Impact of Omnibus on the EU Taxonomy Regulation

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European Commission to simplify EU Taxonomy reporting obligations: The European Commission has adopted a set of measures to simplify the application of EU Taxonomy, as part of the EU's Omnibus Simplification Package.

In brief

• On the 4 July 2025, the Commission adopted a Delegated Act to streamline reporting obligations of the EU Taxonomy.
• The amendments aim to enhance EU competitiveness and support sustainability goals by simplifying reporting, reducing administrative burden, and providing more preparation time.
• The EU Taxonomy will continue to play a key role in identifying investments that contribute to a sustainable transition of the EU economy and directing financial flows towards them, in line with European Green Deal goals.
• More significant simplifications to the assessment framework are still expected from the broader review of the Regulation, already announced by the Commission for the near future.

Recap of the legislation

The EU Taxonomy Regulation (EUTR) establishes a classification system to define sustainable economic activities. It took effect on 12 July 2020, with first reports published in 2022. The regulation outlines the criteria for an economic activity to be deemed environmentally sustainable, providing concrete definitions for companies, investors and policymakers. It currently applies to entities required to publish non-financial statements under the EU Non-Financial Reporting Directive (NFRD), such as public interest entities with over 500 employees, as well as certain financial market participants. In addition, entities falling under the scope of the Corporate Sustainability Reporting Directive (CSRD) are required to report on their sustainability performance against the EUTR, the application scope of which is currently under revision due to the EU Omnibus Simplification Package (“Omnibus Proposal”).

Under the EUTR, these entities must disclose the proportion of their activities that are Taxonomy-eligible and Taxonomy-aligned. While eligibility refers to potentially environmentally sustainable activities, alignment indicates activities that are environmentally sustainable by contributing to one of the six environmental objectives specified in Article 9 of the EUTR¹.

In the context of the first Omnibus simplification package, the European Commission (the Commission) presented a draft Delegated Act in February 2025, aiming to introduce simplification measures that reduce administrative burden for reporting undertakings (undertakings) and improve usability, while preserving the integrity of the Taxonomy framework.

On 4 July 2025, the Commission adopted a new Delegated Act, following a one-month feedback period that ended in March 2025. This new Delegated Act amends the existing Disclosures, Climate and Environmental - Delegated Acts by introducing targeted amendments aiming to simplify both the content and presentation of information to be disclosed.

Simplification measures under the EU Omnibus Simplification Package (“Omnibus Proposal”) and the final EU Taxonomy Delegated Act

The main simplification measures of the final EU Taxonomy Delegated Act (DA) include:

Materiality thresholds for eligibility and alignment assessments:

• Companies are exempt from assessing Taxonomy-eligibility and alignment for economic activities that are not financially material for their business. For non-financial companies, activities are considered non-material where the cumulative Turnover, CapEx or OpEx resulting from those economic activities is below 10% of the denominator of the respective KPI.
• The Turnover, CapEx and OpEx related to the non-material activities need to be reported separately as non-material Turnover, CapEx or OpEx. In the contextual information of the EU Taxonomy disclosures, companies need to clearly state at individual level the sector of the economic activities that are considered as non-material to ensure transparency on those activities. For doing so, reporting undertakings may use the NACE codes.
• In addition, non-financial companies are exempt from assessing Taxonomy-eligibility and alignment for their OpEx when it is considered non-material for their business model, provided that they disclose the total value of the OpEx KPI denominator and explain why the operational expenditure is not material for their business model.

Simplification of mandatory reporting templates:

EU Taxonomy reporting templates are shortened and streamlined by cutting the number of reported data points by 64% for non-financial companies, without losing essential information. Templates are reviewed as follows:

• Summary KPI template (Template 1): a new summary table for the three KPIs, presenting the proportion of Turnover, CapEx and OpEx from products or services associated with Taxonomy-eligible and Taxonomy-aligned economic activities (one line for each KPI). The template introduces a new column for the proportion of economic activities that have not been assessed because they are considered non-material.
• Activity breakdown template (Template 2): provides a breakdown of the assessed economic activities and the template needs to be replicated for each KPI. In Template 2, a new metric is introduced to reflect the proportion of the Taxonomy-aligned KPI within the Taxonomy-eligible KPI.
• Entire Annex XII templates on exposure to nuclear and gas are no longer required.

