{"id":11110,"date":"2025-09-22T14:03:45","date_gmt":"2025-09-22T14:03:45","guid":{"rendered":"https:\/\/blufin.one\/where-is-social-taxonomy-in-search-of-a-missing-pillar-of-sustainable-finance\/"},"modified":"2026-01-14T14:07:00","modified_gmt":"2026-01-14T14:07:00","slug":"where-is-social-taxonomy-in-search-of-a-missing-pillar-of-sustainable-finance","status":"publish","type":"post","link":"https:\/\/blufin.one\/en\/where-is-social-taxonomy-in-search-of-a-missing-pillar-of-sustainable-finance\/","title":{"rendered":"Where is Social Taxonomy? &#8211; In search of a missing pillar of sustainable finance"},"content":{"rendered":"<p>Initially, the <strong>European Taxonomy<\/strong> was to be divided into two parts: environmental (in place since 2020) and social.<\/p>\n<p>While the <strong>Green Taxonomy<\/strong> has already been implemented (6 environmental objectives), the <strong>Social Taxonomy<\/strong> has followed a much more chaotic path. Between initial ambitions, public consultations and recent political arbitrations, notably as part of the <strong>Omnibus I &amp; II<\/strong> packages, its future now seems uncertain. <\/p>\n<p>&nbsp;<\/p>\n<p><strong>  Social Taxonomy: an ambitious but fragile project<\/strong><\/p>\n<p>Back in 2020, when it adopted the <strong>Taxonomy Regulation (EU) 2020\/852<\/strong>, the European Commission had stated its ambition to extend the principle of &#8221; <em>sustainable activities<\/em> &#8221; beyond climate and the environment. The idea was to establish an equivalent framework for <strong>social objectives<\/strong>, to enable investors to distinguish not only what is green, but also what is <strong>socially sustainable<\/strong>. <\/p>\n<p>To make progress on this issue, the <strong>Sustainable Finance Platform<\/strong> &#8211; a consultative body bringing together experts, civil society, financial institutions and regulators &#8211; was mandated by the Commission. In February 2022, it published a <strong>reference report<\/strong> proposing an initial architecture for the Social Taxonomy. Three main objectives were identified:  <\/p>\n<ol>\n<li><strong>Decent work<\/strong>: promoting safe, fair working conditions that respect fundamental rights, in line with<strong>ILO<\/strong> conventions and UN principles.<\/li>\n<li><strong>Living conditions and well-being<\/strong>: guaranteeing access to quality food, housing, health and education.<\/li>\n<li><strong>Inclusive and sustainable communities<\/strong>: contributing to social cohesion, equality and respect for human rights in local areas.<\/li>\n<\/ol>\n<p>These objectives were supplemented by <strong>cross-functional criteria<\/strong>, inspired by the <em>&#8220;minimum safeguards<\/em> &#8221; of the Environmental Taxonomy (art. 18 of Regulation 2020\/852), which require compliance with international conventions on human rights and corporate governance.<\/p>\n<p>However, as soon as it was published, the report drew <strong>criticism<\/strong>:<\/p>\n<ul>\n<li><strong>Methodological complexity<\/strong>: difficult to translate social and human rights into measurable and verifiable criteria for economic activities.<\/li>\n<li><strong>Data availability<\/strong>: unlike climate (measurable CO\u2082 emissions), social indicators rely on information that is often qualitative or heterogeneous.<\/li>\n<li><strong>Risk of overlap<\/strong> with other regulations (CSRD, SFDR, CSDDD), already in the process of integrating a social dimension into their obligations.<\/li>\n<\/ul>\n<p>-&gt; <u>Result<\/u>: while the Social Taxonomy had <strong>transformative potential<\/strong> &#8211; enabling capital to be channelled into projects that concretely improve social well-being and respect for human rights &#8211; it also appeared to be a <strong>fragile project<\/strong>, in search of political and technical feasibility.