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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. Regulation (EU) 2026/73 replaced those appendices and the corresponding appendices in the Environmental Delegated Act from 1 January 2026.

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 current Appendix C points (a) to (f) cover specified substances under the Persistent Organic Pollutants Regulation, mercury rules, the Ozone Regulation, RoHS, REACH Annex XVII, and REACH candidate-list procedures. Each point has its own conditions or exceptions, so a substance inventory should record the legal list and exception used rather than applying one generic prohibition.

Point (f) covers substances, whether on their own, in mixtures, or in an article, above 0.1% weight by weight that meet REACH Article 57 criteria and have been identified under Article 59(1) for at least 18 months. The extra paragraph that formerly extended screening to other substances based only on specified CLP hazard classes is not in the Appendix C text replaced by Regulation (EU) 2026/73.

If a point (f) substance is present above 0.1% w/w and an operator relies on the exception, Appendix C is not satisfied by a bare statement that the substance is necessary. The current text requires the operator to assess and document that no other suitable alternative substances or technologies are available on the market and that the substance is 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 adopted 2026 item is Commission Delegated Regulation (EU) 2026/73, which amends the Disclosures Delegated Act on the content and presentation of information and amends certain DNSH technical screening criteria in the Climate and Environmental delegated acts.

The adopted act does introduce specific thresholds, but they are not a general scope exemption. A non-financial undertaking may omit assessing some activities where their cumulative turnover or CapEx is below 10% of the respective KPI denominator. If OpEx is material, the same 10% approach can apply; if OpEx is not material to the business model, the undertaking may omit the OpEx eligibility and alignment assessment after disclosing the denominator and explaining the immateriality. Amounts left unassessed under these options must be reported separately as non-material.

Regulation (EU) 2026/73 simplifies specified content and presentation requirements but does not repeal Article 8. It applies from 1 January 2026. For a financial year starting between 1 January and 31 December 2025, an undertaking may instead use Delegated Regulations (EU) 2021/2178, 2021/2139, and 2023/2486 as they applied on 31 December 2025.

Financial undertakings also have a temporary route through 31 December 2027. With specified exceptions, Articles 2 to 8 of the Disclosures Delegated Act do not apply if the undertaking makes no claim that its activities are associated with environmentally sustainable activities and includes the prescribed statement in its management report. This is conditional relief, not permission to make an alignment claim without the KPI disclosures.

Commission Notice C/2026/2558 explains that this financial-undertaking opt-out is all or nothing: an undertaking cannot use it for some required KPIs while reporting others. The Notice also explains that a Taxonomy-alignment claim made during the financial year covered by the sustainability report prevents use of the opt-out and requires disclosure under the amended methodology and templates. The Notice is Commission guidance, not a delegated regulation, and only the Court of Justice of the European Union can authoritatively interpret Union law.

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 official source 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. If an activity is left unassessed under the 2026 materiality option, label it as non-assessed and non-material rather than eligible, aligned, non-aligned, or non-eligible.

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. The evidence pack should connect operational facts to accounting treatment so finance teams do not have 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. Apply the same control to internal activity packs: label estimates, identify their source, and separate them from verified evidence.

For reporting from 1 January 2026, an unassessed activity is not automatically an evidence failure. Regulation (EU) 2026/73 allows specified KPI-specific non-materiality options, generally where the cumulative amount is below 10% of the relevant denominator. The pack must record the calculation and keep the amount in the denominator as a separately reported non-material amount; the relief does not convert the activity into eligible, aligned, or non-eligible.

Commission Notice C/2026/2558 explains that an undertaking should assess a material economic activity in its entirety. It should not label one portion of that activity non-material while assessing another portion, because doing so can distort both the eligibility figures and the ratio of aligned to eligible activity. This is Commission guidance on applying the binding amended rules.

A generic compliance checklist is not an activity evidence pack. 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 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.

Commission Delegated Regulation (EU) 2026/73 did not remove that entity-level scope test. From 1 January 2026 it added KPI-specific assessment relief: a non-financial undertaking may omit eligibility and alignment assessment for activities whose cumulative turnover or CapEx is below 10% of the respective KPI denominator, with a similar rule for OpEx where OpEx is material. The omitted amounts stay in the denominator and must be reported separately as non-material.

For financial undertakings, Article 7(9) provides temporary conditional relief from detailed reporting through 31 December 2027. Commission Notice C/2026/2558 explains that this opt-out is all or nothing and cannot be used if the undertaking makes a Taxonomy-alignment claim during the financial year covered by the report. The undertaking must also include the prescribed statement in its management report.

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.

The evidence file 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.