EU Taxonomy
The Taxonomy Regulation establishes a common EU classification system for environmentally sustainable economic activities. The Taxonomy aims to improve transparency, reduce greenwashing and support capital allocation towards activities that contribute to EU environmental objectives.
Overview
The Taxonomy Regulation defines when an activity can be considered sustainable, providing a shared reference point for companies, investors and policymakers.
To be Taxonomy-aligned and considered environmentally sustainable, an activity must:
- make a substantial contribution to at least one EU environmental objective;
- do no significant harm to the other objectives;
- comply with minimum safeguards; and
- meet the relevant technical screening criteria.
The Taxonomy also supports corporate sustainability reporting. Under its Article 8, companies in scope of the Corporate Sustainability Reporting Directive (CSRD) must disclose their share of turnover, capital expenditure and operating expenditure linked to Taxonomy-eligible (when an activity is covered by the Taxonomy Delegated Acts) and Taxonomy-aligned activities. Financial institutions use this data to assess portfolios and report their own Taxonomy indicators.
Platform on Sustainable Finance
The Platform on Sustainable Finance (PSF) is an expert group providing advice to the European Commission on the development of the EU Taxonomy framework. It is constituted of various stakeholders, including real-economy businesses, financial institutions, service providers, and civil society organisations. Eurosif is an observer member of the PSF.
The third mandate of the PSF started in February 2026. This mandate covers revising of the current technical screening criteria, developing new criteria across the Taxonomy’s six objectives, improving the usability of the Taxonomy, and monitoring capital flows into sustainable investments at the EU level.
Current framework
Who is in scope?
Because the scope of Taxonomy Article 8 reporting is linked to the CSRD, the Omnibus I Simplification Directive also reduced the number of companies in the scope of the Taxonomy reporting.
Mandatory reporting against Article 8 of the Taxonomy now applies to companies with:
- more than 1,000 employees; and
- more than €450 million in annual net turnover.
Taxonomy Article 8 disclosure requirements
In-scope companies must disclose the following information:
- For non-financial companies: the share of turnover, capital expenditure and operating expenditure that is Taxonomy-eligible and Taxonomy-aligned.
- For financial institutions: Taxonomy-related indicators for portfolios and financial activities.
Taxonomy disclosures for financial products in scope of SFDR
Articles 5 and 6 of the EU Taxonomy require financial products with an environmentally sustainable objective or those that promote environmental or social characteristics, covered respectively by SFDR Articles 9 and 8, to disclose how and to what extent their underlying investments are in Taxonomy-aligned economic activities.
The SFDR review is currently being discussed by the EU institutions and may entail changes to how Taxonomy alignment is reported at financial product level.
Latest developments
Review of Taxonomy criteria and disclosure requirements
As part of the European Commission’s simplification agenda, amendments to the Taxonomy Delegated Acts were published in the Official Journal of the EU in January 2026. They concern the Disclosures Delegated Act, which lays down the information to report according to Article 8, and the Climate and Environmental Delegated Acts, which specify technical screening criteria for Taxonomy-alignment.
These changes apply from 2026, with companies able to use the simplified reporting measures for the 2025 financial year. They include:
- Simplified reporting templates with fewer data points;
- A materiality threshold for Taxonomy reporting, allowing companies to omit eligible or aligned activities representing less than 10% of cumulative revenue, capital expenditure or operating expenditure.
What’s next?
Ongoing consultations
Further changes to the Taxonomy Delegated Acts are under way:
- The European Commission consulted in early 2026 on additional amendments to the Climate and Environmental Delegated Acts to improve the usability of technical screening criteria; the revised Delegated Acts are expected to be published in the coming months.
- The European Supervisory Authorities launched consultations on a targeted review of the Taxonomy Disclosures Delegated Act, including selected Taxonomy KPIs. See the documents on ESMA’s, EBA’s and EIOPA’s websites for more details. You can find Eurosif’s response to ESMA’s consultation here.
Future implementation
The additional amendments to the Climate and Environmental Delegated Acts are expected to apply in 2027.
Following the ESAs’ technical advice on Taxonomy disclosures expected in October 2026, the European Commission will adopt a revised Taxonomy Disclosures Delegated Act in early 2027.
Find additional information below.
