About
A total of ten construction and real estate activities are covered by the EU taxonomy. In order to qualify as sustainable, the relevant activity must make a substantial contribution to the attainment of one (of a total of six) sustainability objectives under the taxonomy, while doing no significant harm to the other five sustainability objectives. The taxonomy requires each of the activities to be assessed against screening criteria for contributing to one of the sustainability objectives, and screening criteria for not harming any of the other sustainability objectives. The following three sustainability objectives are relevant for real estate activities: (i) Make a substantial contribution to climate mitigation, (ii) make a substantial contribution to climate adaption, and (iii) make a substantial contribution to circular economy.
Activity screening criteria for all three relevant sustainability objectives were implemented in Norway on 5 January 2024. The key screening criteria for the real estate industry are related to the sustainability objective of making a substantial contribution to climate change mitigation and making a substantial contribution to circular economy.
The minimum requirements for making a substantial contribution to climate change mitigation when conducting the following activities are amongst other:
- Construction of new buildings: New buildings are required to have an energy performance (measured in primary energy demand) that outperforms the applicable NZEB standard by at least 10%. According to the guide published from the Ministry of Local Government and Districts on 31 January 2023, the maximum energy requirement for an NZEB office building is 76 kWh/m2/year, measured in delivered energy.
- Renovation of existing buildings: The refurbishment of buildings must either qualify as a "major renovation" within the meaning of the EU Energy Performance of Buildings Directive or result in a 30% improvement in energy performance.
- Installation, repair and maintenance of different technical installations: The installation, repair and maintenance of a number of technical installations, etc., are encompassed by the screening criteria, for example the establishment of electric vehicle charging stations, retrofitting of insulation, installation of low-energy windows and doors, fitting of solar panels, etc.
The minimum requirements for making a substantial contribution to circular economy when conducting the following activities are amongst other:
- Construction of new buildings: For new buildings the life-cycle global warming potential resulting from the construction shall be calculated for each stage in the life-cycle and shall be disclosed to investors and clients on demand.
- Demolitions and wrecking: The operator of the demolition shall conduct a pre-demolition audit in line with the EU Construction and Demolition Waste Management Protocol.
- Renovation: At least 50 % of the original building shall be retained.
The minimum requirements for making a substantial contribution to climate mitigation for the acquisition and ownership of buildings distinguish between buildings constructed before and after 31 December 2020.
- Buildings constructed after 31 December 2020 must comply with the requirements applicable to new buildings.
- Buildings constructed before that date must either be awarded energy rating A or among the 15% best – nationally or regionally – by energy performance. Maximum energy requirements to be among the 15% best energy performing buildings nationally, was published by the Norwegian Water Resources and Energy Directorate on 6 June 2025. The requirements will apply until 31 December 2029. The energy performance shall be calculated in accordance with the method implemented in the revised Building Energy Labelling Regulation that enters into force on 1 January 2026.
In addition to the abovementioned, a number of criteria are set out regarding minimum requirements to prevent an activity from doing significant harm to the other five sustainability objectives. These are related to, inter alia:
- Water consumption
- At least 70% of construction waste being prepared for reuse/recycling in accordance with the EU Construction and Waste Demolition Protocol
- Various measures to ensure the removal of hazardous construction materials
- Activities meeting defined minimum requirements for protection of various ecosystems and biological diversity
Who does it impact?
Property owners and property developers.
At first, we assume that the screening criteria will primarily affect the demands the property industry meets from its lenders. Companies who are subject to direct reporting obligations under the Taxonomy Regulation are also incentivized to choose real estate investments that meet the taxonomy's criteria, rather than those that do not.
In practice, we expect the screening criteria for the property industry to also affect market practices in general and government requirements in the longer run. The screening criteria are therefore assumed to have an impact on the property industry in its entirety.
Status: In force
The EU Taxonomy Regulation has been enacted. The Taxonomy Regulation entered into force in Norway 1 January 2023 through a new Norwegian act (Nw.: Lov om offentliggjøring av bærekraftsinformasjon i finanssektoren og et rammeverk for bærekraftige investeringer).
Relation to other initiatives and regulations
Participants
The EU and Norway under the EEA Agreement
Thommessen's comments
The screening criteria for the real estate industry define a high standard for new buildings, as these are required to over-comply with the Nearly-Zero Energy Building (NZEB) requirements. Each country will be able to define its own NZEB level. In Norway, NZEB was first defined in the guide published by the Ministry of Local Government and Districts on 31 January 2023.
For refurbishment projects, as well as the purchase and ownership of existing buildings, the requirements for the building itself are not as strict as for new buildings, and presumably it may be easier to pass the taxonomy's screening criteria for this type of activities. This is in line with the EU Technical Expert Group's (TEG) position: That a higher incidence of refurbishment is a key sustainability objective for the property industry and reuse of the existing building stock is an important sustainability goal for the real estate industry.
Thus far, the screening criteria measure few other parameters than the primary energy demand of buildings. This means that market players for the time being are not rewarded for a number of other measures that are clearly of importance from a sustainability perspective. However, the screening criteria are intended to be dynamic, and will be developed over time. TEG has signalled a need for developing well-suited screening criteria for a range of other factors, especially in relation to measurement of the total carbon footprint of buildings, including emissions from the production of building materials.