Key Takeaways
- Eligibility means the activity appears in the taxonomy's delegated acts. It does not mean the activity qualifies as environmentally sustainable.
- Companies report eligibility as a proportion of turnover, CapEx, OpEx, and (where applicable) revenue from taxonomy-eligible services.
- The Omnibus delegated act (in force 28 January 2026) introduces a 10% materiality threshold below which activities need not be assessed for alignment.
- Confusing eligibility with alignment in the sustainability statement triggers misclassification that the assurance provider must flag.
What is a taxonomy-eligible activity?
We've seen about half the first-time CSRD reporters in our pipeline confuse eligibility with alignment, sometimes in the same table row of their sustainability statement. The difference is binary and getting it wrong inflates the entity's green credentials in a way the assurance provider can't ignore.
A taxonomy-eligible activity is an economic activity listed in the delegated acts under the EU Taxonomy Regulation (Regulation 2020/852). If the activity appears in the Climate Delegated Act (EU 2021/2139) or the Environment Delegated Act (EU 2023/2486), it's eligible. Eligibility is the preliminary step. Regulation 2020/852 Article 3 sets out the conditions an activity must then satisfy to qualify as taxonomy-aligned: it must make a substantial contribution to at least one of the six environmental objectives, cause no significant harm (DNSH) to the remaining five, comply with minimum safeguards, and pass the relevant technical screening criteria.
Delegated Regulation 2021/2178 Article 8 requires non-financial undertakings in scope for the CSRD to disclose KPIs for taxonomy-eligible turnover, capital expenditure (CapEx), operational expenditure (OpEx), and related contextual information. These KPIs appear in the sustainability statement alongside the ESRS disclosures. The Omnibus delegated act (published in the Official Journal on 8 January 2026) introduced a materiality threshold: where taxonomy-eligible activities cumulatively represent less than 10% of the relevant KPI, the entity doesn't need to assess those activities for alignment. This threshold applies from FY2026, with optional early application for FY2025.
Worked example: Rossi Alimentari S.p.A.
Client: Italian food production company, FY2026, revenue EUR 67M, IFRS reporter. Rossi falls within CSRD scope (large undertaking) and must report taxonomy KPIs for the first time.
Step 1. Identify eligible activities from the delegated acts
Rossi's finance team maps revenue streams against the Climate Delegated Act and Environment Delegated Act activity descriptions. Four activities match: installation of on-site solar panels at the Parma factory (Climate Delegated Act activity 7.6, "Installation, maintenance and repair of renewable energy technologies"), operation of a company-owned fleet of refrigerated trucks (activity 6.6, "Freight transport services by road"), an energy-efficiency retrofit of the cold storage facility (activity 7.3, "Installation, maintenance and repair of energy efficiency equipment"), and water recycling infrastructure at two production sites (Environment Delegated Act activity 2.1, "Water supply").
Documentation note: record the mapping of each revenue stream and capital expenditure line to the delegated act activity descriptions. Where an activity falls outside the delegated acts, document why it is taxonomy non-eligible. Retain the NACE code cross-reference for each eligible activity.
Step 2. Calculate the eligibility KPIs
Solar panel CapEx totals EUR 1.2M out of total group CapEx of EUR 9.4M (12.8% eligible). Fleet-related turnover is EUR 0 (the fleet supports internal logistics, not third-party revenue). Water recycling CapEx is EUR 0.6M (6.4% eligible). Total taxonomy-eligible CapEx is EUR 1.8M (19.1%). Taxonomy-eligible turnover is nil because none of Rossi's external revenue derives from the eligible activities.
Documentation note: record the numerator and denominator for each KPI per Delegated Regulation 2021/2178 Annex I. Explain the treatment of internal logistics (fleet turnover excluded because no external revenue is generated). Cross-check for double counting across activities.
Step 3. Apply the 10% materiality threshold
Taxonomy-eligible turnover is 0%, so no alignment assessment is required for the turnover KPI. Taxonomy-eligible CapEx is 19.1%, which exceeds 10%, so the entity must proceed to assess alignment for eligible CapEx activities. Taxonomy-eligible OpEx is EUR 0.4M out of EUR 3.1M total taxonomy-relevant OpEx (12.9%), also above the threshold.
Documentation note: record the materiality threshold assessment per the Omnibus delegated act. For each KPI below 10%, document the conclusion that alignment assessment is not required. For KPIs above 10%, document the decision to proceed with the alignment assessment.
