of EU greenhouse gas emissions come from buildings and construction activities
The EU Taxonomy: A Classification System for Sustainable Activities
The Taxonomy Regulation (EU) 2020/852 establishes a classification framework that defines which economic activities can be considered environmentally sustainable for the purposes of investment and financial reporting. It is not a labelling scheme for products or a certification for buildings. Rather, it is a tool that enables financial market participants, companies, and policymakers to identify and compare economic activities based on their alignment with the EU’s environmental objectives.
Six environmental objectives: The taxonomy defines six 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 alignment, an activity must substantially contribute to at least one, do no significant harm to any other, and comply with minimum social safeguards.
The regulation 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 qualify as taxonomy-aligned, it must make a substantial contribution to at least one of these objectives, do no significant harm (DNSH) to any of the others, and comply with minimum social safeguards.
For the construction sector, the taxonomy is particularly significant because buildings and construction activities are responsible for approximately 36 percent of EU greenhouse gas emissions and 40 percent of energy consumption. The taxonomy’s Technical Screening Criteria for construction activities set specific, quantitative thresholds that determine whether a construction project, renovation, or building acquisition qualifies as sustainable — and these thresholds increasingly require life cycle environmental data of the kind that EPDs provide.
Construction Activities Under the Taxonomy
The EU Taxonomy’s Climate Delegated Act identifies several construction-related economic activities that can potentially qualify as making a substantial contribution to climate change mitigation. The most relevant are:
| Activity | Key Criteria for Substantial Contribution | EPD Relevance |
|---|---|---|
| 7.1 — Construction of New Buildings | Primary energy demand ≥10% below NZEB threshold; life cycle GWP disclosure for buildings >5,000 m² | Direct — EPDs required as LCA input data |
| 7.2 — Renovation of Existing Buildings | ≥30% reduction in primary energy demand vs. pre-renovation state | Growing — DNSH criteria increasingly consider embodied carbon of renovation materials |
| 7.7 — Acquisition and Ownership | EPC class A or top 15% of national stock (pre-2021 buildings); Activity 7.1 criteria for newer buildings | Indirect — GWP disclosure requirement for qualifying new buildings |
Activity 7.1: Construction of New Buildings
For new buildings to qualify, they must meet specific energy performance criteria — currently, the primary energy demand must be at least 10 percent lower than the threshold set for Nearly Zero-Energy Buildings (NZEB) in national regulations. In addition, for buildings larger than 5,000 square metres, the life cycle Global Warming Potential (GWP) of the building must be calculated for each stage of the life cycle and disclosed to investors and clients on demand. This GWP calculation must be performed according to EN 15978 or, as of the latest standard, EN 15978-1, which relies on product-level data from EPDs as inputs.
Activity 7.2: Renovation of Existing Buildings
Renovation activities qualify if they achieve at least a 30 percent reduction in primary energy demand compared to the pre-renovation state, or if they comply with requirements for major renovation as defined in the Energy Performance of Buildings Directive. While the current criteria for renovation focus primarily on operational energy, the DNSH criteria and evolving technical guidance increasingly consider the embodied carbon of renovation materials.
Activity 7.7: Acquisition and Ownership of Buildings
For buildings constructed before 31 December 2020, acquisition qualifies if the building has at least an Energy Performance Certificate (EPC) class A, or is within the top 15 percent of the national building stock in terms of primary energy demand. For buildings constructed after that date, the criteria from Activity 7.1 apply. Again, the life cycle GWP disclosure requirement for large new buildings means that EPD data is needed.
Technical Screening Criteria and Do No Significant Harm
The taxonomy’s architecture is built on two layers of environmental assessment. The Technical Screening Criteria (TSC) define what constitutes a substantial contribution to the targeted environmental objective. The DNSH criteria ensure that the activity does not undermine any of the other five objectives.
For climate change mitigation in construction, the TSC focus primarily on operational energy performance — the energy consumed during the building’s use phase. This reflects the historical emphasis on reducing heating, cooling, and lighting energy in buildings. However, as operational energy performance improves through better insulation, heat pumps, and renewable energy, the relative importance of embodied carbon — the emissions associated with manufacturing, transporting, and installing building materials — increases.
The DNSH criteria are where embodied carbon and EPD data become directly relevant. For the circular economy objective, the DNSH criteria require that construction and demolition waste management practices comply with EU waste hierarchy principles, and the TSC encourage design for disassembly and material reuse. For the pollution prevention objective, materials must not contain substances of very high concern. For the climate change mitigation substantial contribution itself, the requirement to calculate and disclose life cycle GWP for large buildings creates a direct demand for EPD data.
