management, respecting the integrity of whole ecosystems. The technical screening criteria should therefore aim at addressing the adverse effects of urban and industrial waste water discharges, protecting human health from the adverse impact of any contamination of water intended for human consumption, improving water management and the efficiency of water use, ensuring the sustainable use of marine ecosystem services, contributing to the good environmental status of marine waters and to the overall achievement and maintenance of good status or good potential of bodies of water, including bodies of surface water and groundwater. Technical screening criteria for urban waste water treatment as activity providing a substantial contribution to one or more environmental objectives should be reviewed and where necessary revised, taking into account relevant Union law, including Council Directive 91/271/EEC (7).

(10)

As regards solutions inspired and supported by nature, which provide environmental, social and economic benefits and help build resilience, the technical screening criteria should aim at preventing and protecting against floods or droughts while enhancing natural water retention, biodiversity and water quality.

(11)

The transition to a circular economy is an enabler of environmental sustainability that generates significant benefits for the sustainable management of water, the protection and conservation of biodiversity, the prevention and control of pollution and the mitigation of climate change. The circular economy reflects the need for economic activities to promote efficient use of resources through appropriate re-use and recycling of resources. The technical screening criteria for determining under which conditions an economic activity qualifies as contributing substantially to the transition to a circular economy should therefore ensure that in the design and production phase, the operator takes into account the long-term value retention and waste reduction of the product over its lifecycle. During its use phase, the product should be subject to maintenance to extend its life, while reducing the amount of waste. The product should be dismantled or treated after its use to ensure that it can be re-used or recycled for the manufacturing of another product. That approach can limit the dependency of the Union’s economy on materials imported from third countries, which is particularly important in respect of critical raw materials. It is therefore appropriate to focus first on those economic activities and sectors that have the greatest potential to achieve those aims.

(12)

When considering the circularity of a product, the design and production phases are key for ensuring durability and potential re-use of the product and for its recyclability. Those phases are also imperative for reducing the content of hazardous substances and substituting substances of very high concern in materials and products throughout their life cycle. The technical screening criteria for manufacturing activities that substantially contribute to the transition to circular economy should therefore set design requirements for products’ longevity, reparability and reuse, as well as requirements on the use of materials, substances and processes that allow for quality recycling of the product. The use of hazardous substances should be minimised. Where possible, the criteria should also require the use of recycled materials for the manufacturing of the product itself.

(13)

In the follow-up to Communications from the Commission of 11 December 2019‘The European Green Deal’ (8), of 11 March 2020 on a new Circular Economy Action Plan (9), of 16 January 2018 on a European Strategy for Plastics (10) and of 30 November 2022 on an EU policy framework on biobased, biodegradable and compostable plastics (11), the technical screening criteria for plastic packaging manufacturing should be complemented, reviewed and where necessary revised and taking into account relevant Union law, including Directive 94/62/EC of the European Parliament and of the Council (12) and its future revisions.

(14)

In the absence of legally agreed sustainability criteria on the role of biomass in plastic packaging, the technical screening criteria for manufacturing of plastic packaging making substantial contribution to the transition to a circular economy focus on use of bio-waste feedstock. Taking into account future technology and policy developments, including the review of Directive (EU) 2018/2001 of the European Parliament and of the Council (13), as well as possible contribution to other environmental objectives, those criteria may need to be reviewed.

(15)

Good waste management is a building block of the circular economy and helps prevent waste from having a negative impact on the environment and human health. The Union legislation on waste (14) improves waste management by setting out a ‘waste hierarchy’ under which waste prevention, preparing for re-use and recycling are the preferred options, followed by other recovery, including energy recovery and only as a last resort, disposal such as incineration without energy recovery or landfilling. The technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to the transition to a circular economy should therefore aim at preventing or reducing waste generation, increasing the preparation for re-use and recycling of waste, avoiding down cycling and disposal of waste. Taking into account that materials suitable for being reintroduced into the circular economy, such as metals and inorganic salts, can be recycled from combustion products, in particular from bottom ashes from non-hazardous waste incineration, the establishment of technical screening criteria for that recycling activity is to be considered.

(16)

Construction and demolition is responsible for 37 % of waste in the Union (15). Ensuring that the materials used in the construction and maintenance process of buildings and other civil engineering objects come mainly from re-used or recycled (secondary raw) materials; and are in turn prepared for re-use or recycling when the built asset is demolished, can therefore play an important role in the transition to a circular economy. Technical screening criteria therefore should be laid down for the construction of new buildings, renovation of existing buildings, demolition or wrecking of buildings and other structures, maintenance of roads and motorways and for the use of concrete in civil engineering projects. Considerations of the circularity of the materials and the built asset need to be taken into account in the design phase, up until the dismantling phase. The technical screening criteria should therefore follow the principles of circular design and production of the built asset, as well as a circular use of materials used to produce that asset.

