Are environmental controversies a suitable proxy for “Do No Significant Harm” (DNSH)
for the purpose of “equivalent information” referred to in Article 17(2)(b) of the Delegated
Regulation?

Question

ESA Joint Committee (EBA, ESMA, EIOPA) · Accepted Answer

Data sets referred to as media-based “environmental controversies” are typically entity-level
assessments of a company to a common environmental baseline. Whilst a useful input for investors
when engaging with companies to dealing with reputational risk management, they are not suitable
as a proxy to activity-based DNSH. Important metric-based thresholds and process-based
requirements within the Climate Delegated Act are not considered in environmental controversies.
Similarly, using only compliance with local environmental laws would not equal DNSH compliance.
If a company operates in a jurisdiction with lower environmental standards or no environmental laws,
then the company should not automatically pass DNSH tests.

Are environmental controversies a suitable proxy for “Do No Significant Harm” (DNSH) for the purpose of “equivalent information” referred to in Article 17(2)(b) of the Delegated Regulation?

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