The Platform on Sustainable Finance (PSF), an expert group appointed by the European Commission to advise on sustainable finance policies, has announced a new consultation focused on updates to the EU Taxonomy. These updates aim to simplify and broaden the classification system used to define sustainable economic activities.

The EU Taxonomy, a key component of the EU Action Plan on Sustainable Finance, provides a framework for categorizing economic activities that contribute to at least one of six environmental objectives while ensuring they do no significant harm (DNSH) to others. These objectives include climate change mitigation, climate change adaptation, sustainable water and marine resource use, transitioning to a circular economy, pollution prevention, and biodiversity and ecosystem restoration.

The Taxonomy came into effect in 2022, introducing disclosure requirements for climate change mitigation and adaptation under the EU Taxonomy Climate Delegated Act. The remaining four objectives, outlined in the Environmental Delegated Act, began applying in 2024.

The PSF’s role includes recommending ways to improve the usability of the Taxonomy and expand the range of activities it covers. The new draft report reflects significant input from stakeholders, particularly companies, who highlighted the need to simplify DNSH criteria and increase the number of activities included in the Taxonomy.

Based on this feedback, the PSF’s proposals focus on enhancing the usability of DNSH criteria for new activities, with each recommendation addressing this aspect. The report also reviews the DNSH criteria under the Climate Delegated Act for usability. Additionally, the report suggests including new activities in the Taxonomy, such as digital solutions and services, and the mining and smelting of lithium, nickel, and copper.