The EU Taxonomy in modeling

The EU Taxonomy requires large and capital-market-oriented companies to report on the sustainability of their economic activities. How far this redirects capital flows or changes financing conditions remains unclear. This report outlines approaches to model the Taxonomy’s effectiveness, drawing on modelling from the Pathways project (“Pathways to an EU in 2050 with net-zero GHG emissions”). It also assesses how the project’s three scenarios align with the Taxonomy, showing that the more ambitious pathways achieve alignment earlier and more comprehensively.