Step 4. Proceed to alignment assessment for above-threshold KPIs
For the solar panel CapEx (EUR 1.2M), the team evaluates the technical screening criteria under Climate Delegated Act activity 7.6 and the DNSH criteria for the remaining five objectives, then confirms compliance with minimum safeguards. The water recycling CapEx (EUR 0.6M) is assessed against Environment Delegated Act activity 2.1.
Documentation note: record the technical screening criteria evaluation for each eligible activity, the DNSH assessment against each of the five remaining environmental objectives, the minimum safeguards verification, and any remediation actions taken where criteria were initially unmet. Cross-reference the double materiality assessment where the taxonomy disclosures interact with ESRS E1-E5 topics.
Rossi reports 19.1% taxonomy-eligible CapEx and 0% taxonomy-eligible turnover. The alignment assessment applies only to CapEx activities above the 10% materiality threshold.
Why it matters in practice
At firms like ours, we've seen about half the first-year CSRD reporters treat eligibility and alignment as the same thing. Eligibility requires matching the activity to a delegated act description. Alignment requires passing the technical screening criteria and the DNSH assessment, then confirming minimum safeguards compliance. Delegated Regulation 2021/2178 Article 8(2) requires separate disclosure of eligible and aligned proportions. Collapsing the two into a single figure overstates the entity's green credentials and creates a misstatement in the sustainability statement. It can feel like a tick box exercise to separate the two columns, but that separation is exactly what the regulation demands.
The Omnibus delegated act's 10% materiality threshold applies at the KPI level (turnover and CapEx, plus OpEx where material), not at the individual activity level. We've seen teams assess each activity in isolation against a 10% threshold and exclude activities that individually fall below it, even when the cumulative eligible proportion exceeds 10%. Getting the threshold logic right is genuinely hard when the entity runs dozens of activities across multiple delegated acts, and there's no shortcut past reading the regulation line by line. This misapplication reduces the scope of the alignment assessment below what the regulation requires.
Taxonomy-eligible activity vs. taxonomy-aligned activity
| Dimension | Taxonomy-eligible | Taxonomy-aligned |
|---|---|---|
| What it means | The activity appears in a delegated act under Regulation 2020/852 | The activity passes technical screening criteria, DNSH, minimum safeguards, and continuous compliance monitoring |
| What it proves | The activity falls within the taxonomy's scope | The activity qualifies as environmentally sustainable under EU law |
| Reporting obligation | Disclose eligible turnover, CapEx, OpEx, and any related narrative | Disclose aligned turnover, CapEx, OpEx, and reconciliation to eligible figures |
| Assessment effort | Low (match the activity description to the delegated act) | High (evaluate technical criteria, DNSH for five objectives, minimum safeguards, and document evidence for each) |
| Materiality threshold (post-Omnibus) | Always disclosed regardless of proportion | Alignment assessment required only if cumulative eligible proportion exceeds 10% of the KPI |
The distinction matters on engagements because an assurance provider reviewing the sustainability statement must verify that eligible activities reported as aligned genuinely passed each required test. Reporting eligibility as alignment is a classification error that inflates the entity's taxonomy KPIs and may constitute greenwashing under the EU's regulatory framework.
Related terms
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Frequently asked questions
How do I determine whether an activity is taxonomy-eligible?
Check whether the economic activity matches a description in the Climate Delegated Act (EU 2021/2139) or the Environment Delegated Act (EU 2023/2486). The European Commission's Taxonomy Compass tool lists all eligible activities by NACE code. If the activity appears in the delegated acts, it is eligible regardless of whether it meets the technical screening criteria. Delegated Regulation 2021/2178 Article 8 requires disclosure of the eligible proportion even if the entity has not yet assessed alignment.
Does the 10% materiality threshold mean I can skip taxonomy reporting entirely?
No. The threshold introduced by the Omnibus delegated act (in force 28 January 2026) exempts the entity from the alignment assessment only. The entity must still calculate and disclose the proportion of taxonomy-eligible turnover and CapEx (and OpEx where the entity applies that KPI). If the eligible proportion falls below 10% for a given KPI, the entity reports the eligibility figure and states that no alignment assessment was performed, citing the materiality threshold.
When did the new materiality threshold take effect?
The Omnibus delegated act was published in the Official Journal on 8 January 2026 and entered into force on 28 January 2026. It applies to reports covering financial year 2026 onward. Entities reporting on FY2025 may choose to apply the amended rules early or continue under the previous requirements, and must state which set of rules they applied.