The Data Supply Chain
The taxonomy doesn't exist in isolation. It is part of a broader EU sustainable finance architecture where three regulations work together:
- CSRD creates the obligation for companies to report sustainability data (including taxonomy KPIs)
- The Taxonomy defines what counts as environmentally sustainable
- SFDR requires financial products to disclose how sustainable they are (using taxonomy data)
Each regulation needs the others to function. Remove any one, and the system breaks.
How Taxonomy Connects to CSRD
The Corporate Sustainability Reporting Directive (CSRD) replaced the older Non-Financial Reporting Directive (NFRD) and massively expanded the scope of companies required to report sustainability information.
Taxonomy reporting is embedded within CSRD. When a company prepares its sustainability statement under the European Sustainability Reporting Standards (ESRS), it includes the taxonomy KPIs as part of that statement - specifically within the environmental standards (E1-E5).
| CSRD Phase | Companies In Scope | First Reporting Year |
|---|---|---|
| Phase 1 | Large public-interest entities (already under NFRD) | FY 2024 |
| Phase 2 | All large companies (250+ employees, EUR 50M+ revenue) | FY 2025 |
| Phase 3 | Listed SMEs | FY 2026 |
| Phase 4 | Non-EU companies with EUR 150M+ EU net turnover | FY 2028 |
Key link: CSRD provides the data that financial institutions need to calculate their own taxonomy KPIs (like the Green Asset Ratio). As more companies report under CSRD, the financial sector's taxonomy disclosures become more meaningful. This is deliberately designed as a reinforcing loop.
The ESRS Connection
Within the ESRS framework, taxonomy disclosures sit primarily under:
- ESRS E1 (Climate change) - references taxonomy-aligned activities for mitigation and adaptation
- ESRS 2 (General disclosures) - requires disclosure of the proportion of taxonomy-aligned and eligible CapEx and OpEx
Companies don't report taxonomy KPIs in a standalone document - they are woven into the broader sustainability statement.
Key Takeaways
- 1The taxonomy is part of a three-regulation system: CSRD (who reports), Taxonomy (what counts as green), SFDR (how financial products disclose)
- 2Taxonomy KPIs are reported within the CSRD sustainability statement, not as a standalone disclosure
- 3CSRD is phased in from 2024 to 2028, progressively bringing more companies into scope
- 4As more companies report under CSRD, the data supply chain strengthens and financial institution taxonomy KPIs become more meaningful