Regulatory approaches to facilitate the climate transition have proliferated around the world, particularly with the development of classification systems – or taxonomies – that set out criteria for economic activities labeled as sustainable. These approaches often include requirements for economic activities to “do no significant harm” (DNSH) to environmental objectives and meet minimum social safeguards.
The European Union’s (EU) taxonomy for sustainable activities has become a recognized benchmark for such approaches. This research report, conducted in partnership between IFC and the Equator Principles Association, explores linkages and provides practical comparisons between the EU Taxonomy’s DNSH and minimum safeguards requirements, and the IFC Performance Standards and World Bank Group Environmental, Health, and Safety (EHS) Guidelines.
The research is complemented by two operational tools focused on select sectors (wind energy and manufacture of cement), which build on the comparison tools presented in the report. Each tool sets a checklist of what should be done to comply with the EU Taxonomy’s DNSH and minimum safeguards criteria in cases where the Performance Standards and EHS Guidelines would be applied.
This research contributes to global objectives to seek interoperability and alignment of sustainable finance regulations and standards on environmental and social risk management, which is critical to ensure their effectiveness and avoid greenwashing.