Legal & Regulatory News

Platform on Sustainable Finance publishes final report on EU Social Taxonomy

28 February 2022

On 28 February 2022, the Platform on Sustainable Finance (the Platform) published the final report of the Subgroup on social taxonomy (the Report) on the proposed structure of a social taxonomy designed to fit within the present EU legislative framework for sustainable finance and sustainable governance.

The suggested structure of the social taxonomy proposed by the Platform employs various structural characteristics of the existing EU Taxonomy, including: (i) the development of social objectives; (ii) types of substantial contributions; (iii) ‘do no significant harm’ criteria; and (iv) minimum safeguards. However, unlike the existing EU Taxonomy, which is based on scientific criteria, the social taxonomy proposed by the Platform would be underpinned by international norms, the UN Guiding Principles on Business and Human Rights, and the UN Sustainable Development Goals.

The proposed social taxonomy would be based around three core objectives:

  • decent work (including for value-chain workers);
  • adequate living standards and wellbeing for end-users; and
  • inclusive and sustainable communities and societies.

Each of these objectives would be broken down into sub-objectives in order to ensure that various aspects integral to these core objectives are addressed, including: health and safety; healthcare; housing; wages; non-discrimination; consumer health; and communities’ livelihoods.

In addition, the Report also includes the Platform's suggestions for ensuring a balance in the relationship between an environmental taxonomy and a social taxonomy. These suggestions include: (i) the incorporation of minimum environmental safeguards in any future social taxonomy and (ii) the application of environmental and social 'do no significant harm' criteria to both environmental and social taxonomies.

Finally, the Report presents the Platform's views on requirements for future social criteria and indicators within the proposed social taxonomy framework, together with its ideas about the next steps for developing a social taxonomy.

Click here to view the Report.