Minimum Safeguards
The Minimum Safeguards are the mandatory social and governance requirements under Art. 18 of the EU Taxonomy Regulation that an economic activity must meet in order to qualify as Taxonomy-aligned, even where it already satisfies all environmental criteria.
The Minimum Safeguards are a core element of the EU Taxonomy Regulation (Regulation (EU) 2020/852) and are set out in its Article 18. They ensure that an economic activity may not be classified as sustainable (Taxonomy-aligned) on the basis of its environmental contribution alone, but must additionally comply with binding minimum social and governance standards. An activity can therefore be environmentally exemplary and still fail to be Taxonomy-aligned if it breaches these safeguards.
In substance, Article 18 refers to four international frameworks: the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights (UNGP) including the eight ILO core labour conventions, and the International Bill of Human Rights. These cover in particular human rights, workers' rights, anti-corruption, fair competition and tax compliance. Companies must implement adequate due diligence procedures to identify, prevent and mitigate these issues along their value chain.
The Platform on Sustainable Finance specified in its final report of October 2022 how the Minimum Safeguards should be assessed in practice. It distinguishes four topics (human rights including labour and consumer rights, corruption and bribery, taxation, and fair competition) and asks whether a company, on the one hand, has adequate due diligence processes in place and, on the other, has not been implicated through proven breaches, final convictions or non-cooperative conduct towards OECD complaint mechanisms. The Minimum Safeguards are closely linked to CSRD reporting and the German Supply Chain Due Diligence Act (LkSG), whose due diligence processes provide the required evidence.
Legal Basis
Art. 18 Regulation (EU) 2020/852 (EU Taxonomy Regulation); OECD Guidelines for Multinational Enterprises; UN Guiding Principles on Business and Human Rights; ILO core labour conventions; International Bill of Human Rights
Practical Example
An industrial company reports a high Taxonomy-aligned revenue share for a new plant manufacturing heat pumps, because the activity meets the technical screening criteria of the climate objective and passes the DNSH test. The compliance officer additionally assesses the Minimum Safeguards: she documents the human rights risk analysis from the LkSG process, reviews the whistleblowing system, the anti-corruption framework and tax compliance, and confirms that there are no final breaches or open OECD complaints. Only after this evidence may the revenue be reported as fully Taxonomy-aligned in the CSRD report.