On 5 February 2025, the EU Platform on Sustainable Finance (Platform) issued a report Simplifying the EU taxonomy to foster sustainable finance.

The report builds on previous Platform work and responds to a European Commission (Commission) mandate to help simplify and improve the effectiveness of the framework of the Taxonomy Regulation by enhancing its usability. The report identifies key areas for improvement, including simplification, data access and coherence with other regulations. It offers recommendations to the Commission grounded in two years of market observations, pilot projects and outreach to stakeholders, including investors, credit institutions, insurers, corporates, small and medium-sized enterprises (SMEs), auditors and consultants, that are affected by the EU sustainable finance regulatory framework. The report also provides suggestions on areas that it believes should be prioritised during its next mandate.

The report makes four core proposals to the Commission for simplifying taxonomy reporting:

  • More than one-third reduction in corporate reporting burden with:
  • Adjusting the operational expenditure key performance indicator (KPI) as a voluntary disclosure, except for research and development.
  • Introducing a materiality threshold for reporting the turnover, operational expenditure, capital expenditure KPIs and the combined KPIs of financial companies, in line with the Accounting Directive.
  • Enhancing the alignment with financial reporting.
  • Simplifying reporting templates, with a clear reduction of data points to limit the reporting to information that is relevant for making business decisions.
  • A simplified green asset ratio that encourages green and transition lending:
  • Ensuring a symmetrical green asset ratio with similar numerator and denominator composition.
  • Simplifying retail exposure reporting, focusing on substantial contribution.
  • Allowing for estimates and proxies for reporting, in conjunction with safe harbours to protect against greenwashing allegations.
  • The materiality principle should apply to the combined KPI for financial undertakings, excluding immaterial business segments not consolidated under the Accounting Directive.
  • A practical approach to do no significant harm (DNSH) criteria:
  • Introducing a lighter compliance assessment process (regarding evidence of compliance, documentation and/or on EU regulations).
  • All DNSH criteria should be reviewed as part of the scheduled reviews of various delegated acts, prioritising their usability and practicality for financial and non-financial companies.
  • Introducing a “comply or explain” approach for DNSH assessment of the turnover key performance indicator, as a temporary measure.
  • Helping SMEs access sustainable finance:
  • Adopting a streamlined and voluntary approach for banks and investors’ exposures to unlisted SMEs.
  • Adopting a simplified approach to the EU taxonomy for listed SMEs.