JBCE has published its position paper on the simplification of the DNSH Technical Screening Criteria under the EU Taxonomy

05/12/2025

The Japan Business Council in Europe (JBCE) has published a position paper providing feedback on the simplification of the Technical Screening Criteria (TSC) under the EU Taxonomy’s Climate and Environmental Delegated Acts.
This paper specifically addresses challenges related to the “Do No Significant Harm” (DNSH) criteria and offers recommendations to improve clarity, coherence and practical implementation across EU legislation. 

JBCE welcomes the adoption of the Delegated Act of 4 July 2025, which aligns certain DNSH requirements with the RoHS Directive and removes provisions that previously contributed to market confusion, such as DNSH requirement (g). However, several areas still require further amendment to ensure regulatory consistency and reduce unnecessary burdens for companies. 

JBCE’s main recommendations include:

• Ensuring consistency between the EU Taxonomy and other legislation, particularly the Net Zero Industry Act (NZIA), to ensure that net-zero technologies are appropriately recognised within the Taxonomy.
• Addressing inconsistencies in eligibility criteria, including the treatment of heat pumps close to the 70 kW threshold under the current energy label scheme, which creates market fragmentation.
• Clarifying DNSH Criterion (f) by defining—or removing—unclear requirements such as “no other suitable alternative substances or technologies are available on the market,” given the complexity of assessing alternatives across global supply chains.
• Clarifying assessment and documentation procedures for DNSH compliance, including responsible actors, required evidence and practical feasibility, as existing requirements create operational uncertainty.
• Aligning DNSH requirements for Substances of Very High Concern (SVHCs) with REACH, as the current Taxonomy approach imposes restrictions beyond the intent of the REACH Regulation, placing excessive burdens on companies, particularly SMEs. 

JBCE stresses that excessive or unclear requirements risk undermining the objectives of sustainable finance, by potentially excluding environmentally beneficial products due to impractical compliance expectations.

JBCE remains committed to contributing constructively to the development of coherent and effective EU sustainability policies that support investment, innovation and fair market conditions.

For more information

Masakaru Shimosawa or Nagisa Kagawa
Policy Manager 
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