This page was reviewed and updated on 25/07/25.
The European Commission has adopted a Delegated Act to streamline how companies report against the EU Taxonomy as part of a broader package of simplification measures known as Omnibus I.
The changes are expected to apply from January 2026, covering data from the 2025 financial year. Companies can also choose to apply the updated rules one year later, from 2026 reporting onwards.
What is the EU Taxonomy?
The EU Taxonomy is a classification system that identifies which economic activities can be considered environmentally sustainable. It supports the European Green Deal and aims to direct private investment towards activities that help achieve climate and environmental goals.
EU Taxonomy reporting is mandatory for companies that fall within the scope of the Corporate Sustainability Reporting Directive (CSRD). Other companies may choose to report their Taxonomy alignment voluntarily to demonstrate their sustainability commitments and attract responsible investors.
To be Taxonomy-aligned, an activity must contribute to at least one of six environmental objectives, and do no significant harm to the others. These objectives are:
- 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
What’s changing?
The European Commission has adopted a set of measures to simplify the application of EU Taxonomy.
These changes are adopted in the form of a Delegated Act amending the Taxonomy Disclosures, Climate and Environmental Delegated Acts. The Commission published the draft as part of ‘Omnibus I’ package, allowing stakeholders to provide feedback on the draft measures.
The reforms under Omnibus I are intended to reduce complexity, improve clarity and ease the overall administrative burden of Taxonomy reporting, particularly for smaller and less complex entities.
Key changes include:
1. No assessment required for non-material activities
Companies will no longer need to assess alignment for activities that are not material to their business. This means:
- Non-financial companies can exclude activities that account for less than 10% of turnover, CapEx or OpEx.
- Financial institutions can exclude exposures that represent less than 10% of their portfolio.
2. Optional OpEx reporting for non-financials
Where operational expenditure is not material to a company’s business model, reporting becomes optional. Companies must still disclose total OpEx and provide a brief explanation.
3. Fewer data points required
The number of required data points will be reduced by around 64% for non-financial companies and 89% for financial institutions, helping ease the administrative burden.
4. Streamlined Requirements for Banks and Investors
For financial companies, key performance indicators like the green asset ratio (GAR) for banks are simplified, and they are granted an option not to report detailed Taxonomy KPIs for two years.
5. Clarified technical criteria
The criteria for ‘do no significant harm’ to pollution prevention and control related to the use and presence of chemicals are simplified.
What’s next?
The Delegated Act will now be reviewed by the European Parliament and Council. If no objections are raised during the standard scrutiny period, the changes will apply from the start of 2026.
