ICMA submitted its feedback on the draft Report of the EU Platform on Sustainable Finance on a Social Taxonomy

06 September 2021

The focus on environmental issues, and especially climate change, through the work on the EUTaxonomy to date in effect tackles issues that can also be defined as social issues, given theexistential threat they create for society.

Nevertheless, there are a range of social issues that fall outside the environmental purview, or may be deemed intertwined in a different way, such as the pandemic, which has highlighted the connection between environmental degradation and social issues, including how crises exacerbate pre-existing disparities in healthcare provision and outcomes, as well as in access to good employment, education and housing.

We think that a well-conceived and usable Social Taxonomy could become a useful and
complementary tool in the sustainable bond market to help assess and benchmark the social
objectives and targets incorporated in social, sustainability (mix of social and green) or even
sustainability-linked bonds. It could help investors determine what are robust and meaningful social
activities and projects/investments to guide them in directing their money to companies and
investments that make a difference.

From a regulatory perspective, a Social Taxonomy would also further connect the dots with for
example investors’ disclosure obligations under SFDR which already contain social factors.

The responses below focus on the points in the consultation that are most relevant to ICMA members
and to participants in the sustainable bond market. We concentrate especially on assessing the potential
of the proposed Social Taxonomy as a resource for participants in the sustainable bond market rather
than its potential broader use as a classification tool for investment portfolios for all types of securities
including equities....

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