What is the EU Taxonomy?
The EU Taxonomy is a classification system for economic activities, not a rating for a whole company. Under Regulation (EU) 2020/852 Article 3, an activity is environmentally sustainable only if it substantially contributes to at least one of the six Article 9 environmental objectives, does no significant harm to the others, meets Article 18 minimum safeguards, and satisfies the technical criteria in the delegated acts.
Article 8 applies to undertakings that must publish sustainability information under the EU Accounting Directive. It asks them to disclose how much of their business is associated with environmentally sustainable activities. A non-financial undertaking, meaning an in-scope company that is not a bank, insurer, asset manager, or investment firm, reports proportions for turnover, capital expenditure (CapEx), and operating expenditure (OpEx). The rules applied to climate objectives from 1 January 2022 and to the other four environmental objectives from 1 January 2023. Keslio's Germany reporting guide shows how this requirement sits beside national and EU reporting rules.
Why does the EU Taxonomy matter to you?
Your finance team must connect each claimed activity to financial-statement figures, while operations and sustainability teams must support the environmental tests. A lender, investor, parent company, or customer may also ask for your activity mapping even when your company is not directly subject to Article 8. Treat that as a specific information request, not proof that the regulation applies to you.
A weak file can overstate sustainable turnover, count the same CapEx twice, or call an activity aligned when it is only listed in a delegated act. Keep the reporting entity, financial year, denominator, activity code, criteria version, calculation, and supporting documents together.
How does the EU Taxonomy work?
First, map each economic activity to the activities described in the applicable delegated acts. A described activity is Taxonomy-eligible even if it fails every alignment test. Second, test each eligible activity against substantial contribution, do-no-significant-harm, minimum-safeguard, and technical requirements. Third, calculate the eligible and aligned shares using the turnover, CapEx, and OpEx methods in Delegated Regulation (EU) 2021/2178.
From 1 January 2026, a non-financial undertaking may choose not to assess activities that together generate less than 10% of the turnover KPI denominator. The same option applies separately when the activities account for less than 10% of the CapEx KPI denominator. It must report the unassessed amounts separately as non-material. For OpEx, it may omit the whole assessment when OpEx is not material to its business model, provided it discloses the denominator and explains why. If OpEx is material, it may still leave activities below 10% of the OpEx KPI denominator unassessed.
What mistakes should you avoid?
- Using eligible and aligned as interchangeable labels.
- Applying one activity's criteria to the company's entire revenue or investment programme.
- Reporting percentages without reconciling every numerator and denominator to the financial records.
- Using an old delegated-act version without recording the criteria and reliefs applied for that financial year.
Is Taxonomy-eligible the same as Taxonomy-aligned?
No. Eligible means the activity is described in a delegated act. Aligned means it also passes all four Article 3 conditions. Non-eligible does not by itself mean environmentally harmful; it means the activity is not described in the current delegated acts.
Does EU Taxonomy reporting apply to every EU company?
No. Article 8 is tied to the obligation to publish sustainability information under Articles 19a or 29a of the Accounting Directive. Check the current EU rules, national implementation, group structure, and reporting year before deciding that your company must report.
What records support an EU Taxonomy assessment?
Keep an activity-to-code map, revenue and expenditure reconciliations, the criteria assessment for each claimed activity, technical calculations, minimum-safeguard records, approvals, and the exact delegated-act version used. Mark gaps and exclusions instead of turning an unsupported activity into aligned revenue.