EU: ESAs consult on proposals to simplify EU Taxonomy disclosures

The three European Supervisory Authorities - ESMA, EBA and EIOPA - have launched parallel consultations with proposals designed to reduce sustainability reporting requirements under the Taxonomy Regulation. The proposals focus on making Key Performance Indicators (KPIs) more practical and easier to apply, while preserving transparency for investors.

The consultations build on the Commission’s broader Omnibus I package to streamline sustainability reporting, and follow the Commission’s 4 March 2026 request for technical advice on selected KPIs as part of its review of the Disclosures Delegated Act under the Taxonomy Regulation (see our earlier blog post).

ESMA

ESMA’s consultation proposes several simplifications including:

• Revising the operational expenditure key performance indicator (OpEX): The current OpEx KPI is considered of limited relevance by users of sustainability information, while preparers find the reporting burden significant for little perceived benefit. ESMA proposals several alternative approaches from targeted refinements to more fundamental design options. ESMA is also exploring whether to complement a revised mandatory OpEx KPI with an optional additional KPI (OpEx+), capturing other operating expenditures relevant to an undertakings efforts on green procurement and possibly other expenditures.

• Voluntary use of OpEx by financial undertakings: The consultation examines whether and how OpEx information disclosed by non-financial undertakings could be used by financial undertakings, notably asset managers.

• Group Taxonomy reporting: The consultation identifies challenges in the current framework for mixed groups and financial conglomerates, notably the insufficient relevance and potential methodological errors of aggregated KPIs. It proposes an approach based on a primary reporting regime determined at group level, complemented by targeted disclosures to avoid material information gaps.

• Additional possible simplifications: Additional measures under consideration include: greater connectivity with the ESRS framework, phased-in application of new requirements; clarification of the interaction with IFRS concepts (in particular, IFRS 8); and simplifications concerning the reporting obligations of non-financial undertakings in relation to Annex I of the Act, the templates and contextual disclosures, including a general materiality filter; and targeted improvements to asset managers’ reporting.

EBA

The EBA’s proposals include:

• Simplifying the fees and commission’s KPI, trading book KPI and off-balance-sheet exposures KPI for credit institutions.

• Introducing a simplified ‘other services’ KPI for investment firms, intended to make reporting requirements easier to apply.

• Aligning grandfathering provisions for financial instruments under Taxonomy disclosures with those set out in the EU Green Bond Regulation.

• Clarifying and improving group-level disclosures, including by parent undertakings and other undertakings within the group.

• the treatment of operational expenditure KPI disclosed by non-financial undertakings in the calculation of financial undertakings’ KPI.

EIOPA

Key proposals in EIOPA’s consultation, include:

• redesigning the current ‘underwriting KPI’ for (re)insurers by narrowing the denominator in the Taxonomy and Eligibility rations to Taxonomy-eligible lines of business only and renaming the KPI to ‘Adaptation Underwriting KPI’. 

• standardise how eligible activities are calculated in the numerator, namely by requiring a split of premiums that cover only natural catastrophe perils and by only including contracts with such coverage.

• Exploring the potential introduction of a new ‘Green Insured Activities KPI’ to measure the ratio of Taxonomy-aligned insured activities. The ’Green Insured Activities KPI’ would cover all policies sold to companies that report under the Taxonomy Regulation, as well as retail insurance policies for housing and transport. This KPI would show the amount of green insured business and ensure consistency with the look-through approach used in banking and investments for disclosures. 

• simplifying reporting templates by removing disclosures on the breakdown of gas and nuclear activities and give more prominence to Taxonomy disclosures within insurance undertakings’ annual reports.

• streamlining group reporting to focus on the parent company’s ‘main business’ rather than reporting weighted averages for all business segments and not introducing a voluntary reporting on the Taxonomy-alignment of investments based on Operational Expenditure.

Next steps

All three papers close on 12 August 2026 with the ESAs intending to deliver their final technical advice to the Commission by the end of October 2026.  

The EBA and EIOPA will hold public hearings on 16 July 2026, whilst ESMA will hold a public hearing on 22 July 2026.

The Commission intends to complete its review of the Act by Q1 2027 and for the new measures to enter into force in Q3 2027.

ESMA’s press release is available here.

The EBA discussion paper is available here.

EIOPA’s consultation paper is available here.