CSRD and the EU Taxonomy: How to Align Sustainability Reporting with Taxonomy Disclosures

If you're preparing for CSRD reporting, you will almost certainly also need to disclose under the EU Taxonomy Regulation. The two frameworks are separate pieces of EU legislation, but they interlock — and getting the interaction right is one of the trickiest parts of a first CSRD report. Companies that treat them as two isolated exercises tend to duplicate work, produce inconsistent numbers, and fail their first assurance review.

This guide walks through how the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy fit together, what you actually have to disclose, where the two frameworks share data (and where they diverge), and how experienced CSRD consultants approach the integrated report. Whether you're a first-time filer trying to scope your project or a consultant refining your delivery model, the principles below apply.

What Is the EU Taxonomy — And Why Does It Sit Inside the CSRD?

The EU Taxonomy is a classification system for environmentally sustainable economic activities. It was established by Regulation (EU) 2020/852 and is operationalised through delegated acts covering six environmental objectives:

Climate change mitigation
Climate change adaptation
Sustainable use and protection of water and marine resources
Transition to a circular economy
Pollution prevention and control
Protection and restoration of biodiversity and ecosystems

For each objective, an economic activity can be Taxonomy-eligible (it falls within the scope of a technical screening criterion) and, if it meets the criteria, Taxonomy-aligned (it substantially contributes to the objective, does no significant harm to the others, and complies with minimum social safeguards).

The disclosure obligation is created by Article 8 of the Taxonomy Regulation, which requires large undertakings and listed companies subject to the CSRD to publish the share of their turnover, capital expenditure (CapEx), and operational expenditure (OpEx) associated with Taxonomy-eligible and Taxonomy-aligned activities.

Here is the critical piece for your planning: Article 8 disclosures are made inside the CSRD sustainability statement. They are not a separate report. The ESRS 1 general requirements explicitly cross-reference the Taxonomy KPIs, and ESRS E1 (Climate Change) requires disclosure of Taxonomy-aligned CapEx as part of your climate transition plan. The two frameworks are legally distinct but operationally married.

What You Have to Disclose

Depending on your company type, you disclose different Taxonomy KPIs alongside your CSRD sustainability statement:

Non-financial undertakings

Turnover KPI — proportion of net turnover from Taxonomy-aligned activities
CapEx KPI — proportion of capital expenditure aligned with the Taxonomy (including CapEx plans supporting activities that will become aligned)
OpEx KPI — proportion of operating expenditure (as defined by the Regulation — a narrower scope than accounting OpEx)
Templates from the Disclosures Delegated Act (Annexes I and II), showing eligible, non-eligible, aligned, and non-aligned figures for each of the six objectives, plus a set of qualitative narratives

Financial undertakings

Green Asset Ratio (GAR) for credit institutions
Investment KPIs for asset managers
Underwriting KPI for insurers and reinsurers
Fees and commissions KPI (mostly voluntary in early years)

Additional qualitative context

Description of the accounting policies used to compute the KPIs
Explanation of assessment of eligibility, substantial contribution, DNSH (Do No Significant Harm), and minimum safeguards
Discussion of contextual information — including limitations of the data used

Financial institutions face the tougher lift because the GAR depends on counterparty disclosures — and many counterparties are either not yet in CSRD scope or produce weak Taxonomy data. This is one of the strongest reasons banks and asset managers engage specialist CSRD consultants.

Where CSRD and Taxonomy Overlap (and Where They Diverge)

Understanding the overlap is what turns two exercises into one.

Any company that is in CSRD scope is also in scope for Article 8 Taxonomy disclosures. The Omnibus simplification package proposed re-scoping some smaller undertakings out of both, but the fundamental principle stands: if you file a CSRD report, you file Taxonomy KPIs inside it. The reverse is not always true — some Article 8 filers historically pre-dated CSRD applicability — but for practical purposes plan a single scope.

Both use the consolidation scope of your financial statements. Turnover, CapEx, and OpEx must reconcile to figures in your audited financials. This is a hard reconciliation point that assurance providers will test.

