Do We Need EU Social Taxonomy? By EVPA
EU standards for sustainable finance can encourage investments that will enable a green and just transition, but only if they act as an accurate barometer and truly prevent green and social washing.
Social taxonomy ABC. The European Commission’s Platform on Sustainable Finance published its final report on social taxonomy on 28 February. This comes in the framework of the EU’s legislative package on sustainable finance and EU taxonomy, which aims to create a common language for how companies and investors disclose green and social investments.
Social taxonomy is about defining standards for social investments and for what activities contribute to achieving social objectives. This is important because the net zero transition will not happen without also taking social aspects into account: we need a green and just transition. Companies and investors cannot go ‘green’ whilst ignoring basic rights and decent working conditions. The transition needs to take place in “an economy that works for people” too.
The report proposes a similar social taxonomy structure as the current green taxonomy: developing social objectives, defining types of substantial contributions, ‘do no significantly harm’ criteria; and minimum safeguards. It outlines 3 main objectives: decent work, adequate living standards and wellbeing, and inclusive and sustainable communities and societies.