EU Taxonomy Simplification: What the Omnibus Really Changed

In a post-Draghi report landscape, conversations about reviewing EU regulation seem permanently reduced to a single word: “simplification.” The market is flooded with generic compliance checklists and explainers that try to break down the EU’s attempts to “reduce the compliance burden.” And the process is far from over: on 1 July 2026, Europe’s three financial supervisory authorities opened a new round of consultations proposing 15 further simplification measures for the Taxonomy, with feedback due by 12 August.

But what if the real story has been missed? “Simplification” isn’t only about cutting red tape. Counterintuitively, it may require additional effort from all parties involved.

At Clarity AI, we analyzed the adopted EU Sustainability Omnibus package and the Taxonomy Simplification Delegated Act of July 2025 to map what has actually changed: lighter reporting templates, a revised methodology, and changes that could increase reported Taxonomy alignment. This piece sets out what those changes mean in practice for investors and companies.

What is the EU Omnibus Package?

Proposed by the European Commission in February 2025, the Omnibus package was designed to address the concerns raised by European policymakers that early sustainability reporting frameworks placed an excessive operational burden on market participants, as we explored when the package was first proposed. 

The Commission bundled amendments to three pillars of EU sustainability regulation: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy. The three did not move at the same speed. 

The taxonomy changes moved first, as the disclosure rules could be amended through a Delegated Act, a Commission measure that skips the ordinary legislative procedure of European Council and Parliament negotiations. The Commission adopted an amending Delegated Regulation on July 4, 2025, well ahead of the broader political agreement that dictated the fates of CSRD and CSDDD. The simplified Taxonomy rules officially entered into force on January 1, 2026, for fiscal year 2025 (FY2025) reporting.

CSRD and CSDDD took the slower legislative route, reaching political agreement only later in 2025, but delivered a bigger structural change: CSRD reporting was restricted to undertakings with more than 1,000 employees and €450 million in net turnover, reducing the total number of reporting companies by 80% across the Union, albeit from an increased baseline. 

These two threads meet in the Taxonomy. Under Article 8 of the Taxonomy Regulation, mandatory Taxonomy reporting applies directly to entities subject to CSRD disclosures: non-financial corporates, credit institutions, asset managers, insurers, and investment firms. So a narrower CSRD population should, in theory, mean fewer Taxonomy reporters too. In practice, it’s not that simple, as the numbers below show.

What changed in the EU Taxonomy under the Omnibus?

Part of a wider simplification drive across European policy, the reform brings the following  changes for entities still in scope:

EU Taxonomy scope: who reports now

The headline 80% cut is measured against the far larger group the original rules would have captured. Left unchanged, the CSRD would eventually have brought roughly 50,000 companies into sustainability, and therefore Taxonomy, reporting. The Omnibus strips most of them back out. Only undertakings clearing both thresholds, more than 1,000 employees and over €450 million in net turnover, stay mandatorily in scope.

For financial institutions, this cuts two ways. Compared with who reports today, the Taxonomy’s reach actually grew from roughly 2,500-3,000 companies under the NFRD, the older directive that CSRD replaced. Even after Omnibus, the new regime widened that pool to an estimated 7,700-13,700 large undertakings, around a 4.3x increase, phased in across financial years 2024 to 2028. Those that remain are the largest issuers, which dominate most portfolios by weight; mandatory Taxonomy data still covers the bulk of invested capital even as the number of reporting names shrinks. The trade-off is the long tail: smaller holdings fall out of scope entirely, leaving a data gap to fill with voluntary disclosures or estimates.

EU Taxonomy reporting templates: what’s simplified

Reporting layouts across all in-scope entities have been compressed. The standalone templates for fossil gas and nuclear activities (Annex XII) have been removed and integrated into standard summary tables, reducing reported cells from 166 down to four per KPI. 

Overall, the number of required summary data points falls by 64% for non-financial corporates and 89% for credit institutions. To ease the transition, entities can also keep using the old templates through the 2026 reporting cycle (covering FY2025) while they adapt to the new ones.

Materiality and de minimis relief: what’s exempt

The reforms also introduce greater flexibility through a new 10% materiality threshold. Entities can omit assessing economic activities or assets for taxonomy eligibility and alignment if those activities cumulatively represent less than 10% of total KPI value. 

Non-financial companies can omit the OpEx KPI entirely if operational expenditure is not material to their business model.

Why EU Taxonomy alignment ratios are rising

This is where the simplification becomes counterintuitive: even though layout simplifications reduce administrative work, methodology changes alter the underlying mathematical calculation. 

Take, for instance, the typical calculation of the Green Investment Ratio of an asset manager. For them, Taxonomy alignment is essentially their aligned green assets divided by a base figure (the denominator):

Under the old rules, the denominator was the entity’s assets under management, with only sovereign exposures carved out.  Under the simplified rules, however, it only considers CSRD issuers, companies that report voluntarily, and use-of-proceeds instruments, such as sustainable bonds. Everything else falls outside the new denominator, namely:

• Exposures to non-CSRD counterparties
• Unassessable asset classes, such as derivatives, cash, cash equivalents, goodwill, commodities, and sovereign exposures

With a smaller base to divide by, the same underlying green assets translate into a significantly higher alignment percentage:

This creates a significant trade-off. While the simplifications may bring reporting relief, KPIs are no longer comparable across time, and may not be comparable across companies within the same year either, if two companies use different methodologies. 

Because entities can choose when to transition (using old vs. new templates during 2026), and how to calculate their metrics (such as exercising voluntary numerator inclusions or the temporary opt-out), financial market participants face a temporary comparability gap. 

The gap is manageable, though, if firms take two steps: restate prior-year figures on the new basis to preserve a like-for-like trend, and confirm which methodology each company has used before drawing any cross-company comparison.

What’s next for EU Taxonomy Reporting

The simplification process is not a one off. Regulators continue refining the framework, and each change alters the underlying calculation, so a reported figure is only as current as the methodology behind it. Falling behind means disclosing on an outdated basis. 

We rebuilt our EU Taxonomy solution for the new rules: Omnibus-aligned data fields and metrics, Green Investment Ratio calculations on the revised denominator, and updated Article 8 reporting templates, pre-filled and available for download. 

Our regulatory specialists read each draft as it moves toward adoption, and consult with clients to align on implementation. We build from both, which is why the solution is ready ahead of the reporting cycle, allowing firms enough time to prepare.

Simplification changes more than the volume of reporting required. It changes how sustainability performance gets measured and interpreted. As methodologies evolve, being able to produce accurate and comparable Taxonomy metrics matters as much as reducing the reporting burden itself.