Following a prolonged scrutiny period, Regulation (EU) 2026/73, which implements the amendments to the review of the EU Taxonomy, entered into force on 8 January 2026.
The objective is simplification
The objective is clearly to simplify EU Taxonomy reporting and to reduce the administrative burden placed on companies.
Below, we summarise the changes that will enter into force and that affect both non-financial companies and the advisory sector. The regulation already applies to 2026 disclosures (due in 2027); however, for the 2025 financial year, companies may still choose to apply the previous rules.
What is changing now?
1. Introduction of materiality thresholds
Non-financial undertakings are not required to assess the Taxonomy eligibility or alignment of an activity if that activity:
represents less than 10% of total turnover,
represents less than 10% of total CapEx (capital expenditure),
represents less than 10% of total OpEx (operating expenditure) and is not material to the company’s business model.
For these non-material activities, a separate disclosure obligation applies, whereby they must be reported explicitly as “non-material”.
Example:
In the case of an airport operator, in addition to aviation activities, the operation of passenger terminals may be material based on the level of operating expenditure. By contrast, for a pharmaceutical company, the operation of office buildings is unlikely to reach the materiality threshold in terms of operating costs. However, staying with the pharmaceutical example, the investment cost of a new manufacturing facility is likely to be sufficiently significant to exceed 10% of total CapEx, meaning that the Taxonomy alignment of the building must be assessed.
2. Simplified rules on hazardous substances
The DNSH (Do No Significant Harm) criteria of the EU Taxonomy are one of the core principles of sustainable activities, ensuring that an economic activity does not cause significant harm to any of the environmental objectives. Regulation (EU) 2026/73 amends the DNSH assessment by revising the much-debated Annex C, which sets out rules on the avoidance of hazardous substances, in particular chemical substances.
Previously, Annex C required companies not only to identify hazardous substances, but in certain cases — for example based on CLP* self-classification — to fully avoid their use, unless the activity was deemed socially or safety-critical.
The most important change introduced in 2026 is that the obligation to classify substances based on CLP self-classification is removed. Going forward, the assessment must be limited exclusively to substances of very high concern (SVHCs) listed on the REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) Candidate List.
The avoidance obligation and the “socially indispensable” exemption remain in force, meaning that the DNSH principle itself has not been weakened. However, the administrative burden is significantly reduced, and the rules become clearer and easier to apply in practice, as companies are required to assess and document far fewer substances in their Taxonomy disclosures.
In addition, certain exceptions that were previously difficult to interpret are now explicitly incorporated into the regulation. This includes substances that are already authorised under EU law, for example under REACH or other environmental and safety regulations, where their use is already regulated by existing legislation.
*CLP: Classification, Labelling and Packaging Regulation
3. Simplification of reporting templates
The data sheets used for Taxonomy reporting have been standardised and shortened, while the technical screening criteria remain unchanged.
It is important to note that the EU Taxonomy Compass, which presents requirements by sector and activity, is a useful guidance tool, but it does not necessarily contain legally binding text and cannot replace the Delegated Acts or the legal acts published in the Official Journal of the EU. As such, it does not reflect the most recent changes to the DNSH criteria.
Obliged parties
Companies that previously fell under the NFRD (Non-Financial Reporting Directive) — i.e., large listed companies and/or companies of public interest (e.g., banks, insurers, etc.) — are required to prepare reports under both the CSRD and the EU Taxonomy, as was already the case last year.
However, under the Omnibus and Stop-the-Clock regulations, the scope of reporting obligations has been reduced. Only companies that in the past two financial years have:
more than 1,000 employees, and
an annual net turnover exceeding €450 million,
are now required to report.
This change allows companies to postpone mandatory CSRD/Taxonomy reporting from 2026 to 2027. In 2026, companies have time to prepare — for example, by setting up reporting structures, defining processes, appointing responsible persons, and collecting test data. The first report will then be prepared in 2027, covering data from the 2026 financial year.
Additional changes are still expected in 2026, for instance further simplification of the DNSH requirements, so we will continue to monitor legislative developments.