Do No Significant Harm and Climate-proofing in the context of ERDF/CF financial instruments in the 2021-2027 programming period

In April 2024, financial instruments (FI) practitioners and experts from the European Commission (EC) and European Investment Bank (EIB) came together to discuss the application to FI operations of two new principles described in Appendix 2 introduced by the Common Provisions Regulation (2021/1060) (CPR), namely:
 

• The ‘Do No Significant Harm’ (DNSH) principle which applies to FIs by virtue of:
  • Recital 10 CPR which states, “the Funds should support activities that would respect the climate and environmental standards and priorities of the Union and would do no significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) No 2020/852” (“The Taxonomy Regulation”); and
  • Article 9(4) CPR which states, “the objectives of the Funds shall be pursued in line with the objective of promoting sustainable development as set out in Article 11 TFEU, taking into account the UN Sustainable Development Goals, the Paris Agreement and the 'do no significant harm'  principle”; and
• The ‘climate proofing’ requirement under Article 73(2)(j) CPR for FI operations supporting investments in infrastructure with an expected lifespan of over 5 years.

During the session, participants considered several relevant documents which help describe the potential approaches to compliance with DNSH and climate proofing principles. This Note captures some of the topics discussed at the meeting and in subsequent follow-up exchanges.