Navigating the landscape of sustainable finance requires a solid grasp of regulatory concepts and principles. Whether you’re a policymaker, financial institution, business, or investor, understanding these frameworks is crucial for aligning with Europe’s ambitious climate and sustainability objectives.
The Do-No-Significant-Harm (DNSH) principle is a key element of the European Union’s framework for sustainable finance, specifically under Article 3 of the Taxonomy Regulation.
This principle requires that for an economic activity to be deemed environmentally sustainable, it must not only substantially contribute to one or more of the environmental objectives set out in Article 9 of the Taxonomy Regulation, but also, the relevant activity cannot not significantly harm any of the six environmental objectives. These objectives guide the sustainable development goals within the EU, ensuring that efforts to promote sustainability in one area do not inadvertently cause damage in another.
Climate Change Mitigation
Climate Change Adaptation
The Sustainable Use and Protection of Water and Marine Resources
The Transition to a Circular Economy
Pollution Prevention and Control
The protection and Restoration of Biodiversity and Ecosystems
Article 17 of the Taxonomy Regulation defines what “significant harm” to each of the six environmental objectives foreseen in the Taxonomy Regulation means:
Environmental objective | Significant harm |
| Climate change mitigation | Activity leading to significant greenhouse gas emissions |
| Climate change adaptation | Activity leading to an increased adverse impact of the current climate and the expected future climate, on the activity itself or on people, nature or assets |
| The sustainable use and protection of water and marine resources | The activity is detrimental to the good status or the good ecological potential of bodies of water, including surface water and groundwater; or to the good environmental status of marine waters |
| The transition to a circular economy | Activity leading to significant inefficiencies in the use of materials or in the direct or indirect use of natural resources such as non-renewable energy sources, raw materials, water and land at one or more stages of the life cycle of products, including in terms of durability, reparability, upgradability, reusability or recyclability of products Activity leading to a significant increase in the generation, incineration or disposal of waste, with the exception of the incineration of non-recyclable hazardous waste Activity where the long-term disposal of waste may cause significant and long-term harm to the environment |
| Pollution prevention and control | Activity leading to a significant increase in the emissions of pollutants into air, water or land, as compared with the situation before the activity started |
| The protection and restoration of biodiversity and ecosystems | The activity is significantly detrimental to the good condition and resilience of ecosystems; or is detrimental to the conservation status of habitats and species, including those of Union interest |
Under the Climate Delegated Act, specific requirements are outlined to ensure that economic activities do not cause significant harm to any of the environmental objectives, particularly those not directly related to climate, such as water protection, circular economy, pollution control, and biodiversity.
The ENGAGE Templates V1.1 incorporate a specific section on the DNSH principle covering the economic activity of acquisition and ownership of buildings.
If you want to discover how the ENGAGE Templates V1.1 have integrated the DNSH principle requirements, contact the ENGAGE for ESG team at engage4esg@eurodw.eu
European lending institutions are encouraged to test the ENGAGE Templates for free until October 2025 and can request them by clicking here.
To receive the ENGAGE Templates, lending institutions are required to complete a simple access request form available via the ENGAGE for ESG website. Once the request is processed, the applicant will receive the Templates and supporting documentation via email.
In a 30-minute meeting, the ENGAGE Team will walk you through the nuances of the ENGAGE Templates and demonstrate how they will help lending institutions identify the relevant climate-related data to align their mortgages and home renovation loans with the EU Taxonomy in line with the Technical Screening Criteria of the Climate Delegated Act for the economic activities of acquisition and ownership and renovation of real estate.
Sign the ENGAGE agreement to receive the sample data submission files. A specific legal framework has been prepared for the safe and lawful processing of data.
Complete the ENGAGE Templates and submit your mortgage sample file to the ENGAGE Portal.
Receive the ENGAGE report on EU Taxonomy compliance.
To achieve the proposed 55% emission reduction climate target by 2030, around EUR 275 billion of additional investments are needed per year.
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