EU Taxonomy in Procurement

The EU Taxonomy Regulation (2020/852) established a classification system for identifying which economic activities are environmentally sustainable. Originally designed to guide private investment, the taxonomy is increasingly influencing public procurement by providing a science-based reference for what constitutes a "green" purchase. Contracting authorities in EU member states are beginning to align procurement criteria with taxonomy technical screening criteria (TSCs), particularly for large infrastructure, construction, energy, and transport contracts.

What is the EU Taxonomy in Procurement?

The EU Taxonomy defines six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. For an economic activity to be taxonomy-aligned, it must make a substantial contribution to at least one objective, do no significant harm (DNSH) to any of the others, and meet minimum social safeguards.

For each objective and activity, the taxonomy sets Technical Screening Criteria that specify quantitative thresholds, performance metrics, or process requirements. In a procurement context, these criteria are being translated into:

Technical specifications. A contracting authority commissioning a new public building may require that it meet the taxonomy's TSC for "construction of new buildings," which currently includes a 10% improvement on the nearly zero-energy building (NZEB) standard plus a whole-life carbon footprint below a defined threshold.

Award criteria. Taxonomy alignment scores can be incorporated into award criteria, rewarding bids that exceed the minimum DNSH threshold or that align with multiple environmental objectives simultaneously.

Supplier eligibility. In conjunction with the Corporate Sustainability Reporting Directive (CSRD), large companies subject to CSRD must disclose their taxonomy-eligible and taxonomy-aligned revenue, capital expenditure, and operating expenditure. Contracting authorities can use disclosed taxonomy alignment data as one factor in sustainability pre-qualification.

The taxonomy's impact on procurement is most direct in the construction and infrastructure sectors, where the TSCs for new buildings, renovation, and civil engineering activities set GWP thresholds that align with the ambitions of Net-Zero Procurement Targets. In transport, the taxonomy's TSCs for road vehicles (including the passenger car CO2 threshold) complement the Clean Vehicle Directive (2019/1161) framework.

Outside the EU, the taxonomy's direct legal applicability does not extend to the UK (which has its own Green Taxonomy under development), Norway, or Switzerland. However, large European companies operating across borders are increasingly reporting taxonomy alignment voluntarily, and procurement criteria that reference taxonomy concepts are influencing non-EU markets through supply chain pressure.

Why the EU Taxonomy matters for bidders

The taxonomy is creating a new shared language between sustainability finance and procurement. Suppliers whose activities are taxonomy-aligned can demonstrate this through CSRD disclosures or voluntary taxonomy alignment statements, providing procurement evidence that is increasingly requested for major public contracts. Conversely, suppliers in activities identified as potentially harmful (high-carbon manufacturing, fossil fuel extraction) may face growing exclusion from taxonomy-aligned procurement frameworks.

Understanding which of your activities the taxonomy classifies as eligible and aligned, and being able to evidence this through LCA data and EPDs, is becoming part of the sustainability credentials expected in complex European public bids.

Example

A German federal agency commissions a major office building renovation and requires taxonomy alignment with the EU climate change mitigation objective for construction activities. The TSC requires that the renovation achieve at least 30% primary energy demand reduction. Bidding construction companies must submit an energy performance assessment demonstrating this reduction, along with a whole-life GWP calculation. A company that cannot demonstrate the 30% threshold does not satisfy the technical specification, regardless of price.

Frequently Asked Questions

Is taxonomy alignment mandatory in public procurement?

Not yet as a universal legal requirement. Some EU member states and institutions are moving towards making taxonomy alignment a condition for public investment and grants in specific sectors. The European Commission's sustainable public procurement proposal under discussion would strengthen the link. For now, taxonomy criteria inform voluntary GPP criteria and are used by advanced procurers in construction and infrastructure.

How does the taxonomy relate to GPP criteria?

GPP Criteria and taxonomy TSCs are complementary but not identical. GPP criteria are procurement-specific tools developed for each product category by the Commission's JRC. Taxonomy TSCs are investment-focused thresholds set by delegated regulation. Where TSCs and GPP criteria address the same subject (for example, building energy performance), they broadly align but may use different metrics or boundary conditions. The Commission is working to harmonise them as both frameworks mature.

What is DNSH and why does it matter in procurement?

DNSH (Do No Significant Harm) requires that an activity achieving one environmental objective does not materially harm any of the other five. In procurement, a buyer who sets a climate mitigation criterion should also check that the required solution does not cause significant harm to, for example, biodiversity or water resources. This multi-objective perspective is increasingly reflected in Comprehensive GPP Criteria, which address multiple environmental impact categories rather than carbon alone.