In the past twelve months, an increasing number of Dutch SMEs have received a request from their relationship bank that reads something like this: “Could you indicate which share of your turnover, CapEx and OpEx is aligned with the EU Taxonomy?”

For a non-listed company with no statutory sustainability reporting obligation, the question often lands as a surprise. Yet it is neither random nor optional from the bank’s perspective. Under the Disclosure Regulation and the prudential framework, credit institutions must publish a Green Asset Ratio — the share of their loan book financing activities that qualify as environmentally sustainable under the EU Taxonomy. That ratio is built bottom-up from data provided by the companies they finance. When you supply data, your bank publishes a number. When you do not, your loan increasingly counts against their ratio.

What looks like a sustainability question is, in fact, a financing question. And it is moving from voluntary disclosure to a precondition for competitive pricing.

What the EU Taxonomy actually does

The EU Taxonomy is a classification system. It defines which economic activities can be considered environmentally sustainable, and under what conditions. The framework is built around four sequential tests:

1. Eligibility — Is the activity on the Taxonomy list? Most large sectors are covered: manufacturing, energy, transport, construction, real estate, ICT, water and waste management.
2. Technical Screening Criteria — Does the activity meet the quantitative thresholds for substantial contribution to one of the six environmental objectives (typically climate change mitigation or adaptation)?
3. Do No Significant Harm (DNSH) — Does the activity avoid significant harm to the other five environmental objectives?
4. Minimum Safeguards — Does the company comply with the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, the ILO core conventions, and the International Bill of Human Rights?

An activity that passes all four tests is Taxonomy-aligned. An activity that only passes the first is Taxonomy-eligible. The distinction matters: alignment is the number your bank wants. Eligibility alone is the starting point.

Why this is reaching non-listed SMEs

The CSRD itself does not require non-listed SMEs to publish a Taxonomy report. The pressure is arriving sideways, through three channels:

• Banks, which need aligned-share data from their corporate borrowers to calculate the Green Asset Ratio.
• Large customers subject to the CSRD, who must report aligned share across their value chain and therefore push the same question down to their suppliers.
• Insurers, who increasingly use Taxonomy data to price climate-related underwriting risk.

In practice, this means an SME can receive the same Taxonomy questionnaire from a financier, a customer, and an insurer in the same quarter — each in a different format. Without preparation, that is three rounds of internal scrambling. With preparation, it is the same one-page document sent three times.

A practical approach for SMEs

A workable Taxonomy response for an SME does not require a CSRD-grade reporting infrastructure. It requires a defensible, evidence-backed answer to five questions:

1. Which of our activities are on the Taxonomy list?

Map your revenue streams to the activity descriptions in the Delegated Acts. Most SMEs find two or three relevant activities — for example, manufacture of low-carbon technologies (3.x), freight transport by road (6.6), or acquisition and ownership of buildings (7.7).

2. Do those activities meet the technical screening criteria?

For each eligible activity, identify the specific thresholds — energy intensity, emissions per tonne-kilometre, building energy performance, recycled content — and document whether you meet them. This is the most operational step and the one where SMEs most often need advisory support.

3. Can we evidence DNSH compliance?

DNSH is a checklist exercise, not a measurement exercise. For most SMEs, the existing ISO 14001 environmental management system, GHG inventory, and waste-handling records provide most of what is needed. The work is in collating and signposting it.

4. Can we evidence the minimum safeguards?

This is increasingly where SMEs are tripped up. A code of conduct, a supplier policy, a grievance mechanism, and demonstrable HR practices aligned to ILO core conventions are the baseline. For many SMEs, the gap is not the substance — it is the documentation.

5. Can we produce a one-page summary that any stakeholder can reuse?

This is the deliverable. A single fact sheet, refreshed annually, that any bank, customer, or insurer can use without bespoke follow-up.

The business case: alignment as leverage

Treated as a reporting burden, the Taxonomy is overhead. Treated as a positioning tool, it is leverage:

• Financing cost. Banks are beginning to price Taxonomy-aligned exposures more favourably than unaligned ones. The differential is currently small, but the direction is clear.
• Procurement speed. Customers reporting under the CSRD will increasingly fast-track suppliers who can answer their value-chain questions without bespoke processes.
• Investor and insurer confidence. A documented Taxonomy position signals operational maturity, which compounds across every commercial conversation.
• VSME readiness. The voluntary sustainability reporting standard for non-listed SMEs (VSME) draws on the same data foundation. Work done for the Taxonomy is not wasted; it is reused.

Common pitfalls

The pattern we see across SME engagements:

• Conflating eligibility with alignment. Reporting eligible turnover as if it were aligned turnover is the most common error and the one most likely to be challenged.
• Treating DNSH as an audit. It is a documentation exercise, not a new compliance regime. Most of the evidence already exists in your ISO and HSE systems.
• Ignoring minimum safeguards. Many SMEs have the substance — a code of conduct, fair labour practices — without the formal policy artefacts. The fix is administrative, not behavioural.
• Answering the same question three different ways. Without a single source of truth, every stakeholder request becomes a fresh project.

Where to start

A practical first step is a structured Taxonomy alignment scan: a half-day workshop to map activities, identify the relevant technical criteria, audit existing evidence against DNSH and minimum safeguards, and produce a baseline fact sheet. From there, gaps become a small, scoped roadmap rather than an open-ended programme.

This is best practice. It is also commercially rational. The companies treating Taxonomy alignment as a financing and procurement asset in 2026 will spend less time on sustainability questionnaires for the next five years than the companies still treating it as a one-off reporting task.

Next step

At Royaal Project we run a 30-minute Taxonomy alignment scan for Dutch SMEs and mid-market corporates. We map your activities to the Taxonomy, identify the screening criteria that apply, and outline what evidence your bank, your largest customer, and your insurer will accept.

Book a Taxonomy alignment scan →

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Royaal Project is an independent Dutch advisory firm specialising in compliance, sustainability, ISO management systems, contract management, and project management for SMEs and corporates. Strategy for Sustainable Success.