Effects of EU Taxonomy Alignment: A Stakeholder’s Perspective

Abstract

Background: The EU Taxonomy is a relatively new regulatory framework and phenomenon that is gaining in momentum as its aims to assist firms and investors in the identification and classification of sustainable firm activities. Due to the global focus on the issue of climate change and its mitigation, there has been an increased focus by regulatory agencies towards the mitigation of these risks and towards driving sustainable firm activities and growth. Up until now, a focus has been placed on the regulations and policy initiatives that have given rise to the EU Taxonomy Regulation and how it channels capital and funding to firm activities that are environmentally sustainable. However, there exists evidence that the EU Taxonomy has effects on both reporting firms and their stakeholders. Despite this, there is a lack of research on the effects that EU Taxonomy alignment has on the stakeholders of reporting firms in the construction industry. Purpose: The purpose of this research paper is to contribute to the current research on the EU Taxonomy and Stakeholder Theory by expanding on the effects that firm alignment with the EU Taxonomy has on the different stakeholder groups of a reporting firm within the construction industry. The aim of this research paper is to contribute to the overall research by drawing upon both primary and secondary data of different stakeholders of reporting firms in the construction industry that are affected by EU Taxonomy alignment, Stakeholder Theory, and the EU Taxonomy to develop a deeper understanding of the effects that taxonomy alignment has on the different identified stakeholder groups. Method: This research takes on the form of qualitative research that is based on the interpretivist research philosophy and takes on the form of a comparative multiple case study conducted on stakeholders of reporting firms within the construction industry. The qualitative interviews resulted in findings from 12 different stakeholders of reporting firms in the construction industry. A systematic literature review was carried out, which resulted in the applied Stakeholder Theory. Semi-structured qualitative interviews, secondary data, and the Scopus database search were the main forms of data collection used in this research paper. The collected data was coded and analyzed using a thematic analysis that led to the emergent themes across the data set that enabled a thorough and categorized description of it in comparison to the literature. Conclusion: In combination with the collected empirical data, the findings of the systematic literature, and the analysis of the empirical data, the effects of firm alignment with the EU Taxonomy on the stakeholders of reporting firms in the construction industry are identified. Shim et al. (2014)’s Stakeholder Theory was applied as the main framework to identify the stakeholder groups and the effects that firm taxonomy alignment has on each different stakeholder. EU Taxonomy alignment was seen to have both positive and negative effects on stakeholders of reporting construction firms. Furthermore, the effects were seen to differ across each individual stakeholder group, and provide different considerations.