The EU’s classification of environmentally sustainable economic activity.

The EU Taxonomy is the European Union’s classification system for environmentally sustainable economic activities, established by Regulation (EU) 2020/852. It provides the common language by which “green” activities are defined for the entire EU sustainable finance architecture: CSRD sustainability reporting references it; SFDR fund classification depends on it; the EU Green Bond Standard uses it; sustainability-linked finance increasingly references it for KPI definition. The Taxonomy defines six environmental objectives — climate change mitigation, climate change adaptation, water, circular economy, pollution, biodiversity — and four cumulative alignment conditions: substantial contribution, DNSH, social safeguards, TSC compliance. Reporting is via three KPIs: share of turnover, CapEx, and OpEx from Taxonomy-aligned activities. For Thai-owned EU subsidiaries facing CSRD obligations, Taxonomy KPI disclosure is part of the same disclosure cycle.

Honest scoping: Nataree Aussapim anchors Othello’s consultative EU Taxonomy alignment work as EU Disclosure Lead — it is not an EU-issued practitioner credential. The EU Taxonomy does not operate through individual practitioner certifications; the regulation is owned by the European Commission (DG FISMA), the Technical Screening Criteria sit in the Climate and Environmental Delegated Acts, and supervisory enforcement runs through national competent authorities. What Othello does: helps Thai-owned EU subsidiaries and Thai-listed groups with EU consolidation determine which activities are eligible, which are aligned, and calculates the three KPIs. What Othello does not do: claim EU-conferred practitioner certification; provide the limited-assurance opinion (separately engaged); operate as a national competent authority. The credential category is “applied competence in EU Taxonomy alignment preparation, anchored by Nataree Aussapim” — with substantive cross-Domain integration through Panit’s TGO and ISO 14064 credentials for the climate-objective work.

An economic activity is “Taxonomy-aligned” only if it satisfies all four conditions cumulatively, not any-of: (1) Substantial contribution to at least one of the six environmental objectives, as defined by the activity’s Technical Screening Criteria. (2) Do No Significant Harm (DNSH) to the other five objectives — an activity that substantially contributes to climate change mitigation but causes significant harm to biodiversity is not aligned. (3) Minimum social safeguards — alignment with OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, the eight fundamental ILO Conventions, and the International Bill of Human Rights. (4) Technical Screening Criteria (TSC) compliance — activity-specific quantitative thresholds in the Climate Delegated Act and Environmental Delegated Act. There is no points-based weighting, no “mostly aligned” classification, no partial credit. Either all four are demonstrated with documented evidence, or the activity is “eligible but not aligned” or “non-eligible”.

The six environmental objectives: (1) Climate change mitigation (CCM) — activities reducing GHG emissions or sequestering carbon. (2) Climate change adaptation (CCA) — activities adapting to or reducing physical climate risks. (3) Sustainable use and protection of water and marine resources. (4) Transition to a circular economy. (5) Pollution prevention and control. (6) Protection and restoration of biodiversity and ecosystems. CCM and CCA Technical Screening Criteria were established in the Climate Delegated Act (2021); the other four objectives’ TSC were established in the Environmental Delegated Act (2023, in force 2024). CCM is by far the most commonly used objective for substantial-contribution claims, with the deepest TSC coverage and the largest reported aligned activity volume. An activity needs to contribute to at least one objective and DNSH the other five.

The Omnibus Delegated Act (in force 8 January 2026, retroactive 1 January 2026) introduced a 10% turnover materiality threshold — activities accounting for less than 10% of total turnover can be screened out from full alignment analysis. This is a reporting simplification, not a scope reduction: such activities still need to be identified as eligible or non-eligible and reported as a share of turnover/CapEx/OpEx, but they do not require the full substantial-contribution + DNSH + safeguards + TSC analysis. For Thai-owned EU subsidiaries with diversified activity mixes, the 10% threshold substantially reduces the analytical effort required for marginal activities, allowing the substantive alignment work to focus on the material activities driving the aligned KPI share. The threshold operates at the activity level — meaning a subsidiary with five activities at 8% turnover each could screen-out all five from full analysis, while a subsidiary with one activity at 60% turnover and four at 10% each would fully analyse the 60% activity and have flexibility on the others.

Three KPIs are reported under the Taxonomy: (1) Turnover KPI — share of net turnover from Taxonomy-aligned activities; (2) CapEx KPI — share of capital expenditure from Taxonomy-aligned activities (including a CapEx-Plan path for transitional activities not yet aligned); (3) OpEx KPI — share of operating expenditure from Taxonomy-aligned activities. Each KPI requires attribution of the revenue/cost/capital flow to the specific aligned activities, with documented methodology supporting limited-assurance review. The CapEx KPI includes a forward-looking component — capital expenditure committed to a CapEx-Plan toward future Taxonomy alignment can be counted, providing a route for transitional activities to contribute to the alignment KPIs ahead of full TSC compliance. Limited assurance under CSRD typically scrutinises the KPI attribution methodology most heavily — revenue allocation, cost allocation, and capital classification are the highest-friction areas for assurance providers.

