The European Commission adopts a new Delegated Act to simplify EU Taxonomy reporting requirements

Under the Taxonomy Regulation, companies within the scope of CSRD must report how much of their business is aligned with the EU’s environmental objectives – climate change mitigation, climate change adaptation, sustainable use of water, transition to a circular economy, pollution prevention, and biodiversity protection. This is done using key performance indicators (KPIs) such as turnover, capital expenditure (CapEx), and operational expenditure (OpEx).

Now, based on early reporting experience and feedback gathered through a public consultation earlier in the year, the European Commission has introduced changes aiming to simplify the rules, making them easier to apply.

What are the key changes?

Focus on material economic activities

The revised Delegated Act removes the requirement to assess the Taxonomy compliance of activities that are not financially material – those that cumulatively make up less than 10% of turnover, CapEx or OpEx. This assessment is done for each KPI independently. These activities still need to be reported, but only in summary.

Entities are also now able to exclude reporting on OpEx in cases where the OpEx KPI is immaterial to their business model. In such cases entities only need to report the total value of OpEx in the business without any further assessment of EU Taxonomy eligibility or alignment. However, entities will need to explain why the OpEx is not material for their business model.

Flexible reporting for financial firms

Under the new Delegated Act, financial institutions can:

• exclude exposures to entities not required to report under the Taxonomy
• include exposures to entities that report voluntarily or where the use of proceeds is known
• delay reporting on certain KPIs (like trading book and fee-based services) until 2028
• have the option not to disclose the detailed reporting templates until end of 2027 if they don’t claim Taxonomy alignment, instead making a statement they do not claim any activities as being associated with economic activities that qualify as environmentally sustainable

Simpler templates and fewer data points

The revisions also introduce fewer data points and simpler templates as follows:

• for non-financial entities, the Delegated Act introduces a summary template which focuses on the most important and relevant data points and the information needed by financial entities to compute their KPIs
• the amount of ‘per activity’ information required to be reported for each aligned activity is falling from 78 to 28 data points (a 64% cut)
• for banks and credit institutions, data points are decreasing by up to 89%
• templates for fossil gas and nuclear activities are being removed or merged into general templates

Simplifying the DNSH criteria

The “Do No Significant Harm” (DNSH) rules have been simplified, as follows:

• entities no longer need to assess thousands of self-classified substances
• the focus is now on substances listed as very high concern for authorisation by the European Chemicals Agency

For more information, read the full text of the new Delegated Act. 

Our thoughts

The European Commission believes these changes will:

• save time and reduce admin
• improve clarity and consistency
• help companies focus on what’s most important
• support better data quality over time

The revised Delegated Act is effective from 1 January 2026, with more improvements expected as the EU continues to review the framework.

We are pleased to see the EC engaging with the feedback received during its public consultation and implementing changes quickly to provide immediate relief to reporters. In particular, the simplification of DNSH Appendix C is a positive step in an area that has been complex to apply in practice. However, there are still some questions and concerns with the new requirements. 

For both financial and non-financial undertakings there are concerns regarding how the 10% cumulative materiality threshold will be applied in practice. Furthermore, despite the reduction in the number of data points which must be reported, there is still a significant burden involved in performing the assessment of activities.

These amendments are a positive start focused on disclosures, but we would still like to see more simplification following detailed review of the existing Delegated Acts, focused on simplifying the process as a whole to achieve meaningful reduction in reporting burden.

If you would like to know more about these changes, please reach out to your local Grant Thornton member firm.