EU Taxonomy reporting after the Omnibus

How does the EU Taxonomy work?

The Taxonomy Regulation defines six environmental objectives: climate change mitigation, climate change adaptation, water and marine resources, the circular economy, pollution prevention, and biodiversity and ecosystems. Delegated acts list economic activities and set technical screening criteria for each. An activity is aligned if it makes a substantial contribution to at least one objective, does no significant harm to the others, and is carried out in line with minimum social and governance safeguards. See the CSRD after the Omnibus.

Who must do EU Taxonomy reporting after the Omnibus?

Article 8 applies to companies required to publish sustainability information under the CSRD. After the Omnibus I Directive, that means EU companies and groups with more than 1,000 employees and net turnover above 450 million euros, with the new thresholds applying from financial year 2027, while wave 1 companies above the thresholds continue. Companies outside scope may report voluntarily, and those that claim their activities are environmentally sustainable under the Taxonomy are expected to support the claim with Taxonomy information.

What are the three Taxonomy KPIs?

• Turnover: the share of revenue from products or services of aligned activities.
• Capital expenditure: the share of additions to tangible and intangible assets that relate to aligned activities or to a credible plan to make activities aligned.
• Operating expenditure: the share of certain direct costs, such as research, maintenance and short-term leases, relating to aligned activities.

Each is reported as eligible and aligned, by activity and environmental objective, using standard templates. The denominators come from the financial statements, so the figures must reconcile to them.

EU Taxonomy reporting: a manufacturer's turnover KPI

A manufacturer with turnover of 2,000 million euros makes heat pumps, building insulation products and industrial machinery. It maps its activities to the Taxonomy and applies the 10% relief.

Heat pump sales of 420 million meet the screening criteria, the do-no-significant-harm tests and minimum safeguards, so they are aligned, 21% of turnover. Insulation products of 180 million are eligible but fail one do-no-significant-harm criterion, so they are eligible but not aligned. A small activity with 150 million of turnover, 7.5%, is eligible but below the 10% threshold, so the company does not assess its alignment and reports it as not assessed. The remaining 1,250 million, mostly general machinery, is not covered by the Taxonomy. It repeats the analysis for capital expenditure, where its new heat pump plant makes the aligned share much higher, and omits the operating expenditure KPI because those costs are not material to its business model, saying so.

What did the 2026 simplification change?

Commission Delegated Regulation (EU) 2026/73, adopted on 4 July 2025 and published in the Official Journal in January 2026, applies from 1 January 2026. For non-financial companies, activities that together are below 10% of turnover, capital expenditure or operating expenditure need not be assessed for alignment, though they are still disclosed; operating expenditure can be omitted where it is not material to the business model, with an explanation; and the templates were cut by about two thirds, with separate fossil gas and nuclear templates no longer required. One of the do-no-significant-harm criteria on pollution was simplified. Companies could choose the old or new rules for their 2025 reports; the new rules apply from 2026 reports.

What about banks and investors?

Banks, insurers and asset managers report their own ratios, such as the green asset ratio, built partly from their counterparties' Taxonomy KPIs. The 2026 regulation also simplified their templates, and the smaller CSRD scope means fewer counterparties publish KPIs, which affects how those ratios are calculated. Bonds issued under the European Green Bond label must also use Taxonomy-aligned activities; see green bonds and sustainability-linked loans and ESRS E1.

Where does Taxonomy reporting sit in the annual report?

Taxonomy disclosures form part of the sustainability statement in the management report, alongside the ESRS disclosures, and are covered by the limited assurance engagement. Their figures should be consistent with the transition plan, especially capital expenditure plans. See climate transition plans and sustainability assurance.

This guide is general information. It is not tax or legal advice for your situation.