EU Commission Adopts Simplification Measures for the EU Taxonomy

On July 4, 2025, the Commission adopted a set of measures to simplify the application of the EU taxonomy, in the form of a Delegated Act amending the Taxonomy Disclosures, Climate and Environmental Delegated Acts.

The Delegated Act will now be transmitted to the European Parliament and the Council for their scrutiny. The changes will apply once the scrutiny period of four months, which can be prolonged by another two months, is over. The simplification measures laid out in this Delegated Act will apply as of January 1, 2026, and will cover the 2025 financial year. However, companies will have the option to delay the implementation of the new measures to the 2026 financial year if they find this more convenient.

Among the proposed modifications, we note that financial and non-financial companies should be exempt from assessing Taxonomy-eligibility and alignment for economic activities that are not financially material for their business. Similarly, for non-financial companies, activities are considered non-material if they account for less than 10% of a company's total revenue, capital expenditure (CapEx) or operational expenditure (OpEx). This simplification is expected to lift the burdensome calculation on topics which were arguably not really important. For instance, based on the previous version of the Taxonomy, any company who owns a building (e.g., its headquarters) was expected to report on the alignment of its “Acquisition and ownership of buildings” activity, even if it is not in the real estate business. This meant that some companies whose main activity was not covered by the Taxonomy had to prepare a report under the Taxonomy for ancillary or incidental activities.

Other modifications, such as the deletion of the Annex requiring separate templates on the performance and exposures to fossil gas and nuclear activities, and the simplification of the criteria for ‘do no significant harm’ (DNSH) to pollution prevention and control regarding the use and presence of chemicals, are also expected to make Taxonomy reporting easier and less burdensome for reporting companies.