<\/p>\n<p>&nbsp;<\/p>\n<h4><strong>  Recent news: slowdown and rethink<\/strong><\/h4>\n<p>While the <strong>Environmental Taxonomy<\/strong> is progressing in successive waves of delegated acts (climate in 2021, biodiversity and pollution in 2023-2024), the <strong>Social Taxonomy<\/strong> has never yet reached this milestone.<\/p>\n<p>The European Commission has not published <strong>any delegated acts<\/strong> setting out technical social criteria, despite the preparatory work carried out by the Sustainable Finance Platform.<\/p>\n<p><strong>Why this blockage?<\/strong><\/p>\n<p>There are three main reasons for this <strong>slowdown<\/strong>:<\/p>\n<ol>\n<li><strong>Regulatory overlap<\/strong>\n<ul>\n<li>Since 2022, other texts have structured the social dimension of sustainable finance:\n<ul>\n<li>The <strong>CSRD<\/strong> and its ESRS standards (S1 to S4) require companies to publish detailed social data on their employees, value chain, communities and consumers;<\/li>\n<li>the <strong>CSDDD<\/strong> (Corporate Sustainability Due Diligence Directive, adopted in 2024) requires major corporations to identify, prevent and remedy human rights abuses in their value chains;<\/li>\n<li>the &#8221; <strong>minimum safeguards&#8221;<\/strong> in the Taxonomy Regulation already require compliance with international conventions (UN, OECD, ILO) on human rights and governance.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Technical difficulty<\/strong>\n<ul>\n<li>As much as it&#8217;s possible to scientifically define what constitutes a reduction in CO\u2082 emissions, translating social objectives (decent work, equality, inclusion) into <strong>quantifiable criteria<\/strong> is trickier.<\/li>\n<li>The data available is heterogeneous, often qualitative, and varies widely from one sector or country to another.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Political context<\/strong>\n<ul>\n<li>In a climate of growing anit-ESG pressure, the Commission has chosen to <strong>prioritize simplification, even deregulation<\/strong>.<\/li>\n<li>The <strong>Omnibus I package (April 2025)<\/strong> froze several reporting obligations, while the <strong>Omnibus II package (February-June 2025)<\/strong> proposed relief for CSRD, CSDDD and Environmental Taxonomy (voluntary reporting for certain companies, exemptions for SMEs, etc.).<\/li>\n<li>In this context, the Social Taxonomy was clearly <strong>politically inappropriate and impertinent<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<p><strong> <\/strong><\/p>\n<p><strong>The result: a project with no clear horizon<\/strong><\/p>\n<p>Today, the Social Taxonomy has been put <strong>on hold<\/strong>, with no timetable for its resumption. The Commission <strong>has not formally abandoned it<\/strong>, but it no longer appears as a short-term priority in the 2025 work program. <\/p>\n<p>Financial players can therefore <strong>draw on existing frameworks<\/strong> (CSRD, CSDD, minimum safeguards) to address the social dimension, but a specific binding framework does not seem likely.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Omnibus I &amp; II: disappearance or dormancy of the Social Taxonomy?<\/strong><\/p>\n<p>The publication of the <strong>Omnibus I and II<\/strong> packages <strong>in 2025<\/strong> has confirmed a shift in European sustainable finance strategy: the focus is no longer on expanding the regulatory framework, but on <strong>simplifying<\/strong> and <strong>streamlining<\/strong> it.<\/p>\n<p><strong>Omnibus I &#8211; &#8220;Stop the clock<\/strong><\/p>\n<p>Adopted in spring 2025, the first package suspended or postponed certain <strong>CSRD<\/strong> and <strong>CSDDD<\/strong> obligations, giving companies more time to comply. Although focused on the <strong>environmental and governance<\/strong> dimension, this text sent out a clear signal: <strong>pause the accumulation of new standards<\/strong>, in favor of refocusing on what already exists. <\/p>\n<ul>\n<li>In this context, the <strong>Social Taxonomy<\/strong> was neither integrated nor mentioned as a priority, which amounts to a de facto freeze.