Environmental and Sustainability Indicators 27 (2025) 100752

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Environmental and Sustainability Indicators

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Nesting the multi-level perspective and social-ecological systems

frameworks for green taxonomy implementation: A conceptual
development with a case study of Portuguese rice farmers
Márcia Figueira * , António Guerreiro de Brito , Isabel de Sousa
LEAF—Linking Landscape, Environment, Agriculture and Food Research Center, Associated Laboratory TERRA, Instituto Superior de Agronomia, Universidade de Lisboa,
Tapada da Ajuda, 1349-017, Lisboa, Portugal

A R T I C L E I N F O A B S T R A C T

Keywords: This paper introduces the Multi-Level Social-Ecological-Technical Systems (ML-SETS) framework to operation­
Social-ecological systems alize sustainability indicators from green finance tools, using the EU Environmental Taxonomy as a focal case.
Multi-level perspective of socio-technical tran­ ML-SETS integrates the Social-Ecological Systems (SES) and Multi-Level Perspective (MLP) frameworks to bridge
sitions
micro-level resource governance with macro-level institutional and technological change. A case study of 12 rice
Agriculture transitions
Green taxonomy
farmers in Portugal’s Sado Delta illustrates the application of ML-SETS by analyzing nitrogen use efficiency and
EU taxonomy surplus under Option B of the Taxonomy. Results reveal substantial intra-group variability and a critical de­
Rice pendency of indicators on yield, which can distort compliance in years of climatic stress. The framework’s
analytical core highlights the importance of evaluating indicators within feedback-rich systems and opens
pathways for alternative compliance routes, such as biodiversity-oriented options. ML-SETS provides a scalable
approach for assessing green finance tools in dynamic and situated transition contexts.

1. Introduction community-supported agriculture—that challenge dominant production

models. In this context, financial instruments like the EU Taxonomy, if
Agricultural systems are being reconfigured under the pressure of applied without regard to these systemic constraints, risk reinforcing
interrelated ecological, economic, and governance challenges. Climate specialization and input-intensive practices by privileging what is
change, biodiversity decline, evolving regulatory demands, and already measurable, scalable, and compatible with regime standards.
widening socio-economic disparities are not simply technical problems, This further underlines the need for interpretive frameworks that can
but systemic ones—requiring transitions that address both environ­ reveal and respond to the multi-level dynamics shaping agricultural
mental thresholds and institutional complexity (Costanza et al., 2011; transitions.
Gupta, 1998; Klerkx and Rose, 2020; Pielke and Linnér, 2019; Rock­ A key example is the EU Environmental Taxonomy (European
ström et al., 2009; Scharmer and Kaufer, 2013). In this context, sus­ Commission, 2020), a regulatory tool designed to classify economic
tainability governance is increasingly mediated by financial instruments activities according to their environmental performance. While not a
that aim to steer investment toward environmentally beneficial prac­ conceptual framework, the Taxonomy embeds specific sustainability
tices (Geels, 2013; Kok and Klerkx, 2023; Mazzucato, 2013). criteria that influence how environmental value is defined, measured,
Designing sustainability transitions in agriculture often faces struc­ and incentivized across sectors. In agriculture, applying these criteria
tural limitations rooted in sociotechnical lock-in. As Meynard et al. presents methodological and political challenges. If implemented
(2017) emphasize, dominant agrifood systems are stabilized by path without attention to local systems, the Taxonomy risks reinforcing
dependencies involving tightly coupled actor networks, standardization top-down compliance and narrowing the scope for context-specific
processes, and entrenched value chain infrastructures. These configu­ traditional knowledge and innovation (Mol, 1999; Pacces, 2021).
rations tend to favor incremental or synergistic innovations aligned with This paper argues that interpreting the EU Taxonomy through robust
existing regimes, while marginalizing more radical approaches—such as analytical frameworks is essential for supporting its meaningful appli­
agroecological, permaculture and syntropic systems or cation in agriculture. We ask:

* Corresponding author.
E-mail addresses: marciafigueira@[Link] (M. Figueira), agbrito@[Link] (A.G. Brito), isabelsousa@[Link] (I. Sousa).

[Link]
Received 9 January 2025; Received in revised form 6 May 2025; Accepted 11 June 2025
Available online 12 June 2025
2665-9727/© 2025 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license ([Link]
M. Figueira et al. Environmental and Sustainability Indicators 27 (2025) 100752

How can the EU Taxonomy be operationalized in ways that are Regarding the EU Environmental Taxonomy, primary sources
sensitive to the multi-level dynamics of agricultural transitions, included Regulation (EU) 2020/852, its recitals, and the TSC for agri­
including ecological feedbacks, governance structures, local organiza­ culture (European Comission, 2021; European Commission, 2020),
tions, and financial regulation? supplemented by emerging critiques from sustainability governance,
This question aligns with a growing body of work calling for more environmental economics, and transition studies.
integrative approaches to agrifood transitions. As Lamine et al. (2019) The review followed two complementary strategies: a) Conceptual
emphasize, addressing sustainability challenges in agriculture requires mapping, identifying how governance structures, ecological feedbacks,
conceptual pluralism, attention to power dynamics, and greater focus on innovation processes, and financial mechanisms are addressed across
meso-level change processes. Rather than privileging a single theory or the three frameworks. b) Ontological analysis, systematically examining
metric, advancing just transitions depends on blending new and estab­ key divergences and complementarities between SES and MLP in rela­
lished frameworks in ways that engage both systemic complexity and tion to system boundaries, agency, governance, technological change,
diverse visions of sustainability. and ecological embeddedness—drawing particularly on Ollivier et al.
This paper responds to that call by combining Social-Ecological (2018).
Systems (SES) (Ostrom, 2009; Ostrom and McGinnis, 2014) and the Although the review was primarily theory-driven, targeted searches
Multi-Level Perspective (MLP) (Geels, 2002, 2019) to analyze how in Web of Science and Scopus were conducted to ensure interdisci­
sustainability instruments like the EU Taxonomy operate within layered plinary coverage across environmental governance and transition
governance and socio-technical systems. The first emphasizes adaptive studies.
governance and ecological resilience, while the second focuses on how This integrative conceptual review guided the article’s structure
socio-technical innovations emerge, stabilize, or fail under the influence across Sections 3 through 6 and underpins the development of the Multi-
of regimes and landscape pressures. Each framework offers valuable Level Social-Ecological-Technical Systems (ML-SETS) framework in
insights—but they differ ontologically in how they treat ecology, tech­ Section 7. While the core of the article remains a theoretical synthesis,
nology, and structural change (Ollivier et al., 2018). Section 8 presents a partial operationalization through a case study of
Building on a synthesis of these frameworks, we propose the Multi- rice farming in Sado river delta region, Portugal. This case illustrates
Level Social-Ecological-Technical Systems (ML-SETS) framework. how selected TSC can be interpreted and applied using the nested logic
ML-SETS nests the institutional and ecological dynamics of SES within of SES and MLP. Fig. 1 further illustrates the structure of the article.
the transition architecture of the MLP, while also treating financial
regulation as a performative force—not just reflecting sustainability 3. The EU taxonomy in agriculture transitions: implementation,
priorities, but actively shaping them (Geddes and Schmidt, 2020; Maz­ constraints and framing needs
zucato and Penna, 2015). This integrated framework enables a situated
interpretation of the EU Taxonomy, allowing sustainability indicators to The EU Environmental Taxonomy is a regulatory classification sys­
be operationalized in ways that reflect system complexity. tem (Regulation (EU) 2020/852) established to define which economic
The article proceeds as follows: we begin by outlining the method­ activities are considered environmentally sustainable. It aims to guide
ological approach to the literature synthesis. Next, we introduce the financial flows toward activities that contribute to climate, biodiversity,
structure of the EU Environmental Taxonomy, followed by an exami­ and resource management objectives. The framework outlines technical
nation of the SES and MLP frameworks, highlighting both their com­ criteria for a substantial environmental contribution, while requiring
plementary strengths and areas of ontological mismatch, as well as how that activities do not significantly harm the remaining objectives and
financial regulation has been conceptualized within each. Building on comply with minimum social safeguards (European Commission, 2020;
this synthesis, we propose the ML-SETS framework and use it to rein­ ICMA, 2021).
terpret selected Taxonomy criteria—specifically, nitrogen-related in­ Recent literature identifies both the potential and limitations of the
dicators in agricultural crop production—as situated, system-sensitive Taxonomy. A network analysis of 41 academic publications in envi­
metrics. To demonstrate its application, we analyze a case study of rice ronmental sciences, economics, and management indicates broad sup­
farming in the Sado River Delta, Portugal, illustrating how local prac­ port for its role in standardizing sustainable finance, while also
tices, governance dynamics, and systemic constraints interact with the highlighting concerns about its applicability across diverse contexts
Taxonomy’s criteria. In conclusion, we argue that applying the Taxon­ (Tettamanzi et al., 2023).
omy through a contextualized framework like ML-SETS can support On one hand, the Taxonomy can reduce greenwashing and improve
more adaptive, inclusive, and feedback-responsive implementation alignment between institutional investor strategies and long-term
strategies. environmental goals (Alessi et al., 2021; Gibon et al., 2020; Pacces,
2021; Usmani et al., 2020). The framework relies on disclosure and
2. Methodological approach: integrative literature review technical screening criteria (TSC) that enhance transparency, supported
by tools such as life cycle assessment (LCA), greenhouse gas accounting,
This article is based on an integrative conceptual literature re­ and environmental risk-weighted assets for evaluating environmental
view (Snyder, 2019), aimed at developing a diagnostic framework that performance and investment risk (European Commission, 2020; Faccia
connects the SES and MLP theories with the operational challenges et al., 2021; Gibon et al., 2020). However, several studies caution that
posed by the EU Environmental Taxonomy in agriculture. the Taxonomy may oversimplify complex, place-based sustainability
Rather than conducting a systematic or scoping review, the approach issues and impose disproportionate compliance costs (Brabec and
selectively engaged with seminal and programmatic contributions Machac, 2021; Freiberg et al., 2020). Kooths (2023) argues that the
across three bodies of literature: SES, MLP, and critical analyses of the Taxonomy may generate inefficiencies by diverting labour toward
EU Environmental Taxonomy. The goal was not exhaustive coverage but compliance tasks, particularly in contexts with limited administrative
theoretical and operational synthesis. capacity. Others note that strict thresholds and rigid classifications may
In the SES literature, the review centered on Ostrom’s diagnostic constrain adaptive practices at the farm level. Further concerns relate to
framework and later governance-oriented extensions (Ostrom, 2009; the potential for symbolic compliance, where sustainability reporting is
Ostrom and McGinnis, 2014), with a focus on how financial mechanisms influenced by lobbying or corporate strategies, which may obscure
and adaptive institutions are conceptualized. For the MLP, attention was actual environmental outcomes (Liesen et al., 2015; Michelon et al.,
given to the foundational accounts of transition pathways (Geels, 2002, 2020).
2019) and efforts to integrate the role of financial regimes into These issues are particularly relevant in agriculture, where produc­
socio-technical change (Geddes and Schmidt, 2020). tion systems vary across ecological, institutional, and socio-economic

