European Commission Adopts Measures to Simplify the Application of the EU Taxonomy
On 4 July 2025, the European Commission adopted a Delegated Act aimed at significantly reducing the administrative burden on companies when applying the EU Taxonomy – the EU’s key framework for classifying environmentally sustainable economic activities.
This package of measures forms part of the broader Omnibus I initiative, which seeks to eliminate regulatory barriers and enhance the competitiveness of European undertakings, in line with the objectives of the European Green Deal. The new rules enable companies to focus on the core aspects of their operations and sustainability transition, while maintaining high environmental standards.
Key simplification measures include:
- Both financial and non-financial companies are exempt from assessing taxonomy alignment for economic activities that are not materially significant to their business (i.e. contributing less than 10% to revenue, capital expenditure (CapEx), or operating expenditure (OpEx));
- Non-financial undertakings are no longer required to assess taxonomy alignment of OpEx where it is immaterial to their business model;
- Financial institutions are relieved from detailed disclosure of certain key performance indicators (KPIs), such as the Green Asset Ratio, with postponement until 2028 and a temporary exemption from reporting such data where no taxonomy-aligned activities are claimed;
- Reporting templates have been significantly simplified — with a 64% reduction in data requirements for non-financial undertakings and up to 89% for financial entities;
- The “Do No Significant Harm” (DNSH) criterion regarding pollution has been streamlined in relation to chemical substances — requiring fewer checks and greater focus on substances of high relevance.
Date of application:
- The new measures will enter into force on 1 January 2026, applying to the 2025 financial year. However, companies are granted the option to defer application until the 2026 financial year if preferred.
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