Principle DNSH (Do Not Significant Harm)
“Do not Cause Significant Harm “
1.-What is the principle of “do not causing significant harm to the environment” DNSH ?
Regulation (EU) 2021/241 of the European Parliament and of the Council of February 12, 2021establishing the Recovery and Resilience Mechanism (hereinafter MRR) gives great importance to the pillar of ecological transition, in coherence with the European Green Deal, as a sustainable growth strategy for Europe
Regulation (EU) 2021/241 establishes the actions of the Recovery, Transformation and Resilience Plan (PRTR) that must comply with the principle of not causing significant harm or DNSH principle (“Do not significant harm principle”).
DNSH is a principle included in Regulation 2020/852 of the European Parliament regarding the establishment of a framework to facilitate sustainable investments.
The objectives on which the DSNH principle acts are six environmental objectives:
Image: 6 environmental objectives / Source: Ministry for the Ecological Transition and the Demographic Challenge
2.-What economic activities are eligible?
The MRR allows financing actions that respect the DNSH principle. This important requirement leads to classifying activities into 2 large categories:
1.-Activities that are not eligible in any case, since, due to their very nature and characteristics, they significantly affect one or more of the 6 environmental objectives. These activities must be discarded without evaluating or justifying them. As an example of activities in this group, we have the construction of crude oil refineries, coal-fired thermal power plants and projects that involve the extraction of oil or natural gas, due to harm to the objective of climate change mitigation.
2.-Justifiably eligible activities, those aligned with the 6 environmental objectives. Within these eligible activities, 2 subcategories can be differentiated:
- Activities that are not low environmental impact: which should be restricted only to exceptional and clearly justified cases, under certain requirements, those that lead to significantly better environmental performance than the alternatives available in the sector. As an example of activities in this group; replacement of older, less efficient equipment with more efficient ones.
- Activities that have no/low environmental impact, whose justification would be simpler a priori as they are subject to less conditionality derived from their lower environmental effects.
3.-Activities that cause zero or insignificant damage to some environmental objective: There are some activities that are not considered to cause significant damage to a certain environmental objective (or may even be contributing positively to that objective). This does not exempt from carrying out an evaluation of the DNSH principle for the rest of the objectives, as an example of activities in this group we have: Implementation of a program for the scrapping of old cars, manufacturing of low-carbon technologies for transportation.
3.-What are the guidelines for an effective implementation of the DNSH principle in the allocation of Next Generation funds, what specific criteria should be taken into account?
- Life cycle assessment: It is an important tool for analyzing the environmental impacts of projects throughout their entire life cycle, from raw material extraction to end-of-life or disposal. Life cycle assessment allows you to identify opportunities to reduce negative impacts and improve the sustainability of projects.
- Environmental impact assessment: All projects funded by Next Generation funds must undergo an environmental impact assessment before approval. This assessment should analyze the potential environmental and social impacts of the project in order to determine compliance with EU environmental legislation
- Monitoring/tracking: It is essential to establish a monitoring and follow-up system for projects financed by Next Generation funds. It allows you to evaluate whether the projects are complying with the established environmental and social requirements and take corrective measures if necessary.
- Training: It is crucial that people involved in the implementation of the projects have the necessary knowledge and skills to apply the DNSH principle. Includes training in environmental management, environmental impact analysis, life cycle assessment, monitoring and follow-up, participation, benefit.
4.-How is DNSH compliance evaluated?
To justify compliance and that the DNSH principle is respected, it will depend on the call for Next Generation funds in which the project is framed, different technical documents will have to be developed:
- Validation of the request, presenting a report justifying that the project complies with the DNSH principle.
- Responsible statement on compliance.
- Carrying out the self-assessment of the DNSH Principle.
- External validation carried out by an accredited entity on compliance (Control Body).
On some occasions, public administrations, as well as the organizations in charge of evaluation, may require that said self-evaluation carried out by the company include a validation report carried out by a third party, with a solid technical basis and are reasonable.
5.-DNSH opinion delivery deadlines?
Based on the information we have been able to receive from the aid programs, we found reference deadlines for the validation opinion to the convening Administration:
- Application period (open procedure, according to the convening administration).
- 10-15 business days from the provisional resolution proposal.
- 10-15 business days from the final resolution proposal.
- Up to 2 months after the communication of granting the aid (e.g. CDTI).
- 21-30 business days, validation periods by a control body.
We provide solutions
OAK , our consulting services, based on knowledge of environmental management projects, as well as the evaluation of the complete life cycle of a product or service, allow us to develop projects of compliance with the DNSH principle and compliance with the environmental objectives detailed in the Regulation 2020/852, it is necessary to carry out a detailed analysis of the actions presented in order to validate and confirm that there is no significant damage to the environment, in order to provide the best possible solution to our clients, the most viable alternative for implementation and that non-compliance could lead to some actions being declared non-financeable.
More information can be found at the following links:
Guía DNSH – Ministerio para la Transición Ecológica y el Reto Demográfico