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Appendix C to Annexes I and II of Delegated Regulation (EU) 2021/2139 sets generic DNSH criteria for pollution prevention and control where an activity's technical screening criteria refer to that appendix. The Commission FAQ describes it as covering the use and presence of chemicals, especially substances of very high concern and other hazardous substances referred to in EU chemicals legislation.

A team should therefore start by checking the activity-specific technical screening criteria. Appendix C is relevant only when that activity points to it, for example through a pollution prevention and control DNSH criterion requiring compliance with Appendix C.

The 27 June 2023 amendments revised the former "essential use for society" derogation. For point (f), the Commission FAQ says the focus is substances identified as substances of very high concern under REACH Article 57 and Article 59 procedures; those substances are found on ECHA's candidate list.

The paragraph added after point (f) covers substances meeting CLP criteria for the hazard classes or hazard categories mentioned in REACH Article 57. The Commission notes that the ECHA classification and labelling inventory includes harmonised classifications and self-classifications, and that self-classified entries may differ between undertakings and are not currently subject to verification or quality control.

If a covered substance is present and an operator relies on the derogation, Appendix C is not satisfied by a bare statement that the substance is necessary. The Commission FAQ says operators have to assess and document that no other suitable alternative substances or technologies are available on the market and, if there are no such alternatives, that the substances are used under controlled conditions.

For suitable alternatives, the Commission FAQ treats an alternative as suitable only if it is safer, technically feasible, economically feasible for the operator, and available. For controlled conditions, the FAQ points to risk assessment and management processes that minimise emissions, exposures, and resulting risks in line with existing legal requirements.

Start by identifying which simplification item is being discussed. The source pack supports one adopted 2026 item: Commission Delegated Regulation (EU) 2026/73, described as amending the Disclosures Delegated Act on the content and presentation of information to be disclosed and amending the Climate and Environmental delegated acts for certain DNSH technical screening criteria.

Do not turn that into a broad statement that EU Taxonomy reporting has been removed, that a new threshold applies, or that all 2026 usability proposals are already law. Keep the decision record tied to the exact source status, affected delegated act, affected disclosure or DNSH workflow, and evidence owner.

The grounded answer is limited: the Commission page describes Regulation (EU) 2026/73 as simplifying the content and presentation of information disclosed concerning environmentally sustainable activities. It does not, in this source pack, support replacing the Article 8 scope analysis or removing the need to explain how and to what extent activities are associated with environmentally sustainable economic activities.

For implementation, keep the Article 8 population, activity mapping, KPI calculation files, and presentation templates under change control. Update the disclosure format only where the adopted simplification source and the current delegated-act text support the change.

Do not implement a public-feedback item as if it were already binding. The Commission page lists public feedback open from 17 March 2026 until 14 April for proposed delegated regulations on enhancing the usability of technical screening criteria, and it states those items were not yet adopted and not in force until publication in the Official Journal.

Teams can track those items in a watchlist, but public copy, KPI changes, criteria changes, and assurance files should not present them as adopted unless a later source in the approved source pack supports that status.

Keep a short evidence pack that can be read by reporting, legal, sustainability, product, and assurance teams without guessing which 2026 item was applied. The pack should show whether the change came from the adopted 2026 delegated regulation or from a monitored proposal that has not yet become binding.

For any activity-level conclusion, keep the core Taxonomy test visible. Article 3 still requires a substantial contribution, no significant harm to the other environmental objectives, minimum safeguards, and compliance with the technical screening criteria established by the Commission.

Create a separate evidence pack for each economic activity that may be reported as Taxonomy-eligible or Taxonomy-aligned. The Regulation defines an environmentally sustainable activity through a four-part test: substantial contribution to at least one environmental objective, no significant harm to the others, minimum safeguards, and compliance with the applicable technical screening criteria.

The pack should therefore start with the activity mapping and end with the disclosure consequence. A reviewer should be able to see the delegated-act activity description used, the objective assessed, the criteria applied, the facts checked, any limits on the conclusion, and whether the result affects turnover, CapEx, OpEx, GAR/GIR inputs, or only a qualitative explanation.

A useful pack should be short enough to maintain but specific enough to support assurance. It should contain the source citation, the business facts used for the activity mapping, the criterion-by-criterion conclusion, the KPI treatment, and the unresolved questions that prevent or limit alignment.

For non-financial undertakings, Article 8 disclosures are tied to turnover, capital expenditure, and operating expenditure associated with environmentally sustainable activities. That makes traceability important: the evidence pack should connect operational facts and accounting treatment rather than leaving finance teams to infer the link at year end.

Do not fill evidence gaps with broad sustainability wording. If the activity is eligible but the team cannot demonstrate substantial contribution, DNSH, minimum safeguards, or a technical screening criterion, the pack should say which condition is unverified and keep the conclusion narrower.

The Taxonomy Regulation recognises that financial market participants may sometimes lack complete, reliable, and timely information for activities outside mandatory reporting. In those cases, complementary assessments and estimates must be limited, prudent, and explained. That principle is a useful control even for internal activity packs: estimates should be labelled, sourced, and separated from verified evidence.

