EU Taxonomy Minimum Protection: An Explanation of the Four Criteria

For an economic activity to be considered taxonomy-compliant, a positive environmental impact alone is not sufficient. Article 18 of the EU Taxonomy Regulation also requires compliance with minimum safeguards in the areas of human rights, taxation, corruption, and fair competition. In this article, you’ll learn what the minimum safeguards specifically assess and how to apply them in practice.

Who is affected by the EU taxonomy today?

The requirement to implement the EU Taxonomy, including the minimum sustainability criteria, has been in effect since 2021, initially with a limited scope of application for large capital market-oriented companies. As a result of the Omnibus Package, the scope of application is now aligned with the new, narrower scope of the CSRD: Companies with more than 1,000 employees and net revenue exceeding €450 million are subject to mandatory reporting requirements. The expansion to all other large companies, originally planned for 2025, will therefore no longer take place in this form. You can find the complete timeline in our article on the CSRD Implementation Act, and background information on the reporting methodology in our EU Taxonomy FAQ.

What the minimum protection required under Article 18 entails

The minimum standard is intended to ensure that economic activities considered environmentally sustainable do not simultaneously violate fundamental social standards. It is based on four international frameworks:

• OECD Guidelines for Multinational Enterprises
• United Nations Guiding Principles on Business and Human Rights (UN Guiding Principles)
• Core Labor Standards of the International Labor Organization (ILO)
• International Charter of Human Rights

The guidance document “Final Report on Minimum Safeguards,” published in October 2022 by the Platform on Sustainable Finance—an advisory expert group of the European Commission—remains the key reference for this purpose. The report itself is not legally binding, but in practice it is consistently used as a basis for interpretation.

The Four Areas of Minimum Protection

The minimum protection covers four areas in which companies must meet minimum requirements:

1. Human rights, including labor and consumer rights
2. Bribery, Solicitation of a Bribe, and Extortion
3. Taxation
4. Fair Competition

Each area is assessed in two stages: First, whether appropriate processes are in place (process criterion); then, whether the actual results of these processes meet expectations (performance criterion).

Process criterion. What matters here is the existence of actively implemented due diligence procedures. Similar requirements can also be found in the CSRD, for example under disclosure code GOV-4.

Performance criterion. This section examines whether there are any controversies—that is, court-established violations of human rights or labor rights, breaches of tax or competition law, or unanswered communications from the OECD National Contact Point or the Business and Human Rights Resource Center (BHRRC). A controversy that has already been resolved but for which no follow-up processes have been implemented still results in a failure to meet the requirement. If, however, the processes are in place, compliance can be achieved despite the existence of a controversy. The performance criterion thus serves more as a warning sign of inadequate processes; the process criterion is the dominant requirement.

If an economic activity fails to meet one of the two criteria in any of the four areas, it is considered non-taxonomy-compliant overall, regardless of how well it performs in terms of its environmental contribution.

Important for practical implementation: Minimum protection is not assessed on a per-business-activity basis, but rather at the company level, as an all-or-nothing determination. It is either met for all of the company’s activities or for none. This significantly reduces the assessment burden compared to an activity-based evaluation.

A practical advantage: Companies that have already established structures for the LkSG or the CSDDD—such as a documented complaint mechanism and an effective risk analysis—typically already provide the basis for minimum protection. It is worthwhile to specifically reuse these structures rather than developing a separate verification process for the taxonomy.

Optimal Compliance with Minimum Protection Requirements Using CONSUST

Minimum protection is a separate assessment step alongside the environmental assessment and is often underestimated in practice. Our white paper , “EU Taxonomy 2026: From Reporting Form to Management Tool, ” shows you how to organize it—along with the three KPIs of revenue, CapEx, and OpEx—in a data-driven and audit-ready manner. We have also integrated the minimum protection criteria and the associated interpretation guidelines into our FramesCube software, enabling you to map out the entire process—all the way to the final taxonomy report—in a structured manner. Contact us for a no-obligation consultation.