With the European Commission issuing the omnibus proposal on 26th of February 2025, simplifications are suggested for the CSRD, EU Taxonomy and CSDDD. The reactions from organizations span the range from relieved to annoyed. While some shared their relieve to be rid of the tedious task, others have embraced the EU taxonomy and aim to continue with or without mandatory reporting in place.
This is part 2 in our Omnibus series. Where the first part focused on the changes to the CSRD, this blog focuses on the proposed changes to the EU taxonomy.
The proposed adjustments in short
The omnibus has set out to lower the administrative burden of the disclosures under the EU Taxonomy. As part of the CSRD, the timeline and scope adjustments as discussed in part 1, also apply to the EU Taxonomy. On top of those changes, these are the main adjustments the omnibus proposes:
- The threshold for companies subject to the EU Taxonomy is increased to a turnover of more than 450 million euro. Companies below this requirements, will no longer be obliged to report but can rather opt-in if they wish to report their financial information.
- A rule is suggested to keep companies from having to report on small yet eligible activities. This adjustment will relieve companies with an eligible activity that is associated with less than 10% turnover, Opex or Capex associated, of the requirement to do any further assessment to report on their alignment.
- Companies only have to report the Opex associated with the activities under the EU taxonomy, in case it is really significant (25% of the turnover).
Reduction of scope leads to more space for voluntary reporting
Initially, all companies that were subject to CSRD had to report under the EU taxonomy. With both a reduced scope on the CSRD and the additional threshold on the EU Taxonomy, only the biggest companies are left. With opt-in possibilities for organizations on both the contents and the disclosures as a whole, there now is more space for companies to decide on their reporting. With choices to be made on whether to include Opex and/or small activities, we expect to see varying formats and sizes of EU taxonomy reporting.
Strategic reporting to investors
For those companies still in scope for the EU Taxonomy, the plan ahead seems relatively clear. The real uncertainty is for those companies under the threshold of 450 million euro. They face the decision on whether to spent time and effort on the financial reporting about their sustainable activities. Our advice is twofold.
Firstly, we suggest looking into the eligible activities for your organization. You might want to hold off on the collecting the associated data. However, investing some efforts in identifying what business activities actually fall under the EU Taxonomy is well worth it. Gaining this insight will be crucial for assessing whether reporting under the EU Taxonomy could be beneficial for you. We have seen examples where companies core activities were not really covered by the EU taxonomy and all that remained were investments in the solar pannels on the roof. Although a relevant activity, in the bigger financial picture, these investments might not be seen as material.
Secondly, we suggest looking into the future financial situation of your organization. The EU taxonomy was designed to guide private investments to those companies investing in sustainable practices. If your company is wanting to attract and/or retain investors, disclosures under the EU taxonomy might be quite interesting indeed.
Making decisions based on insights
As goes with many business decisions, insights are key. Being informed and aware of the potential risks and opportunities of choices is the fundament on making a long-lasting decision.
Need help with identifying what these changes mean for you? Intire is here to help. Whether you are looking for someone to tell you more about the regulation, or helping hands to assess your taxonomy activities, look no further.