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Fig. 1. Concept map of the article’s conceptual structure and literature review strategy. The figure illustrates the two main phases guiding the article: (1)
diagnosing the need for integrated analytical frameworks to support sustainability transitions in agriculture, through an integrative conceptual literature review
structured by conceptual mapping and ontological analysis; (2) selectively combining the SES and MLP frameworks to develop a situated interpretation of the EU
Environmental Taxonomy’s regulatory instruments in agricultural transitions; and (3) the introduction and application of the ML-SETS.

conditions. In this context, alignment with the Taxonomy often depends unintended consequences of externally imposed sustainability frame­
on access to enabling mechanisms such as public funding, advisory works on community-based resource governance.
services, or digital infrastructure, which are not uniformly distributed. Therefore, the EU Environmental Taxonomy introduces a structured
Coordination between the EU Taxonomy and existing policy instru­ regulatory basis for defining sustainable practices, but its application in
ments—especially the Common Agricultural Policy (CAP) in the Euro­ agriculture requires further analytical support. Its effectiveness should
pean context —is necessary to support consistent implementation. The be pondered depending on how it is implemented across contexts. We
coexistence of these regimes without structured coordination can create aim to support this by using the MLP and the SES frameworks as
overlapping or contradictory requirements (Cuadros-Casanova et al., analytical tools for a more context-sensitive interpretation of the EU
2023). Environmental Taxonomy. These frameworks may help illuminate
Beyond the EU, the Environmental Taxonomy influences interna­ feedback mechanisms, governance configurations, and historical lock-
tional value chains through indirect mechanisms that establish sus­ ins that shape sustainability outcomes, thereby enhancing the Taxon­
tainability benchmarks. Although the Taxonomy does not directly omy’s applicability in guiding agricultural transitions.
regulate imports, its influence extends through related instruments such
as the Corporate Sustainability Reporting Directive (CSRD) (European
Commission, 2022b) and the Regulation on deforestation-free products 3.1. How the EU Environmental Taxonomy is structured
(European Commision, 2023). These require companies to assess and
disclose the sustainability of their upstream value chains, thereby This section outlines the regulatory architecture of the EU Environ­
creating indirect compliance pressures on non-EU producers and sup­ mental Taxonomy (Regulation (EU) 2020/852), with a focus on its
pliers. These mechanisms contribute to the establishment of global operational logic and application in the agricultural sector. For an ac­
standards for what constitutes “sustainable” activity, creating compli­ tivity to qualify as taxonomy-aligned, it must: (i) make a substantial
ance pressures for producers outside the EU. In the agri-food sector, contribution to at least one of six environmental objectives; (ii) do no
where imports have historically externalized environmental and social significant harm (DNSH) to any of the remaining objectives; and (iii)
costs—including deforestation, biodiversity loss, and human rights vi­ comply with minimum social and governance safeguards.
olations (Mirazo, 2022; Renner et al., 2020) —these regulatory exten­ The concept of substantial contribution requires that an activity
sions may incentivize improved practices. However, they also risk delivers measurable environmental improvements—either directly or by
reinforcing global power asymmetries (Otto, 2025). Small-scale pro­ enabling others to do so. The DNSH principle ensures that benefits to
ducers in the Global South, particularly those lacking access to technical one objective do not come at the expense of others, promoting systemic
assistance, financial capital, or institutional infrastructure, may be un­ coherence. Minimum safeguards link the Taxonomy to international
able to meet the required standards. This reflects a broader temporal standards for human rights and corporate accountability. Table 1 sum­
tension in sustainability transitions: while the Taxonomy promotes marizes the core structural components of the Environmental Taxon­
long-term transformation, short-term constraints may limit adaptive omy, including how they operationalize sustainability claims across
capacity. Without transitional support, this could lead to exclusion from sectors.
EU markets and further marginalize already vulnerable actors. Such The core operational mechanism of the Taxonomy is the TSC, which
dynamics may also crowd out local governance structures and adaptive propose science-based, sector-specific thresholds intended to guide both
practices, echoing concerns raised by Ostrom (2000) about the substantial contribution and DNSH compliance. In the agricultural sec­
tor—and specifically for crop production (European Comission, 2021,

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Table 1 to fertilizer use (pollution prevention), and maintaining riparian vege­

Comparison of objectives and key conditions between the environmental and tation or habitat features (ecosystem protection). Many of these criteria
social taxonomies. Adapted from European Comission (2021, 2022). mirror existing EU directives, such as the Nitrates Directive or the Water
Component Description Framework Directive, but the Taxonomy seeks to extend their applica­
Environmental Activities must contribute to at least one of six
bility and establish broader performance thresholds.
Objectives environmental goals: (1) climate change mitigation; Taken together, the TSC for agriculture provide an ambitious tem­
(2) climate change adaptation; (3) sustainable use and plate for advancing sustainability—combining ecological objectives,
protection of water and marine resources; (4) farm-level management plans, and third-party verification. However,
transition to a circular economy; (5) pollution
there is limited empirical evidence on how effectively these criteria are
prevention and control; and (6) protection and
restoration of biodiversity and ecosystems. These and can be implemented, particularly in farming systems characterized
objectives guide the structuring of sustainability by heterogeneity in scale, capacity, and land-use histories.
claims across sectors, including agriculture. As implementation unfolds, it becomes critical to understand not
Substantial Contribution An activity must generate measurable environmental only where the Taxonomy succeeds, but also where it may fall short in
benefits aligned with at least one environmental
objective. Contributions can be direct (e.g., reducing
addressing structural challenges, local constraints, or ecological
emissions) or enabling (e.g., providing sustainable complexity. In this regard, integrative analytical frameworks such as
technologies), with thresholds defined by the the SES and MLP offer diagnostic value: they help identify feedback
Technical Screening Criteria (TSC). mechanisms, institutional lock-ins, and governance mismatches that
Do No Significant Harm To qualify as sustainable, an activity must not
influence whether and how the TSC support meaningful sustainability
(DNSH) undermine any of the other five objectives. DNSH
compliance is assessed through risk screening and transitions in agriculture.
mitigation strategies, ensuring that benefits in one
domain do not result in trade-offs elsewhere. 4. Ontological divergence and complementarity of transition
Minimum Safeguards All aligned activities must adhere to international
human rights and labor standards, including the OECD
frameworks
Guidelines for Multinational Enterprises, UN Guiding
Principles on Business and Human Rights, ILO Core In order to integrate the lenses of the MLP and SES frameworks and
Labour Conventions, and the International Bill of develop an analytical structure for assessing the context-specific
Human Rights.
adaptability of the EU Taxonomy in agriculture, it is first necessary to
Technical Screening TSC provide science-based thresholds for each
Criteria (TSC) activity, covering both substantial contribution and examine how these frameworks are conceptually aligned and where key
DNSH. These criteria are sector-specific and include mismatches exist. Building on prior comparative analyses—particularly
quantitative indicators such as emission levels, the ontological reflection of Ollivier et al. (2018), we clarify the foun­
nutrient balances, and biodiversity protection. In dational assumptions embedded in each framework, including how they
agriculture, TSC operationalize sustainability through
measurable practices and outcomes.
define agency, system boundaries, governance, and ecological dy­
namics. This effort goes beyond analytical coherence: it also requires
attention to the ontological politics of it (Mol, 1999)—the idea that
pp. 61–111) —the TSC outline three distinct pathways through which frameworks do not merely describe reality, but help enact particular
activities may potentially be recognized as contributing to the protec­ versions of it.
tion and restoration of biodiversity and ecosystems (Fig. 2). When the EU Taxonomy defines “sustainable agriculture” through
These pathways include: a) the integration of large biodiversity-rich nitrogen thresholds, biodiversity metrics, and Farm Sustainability
areas or high-diversity landscape features within the farm; b) the Management Plans (FSMPs), it is not only measuring sustainability—it
maintenance of a sustainable nitrogen balance at the farm gate; and c) is performing a specific vision of what agriculture is and what it ought to
the abstention from the use of synthetic plant protection products and become. That vision is not neutral. Competing approaches such as ag­
copper compounds known to harm biodiversity. roecology, regenerative farming, or indigenous land care systems may
To align with any of these pathways, agricultural activities are ex­ define sustainability through different ontological commitments
pected to meet a common set of performance and management criteria, (Angeon et al., 2024; Flemmer et al., 2024; Ollivier et al., 2018). The
which aim to promote environmentally beneficial practices across land, choice of which frameworks and indicators are institutionalized is,
soil, and water use. These common criteria are designed to harmonize therefore, inherently political.
sustainability performance across diverse farming systems and biogeo­ Both the SES and MLP frameworks offer distinct ontological com­
graphical contexts, albeit with the understanding that local imple­ mitments that can shed light on different dimensions of this process. SES
mentation may vary. foregrounds ecological feedbacks, institutional diversity, and adaptive
Compliance is formalized through a Farm Sustainability Manage­ governance—elements critical for understanding how sustainability
ment Plan (FSMP), which must describe the farm’s ecological context, unfolds across place-based and biophysical constraints (Ostrom, 2009).
outline intended practices, and include a Biodiversity and Ecosystem MLP, on the other hand, emphasizes the co-evolution of technologies,
Impact Assessment. The plan is subject to third-party verification prior user practices, and institutional structures over time, helping to trace
to investment and must be updated at regular intervals, typically every how dominant systems stabilize and how alternatives emerge (Geels,
three years. In this way, the FSMP functions as both a monitoring tool 2014). Mapping ontological differences and points of complementarity
and a mechanism for transparency and accountability. opens a venue to establish a more rigorous and reflexive basis for
Beyond the primary biodiversity contribution, agricultural activities selectively integration. This supports a more context-sensitive and
must also meet DNSH criteria across the other five objectives. These politically aware interpretation of sustainability standards such as the
include indicative requirements such as preserving permanent grass­ EU Environmental Taxonomy, allowing us to evaluate not only their
lands (climate mitigation), using reclaimed water (water efficiency), technical design but also the socio-ecological realities they help
ensuring proper waste management (circular economy), applying limits produce.