(17)

A whole new range of sustainable services, product-as-a-service business models and digital solutions brings about a better quality of life, innovative jobs and upgraded knowledge and skills. In line with the Communication ‘A new Circular Economy Action Plan – For a cleaner and more competitive Europe’, circular economy provides high-quality, functional and safe products, which are efficient and affordable, last longer and are designed for re-use, repair and high-quality recycling. The technical screening criteria for determining the conditions under which innovative sustainable services qualify as contributing substantially to the transition to a circular economy should therefore be laid down for activities that contribute to prolonging the life of products.

(18)

Digital solutions, including the use of digital product passports, can provide real-time data about an item’s location, condition, and availability, and increase the traceability of materials and that way enhance value retention in every design, manufacturing and consumer decision. That in turn enables economic actors to move to circular business models, including product-as-a-service business model, ultimately decoupling economic activities from the use of natural resources and improving an economic activity’s environmental impacts. Technical screening criteria should therefore be established for new digital solutions that can improve the transparency and efficiency of environmental monitoring and regulatory enforcement, including decision-making within integrated water resources management.

(19)

The technical screening criteria for determining under which conditions an economic activity qualifies as contributing substantially to pollution prevention and control should reflect the need to eliminate pollution in air, water, soil, living organisms and food resources. Pollution can cause illnesses and in consequence may lead to premature deaths. Its most harmful impacts on human health are typically borne by the most vulnerable groups (16). Pollution also threatens biodiversity and contributes to the mass extinction of species. As outlined in the Communication from the Commission of 12 May 2021, Pathway to a Healthy Planet for All EU Action Plan: ‘Towards Zero Pollution for Air, Water and Soil’ (17), the economic benefits of fighting pollution are substantial and the benefits for society far outweigh the required costs.

(20)

Following the ambition of the Communication from the Commission of 14 October 2020‘Chemicals Strategy for Sustainability Towards a Toxic-Free Environment’ (18), to help to prevent and control pollution it is particularly important to progressively phase out the most harmful substances from products for consumer or professional use except when their use has been proven to be essential for society and to substitute or minimise the production and use of substances of concern, as far as possible.

(21)

Pollution caused by certain pharmaceutical ingredients may pose risks to the environment and to human health as outlined in the Communication from the Commission of 11 March 2019‘European Union Strategic Approach to Pharmaceuticals in the Environment’ (19). Technical screening criteria for the manufacturing of active pharmaceutical ingredients or active substances and for the manufacturing of medicinal products should therefore aim at promoting the production and use of ingredients that are naturally occurring substances or are classified as readily biodegradable.

(22)

Preventing and reducing emission of pollutants in the end-of-life phase of products, and the cleaning-up of existing pollution, have a significant potential to protect the environment from pollution and to improve the state of the environment. Technical screening criteria should therefore be established for the collection, transport and treatment of hazardous waste which poses a greater risk to the environment and human health than non-hazardous waste, as well as for remediation of non-conforming landfills and abandoned or illegal waste dumps and of contaminated sites and areas.

(23)

The technical screening criteria for determining under which conditions an economic activity qualifies as contributing substantially to the protection and restoration of biodiversity and ecosystems should reflect the need to protect, conserve or restore biodiversity to achieve the good condition of ecosystems or to protect ecosystems that are already in good condition. Loss of biodiversity and collapse of ecosystems are one of the biggest threats facing humanity in the next decade (20).

(24)

Conservation of biodiversity has direct economic benefits for many sectors of the economy. The technical screening criteria should therefore aim at maintaining or improving the status and trends of terrestrial, freshwater and marine habitats, ecosystems and populations of related fauna and flora species.

(25)

The value of biodiversity and of the associated services provided by healthy ecosystems is important for tourism as it contributes significantly to the attractiveness and quality of tourism destinations, and therefore to their competitiveness. Technical screening criteria should therefore be established for tourism accommodation activities and should aim at ensuring that those activities follow appropriate principles and minimum requirements to protect and sustain the biodiversity and ecosystems, and to contribute to their conservation.

(26)

The technical screening criteria for determining whether the economic activities that contribute substantially to one of the environmental objectives cause no significant harm to any of the other environmental objectives should aim at ensuring that contribution to one of the environmental objectives is not made at the expense of other environmental objectives. The ‘do no significant harm’ criteria play therefore an essential role in ensuring the environmental integrity of the classification of environmentally sustainable activities. The ‘do no significant harm’ criteria for a given environmental objective should be specified for those activities that present a risk of causing significant harm to that objective. Those criteria should take into account and build upon the relevant requirements of existing Union law.

(27)

The technical screening criteria for ensuring that activities that contribute substantially to one of the environmental objectives do not cause significant harm to climate change mitigation should ensure that economic activities that have the potential to contribute substantially to environmental objectives other than climate change mitigation do not lead to significant greenhouse gas emissions.

