EU Taxonomy: eligibility, alignment, and what changes in 2026

The EU taxonomy classifies economic activities based on their contribution to the EU's environmental objectives: climate, biodiversity, pollution, circular economy, and water resources. Like the CSRD, it was revised this summer as part of the Omnibus simplification.

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What the taxonomy requires today

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A company subject to the taxonomy must assess, activity by activity, whether it is eligible and then aligned with EU technical criteria, and publish three indicators: the share of its turnover, capital expenditure (CapEx), and operating expenditure (OpEx) covered by aligned activities.

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Taxonomy and CSRD: one report, not two

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The taxonomy does not require a separate document. Its indicators (Article 8 of the Taxonomy Regulation) are integrated directly into the sustainability report produced under the CSRD, alongside ESRS disclosures. The scope of application is also the same: since the Omnibus, only companies with more than 1,000 employees and 450 million euros in turnover are subject to both. A company preparing its sustainability report therefore handles both obligations in the same process, on the same timeline, rather than as two separate projects.

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How to determine if an activity is eligible

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Eligibility is verified in two stages. First, the company determines whether its business activities are included in the list of activities described by the Taxonomy delegated regulations—the Climate Delegated Act and the Environmental Delegated Act—typically by cross-referencing its NACE code with the activity description itself. If the activity is listed, it is eligible; this does not yet mean it is aligned, only that it falls within the scope of assessment. An activity that does not appear in any of the lists remains outside the calculation, neither eligible nor aligned.

With the January 2026 revision, a company may now choose not to assess the eligibility of certain activities if they represent, in aggregate, less than 10% of the total value of an indicator (turnover, CapEx, or OpEx)—a materiality threshold that simplifies the process for marginal activities.

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How to determine if an activity is aligned

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Once eligibility is established, alignment is verified against three cumulative criteria, collectively known as technical criteria:

• Substantial contribution: The activity must demonstrate, based on quantitative or qualitative thresholds specific to each activity, that it contributes significantly to at least one of the EU's environmental objectives.
• Do No Significant Harm (DNSH): The activity must not significantly harm any other environmental objectives. It is precisely regarding the DNSH criterion related to pollution prevention that the January 2026 revision has simplified the requirements.
• Minimum safeguards: The company must demonstrate that it implements due diligence procedures covering human rights, labor rights, taxation, fair competition, and anti-corruption.

An activity is only aligned if it satisfies all three criteria simultaneously. Failing to meet even one of them, even while fulfilling the other two, is enough to exclude the activity from the alignment calculation.

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What changes with the revision

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Delegated Regulation (EU) 2026/73, published in the Official Journal on January 8, 2026 (adopted on July 4, 2025), simplifies this framework in several ways:

• The materiality threshold previously mentioned for eligibility and alignment.
• The OpEx indicator may be omitted entirely if operating expenses are not material to the company's business model.
• Reporting templates have been streamlined: the number of summary data points to be published is reduced by 64% for non-financial companies and by 89% for credit institutions.

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Since when, and for whom

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The text entered into force on January 28, 2026, and applies retroactively to the 2025 financial year for companies already subject to the taxonomy. However, they may choose to defer for one year and continue applying the old regime for the 2025 financial year, provided it is applied in its entirety, without mixing the two texts.

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What this means in practice

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A company reporting on the 2025 financial year must explicitly choose, and specify in its sustainability report, which set of rules it is applying (the old or the new). This is not a technical detail: the two regimes cannot be mixed.

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