Open letter – “Do not lose momentum on the Social Taxonomy”

26 June 2023

Open letter

On 26 June 2023, Finance Watch sent a joint letter to the European Commission along with a coalition of 12 platforms, associations, foundations, and social enterprises urging not to lose sight of the work to extend the current EU Taxonomy framework to include a social and human rights dimension.

The Commission’s advisory platform on sustainable finance in February last year published a technical report on a potential social taxonomy for human and labor rights issues in supply chains. The report already highlighted several merits of a social dimension for the EU Taxonomy, notably:

  • filling an important gap for investors, bringing clarity on the definition of social sustainability for investments;
  • directing capital flows to activities that operate with respect for human rights; and
  • supporting capital flows to investments that improve living and working conditions, especially for the disadvantaged.

The EU Taxonomy Regulation also mandated that the EU executive to publish a report by December 31, 2021 on provisions needed to extend the scope of the regulation beyond environmentally sustainable economic activities — but the Commission hasn’t published such a report yet.

As the EU’s economy accelerates its ‘green’ transition, support for activities that are socially sustainable is critical to ensure that this same transition is also fair and socially inclusive. A social taxonomy would also reinforce existing EU policy such as the European Pillar of Social Rights, the Equality Strategies, the initiative to eradicate child labour or forced labour. Finally, it would contribute to attaining the Sustainable Development Goals just as the Environmental Taxonomy contributes to the implementation of the Paris Agreement on Climate.

Read the full letter