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Fig. 2. Structure of the EU Taxonomy Technical Screening Criteria (TSC) for crop production under the environmental objective of biodiversity and ecosystem protection. It
outlines the three main contribution pathways, along with associated sub-options, overall criteria, and Do No Significant Harm (DNSH) conditions. These inter­
dependent criteria illustrate how the Taxonomy operationalizes sustainability performance in agriculture, linking biodiversity goals with broader environmental
objectives and management requirements.

4.1. Diverging foundations: local systems vs. structural transformations governance conditions. In this way, it aligns closely with the need to
interpret how the EU Taxonomy’s TSC are applied in real-world farming
The SES framework centers on the interplay between ecological systems.
systems, governance arrangements, and resource users within a defined The MLP, by contrast, models transitions as multi-scalar processes. It
context (Ostrom, 2009). It is inherently spatialized and attentive to distinguishes between niches (spaces of experimentation), regimes
institutional diversity, making it well-suited to assess how sustainability (dominant socio-technical configurations), and landscape pressures
interventions unfold under varying biophysical, cultural, and (slow-moving societal forces) (Geels, 2002, 2019). Its strength lies in

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tracing how societal shifts—technological, cultural, regulatory—create financial instruments, such as Payments for Ecosystem Services (PES),
space for or suppress transformative change. While less anchored in subsidies, and mission-oriented investments, have been interpreted
specific territories, MLP reveals how historical lock-ins, incumbent within the SES and MLP frameworks. This review helps clarify what
power, and discursive alignments shape whether sustainability pol­ kinds of system assumptions and transition dynamics each framework
icies are resisted, reframed, or redirected. brings to bear on financial governance—and in turn, how these as­
These divergent emphases—local variability versus structural sumptions shape the meaning and impact of sustainability indicators as
transformation—form the basis for their integration. SES helps inter­ the EU Taxonomy in practice.
pret whether criteria such as nitrogen thresholds or biodiversity metrics
are contextually appropriate and implementable. MLP helps situate 5.1. Embedding financial instruments in SES governance: implications for
these same criteria within broader narratives of technological innova­ the EU taxonomy
tion, regulatory legitimation, and financial governance.
The SES framework provides a structured, multi-tiered diagnostic
4.2. Toward a situated and reflexive integration tool for analyzing complex sustainability challenges. It conceptualizes
these challenges as arising from the dynamic interactions between
The selective integration of SES and MLP allows us to read the EU resource systems (RS), resource units (RU), actors (A), governance sys­
Taxonomy both from the ground up and from the top down. On one tem (GS), and their broader biophysical and institutional contexts
hand, SES draws attention to the enabling conditions that shape how (Ostrom and McGinnis, 2014). This approach has been widely applied in
individual farmers, cooperatives, or regional governance bodies engage diverse fields including collective water management (Cox, 2014; Par­
with policy demands. On the other, MLP helps diagnose the structural telow, 2016), land use governance (Houballah et al., 2020; Schmit­
pressures and discursive framings that influence how such policies are t-Harsh and Mincey, 2020), and agri-food systems (Kopainsky et al.,
designed, legitimized, and interpreted. 2015; Marshall, 2015) - enabling researchers to trace feedback loops,
This dual reading is essential because the Taxonomy operates at identify governance bottlenecks, and assess institutional robustness
multiple levels. Its technical criteria are applied at the farm level, but across scales (Arnaiz-Schmitz et al., 2018; Suggett et al., 2023).
shaped by EU-wide regulatory processes, financial sector expectations, Yet, despite its institutional depth, finance has often been treated as a
and evolving sustainability narratives. Integrating MLP and SES enables peripheral factor in SES-based research—appearing as an enabling
us to examine how these layers interact—not as a closed system, but as a condition, incentive, or input, rather than as a constitutive force within
multi-scalar and evolving configuration of pressures, meanings, governance dynamics (Bennett and Gosnell, 2015; Werdiningtyas et al.,
and practices. 2020). This is particularly evident in the literature on PES, where
Rather than viewing the frameworks’ ontological differences as a broader economic structures—such as investment flows, credit access,
barrier, we treat them as an asset. Their partial compatibility reflects the and market integration—are frequently sidelined despite their role in
layered nature of sustainability governance: simultaneously local and shaping outcomes.
systemic, situated and structural. It is this logic that underpins the Bennett and Gosnell (2015) challenge this narrow view. They argue
development of the ML-SETS framework presented in Section 7. for a shift that treats finance as endogenous to the SES—entangled with
actor strategies, institutional arrangements, and ecological feedbacks.
5. Threads of connection: SES, MLP, and the EU taxonomy PES schemes, for instance, are not merely about pricing ecosystem ser­
vices. They involve negotiated agreements, monitoring protocols, trust
Building on the ontological and governance analyses of SES and MLP, dynamics, and accountability mechanisms that reflect the polycentric
the next step operationalize how sustainability is assessed through these and adaptive character of SES governance. Finance here becomes a
frameworks. Central to this task is the role of indicators—not only as governance mechanism in itself with the potential to reinforce—or
measurement tools, but as boundary objects that mediate between undermine—system resilience, equity, and legitimacy.
different epistemic and institutional domains, translating complex sys­ This reconceptualization has broader implications. Dynamic SES
tem dynamics into actionable standards. As boundary objects, indicators models increasingly recognize financial tools—such as user charges,
rarely function as neutral inputs to decision-making; rather, they oper­ subsidies, and incentive structures—as governance instruments that
ate through indirect and systemic effects, shaping worldviews, rein­ structure trade-offs between ecological integrity and social demands
forcing governance paradigms, and structuring which sustainability (Werdiningtyas et al., 2020). These instruments operate not in isolation
visions become institutionally embedded. Their influence often escapes but within complex systems of rules, norms, and property rights that
the control of producers and users alike, reflecting the ambiguity of mediate actor behavior and institutional adaptation.
informational governance, where indicators can enable reflexivity and Interpreting the EU Environmental Taxonomy through this lens re­
coordination, but also reinforce dominant framings, marginalize alter­ quires us to treat its financial classifications—such as thresholds for
native knowledges, or impose top-down logics ill-suited to local realities nitrogen balance or biodiversity protection—not simply as compliance
(Lehtonen et al., 2016; Mol, 1999). This duality—between their targets, but as embedded rule-making devices. The Taxonomy’s in­
enabling and constraining roles—highlights why indicators must be dicators operate within, and act upon, evolving governance landscapes.
assessed not only for their technical validity, but for their political Its criteria will likely be most effective where they align with existing
performativity, institutional legitimacy, and contextual fit within sus­ institutional arrangements, reflect ecological realities, and can adapt
tainability transitions. through feedback and learning processes.
In the context of the EU Environmental Taxonomy, indicators This perspective broadens the analytical reach of the SES framework,
embedded in the TSC serve not only as tools for measurement and prompting us to ask not only whether activities meet sustainability
compliance, but as institutionalisoilzed boundary objects that give form thresholds in principle, but whether the Taxonomy can be locally
to specific interpretations of sustainability. To situate the EU Taxonomy implemented, equitably governed, and institutionally supported in
within this broader landscape, the next two sections examine how practice. However, this interpretation must be approached with caution,

