Commission proposal to simplify Taxonomy Regulation Level 2 measures

On 4 July 2025, the European Commission adopted a Delegated Regulation.

As we reported at the time, the Commission consulted on its draft measure in February as part of its Omnibus I package of measures.

The adopted Delegated Regulation aims to simplify

• the content and presentation of information to be disclosed concerning environmentally sustainable activities under Article 8 of the Disclosures Delegated Act and
• certain technical screening criteria (TSC) for determining whether economic activities do no significant harm (DNSH) to environmental objectives under the Climate Delegated Act and the Environmental Delegated Act.

What does it include?

Among the proposals in the adopted Delegated Regulation are

• exempting financial and non-financial companies from assessing taxonomy-eligibility and alignment for economic activities where these are not financially material for their business - for non-financial companies, such activities would be ‘non-material’ where they account for less than 10% of a company's total revenue, capital expenditure (CapEx) or operational expenditure (OpEx).
• exempting non-financial companies from assessing taxonomy alignment for their entire OpEx where this is deemed non-material for their business model
• simplifying key performance indicators (KPIs) such as the green asset ratio for banks
• granting financial companies the option of not reporting detailed taxonomy KPIs for two years
• reducing the number of reported data points in taxonomy reporting templates - by 64% in the case of non-financial companies and 89% in respect of financial companies and
• simplifying the DNSH criteria with regard to prevention and control of pollution related to the use and presence of chemicals.

What happens next?

The proposal goes to the Council of the EU and to the EP for scrutiny (4 months, extendable by a further 2 months).

Unless there are objections, the changes will apply once the scrutiny period ends.

The Delegated Act will apply from 1 January 2026, covering the 2025 financial year.

Undertakings are given the option to apply the measures starting with the 2026 financial year if they find this more convenient.