(28)

Climate change is likely to affect all sectors of the economy. The technical screening criteria for ensuring that economic activities that contribute substantially to one of the environmental objectives do not cause significant harm to climate change adaptation should therefore apply to all of those economic activities. Those criteria should ensure that existing and future risks that are material to the economic activity are identified and that adaptation solutions are implemented to minimise or avoid possible losses or impacts on business continuity.

(29)

The technical screening criteria for ‘do no significant harm’ to sustainable use and protection of water and marine resources should be specified for all activities that may hinder such sustainable use and protection. Those criteria should aim at avoiding that economic activities are detrimental to the good status or the good ecological potential of water bodies, including surface water and groundwater, or to the good environmental status of marine waters, by requiring that environmental degradation risks are identified and addressed, in accordance with a water use and protection management plan or with the Member States’ marine strategies.

(30)

The technical screening criteria for ‘do no significant harm’ to transition to a circular economy should be tailored to specific economic activities to ensure that those activities do not lead to inefficiencies in the use of resources or to lock-in linear production models, and that waste is avoided or reduced and, where unavoidable, managed in accordance with the waste hierarchy. Those criteria should also ensure that economic activities do not undermine the objective of transitioning to a circular economy.

(31)

The technical screening criteria for ‘do no significant harm’ to pollution prevention and control should reflect sector specificities to address the relevant sources and types of pollution into air, water or land, referring, where relevant, to best available techniques conclusions established under Directive 2010/75/EU of the European Parliament and of the Council (21).

(32)

The criteria for ‘do no significant harm’ to protection and restoration of biodiversity and ecosystems should be specified for all activities that can pose risks to the status or condition of habitats, species or ecosystems and should require that, where relevant, environmental impact assessments or other appropriate assessments are undertaken and the conclusions from such assessments are implemented. Those criteria should ensure that even in the absence of a requirement to perform an environmental impact assessment or other appropriate assessment, activities do not lead to the disturbance, capturing or killing of legally protected species or the deterioration of legally protected habitats.

(33)

As climate change is likely to affect all sectors of the economy, all sectors of the economy will need to be adapted to the adverse impact of the current climate and the expected future climate. Technical screening criteria for substantial contribution to climate change adaptation are to be therefore established in the future for all sectors and economic activities that are covered by the technical screening criteria for substantial contribution to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control or to the protection and restoration of biodiversity and ecosystems set out in this Regulation.

(34)

The inclusion of new economic activities contributing to environmental objectives pursuant to Articles 12(2), 13(2), 14(2), and 15(2) of Regulation (EU) 2020/852 will widen the coverage of disclosures laid down in Article 8 of that Regulation. Commission Delegated Regulation (EU) 2021/2178 (22), which was adopted on the basis of Article 8(4) of Regulation (EU) 2020/852, should therefore be amended to reflect that widened scope. To address certain technical and legal inconsistencies identified since the application of Delegated Regulation (EU) 2021/2178, targeted amendments should also be introduced to that Regulation.

(35)

Delegated Regulation (EU) 2021/2178 should therefore be amended accordingly.

(36)

The four environmental objectives referred to in Article 9, points (c) to (f), of Regulation (EU) 2020/852 and in Articles 12, 13, 14 and 15 of that Regulation are closely interlinked in terms of the means by which an objective is achieved and the benefits that achieving one of the objectives may have on other objectives. The provisions determining whether an economic activity contributes substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control or to the protection and restoration of biodiversity and ecosystems, are thus closely interrelated, and are closely linked to the need to widen the disclosure obligations laid down in Delegated Regulation (EU) 2021/2178. To ensure coherence between those provisions, which should enter into force at the same time, to facilitate a comprehensive view of the legal framework for stakeholders and to facilitate the application of Regulation (EU) 2020/852, it is necessary to include those provisions in a single Regulation.

(37)

To ensure that the application of Regulation (EU) 2020/852 evolves with scientific, technological, market and policy developments, this Regulation should be regularly reviewed and, where appropriate, amended as regards the activities considered to be contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, to the protection and restoration of biodiversity and ecosystems, and the corresponding technical screening criteria.

(38)

This Regulation is consistent with the climate-neutrality objective set out in Article 2(1) of Regulation (EU) 2021/1119 of the European Parliament and of the Council (23) and ensures progress on adaptation as referred to in Article 5 of that Regulation. The Commission assessed the consistency of the technical screening criteria for ensuring that economic activities that contribute substantially to one of the environmental objectives do not cause significant harm to climate change mitigation and climate change adaptation with the objective and targets of Regulation (EU) 2021/1119 as required by Article 6(4) of that Regulation.

(39)

It is necessary to provide non-financial and financial undertakings with sufficient time to assess whether their economic activities comply with the technical screening criteria laid down in this Regulation, and to report on the basis of that assessment in accordance with Delegated Regulation (EU) 2021/2178. The date of application of this Regulation should therefore be deferred, while the amendments to Delegated Regulation (EU) 2021/2178 should ensure that non-financial and financial undertakings have sufficient time to comply with their reporting requirements under that Regulation,