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as there is still limited empirical literature explicitly linking the SES other regimes, the financial regime exhibits resistance to trans­
framework to financial classification systems such as the EU Taxonomy. formation, owing to entrenched routines and an aversion to
risk—particularly with respect to novel technologies that challenge
incumbent profitability or lack mature markets (Mazzucato and Semi­
5.2. Reconfiguring financial regimes through the MLP: strategic insights eniuk, 2018). This resistance contributes to the “valleys of death” that
for the EU taxonomy often hinder transitions during the commercialization and scaling pha­
ses (Karltorp, 2016).
As with technological or institutional regimes, financial regimes The interaction between financial regimes and technological niches
carry historical path dependencies and power asymmetries that must be can be further analyzed through Smith and Raven (2012) distinction
actively contested if transitions are to be genuinely transformative. In between ‘fit and conform’ (F&C) and ‘stretch and transform’ (S&T)
this sense, the MLP framework conceptualizes socio-technical transi­ processes. In F&C dynamics, niches adapt to existing financial
tions as processes of co-evolution across three analytical levels: niches, norms—such as conventional risk-return logics. In contrast, S&T pro­
regimes, and landscapes. These levels differ in terms of temporal dy­ cesses involve the reconfiguration of financial norms and rules, often
namics and stability: landscapes comprise slow-changing exogenous facilitated by public intervention or mission-oriented finance, to support
trends; regimes represent relatively stable configurations of rules, new innovation trajectories (Lauber and Jacobsson, 2016; Mazzucato
practices, and institutions; and niches are protected spaces where radical and Penna, 2015). This conceptual extension enriches the MLP by
innovations can emerge (Geels, 2002, 2012). framing finance not only as a background condition that enables or
Despite the framework’s comprehensiveness, the role of finance re­ constrains innovation but also as a co-evolving regime that can itself be
mains underrepresented in MLP literature (Geddes and Schmidt, 2020; reshaped alongside technological change.
Steffen and Schmidt, 2021). Finance is often treated implicitly or Furthermore, evolutionary perspectives highlight that financial re­
marginally, even though it plays a pivotal role in shaping innovation gimes are themselves subject to landscape-level pressures. These include
pathways and influencing the stability of socio-technical systems. This trends such as financialization (Lazonick, 2013) macroeconomic crises
analytical gap is addressed by Geddes and Schmidt (2020), who draw on (Geels, 2013), and institutional differences across varieties of capitalism
the ontological origin of the MLP on evolutionary economics. From an (Hall, 2001). Such developments influence how finance interacts with
evolutionary standpoint, finance is not a neutral input but rather a se­ both regimes and niches, underscoring its evolving and
lective mechanism. It acts as the “selection function” of capital markets context-dependent role within transition dynamics.
(Dosi, 1990), determining which technologies and designs enter, persist In this expanded view, the financial regime can be understood as a
in, or exit the innovation ecosystem. Financial actors—such as banks, meta-regime that mediates both material (e.g., money) and symbolic
venture capitalists, and institutional investors—engage in this selection flows (e.g., ideas about value and risk) across sectoral boundaries.
under conditions of uncertainty and bounded rationality. This process Recognizing finance as a dynamic and differentiated structure — rather
results in techno-economic trajectories that are historically contingent than a fixed, monolithic entity, as Geels (2014) cautions against when
and potentially suboptimal (Arthur, 1989; Mazzucato, 2013). In this describing regimes — adds explanatory depth to the MLP framework.
light, finance can be understood as a regime in itself, characterized by This perspective highlights how finance not only shapes transitions
cognitive routines, investment heuristics, and institutional constraints. across sectors but is also reshaped by broader system dynamics. It also
Extending the concept of regimes to encompass finance enables the provides a basis for policy interventions aimed at aligning financial
MLP to account for how financial institutions shape the evolution of mechanisms with sustainability transitions (Mazzucato and Penna,
socio-technical systems (Geddes and Schmidt, 2020; Geels, 2013). Like

Table 2
Translating the EU Environmental Taxonomy through SES and MLP: A Framework-Sensitive Interpretation of Ontological Mismatches. The table contrasts core di­
mensions of the SES and MLP frameworks, identifies their requirements for the taxonomy to function effectively, and concludes each row with a guiding question to
support context-sensitive interpretation.
Dimension MLP View SES View Framework SES Requirements for MLP Requirements EU Taxonomy as a Bridging Tool
Complementarity the Taxonomy for the Taxonomy

Ontological Innovation via co- Ecological- Dual ontologies expand Embed finance in Act as selector for Does it balance system classification
Foundation evolution institutional analytical range ecological- legit innovations with situated relevance?
feedbacks governance context
System Multi-level, Ecological, SES adds place; MLP Support polycentric, Coordinate across Doest it operate effectively across
Boundaries abstract context-specific adds structure local governance transition levels institutional levels and territorial
differences without undermining
local autonomy?
Agency Strategic actors Actors embedded Combines reflexivity Legitimacy via Shape perceptions Is it adaptive enough to reflect the
within structures in feedback and rule-bounded institutional fit and routines values, constraints, and governance
systems agency realities of diverse actors on the
ground?
Governance Strategic Polycentric, Blends hierarchy with Reinforce existing Support stretch- Does it enable coordination across
coordination of adaptive networked governance adaptive structures and-transform governance levels while supporting
regimes governance polycentric, locally adapted
approaches?
Temporal Long-term Short-term, Links resilience and Allow for feedback- Embed future- Does it balance short-term needs with
Focus transition paths feedback-oriented long-term vision based learning oriented criteria long-term aims?
Spatial Sectoral; low Territorial and Merges generality with Reflect local Translate sectoral Is it locally interpreted or top-down
Anchoring spatial focus biophysical scales local specificity capacities and logic territorially only?
ecologies
Role of Key driver of Under-theorized; MLP models innovation; Avoid tech lock-in Guide innovation Are promoted technologies also
Technology regime shifts embedded SES adds context without context fit pathways context-fit?
Role of Landscape-level Core system MLP needs grounding; Integrate ecological Use ecology to Are ecological limits enforced, not
Ecology externality component SES offers it thresholds guide legitimation just named?
Model of Path-dependent, Feedback-driven Bridges inertia and Adapt with system Shape trajectories Can it learn and adjust as systems
Change multi-level adaptation adaptability feedbacks via expectations evolve?

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M. Figueira et al. Environmental and Sustainability Indicators 27 (2025) 100752

2015; Schmidt, 2014). work: shaping meanings of sustainability, mediating power across
Geddes and Schmidt (2020), empirically established the financial governance levels, and reconfiguring eligibility for financial flows. By
regime as a distinct and interactive component within the MLP frame­ surfacing potential tensions and complementarities, it enables a more
work. By distinguishing between interventions that merely ‘fit and reflexive interpretation of how indicators travel across systems—and
conform’ to existing financial logics and those that ‘stretch and trans­ sets the foundation for the next sections, where we apply these insights
form’ the financial regime itself, Geddes and Schmidt position finance as to the agricultural sector by analyzing how the Taxonomy’s Technical
both a gatekeeper and an active participant in sustainability transitions. Screening Criteria can be situated within the SES and MLP frameworks.
Crucially, their identification of secondary and tertiary effects—such as
track-record building and trust signaling—highlights the cumulative 6. Situated interpretation of the EU taxonomy through SES and
and evolutionary character of niche-regime interactions. These findings MLP perspectives
reinforce the argument that finance should not be treated as a mere
backdrop to transition processes, but rather as a regime with its own The following subsections elaborate on the thematic dimensions
transformative potential—unlocked through learning, coordination, and introduced in Table 2, illustrating how SES and MLP logics reveal both
institutional innovation. Consequently, the promise of green finance structural strengths and contextual blind spots in the Taxonomy’s design
within the MLP extends beyond aligning capital flows with sustain­ and implementation.
ability objectives. It requires an intentional reshaping of the financial The appraisal was conducted through a two-stage process (Fig. 3).
regime’s selection criteria, temporal horizons, and risk perceptions to First, the 60 recitals of Regulation (EU) 2020/852 were systematically
better support transformative innovation pathways. mapped against the analytical dimensions of Table 2 (following Ollivier
Reading the EU Taxonomy through the lens of the MLP sharpens its et al. (2018)). This provided a general system-level appraisal of the
strategic relevance by foregrounding how financial environments Taxonomy’s governance architecture, ontological assumptions, and
interact with regime resistance and niche development. Rather than transition logic (SM1). Second, the appraisal was refined through a
treating it as a static compliance tool, the MLP recasts the Taxonomy as a sectoral analysis of the TSC for agriculture, allowing for a situated
performative instrument—reshaping investment heuristics, institutional evaluation of how the Taxonomy performs when applied to a context
expectations, and innovation trajectories. This view highlights not just characterized by territorial, ecological, and governance diversity. This
the importance of directing capital, but of reconfiguring the selection structured analysis informed both the thematic discussions presented
environments through which transformative change is financed and next and the final qualitative appraisal Table 3, laying the groundwork
legitimated. for the integrative strategy proposed for aligning SES and MLP principles
Table 2 serves as an integration matrix that operationalizes our in agricultural transitions through the EU Taxonomy.
framework-sensitive interpretation of the EU Environmental Taxonomy.
It maps how each framework—SES and MLP—conceptualizes key 6.1. Governance architecture and dynamic interpretation
analytical dimensions such as system boundaries, agency, governance,
and the role of ecology and technology (Ollivier et al., 2018), and The EU Taxonomy establishes a common classification system for
specifies what each framework implicitly demands for the Taxonomy to environmentally sustainable activities, providing legal certainty,
function meaningfully and effectively. Rather than presenting a neutral comparability, and coherence across the internal market (Recitals 6, 12,
comparison, it foregrounds how the Taxonomy performs institutional 17). Anchored in fixed TSC, delegated acts, and disclosure obligations, it

Fig. 3. Two-stage appraisal process of the EU Environmental Taxonomy through SES and MLP frameworks. This diagram illustrates the methodological workflow for
interpreting Regulation (EU) 2020/852 through the SES and MLP frameworks.