<\/li>\n<\/ul>\n<p><strong> <\/strong><\/p>\n<p><strong>Omnibus II &#8211; Simplification package<\/strong><\/p>\n<p>Presented in February 2025, Omnibus II was even more explicit:<\/p>\n<ul>\n<li>thresholds for CSRD and CSDDD,<\/li>\n<li>obligations reduced to the bare essentials,<\/li>\n<li>Taxonomy reporting made <strong>voluntary<\/strong> for companies below a certain threshold,<\/li>\n<li>deletion of future ESRS sector standards.<\/li>\n<\/ul>\n<p>The already fragile <strong>Social Taxonomy<\/strong> has become a <strong>collateral victim<\/strong> of this dynamic. On the contrary: the idea of a second classification pillar, the social equivalent of the Green Taxonomy, has <strong>disappeared from the immediate political agenda<\/strong>. <\/p>\n<p><strong> <\/strong><\/p>\n<h3><strong>!! A strategic retreat !!  <\/strong><\/h3>\n<p>The European Union had positioned itself as a <strong>world leader in sustainable regulation<\/strong>, by building a unique architecture (SFDR, CSRD, Taxonomy, CSDD). The mothballing of the Social Taxonomy is therefore a <strong>step back from the original ambition<\/strong>: <\/p>\n<ul>\n<li>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 <strong>common frame of reference<\/strong> for identifying socially sustainable activities.<\/li>\n<li>Social criteria are relegated to a logic of <strong>minimum safeguards<\/strong> (avoiding serious harm), rather than <strong>substantial positive contribution<\/strong> (actively promoting decent work, inclusion, access to rights).<\/li>\n<\/ul>\n<p><strong> <\/strong><\/p>\n<p><strong>Disappearance or simple pause?<\/strong><\/p>\n<p>Officially, the Commission has not &#8220;buried&#8221; 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 <strong>on indefinite hold<\/strong>. <\/p>\n<p>Only <strong>strong political pressure<\/strong> (NGOs, Parliament, institutional investors) could revive the issue in the next few years.<\/p>\n<h4><\/h4>\n<h4><strong>  Perspectives and challenges: human rights, decent work&#8230; is it enough?<\/strong><\/h4>\n<p>Putting the <strong>Social Taxonomy<\/strong> to sleep raises a fundamental question: are the instruments currently in force &#8211; <strong>CSRD<\/strong>, <strong>CSDDD<\/strong> and the <strong>minimum safeguards of<\/strong> the Taxonomy Regulation &#8211; sufficient to ensure that social issues are truly taken into account in sustainable finance?<\/p>\n<p><strong>What we have today<\/strong><\/p>\n<ol>\n<li><strong>CSRD and ESRS social<\/strong>\n<ul>\n<li><strong>ESRS standards S1 to S4<\/strong> (company workers, value chain workers, affected communities, consumers) bring <strong>unprecedented transparency<\/strong>.<\/li>\n<li>Companies must publish data on decent work, wages, health and safety, diversity, and impacts on local communities.<\/li>\n<li>This gives investors a <strong>detailed view of social practices<\/strong>, but without classifying them as &#8220;sustainable&#8221; or &#8220;unsustainable&#8221;.<\/li>\n<\/ul>\n<\/li>\n<li><strong>CSDDD<\/strong>\n<ul>\n<li>The <strong>Corporate Sustainability Due Diligence Directive (2024<\/strong> ) requires large companies to<strong>identify, prevent and mitigate negative impacts<\/strong> on human rights (including decent work) and the environment in their operations and value chains.<\/li>\n<li>It places human rights at the heart of corporate governance, but in a logic of <strong>risk and damage management<\/strong> &#8211; not of valuing positive contributions.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Minimum safeguards for Taxonomy (art. 18, Regulation 2020\/852)<\/strong>\n<ul>\n<li>They oblige Taxonomy-compliant companies to respect<strong>UN<\/strong>,<strong>OECD<\/strong> and<strong>ILO<\/strong> conventions.<\/li>\n<li>These safeguards constitute a <strong>normative floor<\/strong>: to prevent so-called &#8220;green&#8221; activities from being associated with human rights violations.