After the European Parliament on Thursday 18 June laid the final stone for the adoption of the regulation establishing the taxonomy for sustainable finance (see EUROPE 12509/12), experts discussed on Friday 19 June how to include social objectives in the future at an online conference organised by Finance Watch.
“The social aspect will be a key aspect of the renewable sustainable strategy (see EUROPE 12464/29)”, said Elia Trippel, head of the ‘Sustainable Finance’ project at the European Commission.
The context of 2018, in which the EU taxonomy proposal was presented, is very different from today’s, she explained. Two years ago, it was still necessary to “socialise” the taxonomy and above all to ensure that the process of interinstitutional negotiations was successful. Today, people understand the usefulness of taxonomy, she said.
The Covid-19 crisis also played a role. Although the Commission’s priority even before the crisis was to complete the taxonomy, including the social dimension, she considers that this is now more necessary than ever.
The current ‘green’ taxonomy already includes minimum social safeguards, including references to compliance with the relevant UN and OECD guidelines.
The Regulation also includes a revision clause - added at Parliament’s request - that obliges the Commission to publish a report describing the provisions required to extend the scope of the Regulation to other sustainability objectives, including social objectives, by 31 December 2021.
The Commission has already included specific tasks relating to the social dimension in its call for applications to form the Platform on Sustainable Finance, which will be responsible for assisting the Commission in drawing up delegated acts, Mrs Trippel said.
A distinct social taxonomy?
To inform the Commission’s reflections, Antje Schneeweiß, from the Südwind Institute, presented her proposal for a social taxonomy. In her view, the latter would be distinct from the “green” taxonomy, while retaining the same structure.
Such a social taxonomy would therefore classify sectors according to their social risks. As with the “enabling” activities in the ‘green’ taxonomy, there would be a category for sectors with positive social effects. There would also be a “do no significant harm” test and minimal ecological safeguards.
In order to classify the sectors into the different categories, Mrs Schneeweiß suggested using minimum income, the existence of a complaint mechanism, or trade union rights as criteria for determining the level of risk.
In those areas deemed to have a positive impact, she believes that a distinction must be made between the availability of services and benefits and actual access to them.
Using these criteria, food production and trade, textile production and trade, automobile production, computer and telecommunications equipment production, and mining would then belong to the category of high-risk sectors.
Conversely, health, social infrastructure, education, SME financing and civil conflict transformation activities would be classified as sectors with social benefits, she explained.
The Südwind Institute study will be available in English next week. It can be consulted now, in German, at the following address: https://bit.ly/3hHeRMJ (Original version in French by Marion Fontana)