Quick Guide: Key Sustainability Disclosure Regimes: EU Taxonomy Regulation: Article 8 reporting obligations

The EU Taxonomy Regulation establishes a classification system for determining whether an economic activity is environmentally sustainable. 

It also introduces obligations on certain types of financial and non-financial entities to report on the Taxonomy alignment of their activities or the financial products that they offer.

The high-level detail of those reporting requirements is set out in Article 8 of the Taxonomy Regulation, with additional detail on how to calculate and present the information set out within a delegated regulation (known as the “Disclosures Delegated Act”). 

The Disclosures Delegated Act entered into force on 30 December 2021. 

Entities already in scope of the NFRD were required to report on how and to what extent their business activities were taxonomy “eligible” from 1 January 2022 (for financial year 2021). 

In-scope non-financial undertakings were then required to report on how and to what extent their business activities were taxonomy “aligned” from 1 January 2023 (for financial year 2022), with in-scope financial organisations required to do the same from 1 January 2024 (for financial year 2023). 

The entry into force of the CSRD has expanded the scope of the provisions to a broader range of companies (although the scope of both regimes does not completely align and some particularities will apply).  For details of the entities brought into scope by the entry into force of the CSRD, please refer to our CSRD Quick Guide.  That Quick Guide also covers the impact of the “Stop-the-Clock” Directive introduced as part of the Omnibus I simplification package on the timing of application of the CSRD scoping provisions.

High level detail is provided in Article 8 of the Taxonomy Regulation which provides that companies are required to report on how and the extent to which their activities are associated with economic activities that qualify as taxonomy aligned. 

For non-financial undertakings, Article 8 further specifies that such companies are required to disclose the proportion of their turnover derived from products or services associated with economic activities that qualify as taxonomy aligned, as well as the proportion of their CapEx and OpEx related to assets or processes associated with economic activities that qualify as taxonomy aligned. 

The Disclosures Delegated Act then specifies:

• additional information regarding the disclosure obligations of non-financial undertakings;
• information to be provided by various types of financial undertaking based on the types of business undertaken by that financial undertaking, with: (i) separate rules for asset managers, credit institutions, investment firms, and insurance & reinsurance undertakings; and (ii) disclosure rules common to all financial undertakings; and
• disclosure rules common to all non-financial and financial undertakings.

Specifically, the Disclosures Delegated Act sets out:

• details governing the content and presentation of information;
• common and specific rules relating to KPIs. A key point here is that the three KPIs for non-financial undertakings (turnover, CapEx and OpEx) are considered to be less relevant for assessing the activities of financial undertakings.  For credit institutions, for example, the main KPI is the Green Asset Ratio ("GAR").  Asset managers are required to disclose the proportion of investments they have made in taxonomy aligned activities as a proportion of AUM; and 
• disclosure templates. 

On 20 December 2021, the Commission published a set of FAQs entitled “How should financial and non-financial undertakings report Taxonomy-eligible economic activities and assets in accordance with the Taxonomy Regulation Article 8 Delegated Act?”. The FAQs are designed to assist entities in making disclosures under Article 8 of the Taxonomy Regulation. 

A Commission notice on the interpretation of certain legal provisions to clarify the content of the Article 8 Disclosures Delegated Act (designed to complement the December 2021 FAQs) was published in October 2022. 

A further Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets was published on 20 October 2023 (C/2023/305). 

Further Commission guidance was issued on 21 December 2023, with the aim of assisting financial market participants (“FMPs”) to prepare their first mandatory reporting exercise in 2024. 

A key question for reporting entities is the assessment of which activities performed by the entity are eligible under the EU Taxonomy.  

Eligibility refers to the economic activities that could contribute to the Taxonomy’s environmental objectives:

• climate change mitigation;
• climate change adaptation;
• the sustainable use and protection of water and marine resources;
• the transition to a circular economy;
• pollution prevention and control; and
• the protection and restoration of biodiversity and ecosystems.

by reference to the eligibility criteria and NACE sectors covered by the EU Taxonomy Regulation’s delegated acts (the Climate Delegated Act, the Complementary Climate Delegated Act, and the Environmental Delegated Act).  

