Towards social sustainability: a social taxonomy

[Celerity]

A ‘social taxonomy’ should be developed as a counterpart to the green investment taxonomy, with comprehensive employee involvement.

https://socialeurope.eu/towards-social-sustainability-a-social-taxonomy


A social taxonomy could help steer investment finance towards companies committed to decent work (Gorodenkoff/shutterstock.com)

An increasing demand for financial products which address environmental, social and governance (ESG) criteria underpins the political project to push sustainability through the financial sector and to direct investments towards sustainable economic activities. But lack of clear definitions makes it difficult to evaluate social investments and resources and thus steer them toward socially-responsible activities and enterprises. A social taxonomy would aim to address these issues and harmonise how social aspects are measured.

These considerations prompted the European Economic and Social Committee (EESC) of the European Union to draw up an own-initiative opinion in August. In its view, it is necessary to adopt a holistic approach to EU taxonomy, with both environmentally and socially sustainable aspects. The challenges are enormous: the green transformation, the economic and social impact of the pandemic, the Ukraine war and resulting geopolitical tensions. The minimum investment shortfall in social infrastructure has been estimated at around €1.5 trillion for the period 2018 to 2030. A social taxonomy could provide guidelines for investments with a positive social impact.

Three main objectives

Yet social sustainability is not even in its infancy. The European Commission was asked to publish a report by the end of 2021, to assess the options available for extending the scope of the EU taxonomy to ‘other sustainability goals such as social goals’. The report however risks death by commission neglect. In this context, the Platform for Sustainable Finance (Platform) has already presented a concept.The Platform proposes a similar structure for the social taxonomy as for the environmental taxonomy. Three main objectives would address the key stakeholders of a company, complemented by sub-objectives:



Sustainable management objectives, such as transparent and non-aggressive tax planning, should also be incorporated into the social taxonomy. As with the environmental taxonomy, the ‘do no significant harm’ principle should apply, in addition to minimum protection, so that none of the three main objectives is significantly impaired by a corporate activity.

‘Social washing’.....................

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