The European Commission has adopted a delegated act with provisions to simplify the application of the EU Taxonomy Regulation disclosure requirements
The Taxonomy Regulation entered into force in 2020, establishing an EU-wide classification system for environmentally sustainable economic activities based on six environmental objectives.
(EU Taxonomy objectives: climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; protection and restoration of biodiversity and ecosystems)
Companies subject to the CSRD are required to disclose the proportions of their capital expenditures (CapEx) and operating expenditures (OpEx) that align with at least one of these objectives and Do No Significant Harm’ (DNSH) to the other objectives.
The Commission’s revisions will exempt companies from assessing Taxonomy alignment for economic activities that are not financial material to their business. Activities will be considered non-material if they account for less than 10% of revenue, CapEx or OpEx.
In addition, companies will be exempt from assessing Taxonomy alignment for their entire operational expenditure when it is considered non-material for their business model. The Taxonomy reporting templates will also be streamlined, reducing the number of reported datapoints by 64% for non-financial companies.
The delegated act has been submitted to the European Parliament and the Council for a four-month scrutiny period. The simplification measures will apply from 1 January 2026 and cover the 2025 financial year.