The EU Taxonomy marked one of the first legislative attempts to set a commons standard for the “greenness” of a company. Seeking to elevate this from more subjective interpretations.

When it was first announced in 2017 investors, it seems, took notice. According to a study by Bassen et al. (2025), over the subsequent 3 years companies with higher EU Taxonomy aligned revenues outperformed their peers. This was particularly true when the taxonomy was more “on the radar” of market participants, as measured by google searches and newspaper articles.

This is consistent with the theoretical notion that sustainability-focused investors are willing to pay more for greener assets. A sudden external “shock”, such as a taxonomy announcement, could hence result in outperformance of (newly revealed) green assets.

The study of course has its limitations. Sample companies at the time were not yet required to report Taxonomy aligned revenues, so FTSE and MSCI proxies were obtained. It is also not clear if investors are acting out of genuine green interest or an expectation that they will face greater regulatory pressure to buyer taxonomy-aligned companies – regardless of how scientifically robust the taxonomy ends up being as a politically driven project. And it would be interesting to see whether proxies such as taxonomy-aligned capex are better determinants, as they predict direction of the companies future business model.

Source:

Alexander Bassen, Othar Kordsachia, Kerstin Lopatta, Weiqiang Tan, Revenue alignment with the EU taxonomy regulation in developed markets, Journal of Banking & Finance, Volume 170, 2025,