Do No Significant Harm

Definition

A principle requiring that an economic activity making a substantial contribution to one environmental objective does not significantly harm any of the other environmental objectives defined in the Taxonomy Regulation. DNSH criteria are also referenced in SFDR for sustainable investment assessments.

What is the DNSH Principle?

The Do No Significant Harm (DNSH) principle requires that an economic activity contributing substantially to one environmental objective must not cause significant harm to any of the other five environmental objectives defined in the Taxonomy Regulation: climate change mitigation, climate change adaptation, sustainable use of water and marine resources, transition to a circular economy, pollution prevention and control, and protection of biodiversity and ecosystems.

DNSH in the Taxonomy Regulation

Article 17 of the Taxonomy Regulation (Regulation (EU) 2020/852) defines the specific criteria for each environmental objective. The European Commission has adopted delegated acts (notably the Climate Delegated Act and the Environmental Delegated Act) setting out detailed technical screening criteria for DNSH assessments across economic activities.

DNSH in SFDR

Under SFDR, the DNSH principle applies to the definition of 'sustainable investment' (Article 2(17)). Financial market participants claiming to make sustainable investments must demonstrate that those investments do not significantly harm any environmental or social objective, taking into account Principal Adverse Impact (PAI) indicators.