On 4 July 2025, the European Commission adopted a set of measures intended to simplify the application of the EU Taxonomy, aiming to reduce the administrative burden for companies subject to the Taxonomy disclosure framework.

By way of reminder, Article 8 of the EU Taxonomy Regulation imposes disclosure obligations on certain non-financial and financial companies regarding how and to what extent their activities are associated with “environmentally sustainable” economic activities. Article 8 currently applies to large public-interest-entities (PIEs) with more than 500 employees; however, the Corporate Sustainability Reporting Directive extends Article 8 disclosure requirements to companies subject to its sustainability reporting obligations.

Further Review of Taxonomy Requirements

The Commission also confirmed that it is launching a separate comprehensive review of Taxonomy reporting requirements and the technical screening criteria. The review aims to make these requirements simpler, more practical, and better aligned with other EU legislation and the review will have a particular focus on the “do no significant harm” (DNSH) criteria.

Delegated Act and Amendments

The simplification measures are adopted in the form of a new Delegated Act, previously published in draft for consultation in February 2025 alongside the “Omnibus I” package.  The Delegated Act amends:

• the Taxonomy Disclosures Delegated Act;
• the Taxonomy Climate Delegated Act; and
• the Taxonomy Environmental Delegated Act.

Materiality Threshold

A materiality threshold of 10% will apply to both non-financial and financial companies when assessing Taxonomy-eligibility and alignment. Economic activities or assets that are not financially material may be omitted from Taxonomy assessment. Materiality should be assessed for each key performance indicator (KPI) independently.

Non-financial companies:

For non-financial companies, an economic activity will be non-material if, in aggregate, it accounts for less than 10% of turnover, capital expenditure (CapEx), or operational expenditure (OpEx). Non-financial companies will be required to disclose, within their reporting templates, the proportion of turnover, CapEx, or OpEx considered non-material and therefore not assessed. Where OpEx is not material to a non-financial company’s business model, it may report total OpEx and explain why OpEx is not material, without further Taxonomy assessment.

Financial companies

For financial companies, the 10% materiality threshold will apply to financial assets, including loans and investments financing specific economic activities where the use of proceeds is known. If these assets account for less than 10% of all assets included in the denominator of the relevant KPI, they may be excluded from Taxonomy assessment. However, such non-material exposures must still be reported separately in the reporting templates.

Taxonomy KPIs

For financial companies, KPIs, including the Green Asset Ratio for credit institutions, have been streamlined.  In addition, financial companies are granted an optional two-year deferral until 31 December 2027, during which they may refrain from reporting detailed Taxonomy KPIs, provided they do not claim that their activities are associated with Taxonomy-aligned activities.   This temporary relief is intended to alleviate the costs for financial companies pending the Commission’s broader review of the Taxonomy framework.

Taxonomy Reporting Templates

Taxonomy reporting templates have been streamlined. According to the Commission, this change will reduce data points by 64% for non-financial companies and by 89% for credit institutions, with similar reductions for other financial entities. Separate templates for fossil gas and nuclear activities have been removed; reporting on these activities is now integrated into the general templates when they are material.

DNSH Criteria

The technical screening criteria for pollution prevention and control are amended, focusing on DNSH requirements. The amendments clarify exemptions for certain hazardous substances in electrical and electronic equipment and for uses of ozone-depleting substances authorised under EU law.  The need to screen for self-classified substances under the EU Classification, Labelling and Packaging Regulation is removed. The Commission notes that these changes will substantially reduce the number of substances to be assessed.

Next Steps

The Delegated Act is now subject to a scrutiny period by the European Parliament and the Council, each having four months to object (extendable by a further two months upon request). If neither object, the Delegated Act will be published in the Official Journal and enter force 20 days later.

Application

The amendments to the Taxonomy reporting framework will apply for reports published from 1 January 2026 (covering the 2025 financial year) for companies already in scope of the EU Taxonomy regime. Companies may, however, opt to maintain the current framework for that reporting period.

Read more:

European Commission press release: ‘Commission to cut EU Taxonomy red tape for companies’

Questions and answers on EU Taxonomy simplifications to cut red tape for companies