Report proposes a social taxonomy grounded in human rights

The Institute encourages stakeholders to engage with a draft report by the EU Platform on Sustainable Finance.

The EU Platform on Sustainable Finance, of which the Institute is a member, published this week its draft report on the merits and potential design of a social taxonomy. A social taxonomy would enable investors to identify and allocate capital towards economic activities that are socially sustainable and make significant contributions to human rights objectives. 

The EU Platform on Sustainable Finance is an advisory body assisting the European Commission in the development of its sustainable finance policies, including on the development of an EU taxonomy. The Institute is a member of the EU Platform and hopes for broad engagement from diverse stakeholder groups in the call for feedback to inform the finalisation of the report. The report is open for stakeholder input until 27 August.

The draft report contains foundational analysis and recommendations key to the potential crafting of the social taxonomy. 

“Through recommending the inclusion of so-called horizontal objectives, the platform has emphasised that in a social taxonomy respect for human rights by economic actors needs to be at the heart of their contribution to sustainable development”, says Signe Andreasen Lysgaard, Strategic Adviser on Business and Human Rights at the Institute and member of the EU Platform on Sustainable Finance comments.

What is the EU taxonomy?

The EU taxonomy has the potential to scale up and direct capital towards sustainable investment. It is a classification system, which currently establishes a list of environmentally sustainable economic activities aligned with six environmental objectives. A social taxonomy would extend the current taxonomy to include social sustainability objectives and related screening criteria.