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August 2021: Statement on the EU Social Taxonomy

The Investor Alliance was among a group of organizations that provided a response to the  European Commission’s plans to extend the green taxonomy to cover social issues. The Platform on Sustainable Finance was tasked with developing a draft report to elaborate a structure for the Social Taxonomy. The report considers the relationship between the social and environmental taxonomies as well as addresses what constitutes a substantial social contribution, how not to do significant harm, and what activities are harmful. The vertical dimension of the taxonomy would focus on products and services for basic human needs and basic infrastructure, and the horizontal dimension would take into account impacts on different stakeholders affected by economic activities and would cover objectives crucial for ensuring businesses respect human rights.

The Statement encourages equal treatment of social and environmental considerations and supports a taxonomy based on global social and human rights norms and the impact of both products and practices on affected stakeholder groups. It contains recommendations regarding the scope of the social taxonomy, its relationship to the environmental taxonomy, and provisions regarding the vertical and horizontal dimensions as well as corporate governance.