Initially, the European Taxonomy was to be divided into two parts: environmental (in place since 2020) and social.

While the Green Taxonomy has already been implemented (6 environmental objectives), the Social Taxonomy has followed a much more chaotic path. Between initial ambitions, public consultations and recent political arbitrations, notably as part of the Omnibus I & II packages, its future now seems uncertain.

Social Taxonomy: an ambitious but fragile project

Back in 2020, when it adopted the Taxonomy Regulation (EU) 2020/852, the European Commission had stated its ambition to extend the principle of ” sustainable activities ” beyond climate and the environment. The idea was to establish an equivalent framework for social objectives, to enable investors to distinguish not only what is green, but also what is socially sustainable.

To make progress on this issue, the Sustainable Finance Platform – a consultative body bringing together experts, civil society, financial institutions and regulators – was mandated by the Commission. In February 2022, it published a reference report proposing an initial architecture for the Social Taxonomy. Three main objectives were identified:

1. Decent work: promoting safe, fair working conditions that respect fundamental rights, in line withILO conventions and UN principles.
2. Living conditions and well-being: guaranteeing access to quality food, housing, health and education.
3. Inclusive and sustainable communities: contributing to social cohesion, equality and respect for human rights in local areas.

These objectives were supplemented by cross-functional criteria, inspired by the “minimum safeguards ” of the Environmental Taxonomy (art. 18 of Regulation 2020/852), which require compliance with international conventions on human rights and corporate governance.

However, as soon as it was published, the report drew criticism:

• Methodological complexity: difficult to translate social and human rights into measurable and verifiable criteria for economic activities.
• Data availability: unlike climate (measurable CO₂ emissions), social indicators rely on information that is often qualitative or heterogeneous.
• Risk of overlap with other regulations (CSRD, SFDR, CSDDD), already in the process of integrating a social dimension into their obligations.

-> Result: while the Social Taxonomy had transformative potential – enabling capital to be channelled into projects that concretely improve social well-being and respect for human rights – it also appeared to be a fragile project, in search of political and technical feasibility.

Recent news: slowdown and rethink

While the Environmental Taxonomy is progressing in successive waves of delegated acts (climate in 2021, biodiversity and pollution in 2023-2024), the Social Taxonomy has never yet reached this milestone.

The European Commission has not published any delegated acts setting out technical social criteria, despite the preparatory work carried out by the Sustainable Finance Platform.

Why this blockage?

There are three main reasons for this slowdown:

1. Regulatory overlap
   • Since 2022, other texts have structured the social dimension of sustainable finance:
     • The CSRD and its ESRS standards (S1 to S4) require companies to publish detailed social data on their employees, value chain, communities and consumers;
     • the CSDDD (Corporate Sustainability Due Diligence Directive, adopted in 2024) requires major corporations to identify, prevent and remedy human rights abuses in their value chains;
     • the ” minimum safeguards” in the Taxonomy Regulation already require compliance with international conventions (UN, OECD, ILO) on human rights and governance.
2. Technical difficulty
   • As much as it’s possible to scientifically define what constitutes a reduction in CO₂ emissions, translating social objectives (decent work, equality, inclusion) into quantifiable criteria is trickier.
   • The data available is heterogeneous, often qualitative, and varies widely from one sector or country to another.
3. Political context
   • In a climate of growing anit-ESG pressure, the Commission has chosen to prioritize simplification, even deregulation.
   • The Omnibus I package (April 2025) froze several reporting obligations, while the Omnibus II package (February-June 2025) proposed relief for CSRD, CSDDD and Environmental Taxonomy (voluntary reporting for certain companies, exemptions for SMEs, etc.).
   • In this context, the Social Taxonomy was clearly politically inappropriate and impertinent.

The result: a project with no clear horizon

Today, the Social Taxonomy has been put on hold, with no timetable for its resumption. The Commission has not formally abandoned it, but it no longer appears as a short-term priority in the 2025 work program.

Financial players can therefore draw on existing frameworks (CSRD, CSDD, minimum safeguards) to address the social dimension, but a specific binding framework does not seem likely.

Omnibus I & II: disappearance or dormancy of the Social Taxonomy?

The publication of the Omnibus I and II packages in 2025 has confirmed a shift in European sustainable finance strategy: the focus is no longer on expanding the regulatory framework, but on simplifying and streamlining it.

Omnibus I – “Stop the clock

Adopted in spring 2025, the first package suspended or postponed certain CSRD and CSDDD obligations, giving companies more time to comply. Although focused on the environmental and governance dimension, this text sent out a clear signal: pause the accumulation of new standards, in favor of refocusing on what already exists.

• In this context, the Social Taxonomy was neither integrated nor mentioned as a priority, which amounts to a de facto freeze.

Omnibus II – Simplification package

Presented in February 2025, Omnibus II was even more explicit:

• thresholds for CSRD and CSDDD,
• obligations reduced to the bare essentials,
• Taxonomy reporting made voluntary for companies below a certain threshold,
• deletion of future ESRS sector standards.

The already fragile Social Taxonomy has become a collateral victim of this dynamic. On the contrary: the idea of a second classification pillar, the social equivalent of the Green Taxonomy, has disappeared from the immediate political agenda.

!! A strategic retreat !!

