The EU Taxonomy is a key tool of the EU to promote sustainable investments. It provides clarity on which economic activities are considered environmentally sustainable and gives companies a binding framework for assessing and disclosing their sustainability performance. This article offers a structured checklist for companies wishing to align their activities with the taxonomy and report accordingly—practical, easy to understand, and up to date.

EU Taxonomy: Checklist for Companies

The EU Taxonomy helps companies assess and disclose the sustainability of their economic activities. It is particularly relevant for large companies and listed SMEs in Germany. The aim is to prevent greenwashing and promote investments in environmentally friendly sectors. According to the European Commission, the taxonomy is central to the EU’s Sustainable Finance Action Plan, designed to reorient capital flows towards sustainable activities and ensure greater market transparency (source).

Key facts at a glance:

• Affected companies: Large companies (e.g., >500 employees, >€50 million turnover) and listed SMEs.
• Objectives: Climate neutrality by 2050, promotion of sustainability and transparency.
• Reporting components:
  • Turnover: Share of sustainable activities.
  • Investments (CapEx): Investments in sustainable projects.
  • Operating expenses (OpEx): Costs for sustainable measures.
• 6 environmental objectives: Climate protection, climate change adaptation, water resources, circular economy, pollution reduction, biodiversity.
• Obligations from 2023: Disclosure of taxonomy alignment for affected companies.

5-step implementation plan:

1. Analyze activities: Record business activities and match them with NACE codes.
2. Check criteria: Ensure support for environmental objectives, DNSH (Do No Significant Harm) assessment, and compliance with social standards.
3. Calculate KPIs: Determine shares of turnover, investments, and operating expenses.
4. Create reports: Transparent documentation of all relevant data.
5. Set up monitoring: Regular review and adaptation to new requirements.

Compliance with the EU Taxonomy offers advantages such as better financing opportunities, improved market position, and access to green investments. Companies should act early to meet new reporting obligations and remain competitive in the long term. Notably, a 2023 Deloitte survey found that 68% of European CFOs see sustainability regulation as a top driver for business transformation (source).

EU Taxonomy Basics

Definition and Objectives

The EU Taxonomy defines which economic activities can be classified as environmentally friendly. It serves as a basis for clearly identifying sustainable activities and provides a concrete framework supported by defined goals. The taxonomy is legally binding for certain companies under the EU’s Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD) (source).

The 6 Environmental Objectives

The taxonomy is based on six central environmental objectives:

An economic activity is considered sustainable if it makes a substantial contribution to at least one of these objectives without significantly harming any of the others. This principle is known as “Do No Significant Harm” (DNSH). Learn more about Do No Significant Harm (DNSH). The DNSH principle is crucial for ensuring that progress in one area does not come at the expense of another, reflecting a holistic approach to sustainability (source).

Which Companies Are Affected?

The taxonomy directly impacts the reporting obligations of companies in Germany. Since January 1, 2023, the following companies are required to disclose their taxonomy alignment according to the EU Taxonomy Regulation:

• Large companies that:
  • employ more than 500 people,
  • have a balance sheet total of over €43 million, and
  • generate annual turnover of over €50 million.
• Listed SMEs, even if they do not meet the above size criteria.

Smaller companies can voluntarily use the EU Taxonomy to assess their sustainability performance and prepare for future requirements. For guidance on sustainability, see Implementing ESG Criteria: A Beginner's Guide to Sustainability. As the regulatory landscape evolves, the European Commission’s “Omnibus Package” (announced in February 2025) aims to streamline and simplify sustainability reporting, signaling ongoing adaptation to practical business needs (source).

EU Taxonomy: Who Is Affected and What Needs to Be Done?

5-Step Guide to Compliance

Based on the fundamentals of the taxonomy, here is a practical 5-step plan for implementation.

1. Analyze Taxonomy Eligibility

Record all business activities. Use the EU Taxonomy Compass tool, which provides a complete list of relevant activities. Assign the appropriate NACE code to each activity to facilitate classification. The European Banking Authority recommends this structured approach to ensure consistency and comparability in sustainability disclosures.

2. Check Alignment Criteria

Assess your compliance based on these three criteria:

1. Substantial Contribution

Ensure your activities support at least one of the six environmental objectives. The technical screening criteria must be fully met according to the EU Technical Screening Criteria.

2. Do No Significant Harm (DNSH)

Check that your activities do not significantly harm any other environmental objectives as per the DNSH principle.

3. Minimum Social Safeguards

Verify compliance with international labor and human rights standards such as the OECD Guidelines for Multinational Enterprises. This step is increasingly scrutinized by investors and regulators, as social criteria are now seen as integral to overall sustainability.

