EU Taxonomy in CSRD
EU Taxonomy disclosure is mandatory for all CSRD companies — the three KPIs (Revenue, CapEx, OpEx) must be included in your CSRD sustainability report. Understanding how Taxonomy disclosure integrates with ESRS standards and where the data comes from is essential for first-time filers.
EU Taxonomy disclosure is mandatory for all CSRD companies — the three KPIs (Revenue, CapEx, OpEx) must be included in your CSRD sustainability report. The EU Taxonomy Regulation (Article 8) requires sustainability reporting companies to disclose their Taxonomy KPIs — Revenue, CapEx, and OpEx alignment and eligibility percentages.
Where Taxonomy disclosure sits in the CSRD report
The EU Taxonomy Regulation (Article 8) requires sustainability reporting companies to disclose their Taxonomy KPIs — Revenue, CapEx, and OpEx alignment and eligibility percentages. This requirement was established before CSRD and continues under it.
In the CSRD report structure, Taxonomy disclosure is typically presented as: a standalone Taxonomy section within the sustainability report; or integrated into the ESRS E1 (climate) or ESRS E5 (circular economy) sections where the relevant environmental objectives are addressed.
ESRS placement: ESRS does not prescribe exactly where Taxonomy disclosures must appear. The most logical placement is: Climate Change Mitigation (Objective 1 and 2) KPIs within ESRS E1; Water (Objective 3) KPIs within ESRS E3; Circular Economy (Objective 4) KPIs within ESRS E5; Pollution (Objective 5) KPIs within ESRS E2; Biodiversity (Objective 6) KPIs within ESRS E4. A consolidated Taxonomy table covering all six objectives typically also appears either as a standalone section or in the basis for preparation.
XBRL tagging: EU Taxonomy KPIs are included in the EFRAG ESRS XBRL Taxonomy — they must be tagged along with other ESRS datapoints. Ensure your XBRL tagging process covers Taxonomy tables, not just topical ESRS disclosures.
The eligibility vs alignment distinction in CSRD reporting
First-time CSRD reporters frequently confuse Taxonomy eligibility and alignment — disclosing only one or presenting them inconsistently.
Eligibility: The proportion of your economic activities that are covered by the EU Taxonomy — listed in the Delegated Acts as potentially sustainable activities. An activity is eligible regardless of whether it meets the performance criteria. Eligibility has been mandatory to disclose since 2022.
Alignment: The proportion of eligible activities that actually meet the Technical Screening Criteria (TSC) AND the DNSH criteria AND the Minimum Social Safeguards. Alignment is always a subset of eligibility. Alignment is the more meaningful metric — it shows which activities are genuinely sustainable, not just potentially assessable.
For CSRD reporters: both eligibility and alignment must be disclosed for each of the three KPIs, separately for each environmental objective. The disclosure table therefore has many cells — three KPIs × two metrics (eligible/aligned) × six objectives = 36 percentage figures, plus breakdown by Taxonomy activity.
Common error: disclosing only the aligned percentage without the eligible percentage, or presenting the eligible percentage as if it were the aligned percentage. Assurers will verify that both figures are clearly distinguished and that aligned ≤ eligible.
Building Taxonomy data infrastructure for CSRD
Taxonomy disclosure requires data from multiple functions — finance (revenue and CapEx by activity), procurement (OpEx by activity), environmental (TSC performance data), legal (DNSH evidence), and HR (Minimum Social Safeguards documentation).
Revenue KPI: Map product and service revenues to Taxonomy NACE activity codes. Requires finance team involvement and a revenue coding system that aligns with Taxonomy activity definitions. For the first year, manual allocation from management accounts is typical — in subsequent years, automated mapping through ERP coding is more efficient.
CapEx KPI: Map capital expenditure to Taxonomy activities — both direct CapEx in aligned activities and CapEx plans for transitioning to alignment. Requires integration with the investment approval process and the fixed asset register.
OpEx KPI: Map relevant operating expenditure (R&D, maintenance, short-term leases, other OpEx directly related to aligned activities) to Taxonomy activities. OpEx is often the most complex KPI — the definition of 'relevant' OpEx is narrow and requires careful application.
TSC evidence: For each eligible activity claiming alignment, gather and document the evidence that TSC thresholds are met — energy performance certificates for buildings, GHG intensity data for manufacturing, EPC ratings for vehicles. This evidence must be available for assurance review.
For first-time filers: expect Taxonomy data collection to take 6–8 weeks for a medium-sized company. Start early and involve finance, legal, environmental, and HR teams from the outset.
Frequently asked questions
Can we use revenue-based allocation for Taxonomy eligibility if we have complex multi-activity operations?
Yes — revenue allocation by Taxonomy activity is the standard approach for companies with multiple revenue streams. The key is consistency — apply the same allocation methodology year-on-year and document the basis clearly. Where activities span multiple Taxonomy categories, use the primary activity definition or split by revenue sub-category.
Our Taxonomy alignment is very low — should we be concerned?
Low alignment is common, particularly in sectors where TSC are not yet fully developed (objectives 3–6) or where transition investment is underway. Disclose low alignment transparently with a transition plan showing how alignment will improve over time. Inflating alignment figures creates greenwashing risk — accurate low alignment with a credible improvement trajectory is better received by sophisticated investors.
Does Taxonomy disclosure change under the Amended ESRS for Wave 2 companies?
The Amended ESRS (December 2025) did not substantively change Taxonomy disclosure requirements — these are set by the Taxonomy Regulation itself, not by ESRS. Wave 2 companies reporting under Amended ESRS from FY2027 face the same Taxonomy KPI disclosure requirements as Wave 1 companies.