The EU Taxonomy as a tool for more sustainable public investment

INTEGRATION INTO PUBLIC POLICY

Although the implementation of the EU taxonomy does not constitute a legal obligation for managing authorities, certain elements of it are used as a reference framework for financial instruments, such as the ‘do no significant harm’ (DNSH) principle, which is a horizontal requirement under the Recovery and Resilience Facility (RRF) and other financial mechanisms. The application of the DNSH principle is often based on criteria and methodologies derived from the Taxonomy Regulation.

This overlap brings both synergies and certain challenges. On the one hand, the taxonomy provides a structured and scientifically grounded framework for assessing environmental impacts, which can help to fulfil the DNSH principle. On the other hand, the sectoral thresholds and assessment criteria set out in the taxonomy are not always tailored to the diversity of projects at the regional or local level.  

Strictly defined limits and taxonomy criteria raise questions regarding their proportionality, the administrative burden they entail, and the risk of excluding innovative or transitional projects which do not yet meet the specified requirements but nevertheless contribute to sustainability objectives. In this context, a more integrated approach appears appropriate, whereby DNSH assessments would be based on the principles of the taxonomy whilst remaining sufficiently flexible to take into account the specific characteristics of public sector investment and regional development strategies. The application of the EU taxonomy within public policies varies greatly across European regions, despite its growing influence on the design and evaluation of sustainability-related funding. Whilst some regions have already introduced structured methodologies and tools for monitoring it, others are still at the exploratory stage or are encountering significant implementation barriers. 

Given that the taxonomy is not legally binding for public policies, its strict application is not expected. However, it can serve as an important guide for channelling public investment, strengthening the consistency and transparency of funding evaluation criteria, and developing capacity across both administrative bodies and funding recipients.

Find out more in the new thematic overview, where you’ll learn:  

• what the European taxonomy is,
• how it works in practice, using the transport sector as an example,
• how it can benefit public administration,
• how regions can overcome obstacles to its implementation. 

https://jinag.eu/files/2026/07/thematic-brief-eu-taxonomy.pdf

This thematic overview was produced as part of the GreenGov project, which is co-funded by the Interreg Europe programme.