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M. Figueira et al. Environmental and Sustainability Indicators 27 (2025) 100752

Table 3
Qualitative appraisal of the EU Taxonomy’s alignment with SES and MLP principles, based on recital analysis and refinement through the Technical
Screening Criteria (TSC) for agriculture. The appraisal assesses the degree of alignment across key analytical dimensions. Symbols reflect the strength of alignment:
+ = partial or weak; ++ = moderate; +++ = strong; ++++ = very strong. Final synthesis integrates insights from both the Regulation’s governance and ontological
framing (recitals) and sector-specific operationalization in agriculture (TSC).
Dimension Appraisal based on Recitals Appraisal refined based on TSC for Final Synthesis
(Regulation) Agriculture

Ontological ++++ +++ Strong systemic and ecological anchoring; limited structural support for socio-
Foundation ecological diversity.
System Boundaries ++ + Good EU/national harmonization; persistent weak capacity for regional or
biophysical contextualization.
Agency ++ + Centralized procedural participation; limited distributed agency, especially for
smallholders and agroecological actors.
Governance ++ ++ Strong vertical coordination; limited support for territorial, adaptive, and
polycentric governance.
Temporal Focus ++++ +++ Clear long-term orientation; moderate mechanisms for short-term local
adaptiveness.
Spatial Anchoring + + Sectoral anchoring present; absence of structured regional adaptation mechanisms.
Role of Technology +++ ++ Strong systemic orientation; limited local tailoring for diverse farming systems.
Role of Ecology +++ ++ Ecological thresholds embedded formally; territorial ecological sensitivity remains
underdeveloped.
Model of Change +++ ++ Clear directionality toward transition; decentralized learning and adaptive feedback
remain weak.

stabilizes regime-level alignment, particularly within financial systems. 6.3. Stakeholder participation and agency
However, this fixed architecture limits adaptability to diverse
ecological realities and local governance traditions. While the Regula­ The Regulation incorporates formal structures for stakeholder par­
tion enables periodic TSC updates through expert platforms (Recitals ticipation—through the Platform on Sustainable Finance and the
50–54), these mechanisms remain centrally controlled and procedural. Member State Expert Group (Recitals 50–53). While these bodies advise
Opportunities for territorially embedded, adaptive interpretation are on TSC development and revision, actual co-creation remains limited.
absent. Strategic agency is predominantly concentrated among large financial
In agriculture, multiple compliance pathways exist, but they operate and corporate actors capable of navigating complex regulatory
within uniform standards that are not structurally adapted to biophys­ frameworks.
ical or institutional diversity. Thus, the Taxonomy primarily functions as For smaller actors, niche innovators, or local communities, oppor­
a regime-level selector rather than a dynamic, polycentric governance tunities to shape or reinterpret sustainability definitions are marginal.
tool capable of supporting differentiated sustainability transitions. The Taxonomy’s governance model, therefore, leans toward centralized
procedural inclusivity rather than distributed agency and bottom-up
6.2. Multi-level governance and territorial reach experimentation envisioned in SES and MLP frameworks.
Agriculture transitions where practices are rooted in local social and
The Taxonomy successfully aligns EU-wide and national governance ecological systems, this bias is particularly limiting. Farmers and co­
through harmonized classification and disclosure standards (Recitals operatives may be colsulted, but lacking formal roles in adapting sus­
11–14, 19–20, 54). It supports regime reorientation by involving expert tainability tresholds to context. The TSC risks reinforcing incumbent
groups and facilitating institutional feedback loops between EU bodies models and financial logics, rather than supporting and validating the
and Member States. role of diverse, locally-grounded innovations critical to regenerative and
Yet, its territorial sensitivity is limited. While it references national resilient farming futures.
implementation and sectoral regulation (Recitals 26–30, 55), it lacks
formal mechanisms for adapting sustainability criteria to local or 6.4. Flexibility and adaptiveness across scales
regional contexts. From a SES and MLP perspective, this reflects a
governance gap where vertical coherence is achieved, but territorial The Taxonomy anchors sustainability transitions within a long-term
diversity and ecological specificity are underrepresented. systemic vision aligned with the Paris Agreement and the European
In agriculture, the TSC references key environmental concerns such Green Deal (Recitals 3, 7, 24). It integrates life-cycle thinking, ecological
as soil health, nutrient runoff, and biodiversity protection but oper­ thresholds, and precautionary principles into its design (Recitals 40–42).
ationalizes them through generalized technical standards. There is no Short-term adaptability is addressed procedurally through expert
requirement for Member States or local authorities to adapt these advisory structures, periodic TSC updates, and voluntary reporting in­
criteria to territorial agro-ecological conditions, such as Mediterranean centives. However, it remains unclear whether these mechanisms can
drylands or salinic river deltas. Consequently, while agricultural activ­ foster substantive territorial adaptation or dynamic learning across
ities are classified consistently across borders, the Taxonomy’s appli­ diverse socio-ecological contexts. Iterative governance is currently
cation risks ecological misfit and reduced effectiveness at the regional centralized, and there are limited formal structures to enable localized
scale. experimentation or feedback-driven revision, as emphasized in SES and
MLP approaches.
The agriculture TSC illustrate this uncertainty: regular updates are
intended to reflect evolving scientific knowledge—such as improved

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indicators for soil health, nutrient management, or agro-biodiversity— compliance rather than embedding them as dynamic, context-sensitive
but these revisions are orchestrated centrally through the Platform on limits. As a result, the Taxonomy may promote activities that are
Sustainable Finance and expert consultations. Local or sector-specific nominally aligned with environmental goals but fail to sustain ecolog­
governance bodies, such as water management bodies, farmer co­ ical integrity at bioregional scales. Strengthening the operational link
operatives, or territorial land-use agencies, are not structurally between ecological thresholds and territorial specificity remains a
embedded in feedback loops. This raises questions about the Taxon­ crucial unmet need for realizing genuinely resilient and adaptive sus­
omy’s capacity to support differentiated adaptation to shifting ecolog­ tainability transitions.
ical realities across farms as systems and landscapes.
6.8. Guiding innovation and learning over time
6.5. Regional adaptation and intermediaries
The EU Taxonomy combines a strong long-term orientation with
While the Taxonomy shows sectoral and spatial awareness—partic­ procedural mechanisms for iterative updates. It aligns with strategic
ularly in sectors like forestry (Recital 32) and transport (Recital 49)—it frameworks such as the Paris Agreement and the European Green Deal
lacks explicit mechanisms to translate standards into locally actionable (Recitals 2, 4), aiming to reorient capital flows toward climate
frameworks. Investment platforms such as the European Fund for Stra­ neutrality, resource circularity, and systemic resilience. By embedding
tegic Investment (Recital 17) align capital flows territorially but do not life-cycle thinking, risk avoidance, and precautionary principles (Re­
systematically create intermediaries for regional adaptation. citals 40–42), the Taxonomy establishes clear institutional scaffolding to
This lack of of formal regional adaptation pathways limits the guide sustainability transitions over decades.
Taxonomy’s to foster place-based sustainability transitions. For Nonethelss, the flexibility to accommodate learning and innovation
example, agriculutra ministries, regional advisory services, or local land across diverse socio-ecological contexts remains limited. While expert
management bodies are not mandated to contextualize TSC imple­ platforms and delegated acts provide pathways for updating TSC (Re­
mentation according to local agro-ecological zoning, increasing the risk citals 50–54), these processes are centrally orchestrated, with minimal
of applying uniform criteria to highly diverse farming systems across the integration of localized governance structures or real-time feedback
EU. mechanisms. In the agriculture sector, although TSC revisions are ex­
pected to incorporate scientific advancements the governance of these
6.6. Technological fit and systemic change revisions remains predominantly top-down.
This architecture risks prioritizing regulatory coherence over the
The Taxonomy moves beyond surface-level “green” labels by pro­ adaptive governance capacities needed for transformative, context-
moting technologies embedded within ecological limits, sectoral di­ sensitive innovation. Opportunities for territorial learning, decentral­
versity, and system-wide life-cycle frameworks (Recitals 4, 28, 39, 41, ized experimentation, and bottom-up innovation—essential elements
45). It encourages technological pathways that avoid carbon-intensive for resilient transition pathways as emphasized by SES and MLP
lock-ins and supports equity across innovation routes. frameworks—are not structurally embedded. While the Taxonomy
While ecological and institutional coherence is emphasized at sec­ provides long-term directionality, its responsiveness to emerging
toral levels, the regional tailoring of technological standards to diverse knowledge and local system dynamics may remain procedural rather
socio-ecological contexts remains underdeveloped. than transformative.
This limitation is evident in the agriculture. The TSC promotes sus­
tainable technologies and practices based on sectoral criteria without 7. Integrating the EU taxonomy with SES and MLP frameworks
systematically embedding them within territorial ecological contexts. for agricultural transitions
The absence of regional differentiation in defining technological eligi­
bility risks imposing generic “best practices” that may not align with 7.1. Introducing the ML-SETS framework
local biophysical conditions or overlooking niche approaches.
The preceding analysis highlighted how the EU Environmental
6.7. Ecological thresholds as formal criteria Taxonomy, while ambitious in scope, often struggles to accommodate
the governance complexity, territorial diversity, and adaptive needs of
The EU Taxonomy embeds ecological thresholds formally into its agricultural systems. These tensions—revealed through SES and MLP
regulatory architecture, aligning environmental objectives with inter­ perspectives—underscore the need for a framework that can navigate
national agreements such as the Paris Agreement and the Sendai both internal system dynamics and external structural constraints. To
Framework (Recitals 3, 25). TSC are intended to ensure that sustainable meet this challenge, the ML-SETS framework creates a novel structure
activities contribute positively to environmental goals while avoiding that combines key elements of the SES and MLP approaches with the
significant harm (Recital 40). Life-cycle thinking, the precautionary operational logic of green finance.
principle, and scientific evidence are explicitly invoked to guide classi­ Rather than merging the two frameworks, ML-SETS builds on their
fication standards (Recitals 40–42). ontological complementarities and tensions. This nesting allows SES
However, the operationalization of ecological thresholds remains variables to describe internal system dynamics — resource units/sys­
primarily centralized and sectoral. Ecological principles are acknowl­ tems and actors and governance mechanisms — while MLP layers
edged at the regulatory level. Yet, their application often relies on (niches, regimes, and landscape pressures) represent external structural
generalized sectoral standards rather than differentiated local ecological forces that drive or constrain sustainability transitions. In doing so, ML-
baselines. In the case of agriculture, while TSC refer to practices like soil SETS offers an adaptive, multi-level interpretive framework specifically
organic carbon enhancement or nutrient runoff reduction, they do not tailored to assess the implementation and performativity of sustain­
systematically require calibration to region-specific soil, hydrological, ability instruments such as the EU Taxonomy.
or biodiversity conditions. While the SES framework offers a robust architecture for analyzing
This approach risks reducing ecological thresholds to procedural resource-use patterns, governance configurations, and adaptation

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Fig. 4. The multi-level socio-ecological-technical systems (ML-SETS) framework.