An activity can be taxonomy-eligible irrespective of whether it meets any or all of the technical screening criteria (“TSC”) laid down in those delegated acts. 

Taxonomy alignment is determined by way of an assessment of whether an eligible activity: (i) contributes substantially to one or more environmental objectives (by reference to the criteria set out in Articles 10-16 EU Taxonomy Regulation; (ii) does in fact comply with the TSC for those environmental objectives; and (iii) meets minimum safeguards. 

Further, the activity must not harm another environmental objective to which it does not contribute substantially (this is the so-called “do no significant harm” (“DNSH”) criteria, and the rules require that the activity comply with the DNSH criteria for all objectives that it does not contribute to substantially). 

Following the publication of a draft in February 2025 as part of the Omnibus I package, on 4 July 2025, the European Commission adopted a Delegated Act amending the Disclosures Delegated Acts (the “2025 Delegated Act”). 

The key simplification measures set out in the 2025 Delegated Act include:

• Exempting non-financial undertakings from assessing: (i) Taxonomy-eligibility and alignment for economic activities that are not financially material for their business; and (ii) Taxonomy alignment for their entire OpEx when considered non-material for their specific business model (activities will be deemed non-material if they account for less than 10% of total revenue, CapEx or OpEx);
• Exempting financial undertakings from assessing: (i) Taxonomy-eligibility and alignment for economic activities that are not financially material for their business; and (ii) Taxonomy alignment for their entire OpEx when considered non-material for their business (with activities deemed non-material if, broadly, they account for less than 10% of loans and investments financing specific activities whose use of proceeds is known); and
• Granting financial undertakings the option of not reporting detailed Taxonomy KPIs for two years, provided that no claim is made that their activities are associated with Taxonomy-aligned activities (where they opt out, a statement to this effect must be published in the management report).

The 2025 Delegated Act is currently under review by the European Parliament and Council.  Once published in the Official Journal of the EU, it will enter into force 20 days from publication.  The measures will apply from 1 January 2026 (covering the 2025 financial period).  Undertakings have the option to apply the previous rules for this reporting cycle.

Further aspects of the Omnibus I simplification package remain under negotiation.  In particular, the so called “Requirements Proposal” will make substantive changes to the CSRD, including changes to reduce the number of CSRD in-scope companies by about 80%. The proposals further envisage introducing optionality (and more flexibility) to Taxonomy Article 8 reporting in certain circumstances for EU undertakings that are in scope but do not have a net turnover exceeding EUR 450 million (individually or on a consolidated basis).

• EU Taxonomy Regulation (EU 2020/852)
• Disclosures Delegated Act (EU 2021/2178)
• EU Commission webpage that provides links to the Climate Delegated Act, Complementary Delegated Act and Environmental Delegated Act 
• EU Commission’s EU Taxonomy Compass (which provides a visual representation of the Taxonomy’s contents, intended to help users navigate the activities included therein)
• EU Commission FAQs: “How should financial and non-financial undertakings report Taxonomy-eligible economic activities and assets in accordance with the Taxonomy Regulation Article 8 Delegated Act?” (December 2021) 
• Commission notice on the interpretation of certain legal provisions to clarify the content of the Article 8 Disclosures Delegated Act (designed to complement the FAQs) (October 2022)
• Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets (October 2023) (C/2023/305)
• Commission guidance assisting FMPs to prepare their first mandatory reporting exercise in 2024 (December 2023)

• Blog post: EU: European Commission sets out proposals to simplify Taxonomy Delegated Acts
• EU Omnibus Tracker (with links to our latest blog posts on the topic)
• Sustainable Finance Survival Guide
• Quick Guide on CSRD