Factors that would be evaluated under the so-called social taxonomy would include whether companies pay fair wages, give regular training and provide childcare. Moreover, companies would also have to prove how beneficial they are to customers and to society as a whole. For example, companies who import products from abroad would have to prove they are paying workers in developing countries fair wages and housing companies would have to prove that they are building enough social housing. Whether the company is a good taxpayer and data protection will also play a key role in the categorisation. This means that companies selling tobacco or making landmines would automatically be listed as “bad companies”.
The EU is already under fire for labelling some gas and nuclear investments as “green” and the move into social issues is likely to cause more conflict across the bloc.
The new plans have sparked fury across Europe, with Steffen Kampeter, general manager of the employers’ association BDA urging the EU to “hold back”.
He said: “The extension of the taxonomy to social issues is treacherous ice that the Commission should not step on.
“Reasonable social policy should be implemented at a national level; the EU should respect that and hold back.”
Both the mechanical engineering association VDMA and the European employers’ association Business Europe have already rejected the plans.
MEP Markus Ferber (CSU) argued that the new classifications would not improve working conditions.
He said: “In Europe we have the highest social standards in the world. Socio-political questions should be solved through social policy and not through financial market regulation.
“New classification systems only create new reporting requirements and bureaucracy, but no improvement in working conditions.”
However, the Green Group and the Social Democratic S&D Group are in favour of social taxonomy.