The European Commission has announced sweeping changes to EU taxonomy reporting requirements, aiming to reduce the administrative burden on businesses while maintaining a credible framework for sustainable finance. This marks a new phase in corporate sustainability reporting, with a sharper focus on usability and proportionality.
As part of the broader Omnibus I package, the changes aim to make the EU Taxonomy more user-friendly and proportionate. They will come into effect in 2026, covering the 2025 financial year, and mark the first major streamlining of taxonomy reporting since the framework was introduced.
The EU Taxonomy is a central component of the EU’s Sustainable Finance Action Plan. It provides a common language for identifying economic activities that significantly contribute to one or more of six environmental objectives, while ensuring those activities Do No Significant Harm (DNSH) to the others. In doing so, it aims to mobilise investment towards a net-zero, resource-efficient economy.
Yet despite its ambition, many organisations have found EU taxonomy reporting requirements overly complex, particularly with the recent expansion to all six environmental objectives. The new simplification measures aim to resolve this friction without weakening the system’s intent.
Prepare your teams to meet evolving sustainable finance requirements with confidence
What is taxonomy financial reporting, and why is it changing?
At its core, taxonomy financial reporting allows organisations to disclose how much of their business activity aligns with the EU’s environmental objectives. However, until now, the process has involved hundreds of datapoints and complex eligibility assessments, creating challenges for both financial and non-financial companies.
Under the new rules, businesses will be exempt from assessing non-material activities, defined as those accounting for less than 10 percent of revenue, capex, or opex. For financial companies, the same threshold applies to loans or investments where the use of proceeds is known. If the use of proceeds is unknown, institutions can now rely on taxonomy KPIs provided by the investee companies.
Non-financial companies will also be permitted to bypass detailed operating expenditure alignment if opex is immaterial to their business model. Instead of full calculations, companies can simply report total opex and explain its non-materiality. Importantly, the changes reduced reporting datapoints by 64 per cent for non-financial companies and by 89 per cent for financial institutions. Banks will also benefit from simplified Green Asset Ratio (GAR) requirements and updated DNSH criteria, particularly around pollution prevention and chemical management.
Looking ahead: clarity, compliance, and capability
While these changes aim to simplify EU taxonomy reporting requirements from 2025 onward, they don’t lower the bar for sustainability performance. Instead, they signal a shift toward smarter, more focused disclosure, where reported data is credible, material, and decision-useful.
For organisations, this is a clear call to action: build internal capacity, upskill teams in ESG and financial reporting, and align sustainability efforts with the evolving regulatory landscape. With sustainability regulation moving from volume to value, your teams must understand taxonomy financial reporting, but also be equipped to apply it with strategic intent and credibility.
At ISS, we help organisations meet this moment with practical, expert-led training that empowers professionals to lead confidently within the EU’s changing sustainability framework. Explore our suite of comprehensive sustainability training programmes designed to meet the needs of organisations at every level here.
Dedicated to harnessing the power of storytelling to raise awareness, demystify, and drive behavioural change, Bronagh works as the Communications & Content Manager at the Institute of Sustainability Studies. Alongside her work with ISS, Bronagh contributes articles to several news media publications on sustainability and mental health.