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M. Figueira et al. Environmental and Sustainability Indicators 27 (2025) 100752

mechanisms at the local level, it does not systematically engage with To achieve this, the regulation outlines three elements (Fig. 2): i)
structural dynamics such as institutional path dependencies or multi- Compliance Options (A, B, C) for demonstrating substantial contribution;
scalar regulatory influences. Conversely, MLP provides a powerful lens ii) Overall Criteria (O) — transversal agronomic practices (e.g., crop
for examining socio-technical regimes and the macro-level pressures rotation, soil management, biodiversity promotion) applied across op­
that influence system transformation, but it tends to treat ecological tions; iii) Do No Significant Harm (DNSH) Criteria — safeguards ensuring
feedbacks and local variability in a secondary or implicit manner. that no environmental objectives are undermined, including water
The ML-SETS framework responds to these limitations by nesting the quality, climate mitigation, and circularity.
analytical tiers of SES within the broader transition structures defined by This analysis focuses on Option B, which sets performance thresh­
the MLP. This nesting preserves the ontological distinctions between the olds for nitrogen surplus and nutrient use efficiency (NUE). These
two traditions — rather than collapsing them — while enabling a more criteria are especially relevant for operationalizing ecological integrity
integrated assessment of sustainability dynamics. and adaptive governance within farm systems. Their effects ripple across
Crucially, ML-SETS is developed with a methodological focus on the both biophysical cycles and institutional arrangements, making them
operationalization of green finance instruments — in particular, the EU ideal for a situated systems analysis.
Environmental Taxonomy. By reinterpreting the Taxonomy’s TSC not as A final column in Table 4 — Regime Rules/Landscape Pressures —
fixed benchmarks but as dynamic and situated indicators (see section captures the exogenous structuring forces of the SES framework while
7.2.), ML-SETS offers a way to evaluate how these instruments interact bridging to MLP dynamics. This includes macro-level instruments such
with on-farm practices, ecological feedbacks, actor networks, and as CAP conditionalities, EU biodiversity strategies, or climate and
institutional conditions. This facilitates a multi-level analysis that is financial directives, which act as regime rules or landscape pressures
sensitive to both endogenous system dynamics and exogenous struc­ shaping both farm-level compliance and systemic transitions.
turing forces, allowing for a more context-aware and adaptive use of Rather than offering an exhaustive or deterministic mapping, this
financial regulation in sustainability transitions. table functions as a conceptual bridge: it reveals how seemingly
To operationalize this integration, ML-SETS is structured across three technical sustainability standards produce indirect effects across system
interlinked domains, each corresponding to a distinct analytical level: components and scales. It foregrounds how resource conditions, actor
strategies, and governance configurations co-evolve — and where bot­
• Focal Socio-Ecological System: Includes the endogenous SES first- tlenecks or leverage points may emerge.
tier variables — Resource Units, Resource Systems, Actors, and To construct the interpretive Table 4, we followed a qualitative
Governance Systems — as well as internal feedback loops across systems mapping approach guided by the ML-SETS framework. The
them leading to interactions (and outcomes). This is the level where process unfolded in five stages:
farm-system level practices and interactions unfold.
o Related Ecosystems: here activated via LCA, this element enables • Selection of TSC Pathway: We focus on Option B of the EU Tax­
ecological externalities to be internalized and fed back into the onomy for crop production, which sets thresholds for nitrogen sur­
focal SES, while also informing the broader system and chal­ plus and NUE. This pathway is particularly suitable for analyzing
lenging the effectiveness of sustainability instruments. ecological feedbacks and governance interactions at the farm level.
• Multi-Level Socio-Technical System: Reflects the MLP architec­ • Disaggregation and Criterion Coding: Each sustainability condi­
ture, where Landscape Pressures, Regime Structures, and Niche In­ tion within Option B — and its associated Overall (O) and DNSH
novations interact to shape — and be reshaped by — agricultural criteria — was disaggregated into discrete measures using their
transitions. The focal SES may either align with established regime official codes (e.g., B1.1, O2, DNSH3). This ensures traceability to
practices or emerge as niche innovations, depending on the degree of the regulation.
institutional embedding and transformative orientation. • Translation to SES Variables: Each measure was interpreted across
o Regulatory and Ecological Extensions: The Regime embeds the five first-tier SES variables: Resource Systems (biophysical dy­
EU Taxonomy Regulation and TSC, indicating their role as namics such as nutrient cycles or land structure); Actors (e.g.,
formal instruments of socio-technical coordination. These in­ farmers, cooperatives, advisory networks); Governance Systems (e.
struments constrain or enable practices within the focal SES, g., CAP instruments, eco-schemes, national regulations); In­
linking sustainability finance to operational farm metrics. teractions (practices, knowledge flows, adaptation processes), and
Outcomes (biophysical, social, or economic results). This step aims
Together, these layers enable a dynamic systems interpretation of to trace how sustainability criteria ripple through internal system
how policy instruments circulate within agricultural transitions — dynamics and farm-level decision spaces.
influencing, and being influenced by, social-ecological realities. The key • Cross-Scale Governance Mapping: A sixth column captures
feedback mechanisms that structure these interactions — structural pressures from the SES framework (e.g., CAP, biodiver­
including internal system dynamics, cross-system influences, and sity strategies, climate regulation) and integrates MLP dimensions,
contextual nesting — are further detailed in the accompanying such as regime-level policy instruments and landscape trends.
figure legend (Fig. 4). This reflects how external rules condition — or constrain — system
responses at the local level.
7.2. Reframing the TSC as situated indicators within the ML-SETS • Heuristic Framing: The resulting table is not a deterministic model,
framework but a heuristic tool. It visualizes potential leverage points, feedback
bottlenecks, and cross-scale tensions that emerge when regulatory
This section operationalizes the TSC for agricultural crop production instruments like the EU Taxonomy are applied in ecologically
through the lens of the ML-SETS framework. The analysis is presented in diverse, multi-level systems such as agriculture. It is intended to
Table 4, with each row corresponding to a specific sustainability con­ guide empirical application, contextual validation, and stakeholder
dition defined under the TSC (European Comission, 2021). These are reflection.
mapped across the SES framework’s endogenous first-tier variables —
Resource Systems, Actors, Governance Systems, Interactions, and Outcomes By grounding the analysis in resource dynamics and extending to
— to trace how farm-level practices interact with institutional and social and institutional dimensions, Table 4 highlights where sustain­
ecological feedbacks. ability instruments may succeed or struggle — and how adaptive
The agricultural TSC are designed to ensure a “substantial contri­ governance can help bridge these gaps in real-world implementation.
bution to the protection and restoration of biodiversity and ecosystems.”

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Table 4
Situated operationalization of the EU Environmental Taxonomy’s TSC for agricultural crop production, mapped through the ML-SETS framework across SES variables
and MLP dynamics.
TSC TSC Measure Resource Systems Actors Governance System Interactions Outcomes Cross-Scale
Criterion Description Governance/
Code Landscape
Pressures

B1.1. N-surplus limits (30/ Improved nutrient Farmers must EU-compliant Adjusted Lower CAP conditionality;
90 kg N/ha/a for cycling; reduced manage N across digital or written fertilization groundwater implementation of
mineral/organic nitrate leaching; crops and livestock tools to verify N strategies; peer-to- pollution; EU Nitrates
source) enables flexibility with a focus on balance; flexible peer learning; improved Directive
across production whole-farm limits adjusted to refined rotation resilience of soil
systems efficiency livestock excretion systems
B1.2 Minimum NUE Promotes precision Farm managers Tiered NUE Knowledge Efficiency gains; EU Nitrogen Expert
thresholds (70 % fertilization; must track and calculation diffusion through lower GHG and Panel framework;
crops) encourages systems optimize feed guidelines via networks; data ammonia emissions linked to climate
thinking in nutrient imports, fertilizer EUNEP; national harmonization and water strategies
inputs/outputs use, and monitoring
productivity across requirements
product types
B1.3 Combined NUE and Strengthens Farmers balance Interlinked nutrient On-farm testing of Systemic Synergy between
surplus thresholds at integrative decision- multiple objectives regulation to ensure balanced nutrient innovation; agri-environmental
farm level making at system for environmental both efficiency and windows benchmarking of indicators and CAP
level and productive surplus thresholds “optimal farms” subsidies
goals are met
B1.4 Organic nitrogen Prevents nutrient Livestock-intensive Local manure Digital tracking of Reduced nitrate Landscape-scale
application limit: oversaturation; farms must adjust allocation plans; manure flows; runoff; circular manure
120 kg N/ha/a maintains microbial manure logistics; incentives for inter- composting resource use redistribution;
(crops), 140 kg N/ health and soil arable farms balance farm nutrient networks pressure from
ha/a (grasslands) function imports exchanges livestock density
policies
O1 Prohibition of Maintains ecological Farmers in Eco-scheme Tension between Preservation of Natura 2000; Birds
conversion or integrity and habitat expansion zones enforcement; CAP- production critical ecosystems; and Habitats
fragmentation of connectivity adapt land use linked monitoring expansion and potential land-use Directives;
high-biodiversity practices; increased and land conservation constraints for Biodiversity
lands, forests, engagement with designation mandates agriculture Strategy 2030
wetlands (since conservation norms
2008)
Protection of Reduces habitat Farmers near Eco-scheme Land abandonment Improved water Wetlands Directive;
wetlands, aquatic degradation; sensitive habitats incentives; local risks; new roles for regulation and cross-border habitat
habitats, riparian stabilizes species may shift wetland protection environmental habitat continuity corridors
zones; no drainage of populations production or adopt subsidies stewardship
moist farmland areas mitigation practices
O2 Maintain/create Increased landscape Farmers allocate Eco-schemes under Knowledge transfer Improved EU Green Deal
≥10 % HBLFs (non- heterogeneity; land for ecological CAP; National on HBLF pollinator activity goals; Biodiversity
productive native/ support to infrastructure Biodiversity management; Strategy 2030
semi-natural biodiversity Strategies advisory networks
vegetation) corridors develop
HBLF management: Habitat quality Farmers adapt GAEC 9 rules; eco- Peer-to-peer Resilient farm Natura 2000;
no agrochemicals; improves; stronger practices to non- conditionality in exchange on mosaics; increased regional
no cutting in ES provisioning commercial land CAP ecological land biodiversity on- conservation
sensitive periods; areas stewardship farm programs
remove invasives
without chemicals
O3 Avoid soil burial, Preservation of soil Farmers implement Soil-focused eco- Knowledge sharing Improved soil EU Soil Strategy
fragmentation, carbon stocks; reduced tillage; schemes; GAEC through advisory structure; reduced 2030; LULUCF;
preserve porosity supports must adjust standards programs and peer erosion and carbon carbon farming
hydrological machinery use learning emissions initiatives
function
Prevent compaction; Enhances soil Farmers modify Rural development Greater uptake of Long-term LEADER; watershed
Soil practices on biodiversity; stock density and programs; conservation tillage productivity gains; protection
steep/erodible land increases resilience timing of field regenerative and contour short-term cost strategies
to drought operations farming support farming increases
O4 Species protection Conservation of Farmers adjust pest Compliance with Training on IAS Healthier EU Habitats
(IUCN); IAS functional control practices species-safe practice response; ecosystems; Directive; IAS
prevention and biodiversity and and monitor IAS standards biodiversity reduced invasion Action Plans
control trophic interactions integration risks
Habitat connectivity Maintains genetic Farmers install National and Collaborative Improved Ecological
(corridors, fencing) flow and ecosystem wildlife-friendly regional ecological planning for resilience and connectivity
connectivity infrastructure connectivity plans corridors, predator species survival strategies across
mitigation rates Member States
O5 Crop rotation and Improves soil Farmers adopt Incentives under Rotational Long-term soil and EU Green Deal;
main crop rotation fertility, reduces diversified crop CAP and eco- knowledge yield stability climate-resilient
erosion risk rotations schemes exchange; new agriculture plans
farm planning
norms
(continued on next page)