The European Union had positioned itself as a world leader in sustainable regulation, by building a unique architecture (SFDR, CSRD, Taxonomy, CSDD). The mothballing of the Social Taxonomy is therefore a step back from the original ambition:

• Instead of building a system that is as robust for social issues as it is for climate, the EU has abandoned the idea of giving investors a common frame of reference for identifying socially sustainable activities.
• Social criteria are relegated to a logic of minimum safeguards (avoiding serious harm), rather than substantial positive contribution (actively promoting decent work, inclusion, access to rights).

Disappearance or simple pause?

Officially, the Commission has not “buried” the Social Taxonomy. But in the absence of a timetable, and in view of the priority given to simplification, many players consider that it has been put on indefinite hold.

Only strong political pressure (NGOs, Parliament, institutional investors) could revive the issue in the next few years.

Perspectives and challenges: human rights, decent work… is it enough?

Putting the Social Taxonomy to sleep raises a fundamental question: are the instruments currently in force – CSRD, CSDDD and the minimum safeguards of the Taxonomy Regulation – sufficient to ensure that social issues are truly taken into account in sustainable finance?

What we have today

1. CSRD and ESRS social
   • ESRS standards S1 to S4 (company workers, value chain workers, affected communities, consumers) bring unprecedented transparency.
   • Companies must publish data on decent work, wages, health and safety, diversity, and impacts on local communities.
   • This gives investors a detailed view of social practices, but without classifying them as “sustainable” or “unsustainable”.
2. CSDDD
   • The Corporate Sustainability Due Diligence Directive (2024 ) requires large companies toidentify, prevent and mitigate negative impacts on human rights (including decent work) and the environment in their operations and value chains.
   • It places human rights at the heart of corporate governance, but in a logic of risk and damage management – not of valuing positive contributions.
3. Minimum safeguards for Taxonomy (art. 18, Regulation 2020/852)
   • They oblige Taxonomy-compliant companies to respectUN,OECD andILO conventions.
   • These safeguards constitute a normative floor: to prevent so-called “green” activities from being associated with human rights violations.
   • But they are not enough to identify companies or activities that make a substantial contribution to social objectives.

! What a Social Taxonomy would have done!

The Social Taxonomy could have gone further, defining what a socially sustainable activity is:

• A company that actively offers a decent job,
• A project that guarantees access to essential services (health, education, affordable housing),
• An activity that strengthens social cohesion and inclusion.

It would have offered investors a common language, making it possible to distinguish between companies that simply comply with the minimum rules and those that make a positive contribution to human rights and social well-being.

Enough or not?

Today, we can consider that :

Yes, the EU has already put in place a solid framework to prevent human rights violations and improve social transparency.

No, this framework is not sufficient to direct capital on a massive scale towards projects with a high social impact.

-> Without a social taxonomy, investors have many indicators at their disposal, but no benchmark of positive contribution comparable to that of the climate and ecological transition.

There is therefore a risk that the social sector will remain within a “minimal compliance” rationale , at a time when demand from investors, particularly institutional investors, is growing for investments aligned with the objectives of social justice, the fight against inequality and respect for fundamental rights.

-> The question remains: can Europe be credible in sustainable finance if it does not propose a clear framework for measuring and valuing decent work and human rights?

Conclusion

The Social Taxonomy was to be the counterpart of the Green Taxonomy, a tool for recognizing and valuing activities that actively contribute to human rights, decent work and social well-being.

Three years after the first proposals, we have to admit that the project has stalled.

The Omnibus I and II packages have established a new priority for the European Union: simplify, reduce, lighten. In this movement, the Social Taxonomy appears to be a collateral victim, overshadowed by more urgent measures (CSRD, CSDDD, Environmental Taxonomy).

Admittedly, social ESRS, CSDD and minimum safeguards already offer solid safeguards. They improve transparency and limit infringements of fundamental rights. But they are not enough to define a clear and ambitious framework for positive social contribution, which would enable investors to distinguish actors who go beyond mere compliance with standards to actively promote decent work, inclusion and access to essential services.

The mothballing of the Social Taxonomy therefore calls into question Europe’s credibility as a world leader in sustainable finance. By abandoning – at least temporarily – an essential pillar, the EU runs the risk of confining social issues to a defensive rationale, at a time when societal expectations and international regulatory pressure (UN, ILO, ISSB standards) are intensifying.

-> The question remains: is this a pragmatic pause, or a strategic renunciation that will permanently weaken Europe’s ambition for sustainability?

Sources :

European Commission – Omnibus package (2025): “simplification” orientation, focus on large companies, https://ec.europa.eu/commission/presscorner/detail/en/ip_25_614

Taxonomy Regulation (2020/852) – environmental framework, https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en?prefLang=fr

Sustainable finance platform – “Social Taxonomy” report (2022), https://finance.ec.europa.eu/system/files/2022-08/220228-sustainable-finance-platform-finance-report-social-taxonomy_en.pdf

Platform – “Minimum Safeguards” report (2022), UN/OECD/ILO references, https://finance.ec.europa.eu/system/files/2022-10/221011-sustainable-finance-platform-finance-report-minimum-safeguards_en.pdf

CSDDD – Directive (EU) 2024/1760, human rights & duty of care, effective from 25/07/2024, https://eur-lex.europa.eu/eli/dir/2024/1760/oj/eng?eliuri=eli%3Adir%3A2024%3A1760%3Aoj&locale=fr#

ESRS (Set 1) – EFRAG, social standards S1-S4 under CSRD, https://xbrl.efrag.org/e-esrs/esrs-set1-2023.html

Photo by Dominic Kurniawan Suryaputra on Unsplash