How EPD Data Supports Taxonomy Alignment
The connection between EPDs and taxonomy compliance operates at several levels. At the most direct level, the life cycle GWP calculation required for Activity 7.1 (large new buildings) can only be performed if product-level environmental data is available for the building materials used. Environmental Product Declarations prepared in accordance with EN 15804+A2 provide exactly this data — GWP figures for each life cycle module, along with other environmental indicators that may be relevant for DNSH assessments.
The building-level assessment follows EN 15978 (or EN 15978-1), which aggregates product-level data from EPDs with scenario data for transport, construction, use, and end-of-life phases to produce a whole-building life cycle assessment. Without EPDs for the major material inputs — structural concrete, structural steel, facade elements, insulation, windows, and roofing — this building-level assessment cannot be performed with any meaningful accuracy.
Beyond GWP: EPDs support taxonomy alignment in several other ways. Resource use indicators address circular economy assessments, waste category indicators are relevant to pollution prevention, and output flow indicators (components for reuse, materials for recycling, energy recovery) directly support circularity DNSH criteria.
| EPD Indicator Category | Taxonomy Objective Supported | Specific Use |
|---|---|---|
| GWP-total (A1–A3) | Climate change mitigation | Building life cycle GWP calculation |
| Resource use (renewable / non-renewable energy) | Circular economy | Material resource efficiency assessment |
| Waste indicators (hazardous / non-hazardous) | Pollution prevention | Waste management DNSH assessment |
| Output flows (reuse, recycling, energy recovery) | Circular economy | Circularity and end-of-life DNSH criteria |
| Full EN 15804+A2 indicator set | Multiple objectives | Comprehensive environmental profile |
Beyond the direct GWP calculation requirement, EPDs support taxonomy alignment in several other ways. The resource use indicators in EPDs (use of renewable and non-renewable primary energy, secondary materials, secondary fuels) provide data relevant to circular economy assessments. The waste category indicators (hazardous waste, non-hazardous waste, radioactive waste) are relevant to pollution and waste management assessments. And the output flow indicators (components for reuse, materials for recycling, energy recovery) directly address the circular economy DNSH criteria.
Life Cycle Assessment Requirements in the Taxonomy Context
It is important to understand the relationship between a building-level LCA (as required by the taxonomy) and product-level EPDs. A building LCA is an assessment of the entire building across its full life cycle — from the extraction of raw materials for all building products, through manufacturing, transport, construction, decades of use (including maintenance, repair, and replacement), to eventual demolition and waste processing. An EPD covers only a single product, typically from cradle to gate (modules A1–A3), sometimes with additional modules for transport, installation, use phase, and end of life.
Data quality is decisive: For taxonomy reporting purposes, where the GWP figure may determine whether a building qualifies as a sustainable investment, data quality is not a minor technical detail — it can make or break taxonomy alignment. Where specific EPDs from the actual manufacturers are used, the LCA reflects the real environmental performance of the building.
The building LCA uses EPDs as input data. The LCA practitioner takes the per-unit GWP (and other impact category values) from each product’s EPD, multiplies by the quantity of that product used in the building, and aggregates across all products and all life cycle stages. The result is a set of environmental impact figures for the building as a whole, expressed per square metre of floor area per year or over the building’s reference service life.
The quality of the building LCA is therefore directly dependent on the quality and availability of product EPDs. Where specific EPDs from the actual manufacturers are used, the LCA reflects the real environmental performance of the building. Where generic data must be substituted, accuracy diminishes. For taxonomy reporting purposes, where the GWP figure may determine whether a building qualifies as a sustainable investment, data quality is not a minor technical detail — it can make or break taxonomy alignment.
Taxonomy Reporting Under CSRD
The taxonomy and the CSRD are deeply interlinked. Companies subject to CSRD must disclose the proportion of their turnover, capital expenditure, and operating expenditure that is associated with taxonomy-aligned economic activities. For construction companies, this means that every qualifying construction project contributes to the company’s taxonomy-aligned revenue, while non-qualifying projects do not.
The financial implications are significant. Investors, banks, and asset managers are increasingly directing capital toward taxonomy-aligned activities. A construction company that can demonstrate a high proportion of taxonomy-aligned revenue is more attractive to ESG-focused investors and may access more favourable financing terms. Conversely, a company that cannot demonstrate taxonomy alignment — perhaps because it lacks the EPD data needed to perform the required life cycle assessments — may find itself at a competitive disadvantage in capital markets.
of EU energy consumption is attributed to buildings — a key driver of taxonomy focus on construction
This creates a powerful incentive chain: investors demand taxonomy-aligned investments; developers commission taxonomy-aligned buildings; contractors select materials that support taxonomy compliance; and manufacturers produce EPDs to demonstrate their products’ environmental performance. At every link in this chain, verified environmental data flows from material producers up to financial markets, and EPDs are the primary vehicle for that data.