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Table 4 (continued )
TSC TSC Measure Resource Systems Actors Governance System Interactions Outcomes Cross-Scale
Criterion Description Governance/
Code Landscape
Pressures

Intercropping, Enhances nutrient Farmers modify Technical support Increased uptake of Stronger Biodiversity
legumes, plant cycling and pest planting strategies for diversification biodiversity- agroecosystem Strategy 2030; Farm
diversity control and field and legume enhancing function and to Fork
configurations integration practices biodiversity implementation
benefits
DNSH1 Permanent grassland Preserves carbon Farmers face Implemented Land-use Carbon LULUCF
maintenance; no sinks and avoids pressure to convert through CAP adjustments; sequestration and Regulation; EU
conversion of emissions from land to more profitable conditionalities awareness of biodiversity Deforestation
continuously use change land uses carbon sinks; shifts preservation Regulation
forested areas in planning logic
Wetland and Conserves high- Peatland managers Peat-free Habitat restoration GHG mitigation; EU Biodiversity
peatland protection; carbon ecosystems; face opportunity certification; local projects and ecosystem service Strategy; Peatland
no peat product use prevents GHG costs; market shifts incentives alternative recovery Restoration Targets
emissions required substrate trials
No stubble burning; Reduces soil carbon Farmers adjust to Support via eco- Conservation Improved soil EIP-Agri; EU Soil
minimum tillage on loss; enhances soil-friendly schemes, training tillage adoption; structure and Strategy 2030
slopes resilience practices; platforms knowledge reduced emissions
equipment exchange
investment needed
DNSH2 Climate risk and Promotes adaptive Farmers identify and Encouraged via CAP Adaptive farming Resilience to EU Adaptation
vulnerability site-specific respond to climatic planning tools strategies emerge extreme events; Strategy; IPCC-
assessment (RVA) practices threats across zones risk redistribution aligned RVA
frameworks
Adaptation must not Promotes systemic Coordination Guided by Cross-sectoral Reduced Integrated spatial
reduce resilience of and ecosystem- required across land ecosystem planning dialogue and maladaptation; planning and
other systems based adaptation managers instruments ecosystem stronger landscape resilience funding
safeguards integrity
DNSH3 Water abstraction Protects long-term Farmers in stressed Guided by Tech upgrading Sustainable water Water Framework
limits; irrigation water availability regions must reduce abstraction permits and behavioral use and equitable Directive; WEI +
efficiency and quality extraction and WFD plans shifts access thresholds
No alteration of Preserves ecological Drainage-heavy Local basin Habitat-oriented Biodiversity gains River Basin
natural hydrological and hydrological farms adapt authorities oversee waterbody and flood Management Plans;
bodies processes management plans compliance protection regulation Nature Directives
DNSH5 Winter soil cover Reduces leaching Farmers must shift Monitored under Soil health Improved fertility Nitrates Directive;
with crops/ and erosion planting cycles greening and nitrate practices and water retention CAP conditionality
vegetation programs institutionalized
Nutrient Increases nutrient Farmers undertake Supported via EU Precision Sustained fertility Sustainable
management and use efficiency and regular assessments and national fertilization and lower pollution Agriculture
systematic soil soil health programs practices adopted Regulation; AKIS
testing systems
Low-emission Reduces ammonia Farmers must Funded through Air-friendly Air quality NEC Directive;
manure application emissions upgrade to trailing CAP Pillar II fertilization norms improvement and Ammonia
methods hose/injection expand GHG mitigation Reduction Programs
systems

8. Operationalizing the ML-SETS framework through a case Structurally, Portuguese rice farming is marked by economic and
study ecological rigidity. Farmers are highly dependent on rice monoculture
due to saline, alluvial soils with few viable crop alternatives. The sector
To illustrate the operationalization of the ML-SETS framework in faces declining cultivated area (− 11 % between 2015 and 2020),
real-world conditions, this section presents a case study of rice pro­ shrinking yields, and high intermediary costs — 66 % of total expenses,
duction in the Sado River Delta, Portugal — one of the country’s key with nearly half linked to agrochemicals, seeds, and fertilizers. Market
rice-growing regions. concentration and low bargaining power further constrain innovation.
In 2022, the average farm balance was –€340/ha, with CAP subsidies
8.1. Mapping multi-level socio-ecological-technical interactions in Sado pushing net income up to €810/ha — underscoring the sector’s reliance
rice systems on public support, primarily oriented to compliance rather than
transformation.
This case study draws on data from 12 farmers operating within a Ecologically, rice systems are ambivalent: while flooded fields sup­
cooperative in the Sado River Delta. These farmers share similar bio­ port biodiversity and block salt intrusion, they are also a major source of
physical conditions and benefit from collective technical support, input methane emissions, making rice the fourth-largest contributor to agri­
procurement, and market coordination. Yet, their agronomic practices cultural GHGs in Portugal. Climate change compounds these risks, with
diverge: eight follow conventional tillage-based systems, while four use projections of reduced yields, salinization, and water scarcity. Agro­
direct seeding. The conventional method involves soil mobilization and chemical resistance persists, reinforcing lock-in to intensive input use
tillage prior to seeding, typically followed by seed distribution using (European Commission, 2022a).
spreaders—such as tractors or airplanes—depending on whether seed­ These interlocking pressures illustrate the inertia of the current rice
ing occurs before or after flooding the soils. In contrast, the direct regime — shaped by institutional dependency, economic vulnerability,
seeding method skips tillage, placing seeds directly into the soil using and environmental stress. Yet, they also expose entry points for transi­
line or precision seeders. These variations reflect different levels of risk tion: direct seeding with no-tillage, alternate wetting and drying, plan­
tolerance, experimentation, and access to information. tation, and digital monitoring are gaining traction across Mediterranean

14
M. Figueira et al. Environmental and Sustainability Indicators 27 (2025) 100752

Fig. 5. ML-SETS framework applied to the rice farming system in the sado river delta, Portugal.

Table 5
Average nitrogen surplus and nitrogen use efficiency (NUE) for 12 farmers over 2022–2024, grouped by farming practice. Farmers who meet either the EU Taxonomy threshold
for surplus (≤30 kg N/ha/year) or NUE (≥70 %) are shown in bold. Farmers meeting both thresholds in a given year are shown in bold green, indicating double compliance.
Farmer Parameters Years B.1.1. B1.2. NUE

