EU: Public consultation to review the EU taxonomy environmental delegated act to update and simplify the technical screening criteria.

 

The EU Commission has launched a public consultation to review the EU taxonomy environmental delegated act to update and simplify the technical screening criteria.

The EU Taxonomy is a classification framework that sets out criteria for identifying environmentally sustainable economic activities, aiming to guide and stimulate investments essential for the EU’s green transition. While the Taxonomy Regulation provides the overall structure, the European Commission defines detailed technical screening criteria—used to determine whether an activity qualifies as environmentally sustainable—through delegated acts. The Taxonomy Climate and Environmental Delegated Acts, adopted in 2021 and 2023 respectively, establish these criteria for activities contributing to the EU’s six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

This initiative aligns with the Commission’s broader political priorities, including reducing unnecessary reporting burdens for businesses and enhancing sustainable finance through simpler and more transparent rules. It also fulfills the Commission’s legal obligation under the Taxonomy Regulation to periodically review and, where necessary, update the technical screening criteria. Accordingly, the initiative serves both as a required regulatory update and a response to stakeholder concerns about the complexity and usability of the current framework. It is closely linked to the Commission Communication “A Competitiveness Compass for the EU” and the recent Omnibus I Sustainability Simplification Package.

The central issue the initiative seeks to address is the difficulty stakeholders face in applying certain technical screening criteria under the Climate and Environmental Delegated Acts. Despite the Taxonomy’s key role in the EU Sustainable Finance framework, stakeholders—including businesses, financial institutions, auditors, and public authorities—have reported inconsistencies, legal ambiguities, and excessive complexity in the criteria, based on their initial experiences with implementation and reporting.

Common concerns raised include overly complex or unclear criteria, misalignment with updated EU legislation, and the detailed or confusing nature of the “do no significant harm” requirements. Stakeholders also note insufficient guidance on demonstrating compliance. These challenges have increased the administrative and compliance burdens for companies, heightened risks, and discouraged sustainable investment.

Without coordinated EU-level action, these issues are expected to continue or worsen. Beyond administrative inefficiencies, there is also a political risk: if the framework is seen as too complicated or impractical, it could undermine confidence in the EU’s overall sustainable finance agenda.

The proposed initiative—presented as a package of two Delegated Regulations—seeks to enhance the clarity, usability, legal certainty, and cost-effectiveness of the EU Taxonomy. It aims to resolve implementation issues by clarifying and simplifying the technical screening criteria, including the “do no significant harm” requirements, aligning them with recent EU legislative updates, and removing unnecessary complexity. These improvements will promote more consistent application across Member States and sectors while reducing reporting burdens and compliance costs for businesses.

The Commission is considering targeted revisions to make the criteria more user-friendly and proportionate, without compromising their scientific rigor or credibility. Potential adjustments include refining specific technical screening criteria, improving definitions, providing clearer compliance requirements, eliminating duplicative or disproportionate provisions, and strengthening references to relevant EU legislation. The focus will remain on areas where there is clear evidence of practical difficulties or inconsistencies, ensuring that changes enhance both effectiveness and trust in the EU Taxonomy framework.