Practical Steps for Construction Stakeholders
For Building Developers and Investors
Establish clear requirements in project briefs that life cycle GWP calculations will be performed and that taxonomy alignment is a project objective. Ensure that design teams and contractors understand the data requirements and that EPD availability is considered in material selection. Budget for building LCA services as a standard project cost, not an optional extra.
For Contractors and General Contractors
Engage with your supply chain to understand which suppliers have EPDs and which do not. Prioritise procurement from suppliers with verified EPDs, particularly for high-volume, high-impact materials such as concrete, steel, and insulation. Develop internal capabilities or partnerships to perform building LCAs using EPD data, and integrate this into your tender and delivery processes.
For Material Manufacturers
Developing an EPD is no longer a purely voluntary, marketing-driven activity. It is rapidly becoming a market access requirement. Manufacturers whose products lack EPDs will increasingly be disadvantaged in procurement processes where taxonomy alignment or green public procurement criteria apply. EPD Polska provides a structured, recognised pathway for manufacturers in Poland and Central Europe to obtain verified EPDs that meet EN 15804+A2 requirements and support their customers’ taxonomy reporting obligations.
The Evolving Landscape: What to Expect Next
The taxonomy’s Technical Screening Criteria are subject to periodic review and revision. The European Commission’s Platform on Sustainable Finance has recommended strengthening the embodied carbon requirements for new buildings — potentially moving from a disclosure requirement to a binding threshold for life cycle GWP. If adopted, this would make EPD data not just useful but essential for any new construction project seeking taxonomy alignment.
Additionally, the taxonomy criteria for circular economy substantial contribution are still being developed. These are expected to include requirements related to material passports, design for disassembly, and secondary material content — all areas where EPD data provides relevant information. The integration of the taxonomy with the Construction Products Regulation framework will further embed life cycle environmental data into the regulatory fabric of the EU construction sector.
For all stakeholders in the construction value chain, the strategic message is clear: life cycle environmental data, delivered through verified EPDs, is becoming a foundational element of sustainable finance compliance, market access, and competitive positioning. The companies that invest in developing and using this data now will be the ones best positioned for the regulatory and market environment of the next decade.
Frequently Asked Questions
Is a life cycle GWP calculation mandatory for all new buildings under the EU Taxonomy?
Currently, the life cycle GWP calculation and disclosure requirement under Activity 7.1 applies to new buildings with a floor area exceeding 5,000 square metres. For smaller buildings, the requirement does not apply as part of the Technical Screening Criteria. However, this threshold may be revised in future updates to the Climate Delegated Act, and some national green building standards already require life cycle assessments for buildings of all sizes.
Which environmental indicators from EPDs are relevant for taxonomy assessment?
The most directly relevant indicator is Global Warming Potential (GWP-total), which is needed for the life cycle GWP calculation. However, other EPD indicators are also useful for DNSH assessments: resource use indicators for circular economy criteria, waste indicators for pollution prevention, and output flow indicators (reuse, recycling, energy recovery) for circularity assessment. The full EN 15804+A2 indicator set provides a comprehensive environmental profile that supports multiple aspects of taxonomy compliance.
Can generic LCA data be used instead of EPDs for taxonomy reporting?
In principle, generic data can be used where product-specific EPDs are not available, but this is a less robust approach. The taxonomy does not currently specify a minimum proportion of EPD-based versus generic data for the GWP calculation. However, the credibility and auditability of the assessment are stronger when product-specific EPDs are used, and some green building certification schemes that align with taxonomy criteria — such as DGNB or BREEAM — have specific requirements regarding data quality and EPD usage.
How does the EU Taxonomy relate to green building certifications like BREEAM or LEED?
Green building certifications and the EU Taxonomy are separate frameworks with different legal status and objectives. The taxonomy is a regulatory classification for financial reporting, while BREEAM, LEED, DGNB, and similar schemes are voluntary certification systems. However, there is significant overlap in the underlying assessment criteria — particularly around energy performance, life cycle environmental impact, and material sustainability. A building that achieves a high rating under DGNB or BREEAM is likely to meet many, though not necessarily all, of the taxonomy’s Technical Screening Criteria. The key difference is that taxonomy alignment has direct financial and regulatory consequences through CSRD reporting and sustainable finance disclosure requirements.
What role does EPD Polska play in supporting taxonomy compliance?
EPD Polska, as a programme operator, enables manufacturers to produce verified Environmental Product Declarations that meet EN 15804+A2 requirements. These EPDs provide the product-level environmental data that building designers, contractors, and LCA practitioners need to perform the whole-building life cycle assessments required for taxonomy alignment. By making it straightforward for Polish and Central European manufacturers to obtain EPDs, EPD Polska contributes to the data infrastructure that underpins the entire taxonomy reporting chain in the construction sector.