Simplification of generic DNSH to Pollution Prevention and Control (Appendix C): 

• Clarifies that exemptions are valid under existing EU environmental legislation related to ozone-depleting substances and hazardous substances under RoHS Directive².
• Removes the additional paragraph after point (f) of Appendix C concerning “other substances”: the additional requirement to assess substances that are self-classified under the CLP Regulation³ has been removed. Now, only substances listed on the REACH⁴ Candidate List are in scope. This significantly reduces the number of substances undertakings must assess.

Financial institutions:

• Two-year relief option to not disclose the Taxonomy templates: Until the Commission finalizes its detailed review of the EU Taxonomy  disclosure rules and technical screening criteria, financial institutions are allowed to no longer report detailed taxonomy disclosures, provided that they publish a statement in their management report to indicate that they do not claim that their activities are associated with environmentally sustainable activities under the EUTR.

Additional expected changes

As a next step, the Commission will carry out a systematic and thorough review of the reporting requirements and of all the technical screening criteria, in particular, all the DNSH criteria, with the aim of assessing ways to make them more simple, usable and aligned with EU legislation.

In addition, further changes are expected with the forthcoming CSRD "Content Directive" still under discussion as part of the first Omnibus simplification package. The initial proposal of the CSRD Content Directive included a revision of the scope of application of the EUTR, limiting mandatory Taxonomy disclosures to undertakings with more than 1,000 employees and €450 million in net Turnover. For those below the thresholds, an “opt-in” regime would be available, allowing voluntary application.

Additionally, the proposed Content Directive introduced the concept of ‘partial alignment’ reporting, allowing undertakings to disclose progress toward sustainability, where full alignment has not yet been achieved. Those additional and envisaged changes are still to be defined and adopted and do not impact the scope and application of the EUTR at this stage. 

Timeline

The simplification measures laid out in this Delegated Act will apply as of 1 January 2026 and will cover 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, while avoiding undue costs of compliance.

The Delegated Act has been submitted to the European Parliament and the Council for their scrutiny. The changes will apply once the scrutiny period of four months ends, which could also be extended by two more months.

What does that mean for businesses?

The simplification measures primarily impact the reporting timelines of businesses, as well as the reporting requirements, whereas simplification around the assessment criteria is not introduced yet (with the exception of DNSH Appendix C).

While some companies are required to follow a set compliance path under the EUTR, others will potentially have the opportunity to use it as a voluntary framework to guide their sustainability reporting, assessments and strategic priorities and to showcase their alignment. More specifically:

• Listed large companies falling under CSRD “Wave 1” will continue reporting in line with the EUTR, benefiting from the simplified templates and materiality thresholds
• Non-listed large companies falling within the updated CSRD scope will still be expected to follow the compliance road but can take advantage of the additional time proposed to prepare for their Taxonomy obligations
• Companies that voluntarily “opt-in” can now assess whether the EUTR represents an opportunity for them and assess whether they can benefit from the possibility to report on partial alignment⁵ and using the EUTR criteria overall as a strategic tool to guide a phased transition toward greater environmental sustainability in their activities. 

Given that the assessment criteria are not revisited or amended yet⁶, businesses can leverage their prior investments made to achieve alignment, as they remain consistent with the regulatory framework. Therefore, businesses can be confident that their efforts towards alignment continue to meet the reporting requirements, even as reporting obligations evolve. 

Lastly, in the case of Swiss companies, as for all third-country parent undertakings, the scope of reporting might impact the decision on reporting approach with regards to the consolidated (Swiss) Group levels or EU subsidiary level.