EU eases (that other) taxonomy burden to boost competitiveness
Earlier this month the European Commission adopted a package of simplifications to the EU ESG Taxonomy framework, designed to cut red tape and reduce administrative burden on companies.
From 1 January 2026, companies will face fewer hoops to jump through. Non-financial firms can skip reporting on activities that are immaterial (under 10% of revenue, CapEx or OpEx), and financial institutions will see their green asset ratios made more digestible, with a temporary reprieve from detailed disclosures. Reporting templates have also been put on a diet, slimming down by 64% for corporates and 89% for financials.
The measures offer relief across a range of areas. Non-financial companies can now exclude immaterial activities (less than 10% of revenue, CapEx or OpEx) from Taxonomy assessments. Financial companies benefit from simplified green asset ratio calculations and a two-year grace period for detailed disclosures. Across the board, reporting templates are dramatically streamlined, cutting required data points by 64% for non-financials and 89% for financials.
The reforms arrive via a Delegated Act, following public consultation as part of the EU’s ‘Omnibus I’ legislative package. They respond directly to feedback that the existing Taxonomy reporting regime was complex, costly and hard to implement.
By trimming the unnecessary complexity, the EU is clearing the runway for clearer, more effective sustainability disclosures. This is, however, just one piece of the Omnibus puzzle – stay tuned for more updates in the coming months.
Read the announcement from the European Commission.