The common mistake is treating the evidence pack as a generic compliance checklist. That misses the point: Taxonomy reporting is activity-specific, criteria-specific, and KPI-sensitive. A pack that does not identify the activity, criteria, evidence, and disclosure impact will not reliably support a public KPI or an investor-facing explanation.

Another mistake is letting public sustainability claims drift away from the evidence record. The same pack should support the claim language, the Article 8 disclosure treatment, and the internal control conclusion, or it should clearly state why one of those uses is not supported.

Article 8 of Regulation (EU) 2020/852 applies to undertakings that are subject to the obligation to publish non-financial information under Article 19a or Article 29a of Directive 2013/34/EU. Those undertakings must include information on how and to what extent their activities are associated with economic activities that qualify as environmentally sustainable.

The practical scope decision should therefore begin with the reporting entity and consolidation boundary. If the undertaking is in scope, the next question is which disclosure route applies: non-financial undertaking KPIs under Annexes I and II of Commission Delegated Regulation (EU) 2021/2178, or the financial undertaking rules for asset managers, credit institutions, investment firms, and insurance or reinsurance undertakings.

For non-financial undertakings, Article 8(2) points to the proportion of turnover, capital expenditure, and operating expenditure related to assets or processes associated with environmentally sustainable economic activities. The Disclosures Delegated Act then requires those disclosures as specified in Annex I and presented using the templates in Annex II.

For financial undertakings, turnover, CapEx, and OpEx do not describe lending, investment, insurance, or similar financial activities in the same way. Commission Delegated Regulation (EU) 2021/2178 therefore provides separate KPI methodologies for asset managers, credit institutions, investment firms, and insurance or reinsurance undertakings.

The Disclosures Delegated Act requires additional disclosures accompanying the KPIs to appear in the same part of the non-financial statement as the indicators, or to be cross-referenced from that part. The same Article 8 provisions also require KPIs to cover the previous annual reporting period and to use the same currency as the financial statements.

That makes the evidence file more than a legal memo. It should tie the in-scope entity, financial statement currency, previous reporting period, chosen KPI route, and cross-references to the non-financial statement into one reviewable record.

Keep evidence that explains why the entity is in scope, which undertaking type was used for the KPI framework, and how the disclosure record connects to the annual reporting package. A useful record should be readable by sustainability, finance, legal, and audit reviewers without relying on undocumented assumptions.

For financial undertakings, the record should also capture scope exclusions and numerator limits where relevant, such as the common Article 7 treatment for exposures to central governments, central banks, supranational issuers, derivatives, and undertakings not obliged to publish non-financial information.

Build the evidence file around the four alignment conditions in Article 3 of Regulation (EU) 2020/852: substantial contribution to at least one environmental objective, no significant harm to the other objectives, compliance with minimum safeguards, and compliance with the Commission's technical screening criteria.

Do not describe every review as a mandatory audit. The Commission's Climate Delegated Act notice says some technical screening criteria contain specific verification requirements for certain activities; where the criteria require verification, the external verifier's report is evidence of compliance. For other activities, the file still needs enough documentation to let a reviewer trace the eligibility, alignment, DNSH, safeguards, and KPI decisions.

A review-ready file should let a person who was not involved in the original assessment reproduce the conclusion. Start with the activity boundary and the applicable delegated-act criteria, then connect each data point to the published disclosure line or KPI value it supports.

For Article 8 reporting, non-financial undertakings disclose turnover, CapEx, and OpEx proportions associated with environmentally sustainable economic activities. The Disclosures Delegated Act also requires contextual information for financial undertakings, including scope, data sources, and limitations, so evidence should preserve the source and limitation story behind each KPI.

Treat every technical screening criterion as an evidence requirement, even when the criterion does not prescribe a formal verifier. The Climate Delegated Act notice says compliance checking requires collecting and assessing relevant information; it also explains that all substantial-contribution criteria, DNSH criteria, and minimum social safeguards must be met for an activity to be considered Taxonomy-aligned.

Evidence depth should match the criterion. For example, the Commission notice discusses adequate evidence for building top-15-percent assessments, coherent adaptation plans for DNSH climate adaptation where climate risks are identified, and supplier information or testing for some Appendix C pollution-prevention checks.

The common mistake is presenting a broad sustainability policy as evidence for a specific Taxonomy-aligned activity. That does not show how the activity met the relevant technical screening criteria, DNSH checks, minimum safeguards, and KPI allocation rules.

A stronger file is narrower and more traceable: it names the activity, the criteria version, the reporting period, the data source, the calculation or allocation method, the reviewer, and the unresolved limitations. For CapEx allocated across mixed-use assets, the Commission notice says the allocation methodology should be based on verifiable evidence.

Use the CapEx plan route only when the CapEx KPI numerator is relying on Annex I Section 1.1.2.2 point (b): expenditure that is part of a plan to expand Taxonomy-aligned activities or upgrade Taxonomy-eligible activities so they become Taxonomy-aligned.

Do not use the label for every sustainability budget. Annex I also has separate CapEx numerator routes for assets or processes already associated with Taxonomy-aligned activities and for certain purchases of Taxonomy-aligned output or individual measures. The file should identify which route is being used before the amount is reported.