How the EU taxonomy assesses buildings
For buildings, the Taxonomy depends heavily on data. To assess whether a building-related activity can be considered sustainable, it is necessary to look at energy performance, renovation outcomes and, in some cases, how the building compares with the national or regional building stock. For acquisition and ownership of buildings built before 31 December 2020, the Taxonomy refers to EPC class A or to buildings in the top 15% of the national or regional stock in terms of operational primary energy demand.
The importance of EPCs for the EU Taxonomy
This is why Energy Performance Certificates, or EPCs, are becoming more important. An EPC is not just a document required when selling or renting a property. It can also provide evidence on the energy quality of a building. For public authorities, it can support renovation policies. For banks and investors, it can help understand whether a building may meet Taxonomy-related criteria. For households, it can show whether a home is already efficient or where improvements may be needed.
The importance of the EPBD for aligning with the EU Taxonomy
The revised Energy Performance of Buildings Directive, Directive (EU) 2024/1275, strengthens this role. It entered into force on 28 May 2024 and must be transposed by Member States by 29 May 2026. The directive aims to support a fully decarbonised building stock by 2050 and gives more attention to renovation, especially for the worst-performing buildings. It also supports better EPCs, national databases and digital exchange of building information.
How the Smart Readiness Indicator supports the alignment of the Taxonomy
The Smart Readiness Indicator, or SRI, adds another useful layer. While the EPC mainly describes energy performance, the SRI measures how ready a building is to use smart technologies. These include systems that can help optimise heating, cooling, ventilation, lighting, energy flexibility and interaction with the grid. The SRI does not replace the EPC, but it can complement it by showing whether a building is better equipped to operate efficiently and respond to users’ needs.
How the EU Taxonomy changed in 2025
The Taxonomy framework has also recently changed. On 4 July 2025, the European Commission adopted a delegated act to simplify parts of the Taxonomy rules. The act amends the Taxonomy Disclosures Delegated Act, the Climate Delegated Act and the Environmental Delegated Act. Its purpose is to reduce unnecessary reporting burden while maintaining the main climate and environmental objectives of the framework.
The simplified rules were published in the Official Journal on 8 January 2026 as Commission Delegated Regulation (EU) 2026/73. They apply from 1 January 2026 and cover reporting for the 2025 financial year. Companies may, however, choose to apply the previous rules for that financial year if this is more convenient. This gives organisations some time to adapt their reporting and data processes.
In practical terms, the update introduces simpler reporting templates, fewer data points, materiality thresholds and targeted changes to some Do No Significant Harm requirements. This means that companies should face less complexity when reporting non-material activities. However, simplification does not mean that evidence becomes optional. If a building or renovation is presented as Taxonomy-aligned, the underlying data still needs to support that assessment.
Impacts of the new Taxonomy for the building sector
For buildings, this makes EPC and SRI data even more relevant. Simpler rules can work only if the data behind them is credible, accessible and consistent. A well-structured EPC database can help avoid repeated data collection and make the same information useful for renovation planning, public incentives, green loans and Taxonomy screening. SRI data can add information on smart systems and operational flexibility, especially for buildings where digital technologies play a growing role.
How policymakers could adapt to the new Taxonomy
For policymakers, the message is practical: Taxonomy implementation is also a building data challenge. National authorities need clear methodologies, interoperable databases, privacy safeguards and links between EPC systems, renovation programs and financial instruments. One-stop shops can help households and SMEs translate EPC recommendations into concrete renovation projects that may be suitable for incentives or financing.
Discover how the SmarterEPC methodology for an integrated SRI and EPCs here
Implications for banks and investors
For banks and investors, EPCs and SRI should be treated as useful inputs, not automatic labels. A good EPC rating may support Taxonomy screening or green finance, but financial risk also depends on location, property market conditions, borrower affordability and renovation costs. A careful approach is therefore needed: building data can improve decisions, but it should be interpreted in context.
Overall, the direction is clear. The EU Taxonomy is becoming more proportionate, while the need for reliable building data remains strong. EPCs and SRI can help connect regulation, renovation and finance more practically. The challenge now is to make building data understandable, trustworthy and usable, so that Europe’s renovation goals can be measured and financed more effectively.
USE THE TAXONOMY COMPASS TO EXPLORE THE DETAILED ACTIVITIES FOR THE CONSTRUCTION SECTOR AND THE REAL ESTATE SECTORS TO ALIGN WITH THE TAXONOMY
