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A green classification system designed to translate the climate and environmental goals of the EU into criteria for environmentally sustainable economic activities – with the EU taxonomy, it will be easier in the future to evaluate companies according to their ecological actions and to derive investment decisions from them, for example.

Economic activities that make a significant contribution to at least one of the EU’s climate and environmental goals, do not contradict them significantly and meet social minimum standards are recognized as environmentally or environmentally sustainable.

However, the lack of formal evaluation criteria and the previously only non-specifically designed guidelines for the social minimum standards in the taxonomy system, the minimum safeguards, pose a problem. The concrete interpretation of the specifications set by the Minimum Safeguards has so far been left up to the companies themselves.

The implementation of the EU taxonomy is therefore undoubtedly a challenge for every company concerned – especially with regard to mandatory upcoming reporting as of fiscal year 2021. From then on, companies must make certain reports on the minimum safeguards for the first two defined environmental targets. For fiscal year 2022, the EU taxonomy will require full reporting on all six environmental targets.

In recent months, we have therefore discussed the implementation possibilities of the EU taxonomy with our customers, in our teams and with other stakeholders both in the consulting business and in the context of non-financial audits.

This has revealed an urgent need for practical guidance on terminology, methods and concepts for interpreting the Minimum Safeguards.

With our White Paper Minimum Safeguards, we provide not only an overview of the current state of the discussion, but also a concrete approach to implementing the requirements with regard to the social minimum standards. We take into account initiatives known to us and announced regulations.

In addition to the EU Taxonomy Directive, many of our customers in Germany are also faced with the requirements of the new German law on due diligence in the supply chain (LkSG). A comparative analysis between the requirements of the LkSG and our KPMG approach to minimum social standards requirements is also shown in our white paper.

We would also like to give you some practical guidelines for the use of the EU taxonomy. We would welcome your feedback and the possibility to share insights gained from your own experience, and we intend to add this knowledge to this white paper in a future edition.

You can download the white paper “Minimum Safeguards” here: