The K- Taxonomy is a voluntary guideline that defines green economic activities and was developed to provides clear principles and criteria for green economic activities to prevent damage caused by greenwashing such as information overload and misinformation and to help private and public funds flow into green projects and green technologies. 

• Article 10.4 of 「Environmental Technology and Environmental Industry Support Act」 (Support and Revitalization of Environmentally Responsible Investment) 

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Principles

Green economic activities should comply with the following three principles 

1. SC(Substantial contribution) : Green economic activities Should substantially contribute to the environmental objectives; They   should make    substantial contribution to accomplishing at least one of the six environmental objectives.* 

*Six environmental objectives : Greenhouse Gas Reduction, Climate Change Adaptation, Sustainable Water preservation, Transition to Circular                   Economy, Pollution Prevention and Control, Biodiversity Preservation

2. DNSH(Do No Significant Harm) : Green economic activities Should comply with “DNSH” principle to the environment; They   should not cause any significant harm to the other environmental objectives in the process of achieving one or more of the   environmental objectives.

3. MS(Minimum Safeguards) : Green economic activities Should Comply with minimum safeguards; They should not violate laws   pertaining to human rights, labor, safety, anti-corruption and destruction of cultural heritage  

Composition

The K-Taxonomy includes detailed definitions and descriptions of economic activities that contribute to the environmental objectives. It defines economic activities in the ‘green area’, which contribute to a carbon-neutral society and environmental improvements, as well as activities in the ‘transitional area’, which are necessary during the transition period as intermediate processes for achieving carbon neutrality.

The ‘green area’ is divided into six categories: greenhouse gas reduction, climate change adaptation, sustainable water preservation, transition to circular economy, pollution prevention and control, biodiversity preservation. It consists of a total of 67 green economic activities. 

Economic activities in the ‘transitional area’ cannot be viewed as truly green because it is not the final destination for carbon neutrality, the ‘transitional area’ consists of economic activities necessary during the transition period as intermediate processes to shift toward carbon neutrality. The transitional area is divided into seven economic activities 

Alignment Assessment Process

When all four criteria, namely the activity criteria, recognition criteria, exclusion criteria and protection criteria, are satisfied, it shall be deemed to fit the K-Taxonomy 

① Determination based on the activity criteria : 
To determine whether an economic activity meets the presented criteria 

② Determination based on the recognition criteria : 
To determine whether an economic activity meets the technical standards to achieve at least one of the six environmental objectives 

③ Determination based on the exclusion criteria :
To determine whether an economic activity meets the criteria for judgment of serious
environmental damage

④ Determination based on the protection criteria : 
To determine whether an economic activity violates laws pertaining to human rights, labor, safety, anti-corruption, destruction of cultural heritage, etc. 

 ※ Even if not specified in the criteria above, the economic activity concerned should comply with all applicable domestic laws, public notifications, guidelines, criteria, etc. 

Determining Criteria for the K-Taxonomy

Example) 

Green Area 

Category: Common 

Field: Industry 

Economic activities: Manufacture of innovative items