EU Parliament Extends Scrutiny Period for EU Taxonomy Amendments

The European Parliament has formally requested to extend the scrutiny period for the EU Taxonomy Delegated Act by two months, moving the deadline to 5 January 2026. The decision, which is part of the broader Sustainability Omnibus Package, is intended to provide lawmakers additional time for review and translation before adoption while ensuring legal and procedural accuracy.

Why this matters

The extension was requested by the Parliament’s Committees on Economic and Monetary Affairs (ECON) and on Environment, Climate and Food Safety (ENVI), both responsible for reviewing delegated acts. While such extensions are not unusual, the timing creates procedural uncertainty. It is now possible that the Delegated Act, which is meant to apply from 1 January 2026, will not have entered into force by that date.

Timeline implications

Even if the scrutiny period concludes without objections, the Delegated Act will only enter into force 20 days after its publication in the Official Journal. Before publication, it must be translated into all official EU languages, a process that often takes several weeks. This means that the window between the end of the scrutiny period and the start of the 2026 reporting cycle is narrow.

Key dates at a glance:
• End of scrutiny period: 5 January 2026
• Translation and publication in the Official Journal: several weeks later
• Entry into force: 20 days after publication
• Intended application date: 1 January 2026

Key content of the amendments

The amended Delegated Act aims to simplify and streamline EU Taxonomy disclosures in order to reduce administrative burdens. The proposal, originally introduced in February 2025, includes Level 2 amendments to the implementing regulations rather than changes to the core legal text.

The main adjustments include:
• Introduction of a financial materiality threshold allowing companies with less than 10 percent eligible activities to opt out of detailed alignment disclosures
• Simplification of “Do No Significant Harm” (DNSH) provisions, particularly regarding pollution prevention and chemical use
• Adjustments to the Green Asset Ratio (GAR) for banks, allowing exclusion of certain financial exposures outside the scope of the Corporate Sustainability Reporting Directive (CSRD)

Implications for companies

The extended scrutiny period introduces uncertainty for reporting entities preparing for the next reporting cycle. Even if the Delegated Act is not rejected, it may still be published and enter into force after companies begin preparing their 2026 reports.

This uncertainty leaves organizations with several options:

1. Continue applying the existing taxonomy rules for the 2026 reporting period
2. Prepare for the new simplified framework while maintaining a fallback plan
3. Adopt the simplified approach early while monitoring the final publication timeline

Although the situation is not expected to cause major disruption, companies must remain alert to potential timing issues. If managed efficiently, the new simplifications could still apply to reports covering the 2025 financial year.

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