What role do the minimum safeguards play in the EU Taxonomy Regulation?

The Taxonomy Regulation provides that an economic activity can only qualify as environmentally sustainable if, in addition to meeting the other requirements of Article 3, it is carried out in compliance with the minimum safeguards laid down in Article 18.

This is in line with the principles consecrated in the European Pillar of Social Rights in support of a sustainable and inclusive growth, as well as with the relevant international minimum human and labour rights standards.

The minimum safeguards are therefore an integral part of the Taxonomy and are one of the four criteria which must be met for economic activities to be considered environmentally sustainable. The inclusion of minimum safeguards in the Taxonomy framework aims to ensure that entities carrying out economic activities considered as Taxonomy-aligned meet also certain minimum social and governance standards.

In other words, the purpose of the minimum safeguards under the Taxonomy Regulation is to prevent activities and investments from being regarded as ‘sustainable’ if they do not align with minimum standards for responsible business conduct.