The DNSH principle, an acronym for “Do No Significant Harm,” is a concept established in the European Union Taxonomy Regulation (Article 17 of the EU 2020/852). This principle states that financial activities, investments, or projects submitted under the Recovery, Transformation, and Resilience Plan (PRTR) must not cause significant harm to the environment. This Plan emerged after COVID-19 to counteract the pandemic’s impact on the economy, promoting reforms and investments through European funds. It seeks to achieve a more sustainable, inclusive, and digital future, with greater social and territorial cohesion and no gender gaps. Small and medium-sized enterprises, as well as freelancers, can access this plan for direct assistance.
There are six environmental objectives to assess the activities:
- Climate change mitigation.
- Climate change adaptation.
- Sustainable use and protection of water and marine resources.
- Transition to a circular economy.
- Pollution prevention and control.
- Protection and restoration of biodiversity and ecosystems.
Financing eligibility under the DNSH principle
The Recovery and Resilience Mechanism (RRM) only provides financing to activities that do not harm these environmental objectives. Activities are classified as follows:
- Non-eligible activities: Those that do not comply with the DNSH principle by impacting any of the six environmental objectives.
- Justified eligible activities: Those that do not affect any of the six objectives but must be adequately justified. These eligible activities are divided into two subcategories:
- Eligible activities with non-low environmental impact: These occur in exceptional and justified cases with a set of conditions.
- Eligible activities with low environmental impact: Given their lower environmental impact, they require simpler justification.
To determine if these actions comply with the principle of not harming the six objectives, a self-assessment questionnaire* is available to help entities pre-identify the potential impacts associated with different projects and ensure they meet established environmental standards.
*Annex II of the DNSH Guide https://www.boe.es/doue/2023/111/Z00001-00033.pdf
Application of the DNSH principle
In evaluating an economic activity under this principle, the entire lifecycle of the activity or product must be considered. This means that not only the environmental impacts of the activity during the planning phase are evaluated, but also the potential effects during production, use, and the end of the product’s useful life. Otherwise, project funding could be denied for not complying with the Green Deal, the European environmental transition strategy, and the Sustainable Development Goals (SDGs).
Compliance with the DNSH principle
To receive European funding, we must demonstrate that our actions will comply with this principle. Some of the guidelines specified in the DNSH Guide of the PRTR are:
- Activities must not have negative environmental effects. In other words, the effects of this activity should be considered on their own without comparison to more harmful activities.
- Consider the direct and indirect effects in all phases of the process and their subsequent impacts.
- Refer to the conditions of the Taxonomy Regulation’s Delegated Acts.
- Cite current environmental legislation and commit to complying with it.
- Provide environmental impact assessments.
- Provide evidence of compliance with the DNSH principle available in Annex II of the European Commission’s Technical Guide.
- Indications for certain activities are listed in Annex II of the Guide.
Importance of this principle
This principle is beneficial because it:
- Ensures compliance with the sustainability criteria established by the European Union.
- Promotes sustainable development that protects human and natural resources in the long term.
- Serves to guide decision-making and actions toward economically viable, socially, and environmentally responsible development, even when not applying for PRTR funds.
- Can be a significant differentiating factor by demonstrating environmental responsibility in project execution.
- Encourages a reduction in greenhouse gas emissions, increases energy efficiency, and boosts the use of renewable energies.
The DNSH concept is fundamental to the European Union’s strategy to achieve the Sustainable Development Goals (SDGs) established in the 2030 Agenda.