The EU Taxonomy is the European Union’s classification system defining which economic activities count as environmentally sustainable. Companies in CSRD scope report the share of their turnover, capital expenditure and operating expenditure aligned with the Taxonomy’s six environmental objectives, using technical screening criteria set out in delegated acts.
Why It Matters for Manufacturers
The Taxonomy works at the activity level, which for a manufacturer means assessing specific production activities — not the company as a whole — against technical criteria, then mapping revenue and spend to each. That is an operational data exercise: activity-level financials plus evidence that an activity does no significant harm to the other objectives.
The payoff is financial rather than regulatory. Alignment KPIs feed lenders’ and investors’ sustainable-finance criteria. And capital expenditure alignment is how a manufacturer’s decarbonization investment shows up in a comparable, independently assured number.
The new materiality threshold is significant relief. Activities cumulatively below 10 percent of turnover, capital expenditure or operating expenditure no longer require detailed assessment, which spares manufacturers from screening every marginal line of business.
U.S. and EU Applicability
Taxonomy reporting follows CSRD scope, so U.S. manufacturers encounter it through the same doors: EU subsidiaries that report directly, or the third-country regime. Outside scope, the Taxonomy still surfaces through EU lenders and investors that use alignment figures in financing decisions. There is no U.S. equivalent classification system.
Current Status
Last updated: July 2026
- A simplification delegated act (Commission Delegated Regulation (EU) 2026/73) entered into force Jan. 28, 2026, applying from Jan. 1, 2026. It introduced the 10 percent materiality threshold, cut reporting data points by roughly 64 percent for non-financial companies and simplified the “do no significant harm” criteria for pollution.
- For reports covering fiscal 2025, companies may apply either the amended or the previous rules, stating which they used.
- Because Taxonomy reporting follows CSRD scope, the Omnibus threshold changes flow through: companies leaving CSRD scope leave mandatory Taxonomy reporting with it.