Your ESRS E1 climate disclosures, your Scope 3 emissions inventory, and your CapEx plan for transition-enabling activities are used by both frameworks. Build the data pipeline once.

The Taxonomy's minimum safeguards test refers to the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. Much of the evidence you produce for ESRS S1, S2, S3, S4 and G1 supports the minimum safeguards conclusion.

Where they diverge

Materiality basis is different. CSRD is built on double materiality. The Taxonomy is objective, criterion-based, and does not depend on materiality — you must disclose eligibility and alignment regardless of whether they are "material" to your business. A common consultant error is filtering Taxonomy disclosures through the CSRD materiality assessment. Don't.
Level of prescription. ESRS gives you room for judgement inside a principles-based structure. The Taxonomy is highly prescriptive, activity by activity, with numeric thresholds and DNSH tests you either pass or fail.
KPIs are financial, not sustainability metrics. Taxonomy KPIs are ratios of euros. ESRS metrics include tonnes, cubic meters, headcount, and narrative disclosures. Your finance team owns the Taxonomy numerator/denominator; your sustainability team owns the assessment of technical criteria.
Amount of narrative. CSRD requires substantial narrative around governance, strategy, IROs (impacts, risks, opportunities), and actions. The Taxonomy is largely tabular disclosure plus a short qualitative section.

A Practical Integration Model for CSRD + Taxonomy

The mistake to avoid is running two parallel projects with two data models, two sets of controls, and two review cycles. The winning approach uses one integrated program with clearly separated workstreams. Here is the model most experienced CSRD consultants use in practice.

Step 1 — Map activities to the Taxonomy taxonomy

Before you touch a spreadsheet, get your revenue lines, investment plans, and cost centres classified against the Taxonomy activity codes. This is the single most under-invested step. Weak activity mapping leads to arguments six months later about whether a given revenue stream is eligible.

Deliverable: a mapping table with every revenue stream, CapEx line, and material OpEx line tagged with (a) the Taxonomy activity code, (b) the environmental objective(s) it targets, and (c) whether it is eligible.

Step 2 — Run technical screening and DNSH assessments

For each eligible activity, apply the substantial contribution criteria and the DNSH criteria across the other five objectives. This is where domain experts earn their fee — the technical criteria for activities like "manufacture of iron and steel" or "electricity generation from wind power" require engineering evidence.

Step 3 — Wire the KPIs into the general ledger

Assurance providers will trace the Taxonomy numerator back to specific journal entries and invoices. Set up the accounting sub-ledgers (or tags on your existing chart of accounts) before the reporting year, not after.

Step 4 — Build one materiality universe

Even though the Taxonomy is not materiality-based, the qualitative narrative you provide about Taxonomy activities should tie into the double materiality assessment. If your climate transition plan (ESRS E1) is anchored on shifting CapEx toward Taxonomy-aligned activities, that story must reconcile with the CapEx KPI you disclose.

Step 5 — Prepare an integrated data book for assurance

The assurance provider will test the sustainability statement and the Taxonomy KPIs together. Prepare one evidence pack, one control matrix, and one reconciliation between financial statements and both sets of disclosures.

Step 6 — Draft in one voice

The Taxonomy narrative should not read like it was written by a different team than the ESRS narrative. Tell one coherent story: what activities you do, how they relate to the six environmental objectives, how much of your revenue and investment is contributing to the transition, and how you plan to grow that share.

Common Pitfalls (and How to Avoid Them)

Pitfall 1: Confusing eligibility with alignment

Eligible means the activity is on the Taxonomy list. Aligned means it also passes the technical criteria, DNSH, and minimum safeguards. A large share of eligibility with a small share of alignment is not a failure — it's a starting point for your transition plan.

Pitfall 2: Underestimating DNSH data collection

DNSH criteria often reference other regulatory frameworks (water usage limits, chemical restrictions, biodiversity assessments). Sourcing that evidence from operational sites is a major project on its own.