3. Determine Key Figures

Measure the following KPIs:

• Turnover: Share of taxonomy-aligned activities in total turnover
• CapEx: Investments in taxonomy-aligned activities
• OpEx: Operating expenses for taxonomy-aligned activities

"Working together saved us a lot of effort, as the topic was too new, complex, and extensive to tackle without external expertise. Otherwise, this hurdle would have been too high." – Gilbert Guntschnig, Manager, OMNIA Energy

4. Create Reports

Document all relevant information:

• Description of taxonomy-eligible activities
• Evidence of meeting technical criteria
• Calculation bases for KPIs
• DNSH assessments and supporting evidence

5. Monitor Requirements

Set up systematic monitoring to stay up to date:

• Regularly review the EU Taxonomy Compass
• Document changes and their impacts
• Integrate new requirements into existing processes

This approach ensures long-term compliance. According to a McKinsey study, 75% of consumers consider product sustainability when shopping, highlighting the growing market relevance of transparent sustainability reporting.

Implementation Resources

Reference Materials

Here are some useful resources to help you with implementation:

These tools provide a solid foundation for your next practical steps. For further guidance, the European Commission’s official portal offers up-to-date documentation and FAQs.

Practical Examples from German Companies

A look at German companies shows how successful implementation can be achieved:

Nordex SE has achieved impressive results in the field of renewable energy:

• Focus on "Manufacturing of renewable energy technologies (3.1)" and "Electricity generation from wind power (4.3)"
• Fulfillment of technical criteria
• Disclosure of KPIs in the Integrated Annual Report 2024

Deutsche Börse Group has also pursued interesting approaches:

• In fiscal year 2021, the focus was on data-driven solutions to reduce greenhouse gases
• Emphasis on data processing and hosting
• No significant taxonomy-relevant operating or investment expenses identified

These examples show that structured approaches and adaptations are crucial for sustainable and successful taxonomy implementation. Documentation and ongoing process optimization play a key role. According to a PwC study, companies that proactively address taxonomy requirements report smoother audits and improved stakeholder trust.

Business Benefits

Access to Investments

Compliance with the EU Taxonomy opens up new financing opportunities for companies. Since the introduction of the Disclosure Regulation in March 2021 and the EU Taxonomy, investors focused on sustainability have clear criteria for evaluating their investments. For more on unlocking ESG value, see Unlocking ESG Value for Startups and Venture Capital. The European Investment Bank has reported a significant increase in green bond issuances and sustainable finance products since the taxonomy’s introduction.

A structured tax compliance management system (Tax-CMS) that integrates tax issues into the ESG strategy can efficiently leverage the tax benefits of sustainable investments. According to the OECD, such integration can also reduce compliance costs and enhance investor confidence (source).

Market Position

The EU taxonomy not only offers better financing opportunities but also strengthens competitiveness. This is particularly relevant in the following sectors:

• Agriculture
• Manufacturing
• Energy
• Mobility
• Communication
• Real Estate

Aligning with the EU taxonomy requirements provides these sectors with clear advantages^[10]. However, according to a study by the DGNB (German Sustainable Building Council), only one out of 62 evaluated real estate projects currently fully meets the taxonomy criteria^[10]. This shows: companies that act early can secure a pioneering role.

With a comprehensive ESG tax strategy, companies can not only achieve tax advantages but also enhance their reputation. Transparent reporting and applying the GRI Standard 207 'Tax' can further strengthen their market position^[3].

EU Requirements

The EU has introduced specific regulations to further advance the implementation of the EU taxonomy. These are established in both the CSRD and the German reporting standards.

CSRD Requirements

The CSRD significantly expands the reporting obligations for EU companies. Starting from the 2024 financial year, large companies are required to implement the new provisions for the first time. The criteria for reporting obligations are clearly defined:

The number of companies subject to reporting requirements is expected to rise to around 14,600. At the same time, the number of data points to be reported is set to decrease by almost 70% in order to reduce the bureaucratic burden ^[11].

Next Steps

To successfully implement the EU taxonomy, concrete actions are now required. These build on the compliance steps previously outlined and lead to practical application.

Immediate Preparatory Measures

• Conduct an activity analysis
  Record all economic activities of your company and use the classification systems described in the previous section.

• Establish data management
  Set up systematic data management for the relevant identified topics.

"In our experience, the first reporting cycle is usually the biggest challenge. Therefore, companies that start early are better positioned to establish a solid foundation that facilitates and improves future reporting cycles." ^[5]

Practical Implementation

• Conduct a gap analysis for ESRS reporting by the end of 2024 and plan a trial run for 2025.
• Train responsible employees early on to build expertise and confidence in dealing with the requirements.
• Establish an ongoing dialogue with auditors to identify and resolve potential challenges early.

As support, you can use the ten-step guide developed by the Environmental Business Information Centre (IZU) and the Bavarian Chamber of Industry and Commerce (BIHK). It serves as a practical guide for a structured approach to sustainability reporting.

How I Can Help

I support companies in efficiently implementing the requirements of the EU taxonomy – with a clear, practical approach. Whether it's an initial gap analysis, KPI calculation, or complete reporting: I provide guidance with experience, the right tools, and a structured methodology. Together, we lay the foundation for regulatory compliance and leverage the taxonomy as a driver for sustainable transformation and investment readiness. Get in touch with me.