Do No Significant Harm!

How can financial market participants ensure that their investments comply with the EU Taxonomy requirements by avoiding significant harm to EU environmental objectives and fulfilling defined social standards? As the Do No Significantly Harm (DNSH) assessment plays a crucial role within the EU Taxonomy it is important to be aware of its systematic.

The Frankfurt School - UNEP Collaborating Centre for Climate & Sustainable Energy Finance has – together with Maples Group and Environmental Liability Solutions Europe (ELS) – published a DNSH handbook. Its aim is to assist financial market participants to evaluate relevant DNSH aspects and to raise awareness among different stakeholder groups at the earliest stage possible.

In three case studies, the handbook provides an insight in the DNSH disclosure requirements applied to the economic activities of new building construction, infrastructure for personal mobility (cycle logistics) and acquisition and ownership of buildings. The case studies show how stakeholders can incorporate DNSH assessment in their decision-making process to avoid stranded assets. It also illustrates how they may use the EU Taxonomy to guide strategic environmental goals to identify potential risks that could have a negative impact on the risk-return profile of the investment.

The different case studies underline how owners and developers of large construction, real estate and infrastructure projects can improve the DNSH assessment and identify relevant ESG factors. Strategic decisions made early in the development pre-construction stage by developers and planners will ease the disclosure burden on all stakeholders and ensure the environmental ambitions of the project are rewarded.