EU: Platform on Sustainable Finance publishes draft report on changes to activities and technical screening criteria in EU Taxonomy

On 8 January 2025, the Platform on Sustainable Finance (PSF) published a draft report on preliminary recommendations for the review of the Climate Delegated Act and the addition of activities to the EU Taxonomy, with a related call for feedback. 

The PSF advises the European Commission on the implementation and usability of the EU Taxonomy and the broader sustainable finance framework. In December 2024, the Platform’s mandate was extended by three months, until the end of March 2025, to enable the completion of outstanding work. 

Review of technical screening criteria and analysis for the Climate Delegated Act

The Commission asked the PSF to recommend revisions to the technical screening criteria (TSC) of the economic activities included in the Climate Delegated Act (Climate DA) adopted in 2021, with a focus on transitional activities. 

The Draft Report contains the following recommendations: 

• Usability improvements for the generic climate change adaptation criteria.
• Consistency and usability improvements for selected activities under the Climate Change Mitigation and Adaptation objectives, including through harmonising activity titles and descriptions.
• Adjustment to scientific results and technological developments of selected substantial contribution and Do No Significant Harm (DNSH) criteria under the Climate Change Mitigation objective.
• General recommendations for updating substantial contribution and DNSH criteria under the Climate Change Mitigation objective. 
• Mapping of activities with inconsistent or insufficiently considered DNSH criteria. 

For background information on the Climate DA, see our previous blog post. 

New activities

The PSF has developed TSC for a list of new economic activities. This involved developing TSC for these activities to make a Substantial Contribution (SC) to at least one of the environmental objectives defined by the Taxonomy Regulation while ensuring they Do No Significant Harm (DNSH) to any environmental objective. 

New activities included:

1. Refining substantially contributing to Climate Change Mitigation.
2. Mining substantially contributing to Climate Change Mitigation. 
3. Close to Market Research, Development and Innovation substantially contributing to all four objectives of the Environmental Delegated Act. 
4. Digital Solutions and Services substantially contributing to all four objectives of the Environmental Delegated Act. 

The PSF noted that they could not finalise their recommendations on all activities that were mandated by the Commission. For most of these activities (manufacture of emergency aircraft, maintenance of tunnels and bridges, manufacture of tyres, energy efficiency equipment), they included progress reports. 

The PSF also noted that for the telecommunication networks activity, that was also mandated by the Commission, no progress has been made due to a lack of resources. 

The PSF stressed that the non-inclusion of an activity in the Draft Report does not imply that the activity will not be considered for inclusion in the EU Taxonomy. 

Recommendations for Climate Change Adaptation

The PSF’s mandate included developing DNSH criteria for activities to be included in Annex II to the Climate DA, as “adapted” activities. 

This is both for the new activities developed under the current mandate and for activities already included in the Taxonomy Delegated Acts for SC to an environmental objective other than adaptation, for which no such criteria exist yet. 

The Draft Report mentions that “the reason for this inclusion is to support climate resilience of the whole economy, and to support environmental transition across the whole economy, as well as to enable a significantly wider range of entities to claim their investments in climate resilience as Taxonomy-aligned, resulting in an overall increase in adaptation finance. To achieve this, a number of additional issues on climate change adaptation are also addressed in this report.”

Further recommendations for Climate Change Adaptation made in the Report: 

• DNSH criteria for “adapted” activities for: (i) the newly proposed activities under the current mandate of the Platform; and (ii) activities already included in existing Delegated Acts but not included in Annex II to the Climate DA.
• A Climate Change Adaptation Headline Ambition Statement. This is a high-level indication of the overall ambition level for the Taxonomy objectives, in alignment with existing EU policies, commitments and targets. It complements the PSF Report of 30 March 2022 that defined the Headline Ambition Statements for the four (non-climate) environmental objectives.
• An analysis of sectors most vulnerable to physical climate risks – to be prioritised for inclusion as “adapted” activities in the future. 
• Progress on conceptual approach to nature-based solutions’ inclusion enabling Climate Change Adaptation objective. 

The PSF is inviting feedback on the Draft Report until 5 February 2025, after which the PSF will finalise the report and submit this to the European Commission. The Commission is not bound by the PSF’s recommendations but they do carry significant weight.

For more information on the EU Taxonomy and the EU’s wider sustainable finance package, see:

• UK & EU: Sustainable Finance Sources - survival guide
• Sustainable Finance in Europe: Regulatory State of Play updated Linklaters / AFME report December 2024