The EU Taxonomy Regulation Is Simplified to Ease Reporting Burden

As reported in a Proskauer article, the European Commission has adopted a delegated regulation aimed at facilitating the implementation of the EU Taxonomy Regulation. The Taxonomy Regulation is a framework that classifies environmentally sustainable economic activities. In place since 2020, this initiative aims to direct capital flows toward environmentally friendly activities and prevent greenwashing. 

The framework has been criticized as overly complex and burdensome. The delegated regulation addresses these challenges by streamlining implementation and improving clarity. It ensures that the taxonomy remains a workable tool for guiding sustainable investment while upholding the EU’s climate and environmental goals.

Among the most notable reforms are the introduction of materiality thresholds, which enable companies to exclude activities with an impact below a 10% threshold from reporting. Streamlined reporting templates further cut data requirements by more than half, while financial institutions have been given the option to defer detailed taxonomy reporting until 2027.

In addition, the regulation simplifies “do-no-significant-harm” criteria, especially regarding pollution prevention and control of the presence and use of chemicals. These changes make it easier to assess and demonstrate compliance. The new rules are set to take effect on January 1, 2026, with the flexibility to defer until the 2026 reporting year.

For legal ops teams, the reforms bring opportunities and responsibilities, including updating reporting frameworks, providing targeted training, and monitoring the regulation’s progress through EU institutions. Close collaboration with sustainability consultants and careful documentation are critical to ensuring defensible compliance and transparent communication with stakeholders.