The Impact of the EU Taxonomy of Sustainable Finance on the Building Field

If the capitalist economy could be redirected to serve sustainabilitySustainability, it would bring hope for having a chance to mitigate the ongoing climate change. Following the Paris accord, the EU has undertaken several initiatives to regulate the private sector activities among which the EU taxonomyTaxonomies. The taxonomyTaxonomies aims at directing private finance investments by providing a classification system establishing a list of environmentally sustainable economic activities. The question this paper aims to address is what are the implications of regulation of finance and investments for companies in the building and real estateReal estate sector? Drawing on institutional theoryInstitutional theory, focusing on legitimacyLegitimacy, we follow the process of introducing the taxonomyTaxonomies within three companies – a contractorContractors, a real estateReal estate company, and a consulting engineering company – to identify the changes the taxonomyTaxonomies can introduce in their business. Keeping in mind that establishing the regulation and the taxonomyTaxonomies is a compromise between politicians, industry lobbyists’ interventions, and technical experts’ advices, the proposed solutions may not be able to achieve the aforementioned goals. The cases were selected as possible forerunners of the impact of the taxonomyTaxonomies in SwedenSweden. Two of the companies, a contractorContractors and a real estateReal estate company, engaged recently in systematizing their measures, documenting their climate impact, and establishing strategic goals for reduction of energy and material consumption. The third, a consulting engineer company, has so far felt comfortable doing progressive statements. The extra effort of establishing documentation was carried out within 3 years during which the companies have had an unusually good economy. The analysis shows that the taxonomyTaxonomies is not demanding enough to provide the needed push for living up to the Paris accord and consequently risks becoming a publicly sanctioned greenwashing. The paper aims at reinforcing the development toward a sustainabilitySustainability of the Swedish construction sector. In doing so, it contributes to SDGs 11, 12, and 13.