<\/li>\n<li>But they are not enough to identify companies or activities that <strong>make a substantial contribution<\/strong> to social objectives.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<h5><strong>! What a Social Taxonomy would have done!<\/strong><\/h5>\n<p>The Social Taxonomy could have gone further, defining what a <strong>socially sustainable activity<\/strong> is: <\/p>\n<ul>\n<li>A company that <strong>actively offers a decent job<\/strong>,<\/li>\n<li>A project that <strong>guarantees access to essential services<\/strong> (health, education, affordable housing),<\/li>\n<li>An activity that <strong>strengthens social cohesion and inclusion<\/strong>.<\/li>\n<\/ul>\n<p>It would have offered <strong>investors a common language<\/strong>, making it possible to distinguish between companies that <strong>simply comply with the minimum rules<\/strong> and those that make <strong>a positive contribution to human rights<\/strong> and social well-being.<\/p>\n<p>&nbsp;<\/p>\n<h4><strong>Enough or not?<\/strong><\/h4>\n<p>Today, we can consider that :<\/p>\n<p>Yes, the EU has already put in place a solid framework to <strong>prevent<\/strong> human rights <strong>violations<\/strong> and improve <strong>social transparency<\/strong>.<\/p>\n<p>No, this framework is not sufficient to <strong>direct capital on a massive scale<\/strong> towards projects with a high social impact.<\/p>\n<p>-&gt; Without a social taxonomy, investors <strong>have many indicators at their disposal<\/strong>, but no <strong>benchmark of positive contribution<\/strong> comparable to that of the climate and ecological transition.<\/p>\n<p>&nbsp;<\/p>\n<p>There is therefore a risk that the social sector will remain within <strong>a &#8220;minimal compliance&#8221;<\/strong> <strong>rationale<\/strong> <strong>,<\/strong> at a time when demand from investors, particularly institutional investors, is growing for investments <strong>aligned with the objectives of social justice<\/strong>, <strong>the fight against inequality and respect for fundamental rights<\/strong>.<\/p>\n<p>-&gt; The question remains: <strong>can Europe be credible in sustainable finance if it does not propose a clear framework for measuring and valuing decent work and human rights?<\/strong><\/p>\n<p>&nbsp;<\/p>\n<h4><strong>Conclusion<\/strong><\/h4>\n<p>The <strong>Social Taxonomy<\/strong> was to be the counterpart of the Green Taxonomy, a tool for <strong>recognizing and valuing activities that actively contribute to human rights<\/strong>, decent work and social well-being.<\/p>\n<p>Three years after the first proposals, we have to admit that the project has <strong>stalled<\/strong>.<\/p>\n<p>The <strong>Omnibus I and II<\/strong> packages have established a new priority for the European Union: <strong>simplify, reduce, lighten<\/strong>. In this movement, the Social Taxonomy appears to be a <strong>collateral victim<\/strong>, overshadowed by more urgent measures (CSRD, CSDDD, Environmental Taxonomy). <\/p>\n<p>Admittedly, <strong>social ESRS<\/strong>, <strong>CSDD<\/strong> and <strong>minimum safeguards<\/strong> already offer solid safeguards. They improve transparency and limit infringements of fundamental rights. But <strong>they are not enough to define a clear and ambitious framework<\/strong> for <strong>positive social contribution<\/strong>, which would enable investors to distinguish actors who go beyond mere compliance with standards to <strong>actively promote decent work, inclusion and access to essential services<\/strong>.  <\/p>\n<p>The mothballing of the Social Taxonomy therefore calls into question <strong>Europe&#8217;s credibility as a world leader in sustainable finance<\/strong>. By abandoning &#8211; at least temporarily &#8211; 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. <\/p>\n<p>-&gt; The question remains: is this a <strong>pragmatic pause<\/strong>, or a <strong>strategic renunciation<\/strong> that will permanently weaken Europe&#8217;s ambition for sustainability?