26/08/2026
Written by Corporate Europe Observatory
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In July, the European Commission presented its proposal for the EU’s 2028-2034 budget, the next Multiannual Financial Framework (MFF). Amounting to nearly €2 trillion, it features an alarming concession to some of Europe’s most polluting and dangerous industries. Namely, a series of exceptions to the ‘Do No Significant Harm’ (DNSH) principle, which is meant to ensure that EU funding does not support activities that significantly harm environmental and climate objectives.
DNSH was incorporated into the financial rules for the EU budget in 2024, in accordance with the EU’s 2020 sustainable finance taxonomy. The EU Taxonomy requires that for economic activities to be considered sustainable, they must not significantly harm any of six environmental objectives, including climate change mitigation, pollution prevention and biodiversity protection.
The corporate lobby world, however, was never keen on not doing significant harm: big business groups pushed to simplify DNSH criteria, while oil and gas lobbies complained of “disproportionate administrative burdens”. Enter the Commission’s new deregulatory tool, the omnibus, deregulating handfuls of laws in one go, guided by industry. The very first omnibus targeted corporate sustainability rules including the EU Taxonomy, with promises to “simplify” the application of the DNSH principle it introduced.
In that context, it is perhaps not surprising that the new rules for the EU budget require that EU funded programmes and activities only follow the DNSH principle “where feasible and appropriate”. Recent draft guidelines – appearing after a public consultation earlier this year, and now the subject of a consultation of the EU’s funding programmes – set out what this could mean.
And the prognosis is not good: colossal loopholes to the DNSH principle allow EU taxpayers’ money to be used in a way that causes significant harm to the climate, water resources, biodiversity and ecosystems. They suggest that applying DNSH would not be “feasible or appropriate” in crisis situations, for defence and security, and for other reasons of “overriding public interest”. Certainly, this not the first place that military exemptions to environmental protection have been introduced (take, for example, the Climate Law). And CEO has documented the expanding application of so-called ‘public interest’ to more and more problematic and polluting industries, at the request of those very same industries. Even Politico has noted that the Commission’s plans to exempt projects judged to be “overriding public interest” from DNSH could open the door for data centers or critical raw materials to benefit from favorable treatment.
Music to the ears of mining lobby group Euromines – an influential player in the industry push to weaken rules protecting community rights and the environment so that it becomes much easier to get permits. Euromines describes how it actively pushed against the use of the DNSH principle “as a negative filter for accessing EU funding”, an “exclusionary tool” that could limit mining corporations’ access to EU public money.
Another happy customer will be the fossil fuel lobby – due to the many additional specific exceptions provided in the draft guidelines. ‘Carve-outs’ are provided for a list of activities that do significant harm, such as fossil fuel production, transport and burning for electricity. These exceptions, however, would allow funding of fossil fuel-enabling infrastructure via the false promise of carbon capture technology. For example, there are carve-outs for ‘low-carbon’ energy and hydrogen infrastructure, by which they mean fossil gas or fossil-based hydrogen in combination with carbon capture and storage, a risky, costly and repeatedly failed technology. This echoes demands by fossil fuel lobbyists such as Gas Distributors for Sustainability, Italgas and Snam, as well as HydrogenEurope. Likewise, “net-zero technologies” – which explicitly include hydrogen and carbon capture – for industrial processes and fossil power generation get a free pass, as do waste incinerators using carbon capture and storage.
The next EU budget is going to be a hot topic for the coming year, and these steps to remove vital safeguards against harm will need continued scrutiny.