The 2023 KPMG report on EU Taxonomy compliance offers a snapshot of the environmental sustainability landscape among large European corporations. Analyzing data from 291 non-financial companies across 17 industries, the study highlights how businesses are navigating complex regulatory requirements. The findings indicate that, as the EU expands its environmental objectives, more companies are disclosing sustainable activities.

In this year’s report, KPMG found that 76% of sampled companies reported Taxonomy-eligible turnover, a significant jump from 60% the previous year. Key sectors, including Real Estate and Utilities, showed the highest alignment rates, reflecting these industries’ potential to lead in sustainable practices. The Real Estate sector emerged as a front-runner, reporting an average eligible turnover rate exceeding 90%. Meanwhile, the Utilities sector recorded the highest percentage of Taxonomy-aligned turnover.

KPMG’s report also revealed areas for improvement. About 36% of companies did not report eligibility or alignment for activities recently included in the EU Taxonomy, highlighting challenges in adapting to newly covered environmental objectives. Sectors such as Consumer Goods and Telecommunications displayed lower compliance levels, suggesting that certain industries still struggle to integrate sustainability into their core business models.

The analysis points to inconsistencies in qualitative reporting, with many companies failing to provide full disclosures. Only 43% of companies reporting aligned turnover included contextual details, indicating a gap in transparency. As mandatory assurance requirements come into effect under the Corporate Sustainability Reporting Directive (CSRD) in 2024, companies may face increased pressure to improve reporting accuracy.

KPMG’s findings underscore the importance of compliance with the EU Taxonomy’s six environmental objectives, ranging from climate change mitigation to biodiversity protection. The coming year will be pivotal, as companies prepare for more stringent reporting standards and an increased focus on detailed disclosures and sector-wide alignment.