EU Taxonomy Update 2025: Key Changes to the Delegated Act and Impact on CSRD & ESG Reporting

On 26 March 2025, the EU Platform on Sustainable Finance published a key document responding to the public consultation on the new delegated act updating the EU taxonomy.

It may sound technical, but it has a direct impact on how companies report on sustainability, how investors assess what’s “green”, and how money flows towards sustainable activities in Europe.

The Platform supports simplifying reporting processes—but makes it clear: simplifying doesn’t mean weakening. You can’t build a sustainable finance system if the rules lose credibility.

Here’s what you really need to know:

What is the EU taxonomy and why is it being reviewed?

The taxonomy is the EU’s official system for defining which economic activities are considered environmentally sustainable.

Its main goal: direct private capital towards activities that align with the EU’s climate and environmental objectives.

In March 2025, the European Commission proposed a new delegated act to adjust and simplify the taxonomy’s practical implementation, after two years of initial rollout. The Platform on Sustainable Finance—made up of experts from companies, banks, NGOs, regulators and more—responded with concrete feedback and warnings.

The “Omnibus” package: what’s happening to the CSRD and why it’s raising concerns

At the same time, a legislative proposal known as the “Omnibus” package is aiming to change several EU directives, including the CSRD (Corporate Sustainability Reporting Directive).

What’s being proposed:

• Shrinking the scope of the CSRD by up to 80%, excluding many medium-sized companies from the obligation to report.
  
  
• Allowing large companies (over 1,000 employees) to opt in voluntarily—meaning they could choose whether or not to report.
  
  

Why is this a problem?

According to the Platform:

• If some companies report and others don’t, data becomes fragmented and non-comparable.
  
  
• The reliability and transparency of the system are at risk.
  
  
• They estimate 1 in 7 companies currently reporting under the taxonomy would drop out.
  
  

This has major consequences for investors, financial institutions and anyone relying on ESG data.

3 key risks identified by the Platform

1. Data fragmentation and loss of transparency
   Without consistent reporting, the ecosystem becomes unreliable and hard to trust.
   
   
2. More greenwashing, more complexity
   Less data means more guesswork, more reliance on third-party estimations, and more ad hoc reporting. That increases greenwashing risks and reporting burdens.
   
   
3. Break in alignment between the CSRD and the taxonomy
   The CSRD is what makes taxonomy reporting mandatory. If that’s weakened, the taxonomy loses its power as a tool for guiding capital.
   

What the Platform recommends (and why it makes sense)

• Don’t reduce the CSRD’s scope. Keep the current coverage. No opt-in for large companies.
  
• Simplify the indicators, not the number of companies required to report.
  
• Promote the use of ESRS, the common European standards for sustainability reporting.
• ‍Support SMEs with proportionate tools like the simplified SME SFS standard.

Other key takeaways

Reporting with ESRS = speaking the financial language of Europe
Using ESRS isn’t just about compliance. It’s how you connect with European investors and regulators.

Partial alignment: showing progress, not perfection
The proposal includes allowing companies to report activities that partially meet taxonomy criteria. This is essential for sectors in transition.

SMEs must be included
They can’t be expected to do the same as large multinationals, but they still need a clear path to participate and access sustainable finance. That’s where SME SFS and VSME ESRS come in.

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Keep what works, improve what doesn’t

At Dcycle, we believe speaking the ESRS language is essential to stay competitive in the European market.

We help you take full control of your ESG data through a reporting system that’s standard-compliant and user-friendly.

If you're ready to take real control of your company’s sustainability, you’re looking for our solution. And we’re here to help.

Quick glossary

• EU taxonomy: The official classification of sustainable economic activities.
  
  
• CSRD: EU directive requiring companies to report on sustainability (replacing the NFRD).
  
  
• ESRS: European Sustainability Reporting Standards.
  
  
• Opt-in: When companies choose voluntarily whether to report (not recommended).
  
  
• CapEx / OpEx / Turnover: Key indicators—investments, expenses, revenue—used to measure sustainability.
  
  
• DNSH: “Do No Significant Harm” to other environmental objectives.
  
  
• GAR / GIR: Green Asset Ratio / Green Investment Ratio. KPIs used by banks and insurers.
  
  
• Partial alignment: Activities that only partially meet taxonomy criteria.

• SME SFS / VSME ESRS: Simplified reporting standards for SMEs.