Mandatory Taxonomy KPI disclosure is linked to CSRD scope post-Omnibus — companies in CSRD scope (1,000+ employees AND €450M+ net turnover) must publish Taxonomy KPIs in their CSRD report. The two regimes operate in the same disclosure cycle: same scope thresholds, same reporting wave timing, same limited-assurance engagement. For Thai-owned EU subsidiaries entering Wave 2 CSRD reporting (FY2027 report 2028), Taxonomy KPI disclosure is part of the same compliance build — not a separate exercise. For non-EU groups with €450M+ EU turnover (FY2028 report 2029), the same logic applies. The Omnibus simplifications to Taxonomy and CSRD were deliberately coordinated — common scope thresholds, common reporting cycle, common simplification logic. Othello scopes CSRD + Taxonomy under one engagement letter where both apply. See /certifications/csrd-esrs/.

For activities claiming substantial contribution to Climate Change Mitigation (CCM), the underlying GHG accounting must be ISO 14064-compliant. ISO 14064-1 covers organisational GHG inventories (relevant for entity-level emissions reporting that feeds activity-level TSC); ISO 14064-2 covers project-level GHG quantification (relevant for activity-specific TSC like electricity generation lifecycle emissions below 100g CO2-eq/kWh). Panit’s CQI/IRCA ISO 14064 Lead Auditor credential is the substantive methodology floor for CCM substantial-contribution analysis. For Thai-owned operations with TGO CFO (Carbon Footprint Organisation) or CFP (Carbon Footprint Product) certification, the verified Thai emissions data feeds directly into the Taxonomy substantial-contribution evidence chain. The cross-Domain integration between Nataree’s EU Taxonomy work and Panit’s GHG-cluster credentials is what makes Othello’s bench substantively differentiated for Thai clients with climate-objective alignment work.

What the Omnibus Delegated Act (in force 8 January 2026) changed: (1) introduced the 10% turnover materiality threshold for full alignment analysis; (2) simplified the chemicals-related DNSH criteria (Appendix C) to focus on ECHA-classified substances of very high concern only; (3) reduced required datapoints in reporting templates by approximately 64% for non-financial companies; (4) allowed combined reporting on DNSH and across objectives (rather than separate by-objective reporting); (5) clarified Appendix C interpretation via FAQ guidance published 17 December 2025. What the Omnibus did NOT change: (1) Technical Screening Criteria thresholds — underlying environmental performance requirements are unchanged; (2) the four cumulative alignment conditions; (3) the six environmental objectives; (4) double materiality (which is a CSRD concept, not Taxonomy); (5) limited assurance requirement. The substantive environmental rigour of the Taxonomy is preserved; only the reporting infrastructure is simplified.

The EU Taxonomy is the third of Nataree Aussapim’s five EU & Cross-Border Disclosure anchors, alongside CSRD/ESRS, CBAM, TCFD, and SBTi. The CSRD + CBAM + Taxonomy triangle is the operating core of Nataree’s EU cluster: CSRD is the sustainability disclosure regime, CBAM is the carbon-import tariff, Taxonomy is the green-activity classification language. Cross-Domain integration with Panit Chancharoonpong’s seven-credential ESG-assurance cluster anchors the climate-objective work — particularly TGO CFO + CFP Auditor and ISO 14064 Lead Auditor for the CCM substantial-contribution analysis, ISCC PLUS for circular-economy alignment, and Verra for biodiversity-objective alignment via biodiversity credits. Together with the firm’s three reporting-framework anchors (GRI 2021, IFRS S1/S2, FTSE Russell), the configuration delivers the full sustainability-disclosure stack a Thai-owned EU subsidiary or Thai-listed group with EU consolidation needs: CSRD + Taxonomy disclosure compliance (Nataree), embedded-emissions verification feeding CCM TSC (Panit), Thai TGO carbon-price documentation (Panit), GRI-interoperable content (firm-level), IFRS S2 climate disclosure where SET50-listed (Kittichai), AA1000AS-grade assurance overlay where commissioned (Panit, separately scoped). Founded 2020 on US Government bilingual contracts under FAR-grade contractor verification, the firm’s procurement-grade audit-trail standard applies to Taxonomy engagements the same way. One engagement letter, one NDA from first email, one audit-trail Bangkok-side, twenty credentials behind it. Email [email protected] or call +66 02-859-2145.