The European Commission has announced that it will begin work on a proposal to include not only environmental issues but also social and good governance issues in the European taxonomy.
Taxonomy, even with all its criticisms, is a tool that will serve to make better decisions and to make tangible elements that today are absolutely intangible. Defining criteria for what is sustainable and what is not is fundamental.
So far, the first preview that has been launched focuses on environmental criteria. So far, the first breakthrough of the taxonomy focuses mainly on environmental criteria, specifically based on a list of 67 activities that contribute to mitigating climate change in order to determine whether a financial asset is green or not.
However, sustainability is more than environmental issues. This has led the Commission to seek to integrate social and good governance aspects in the future.
As far as social issues are concerned, at least for the time being, companies have to comply with minimum social guarantees, which are currently defined on the basis of the core labour conventions of the International Labour Organisation. But this is insufficient.
Defining a classification system for sustainable activities, known as taxonomy, is not easy. It is a challenge in terms of definition but also in terms of implementation by companies.
With this announcement that by the end of the year there will be a detailed regulation on how the taxonomy will be structured and how it will work, organisations will understand how they will have to report sustainability information.
