EU Social Taxonomy: Report of the Platform on Sustainable Finance

On 28 February 2022, the Platform on Sustainable Finance (Platform) published its final report on the possible structure of an EU Social Taxonomy, following the publication of a preliminary report in July 2021. The EU Social Taxonomy is intended to serve as a framework for socially sustainable economic activities to redirect capital flows towards sustainable investments, together with the EU Environmental Taxonomy (Regulation (EU) 2020/852). The final report also addresses interactions of the EU Social Taxonomy with the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/ 2088), the draft Corporate Sustainability Reporting Directive and the draft Corporate Sustainability Due Diligence Directive.

The proposed structure of the EU Social Taxonomy is based on the structure of the EU Environmental Taxonomy. It proposes to use screening criteria to identify socially sustainable economic activities that contribute substantially to at least one social objective of the EU Social Taxonomy, do not significantly harm any other social objective, and are carried out in compliance with (social or environmental) minimum safeguards. Subsequently, depending on the respective social objective, either the turnover or the capital expenditures and operating expenditures per socially sustainable economic activity are to be reported. Initially, only selected economic activities from prioritised sectors are to be considered by the EU Social Taxonomy.

The Platform’s final report is intended to support the European Commission in its own report on the EU Social Taxonomy, which was originally planned to be published in 2021 (Article 26 paragraph 2 Regulation (EU) 2020/852). A decision on whether and in what form an EU Social Taxonomy should be developed has not yet been taken.

In addition to the final report, a webinar was held on 28 February 2022, which will be available on the platform’s website.

The ASCG will continue to follow the developments on the EU Social Taxonomy. In addition, the ASCG fora on the application of the EU Environmental Taxonomy and the submissions to the European Commission will be continued.