Pitfall 3: Filtering Taxonomy through CSRD materiality

The Taxonomy is not materiality-gated. Even if climate is not the most material topic in your double materiality assessment, you still disclose the Taxonomy climate KPI.

Pitfall 4: OpEx scope misunderstanding

The Taxonomy definition of OpEx is much narrower than accounting OpEx — it covers non-capitalised R&D, building renovation measures, short-term lease, maintenance and repair, and other direct expenditures related to day-to-day servicing of assets. Companies routinely report the wrong denominator here and get a review finding.

Pitfall 5: Late-stage CapEx plan changes

If you disclose a "CapEx plan" alongside the CapEx KPI (a way to count investment in activities that will become aligned), any change to that plan later needs to be tracked and disclosed. Board-approved is board-committed.

Pitfall 6: Minimum safeguards checked at group level only

The safeguards test applies to the activities you disclose against. Group-level policies help, but you also need evidence that safeguards are implemented in the countries and business units generating the Taxonomy revenue.

Pitfall 7: Templates not matching the latest Annex

The Disclosures Delegated Act templates have been updated multiple times. Use the version applicable to the reporting year, not a template you found in a consultant deck from 2023.

What This Means for Companies Choosing a CSRD Consultant

If you are hiring a CSRD consultant, the ability to deliver an integrated CSRD + Taxonomy engagement should be a hard requirement — not a nice-to-have. Ask these questions during your selection process:

"Walk me through how you scoped the Taxonomy on your last engagement — what did the activity mapping deliverable look like?" A consultant who cannot describe this deliverable in detail has not done it.
"How do you split the workstream between the finance team and the sustainability team? Who owns the numerator, who owns the denominator, who owns the criteria assessment?" The answer reveals whether they understand the organisational reality.
"How have you handled DNSH evidence for operating sites in jurisdictions without EU-equivalent regulation?" This tests real-world experience.
"How do you tie the CapEx KPI to the ESRS E1 transition plan?" The two should tell one story.
"How have your KPI templates changed with the latest Delegated Act updates?" Tests currency.

If you're building an RFP for CSRD consulting, add a dedicated Taxonomy section to the scope of work. Don't assume it will be covered as a sub-bullet.

What This Means for CSRD Consultants

If you are a CSRD consultant — or building your practice — Taxonomy fluency is now table stakes. Two positioning notes:

Package the integration. Selling "CSRD" and "EU Taxonomy" as separate line items on a proposal signals to sophisticated buyers that you don't know how they fit together. Package them as one integrated deliverable with visible workstreams.
Show your reconciliation model. In the sales conversation, show how you reconcile the Taxonomy KPIs to the audited financials and to the ESRS E1 transition plan. Clients who have already been through a first cycle know this reconciliation is where projects fall apart, and demonstrating a clean model is a strong differentiator.
Own the sector nuances. Taxonomy alignment for a construction contractor is a different animal from alignment for an insurer. Publish sector-specific case studies. Explaining how alignment works for a specific industry is one of the highest-converting content moves you can make for inbound leads.

The Bottom Line

The CSRD and the EU Taxonomy are two regulations, one report. Companies that plan them as one program from the start save months of rework, produce numbers that reconcile, and pass their first limited assurance without material findings. Companies that treat them as separate projects find themselves rebuilding the same data pipeline twice, arguing with their auditor about scope, and asking their CSRD consultant to fix it in the final month.

If you're just starting your CSRD journey, add "integrated Taxonomy workstream" to the project charter now — not after the double materiality assessment is done. And if you're evaluating consulting proposals, make sure the team you hire has actually delivered a joint CSRD + Taxonomy engagement end-to-end. The learning curve for the two frameworks together is much steeper than either one alone.

Related reading

CSRD and the EU Taxonomy: How to Align Sustainability Reporting with Taxonomy Disclosures

What Is the EU Taxonomy — And Why Does It Sit Inside the CSRD?