Code 2022 2023 2024 Surplus (Avg) 2022 2023 2024

C1 N input (kg/ha) 141.20 129.00 141.2 85.62 38.39 % 35.19 % 38.92 %

Yield (t/ha) 5.42 4.54 5.495
C2 N input (kg/ha) 101.40 79.37 130.89 27.45 68.20 % 109.70 % 55.85 %
Yield (t/ha) 6.92 8.71 7.31
C3 N input (kg/ha) 109.90 109.80 114.4 60.55 40.19 % 51.93 % 44.81 %
Yield (t/ha) 4.42 5.70 5.126
C4 N input (kg/ha) 102.79 146.48 116 67.1 35.21 % 30.73 % 71.34 %
Yield (t/ha) 3.62 4.50 8.276
C5 N input (kg/ha) 80.23 74.06 93.58 14.89 74.64 % 82.84 % 87.58 %
Yield (t/ha) 5.10 6.14 8.20
C6 N input (kg/ha) 159.38 134.50 127.60 99.55 13.50 % 21.41 % 56.84 %
Yield (t/ha) 2.15 2.88 7.25
C7 N input (kg/ha) – 112.23 109.01 34.94 – 59.28 % 45.78 %
Yield (t/ha) – 6.65 4.99
C8 N input (kg/ha) 123.50 77.20 136.00 61.45 44.99 % 74.21 % 29.05 %
Yield (t/ha) 5.56 5.73 3.95
DS1 N input (kg/ha) 66.51 47.00 136.00 43.82 20.48 % 104.34 % 40.73 %
Yield (t/ha) 1.36 4.90 5.54
DS2 N input (kg/ha) 144 81.80 106.00 110.6 8.52 % 59.19 % 73.27 %
Yield (t/ha) 1.23 4.84 7.77
DS3 N input (kg/ha) 65.40 129.50 91.00 95.3 62.22 % 56.42 % 52.37 %
Yield (t/ha) 4.70 7.31 4.77
DS4 N input (kg/ha) – 89.60 168.70 61.18 72.40 % 42.13 %
Yield (t/ha) – 6.49 7.11

rice systems. These innovations remain niche but are supported by CAP feedbacks, governance systems, and innovation pathways in the Sado
reforms and climate-induced urgency. rice context.
Against this backdrop, the EU Environmental Taxonomy introduces a The accompanying Fig. 5 presents a simplified ML-SETS diagram of
new layer of regulatory-financial selection. It aims to steer investment the Sado rice system. It illustrates how resource units, governance ar­
toward environmentally sustainable practices, functioning as both a rangements, and related ecosystems interact with broader landscape
compliance tool and a potential regime disruptor. The ML-SETS frame­ pressures, entrenched regime logics, and emerging niche innovations —
work is used here to trace how this instrument intersects with ecological positioning the EU Taxonomy as a prospective lever for sustainability

15
M. Figueira et al. Environmental and Sustainability Indicators 27 (2025) 100752

transitions. Section 8.2 explores this potential more concretely through need for multi-pathway designs that accommodate systemic diversity
nitrogen performance indicators under TSC Pathway B. rather than penalize it.

8.2. Partial operationalization of indicators: nitrogen use and efficiency 8.3. Limitations and future directions for ML-SETS operationalization
among farmers in a rice cooperative
The partial operationalization of the ML-SETS framework presented
This section presents a partial operationalization of the ML-SETS in this case study offers a valuable starting point, but it also reveals
framework by applying nitrogen-related sustainability indicators to important limitations and areas for further development.
the case study introduced in Section 8.1. Using data from 12 farmers The analysis relied on estimated nitrogen content in rice grain (1 % N
within a cooperative in the Sado region, we analyze nitrogen input and per tonne), rather than lab-based measurements. As such, both NUE and
yield over a three-year period to evaluate performance against the EU nitrogen surplus values should be interpreted as indicative rather than
Taxonomy’s Option B thresholds for farm-gate nitrogen surplus and definitive. Additionally, farm-level nitrogen balances did not account for
NUE. This comparative assessment highlights variations across farming off-field losses such as leaching, volatilization, or atmospheric deposi­
practices (conventional and direct seeding) and offers insights into the tion. These unmeasured flows likely affect actual nitrogen cycling and
structural conditions that support or hinder compliance with sustain­ compliance outcomes.
ability benchmarks. Moreover, only the EU Taxonomy’s Option B indicators (B1.1–B1.3)
To assess nitrogen-related sustainability performance, three in­ related to mineral nitrogen management were applied. (B1.4, which
dicators defined under the EU Taxonomy’s Option B (Table 5) were assesses organic nitrogen inputs, was excluded since the farmers rely
applied: B1.1, B1.2, B1.3. Data on nitrogen input and rice yield were exclusively on mineral fertilisation). The broader “Do No Significant
collected from 12 farmers over three consecutive years (2022–2024). Harm” (DNSH) criteria and overarching objectives (O indicators) of the
Nitrogen inputs include mineral fertilizers only. Taxonomy — including impacts on biodiversity, water quality, and GHG
To estimate nitrogen output, a nitrogen content of 1 % per tonne of emissions — were not addressed in this analysis.
harvested (white) rice was used, corresponding to 10 kg N per tonne — The case study maintained a farm-gate focus, limiting the SES anal­
a conservative estimate based on typical values for white rice (IRRI, ysis to nitrogen performance within individual farm plots. Cross-farm
2000). Both NUE and nitrogen surplus were calculated per farmer and dynamics such as nutrient sharing, coordinated water management, or
averaged over the three-year period, in line with the EU Taxonomy’s biodiversity conservation efforts were not included. Furthermore, while
rolling average requirement. The EU Taxonomy defines compliance the ML-SETS framework proposes integrating a LCA for more compre­
under Option B as nitrogen surplus ≤ 30 kg N/ha/year; and a nitro­ hensive environmental evaluation, that step remains pending.
gen use efficiency ≥ 70 %. These thresholds were used to evaluate While institutional structures and behavioral patterns were dis­
which farmers met sustainability criteria and to explore the relationship cussed, they were inferred from context rather than empirically traced
between performance and production mode (conventional, direct through interviews or process documentation. Aspects such as actor
seeding, or no tillage). learning, social norms, and feedback mechanisms within governance
Despite operating under similar ecological, infrastructural, and systems were not directly observed. Similarly, the degree to which niche
organizational conditions within the same cooperative, the 12 farmers in practices like direct seeding with no tillage are supported or constrained
this study displayed a wide range of nitrogen performance outcomes. by systemic factors warrants deeper investigation.
Average nitrogen surplus values ranged from as low as ~15 kg N/ha/ To strengthen the operationalization of ML-SETS, future research
year to over 110 kg N/ha/year, while NUE spanned from below 15 % to should prioritize longitudinal monitoring of the same farms, using lab-
over 100 %. Only one farmer consistently met both EU Taxonomy tested nutrient content and a broader range of sustainability in­
thresholds across all three years, while nine failed to meet either dicators. Incorporating data on biodiversity, economic performance,
threshold in any given year. This diversity illustrates that management and social wellbeing would enable alignment with other EU Taxonomy
choices, agronomic strategies, and field-level variability play a signifi­ pillars and DNSH criteria. Conducting interviews with farmers, coop­
cant role — even within a relatively homogenous production system. erative staff, and policymakers could validate assumptions about
However, the analysis also exposes a critical structural issue: both governance structures and actor behavior. Finally, integrating cross-
nitrogen surplus and NUE are directly influenced by yield, since nitrogen scale feedback modeling — for example, analyzing how CAP reform
output is estimated as a fixed percentage (1 %) of harvested rice. As a affects on-farm practices over time — would help capture the dynamic
result, years marked by climatic stress, pest outbreaks, or other yield- nature of transitions in socio-ecological-technical systems.
reducing shocks can artificially inflate surplus values and deflate NUE
— regardless of whether nitrogen input levels were appropriate or 9. Conclusions
conservative. This creates a compliance vulnerability, where farmers
may be judged non-compliant due to external environmental factors This paper proposed the ML-SETS framework as a novel tool for
rather than actual mismanagement. It raises important questions about operationalizing sustainability indicators derived from green finance
the fairness and resilience of fixed indicator thresholds in the context of instruments, specifically the EU Environmental Taxonomy. Grounded in
climate-volatile agricultural systems. a conceptual synthesis of the SES and MLP frameworks, ML-SETS
This issue underscores the importance of the “analytical core” (rep­ emerges from a recognition of both ontological complementarities and
resented by the star in the ML-SETS diagram) — the zone where per­ mismatches between the two traditions.
formance indicators, policy mechanisms like the EU Taxonomy, and By nesting SES variables within the structural layers of the MLP, the
systemic pressures converge. It is in this core that the effectiveness and ML-SETS framework enables a more integrated reading of how sus­
fairness of sustainability metrics must be evaluated, accounting for real- tainability instruments like the EU Taxonomy function in real-world
world variability, feedback loops, and institutional rigidity. Moreover, transition contexts. Rather than treating the EU Taxonomy’s TSC as
this space also serves as an entry point for adaptation and flexibility static compliance benchmarks, ML-SETS repositions them as dynamic
within the EU Taxonomy framework. Given the observed limitations of and situated indicators embedded in feedback-rich systems. This reor­
Option B when yields are climate-constrained, alternative compliance ientation supports a more context-aware evaluation of how green
routes such as Option A (High Biodiversity Landscape Features finance tools interact with on-the-ground practices, governance capac­
(HBLFs) may offer more context-sensitive pathways for farmers to ities, and multi-scalar institutional pressures.
demonstrate sustainable practices — especially in regions exposed to The empirical illustration, drawn from a rice cooperative in the Sado
higher environmental risk or ongoing transitions. This reinforces the Delta of Portugal, demonstrated the partial operationalization of TSC

16
M. Figueira et al. Environmental and Sustainability Indicators 27 (2025) 100752

Option B indicators through the calculation of NUE and nitrogen surplus Declaration of competing interest
across different production modes. While this case study provided pre­
liminary insights into how technical performance can vary by practice The authors declare that they have no known competing financial
and context, it also underscored the limits of simplified indicator-based interests or personal relationships that could have appeared to influence
approaches. Many relational dimensions—including actor learning, the work reported in this paper.
governance coordination, and ecological feedbacks—remain insuffi­
ciently captured in static data alone. Appendix A. Supplementary data
Future applications of the ML-SETS framework should deepen these
connections, incorporating LCA tools, participatory governance map­ Supplementary data to this article can be found online at [Link]
ping, and broader sets of indicators to reflect the full scope of sustain­ org/10.1016/[Link].2025.100752.
ability goals embedded in the EU Taxonomy. Moreover, the framework
holds potential for adaptation beyond agriculture, offering a heuristic to Data availability
guide the situated use of green finance instruments in other sectors
where ecological, social, and technological dynamics co-evolve. Data will be made available on request.
Recent updates to the EU Taxonomy (European Comission, 2025)
—such as the simplification of DNSH criteria, the introduction of a References
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