<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h4><strong>Sources :<\/strong><\/h4>\n<p><strong>European Commission <\/strong><em>&#8211; Omnibus package (2025): &#8220;simplification&#8221; orientation, focus on large companies<\/em>, <a href=\"https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/ip_25_614\" target=\"_blank\" rel=\"noopener\">https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/ip_25_614<\/a><\/p>\n<p><strong>Taxonomy Regulation (2020\/852) &#8211; <\/strong><em>environmental framework,<\/em>  <a href=\"https:\/\/finance.ec.europa.eu\/sustainable-finance\/tools-and-standards\/eu-taxonomy-sustainable-activities_en?prefLang=fr\" target=\"_blank\" rel=\"noopener\">https:\/\/finance.ec.europa.eu\/sustainable-finance\/tools-and-standards\/eu-taxonomy-sustainable-activities_en?prefLang=fr<\/a><\/p>\n<p><strong>Sustainable finance platform <\/strong><em>&#8211; &#8220;Social Taxonomy&#8221; report (2022<\/em><strong>)<\/strong>, <a href=\"https:\/\/finance.ec.europa.eu\/system\/files\/2022-08\/220228-sustainable-finance-platform-finance-report-social-taxonomy_en.pdf\" target=\"_blank\" rel=\"noopener\">https:\/\/finance.ec.europa.eu\/system\/files\/2022-08\/220228-sustainable-finance-platform-finance-report-social-taxonomy_en.pdf<\/a><\/p>\n<p><strong>Platform <\/strong><em>&#8211; &#8220;Minimum Safeguards&#8221; report (2022)<\/em>, UN\/OECD\/ILO references, <a href=\"https:\/\/finance.ec.europa.eu\/system\/files\/2022-10\/221011-sustainable-finance-platform-finance-report-minimum-safeguards_en.pdf\" target=\"_blank\" rel=\"noopener\">https:\/\/finance.ec.europa.eu\/system\/files\/2022-10\/221011-sustainable-finance-platform-finance-report-minimum-safeguards_en.pdf<\/a><\/p>\n<p><strong>CSDDD &#8211; <\/strong><em>Directive (EU) 2024\/1760, human rights &amp; duty of care, effective from 25\/07\/2024,<\/em> <a href=\"https:\/\/eur-lex.europa.eu\/eli\/dir\/2024\/1760\/oj\/eng?eliuri=eli%3Adir%3A2024%3A1760%3Aoj&amp;locale=fr#\" target=\"_blank\" rel=\"noopener\">https:\/\/eur-lex.europa.eu\/eli\/dir\/2024\/1760\/oj\/eng?eliuri=eli%3Adir%3A2024%3A1760%3Aoj&amp;locale=fr#<\/a><\/p>\n<p><strong>ESRS (Set 1) <\/strong><em>&#8211; EFRAG, social standards S1-S4 under CSRD<\/em>, <a href=\"https:\/\/xbrl.efrag.org\/e-esrs\/esrs-set1-2023.html\" target=\"_blank\" rel=\"noopener\">https:\/\/xbrl.efrag.org\/e-esrs\/esrs-set1-2023.html<\/a><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>Photo by <a href=\"https:\/\/unsplash.com\/@d_ks11?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash\" target=\"_blank\" rel=\"noopener\">Dominic Kurniawan Suryaputra<\/a> on <a href=\"https:\/\/unsplash.com\/photos\/a-black-and-white-photo-of-a-crowd-of-people-MYuiVyQ4GEA?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash\" target=\"_blank\" rel=\"noopener\">Unsplash<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>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<\/p>\n","protected":false},"author":2,"featured_media":10893,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[102,105,100,101,1],"tags":[],"class_list":["post-11110","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-human-rights-social-issues","category-news","category-regulatory-frameworks","category-sustainable-finance"],"acf":[],"_links":{"self":[{"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/posts\/11110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/comments?post=11110"}],"version-history":[{"count":0,"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/posts\/11110\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/media\/10893"}],"wp:attachment":[{"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/media?parent=11110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/categories?post=11110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blufin.one\/en\/wp-json\/wp\/v2\/tags?post=11110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}