EU Sustainable Finance Platform Proposes Taxonomy Enhancements
Overview
The EU Platform on Sustainable Finance has proposed updates to the EU Taxonomy to simplify and expand its scope. These changes aim to enhance the usability and effectiveness of the classification system for sustainable economic activities.
The EU Platform on Sustainable Finance (PSF), an expert group advising the European Commission, has unveiled a series of proposals to update the EU Taxonomy. These updates are designed to simplify the classification system and expand its scope to include more economic activities.
Background on the EU Taxonomy
The EU Taxonomy is a classification system that helps categorize economic activities based on their contribution to six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. The Taxonomy aims to ensure that these activities do no significant harm (DNSH) to any of the other objectives.
Key Proposals
The PSF's new proposals focus on improving the usability of the DNSH criteria and expanding the range of activities covered by the Taxonomy. The recommendations were developed following extensive stakeholder engagement, particularly with companies seeking to have their activities included in the Taxonomy.
Usability Enhancements
One of the main goals of the new proposals is to make the DNSH criteria more user-friendly. Each recommendation includes a dedicated section on how usability has been considered, ensuring that the criteria are practical and straightforward for companies to apply.
Expansion of Activities
The proposals also suggest adding new activities to the Taxonomy, such as digital solutions and services, and the mining and smelting of lithium, nickel, and copper. These additions reflect the evolving landscape of sustainable economic activities and the need to include sectors critical to the green transition.
Future Outlook
Helena Viñes Fiestas, Chair of the Platform on Sustainable Finance, emphasized the importance of these updates in her introductory note. She expressed hope that once the necessary changes are implemented, the Platform will be able to incorporate even more activities into the Taxonomy in the future.
The proposed updates to the EU Taxonomy represent a significant step towards a more inclusive and user-friendly classification system for sustainable economic activities. By simplifying the DNSH criteria and expanding the scope of the Taxonomy, the PSF aims to enhance the effectiveness of the EU's sustainable finance framework and support the transition to a greener economy.
Read the EU’s full proposal here:
Participate in the EU’s call for feedback here:
