European Commission's proposal for simplified Taxonomy rules
On 4 July 2025, the European Commission announced a series of measures in a delegated Regulation, aimed at simplifying the application of the EU Taxonomy and reducing administrative and reporting burdens on companies.
As background, the Taxonomy Regulation entered into force in 2020 and forms part of the action plan on financing sustainable growth. This plan outlines a comprehensive strategy to further align financial flows with sustainability objectives. The EU Taxonomy is a classification system that defines criteria for economic activities aligned with the EU’s 2050 net-zero goal and broader environmental objectives beyond climate. It is designed to guide investments toward the activities most needed for the green transition and enables both financial and non-financial companies to work with a common definition of sustainable economic activity.
One of the key changes is the exemption for non-financial companies1 from assessing Taxonomy eligibility and alignment for economic activities considered non-material—those representing less than 10% of revenue, capital expenditure (CapEx), or operational expenditure (OpEx) e.g. their total financial expenditure.
Additionally, non-financial companies will no longer be required to assess Taxonomy alignment for their entire OpEx when it is deemed non-material to their business model. This adjustment particularly benefits service-based activities. In such cases, companies may choose not to report OpEx-related Key Performance Indicators (KPIs) and instead provide the total OpEx amount along with an explanation of its non-materiality.
Finally, the Taxonomy reporting templates have been significantly simplified. The number of data points required from non-financial companies has been reduced by 64%, easing the overall reporting burden.
Next steps:
- The delegated act will be transmitted to both European Parliament and Council.
- If there is no objection, the simplification measures will apply as of the beginning of 2026, covering the 2025 financial year.
- However, undertakings are given the option to apply the measures starting with the 2026 financial year if they find this more convenient.
For additional information: