The Other Side of the Coin
Substantial contribution asks: "Does this activity help?" DNSH asks: "Does it hurt something else in the process?"
An activity that substantially contributes to climate mitigation but destroys a river ecosystem is not taxonomy-aligned. The DNSH principle prevents single-objective tunnel vision.
How DNSH Works
For each activity in the delegated acts, there are DNSH criteria for every objective the activity is NOT contributing to. If an activity substantially contributes to climate mitigation, it needs DNSH assessments for the other five objectives: adaptation, water, circular economy, pollution, and biodiversity.
The DNSH criteria are activity-specific. A manufacturing process has different DNSH requirements than a real estate activity. You don't apply a generic checklist - you look up the specific DNSH criteria for your activity in the delegated act.
What DNSH Criteria Actually Look Like
Here is a simplified view of typical DNSH requirements:
| Objective | Typical DNSH Requirement |
|---|---|
| Climate adaptation | Conduct a climate risk assessment per Appendix A of the delegated act. Implement adaptation solutions for material physical climate risks. |
| Water | Comply with EU Water Framework Directive. Conduct an Environmental Impact Assessment (EIA) if relevant. Use water-efficient equipment. |
| Circular economy | Assess availability of and use techniques that support reuse, recycling, and recovery. Manage waste in accordance with the waste hierarchy. |
| Pollution | Comply with REACH, RoHS, and other relevant EU pollution regulations. Do not manufacture or use substances of very high concern (SVHC). |
| Biodiversity | Carry out an EIA or screening where required. Operate outside protected areas, or demonstrate no degradation of habitat quality. |
A solar farm contributing to climate mitigation. DNSH checks:
- Adaptation: Has the site been assessed for flood risk, heat stress, and extreme weather events? Are panels designed to withstand projected climate impacts?
- Water: Does construction affect nearby water bodies?
- Circular economy: Is there a plan for end-of-life panel recycling?
- Pollution: Are panels free of hazardous substances beyond REACH limits?
- Biodiversity: Was the site previously a forest or ecologically sensitive area? Was an EIA conducted?
DNSH is where many activities fail the alignment test. Companies often focus on the substantial contribution threshold and overlook the DNSH requirements. In practice, the climate risk assessment (Appendix A) for the adaptation DNSH is one of the most common stumbling blocks.
Deep Dive: The Appendix A Climate Risk Assessment
Almost every activity in the delegated acts requires DNSH compliance with climate adaptation via "Appendix A" - the generic criteria for DNSH to climate change adaptation. Here is what it actually requires:
The Three-Step Process
Step 1 - Screening. Identify which physical climate hazards from the classification table could affect the activity during its expected lifetime. The hazards are grouped into four categories:
| Temperature | Wind | Water | Solid Mass | |
|---|---|---|---|---|
| Chronic | Rising temperatures, heat stress | Changing wind patterns | Changing precipitation, sea level rise | Coastal erosion, soil degradation |
| Acute | Heat wave, cold wave, wildfire | Cyclone, storm, tornado | Drought, flood, heavy precipitation | Landslide, avalanche, subsidence |
Step 2 - Risk and vulnerability assessment. If material risks are identified in screening, conduct a detailed climate risk and vulnerability assessment using the highest available resolution climate projections, including scenarios covering 10-30 years for major investments.
Step 3 - Adaptation solutions. Identify and implement measures to reduce the identified risks. Solutions must favour nature-based approaches or blue/green infrastructure where possible, and must not adversely affect the adaptation efforts of others.
Proportionality rules: Activities with an expected lifespan under 10 years can use a lighter-touch assessment. All other activities must use state-of-the-art climate projections. For existing activities, adaptation solutions must be implemented within 5 years via an adaptation plan. For new activities using new physical assets, solutions must be integrated at the design and construction stage before operations begin.
Key Takeaways
- 1DNSH ensures an activity does not harm any of the other five environmental objectives while contributing to one
- 2DNSH criteria are activity-specific and defined in the delegated acts - there is no generic checklist
- 3The climate risk assessment for adaptation DNSH (Appendix A) is one of the most common compliance challenges
- 4DNSH is where many activities fail the alignment test - companies frequently overlook it while focusing on substantial contribution thresholds