DNSH Criteria Explained: The Often-Overlooked Half of EU Taxonomy

Most attention in EU Taxonomy discussions goes to the substantial contribution criteria - the headline thresholds that define what counts as "green." But taxonomy alignment has four conditions, and Do No Significant Harm (DNSH) is where the majority of alignment failures happen.

What DNSH Actually Means

The EU Taxonomy Regulation requires that any activity claiming alignment must not only make a substantial contribution to one environmental objective but must also do no significant harm to the other five. This is not aspirational language - it is a legally defined test with specific criteria set out in the Climate Delegated Act (EU) 2021/2139.

The six environmental objectives are:

1. Climate change mitigation
2. Climate change adaptation
3. Sustainable use and protection of water and marine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protection and restoration of biodiversity and ecosystems

If an activity substantially contributes to objective 1 (mitigation), it must pass DNSH tests for objectives 2 through 6. The criteria are not the same as the substantial contribution thresholds - they are separate requirements, often more qualitative, and they catch companies off guard.

The 5+1 Check in Practice

For each activity, the Delegated Acts specify what DNSH means for each of the remaining objectives. Here is what this looks like for a typical building activity:

DNSH to Climate Adaptation (Objective 2): Where the activity's criteria invoke Appendix A, conduct a Climate Risk and Vulnerability Assessment. Consider its indicative, non-exhaustive list of 28 physical hazards as a minimum, apply the projection rule for the activity's scale and expected lifespan, identify material risks, and assess adaptation solutions.

DNSH to Water (Objective 3): Install water fixtures that do not exceed specified flow rates - for example, wash hand basin taps at a maximum of 6 litres per minute, showers at 8 litres per minute.

DNSH to Circular Economy (Objective 4): Ensure at least 70% (by weight) of non-hazardous construction and demolition waste is prepared for reuse, recycling, or recovery. Design for adaptability and disassembly where feasible.

DNSH to Pollution (Objective 5): Comply with restrictions on hazardous substances. Formaldehyde emissions from wood-based products must not exceed E1 class. VOC emissions from paints, coatings, and adhesives must meet specified limits.

DNSH to Biodiversity (Objective 6): Conduct an Environmental Impact Assessment (EIA) or screening where required. Do not build on arable land, greenfield land of recognised ecological value, or forested land.

Where Companies Fail

1. Treating DNSH as a Checkbox

The most common failure mode is treating DNSH as a simple yes/no questionnaire rather than a substantive assessment. Where the climate-adaptation DNSH criteria invoke Appendix A, a statement that "the building is not in a flood zone" is not a substitute for the assessment. Appendix A's indicative, non-exhaustive list of 28 hazards spans temperature, water, wind, and solid-mass hazards and must be considered as a minimum.

2. Ignoring the Climate Adaptation DNSH

Many companies invest significant effort in proving substantial contribution to mitigation (energy performance thresholds, renewable energy installation) but underestimate the adaptation DNSH requirement. Activities 7.1, 7.2, and 7.7 must comply with Appendix A. The assessment is proportionate to scale and expected lifespan: activities expected to last under 10 years use projections at least at the smallest appropriate scale; all others use highest-available-resolution, state-of-the-art projections across an existing range of future scenarios consistent with the expected lifetime.

For some urban buildings, standard regional climate data may not capture the Urban Heat Island effect and its local temperature differences. Microclimate simulation can provide optional site-specific supporting evidence where heat risk is material and the added analysis is proportionate; the regulation does not require CFD or guarantee acceptance of a particular model.

3. Missing Water Flow Rate Thresholds

The water DNSH criteria include specific numerical thresholds for fixture flow rates. These are not guidelines - they are hard limits. Companies that install standard commercial fixtures without checking these specifications fail the DNSH test for water.

4. Incomplete Waste Documentation

The circular economy DNSH requires documented evidence that 70% of construction waste was prepared for reuse or recycling. This requires waste tracking systems to be in place during construction, not retroactive estimates.

5. Overlooking Biodiversity for Urban Sites

Companies sometimes assume that urban building sites have no biodiversity implications. But the DNSH criteria for biodiversity require an EIA screening regardless of location if the activity falls within the scope of the EIA Directive. Proximity to Natura 2000 sites, even in urban areas, triggers additional requirements.

DNSH After the 2025 Simplification

Commission Delegated Regulation (EU) 2026/73, adopted in 2025 and published in January 2026, simplified taxonomy reporting and certain pollution-related DNSH criteria.

It did not amend Appendix A's climate-risk criteria. Whether Appendix A applies still follows the technical screening criteria for the relevant activity, so companies should check the current activity-specific text rather than infer a general DNSH shortcut.

How to Structure a Robust DNSH Assessment

Step 1: Identify which objectives your activity claims substantial contribution to. The DNSH assessment covers all remaining objectives.

Step 2: For each remaining objective, read the specific DNSH criteria in the relevant Delegated Act. Do not rely on summaries - the criteria contain precise numerical thresholds and procedural requirements.

Step 3: Gather evidence. Maintain CRVA reports, water fixture specifications, waste management records, material safety data sheets, and EIA screenings so the applicable reviewer or auditor can assess the claim.

Step 4: Identify gaps early. If your CRVA reveals material climate risks, you need documented adaptation measures. If your water fixtures exceed the flow rate limits, you need to specify alternatives before construction, not after.

Step 5: Review against the Minimum Safeguards as well. DNSH is one of four alignment conditions - do not forget the social governance requirements.

The Bottom Line

DNSH is not a secondary requirement - it is half the alignment test. Companies that invest in proving substantial contribution but treat DNSH as an afterthought will fail the alignment assessment. The criteria are specific, measurable, and auditable.

Start with the climate adaptation CRVA, get the water and waste documentation right, and build the assessment into your project planning from day one.