EU: ESMA and EBA finalise proposals to simplify Taxonomy reporting

The European Supervisory Markets Authority (ESMA) and the European Banking Authority (EBA) have both submitted their final reports of technical advice to the European Commission on targeted changes to EU taxonomy disclosure rules. The recommendations are part of the wider EU regulatory simplification strategy and cover key performance indicators (KPIs), group reporting and template changes for sustainability disclosures.

The reports respond to a request from the European Commission in March 2026 for targeted technical advice to support its forthcoming review of the Disclosures Delegated Act under Article 8 of the Taxonomy Regulation. The authorities consulted on their draft reports in July 2026 (see our earlier blog post).

ESMA’s final report

ESMA’s recommendations include:

• Revising the operational expenditure key performance indicator (OpEx) KPI: ESMA recommends narrowing the OpEx KPI so that it focuses on non-capitalised research and development expenditure, without affecting the existing materiality reliefs. ESMA does not recommend introducing prescribed requirements for a voluntary OpEx+ KPI. Instead, the status of any voluntary Taxonomy-related disclosure should be clarified and appropriate safeguards should apply in relation to reconciliation, transparency, comparability and greenwashing risks. ESMA also recommends monitoring the revised KPI framework for a period of five years.
   

• Voluntary use of OpEx by financial undertakings: ESMA does not recommend introducing the voluntary use of the OpEx KPI in the Taxonomy disclosures of financial undertakings, particularly those of asset managers.
   

• Group Taxonomy reporting: ESMA recommends removing the requirement to calculate a weighted-average KPI and determining the main reporting regime primarily by reference to the nature of the parent undertaking, subject to a specific rule for financial conglomerates and to the application of the non-financial undertaking regime to other financial holdings. Simplified disclosures should be required for secondary businesses of a different nature to avoid the loss of material information.  In addition, ESMA’s specific considerations on this matter include the possibility of relying on a cumulative materiality threshold of 10% to determine when secondary business disclosures can be omitted.
   

• Additional possible simplifications: These include:

  • introducing optional reliefs in relation to acquisitions, disposals, omitted information and comparative information; 

  • permitting cross references to European Sustainability Reporting Standards’ disclosures; 

  • providing for a one-year phased application of amendments; 

  • allowing eligibility-only reporting for newly introduced activities and first-time reporters during the first financial year;

  • clarifying that IFRS 8 should serve as contextual information and a consistency check, rather than as a determinative factor in Taxonomy materiality assessments; and

  • retaining the reporting requirements for enabling and transitional activities pending completion of the SFDR review and incorporating the clarification in existing Commission FAQs (notably FAQ 5) on adaptation related activities into the relevant delegated acts.

ESMA also recommends removing the adjusted Turnover KPI for sustainable bonds, making the disclosure of turnover from internal sales voluntary, introducing a materiality filter for contextual information, establishing a closed list of quantitative and qualitative contextual datapoints for future digital tagging, enhancing the accessibility and governance of Taxonomy FAQs, and refraining from further amendments to the asset-management annex at this stage.

EBA final report

The EBA focuses its recommendations on five areas: 

• removing the Fees and Commission's KPI and the Trading Book KPI from taxonomy disclosure requirements;
   

• limiting the scope of the investment firms’ “other services” KPI to capital markets activities and exploring an asset-value-based measurement approach;
   

• aligning grandfathering provisions with the EU Green Bond Regulation for bonds issued under that regime;
   

• advising against introducing the voluntary inclusion of operational expenditure KPI disclosed by non-financial undertakings into the calculation of financial undertakings' KPIs, due to its potential complexity and limited added value; and
   

• simplifying group disclosures by relying on the parent undertaking's KPIs and, where relevant and subject to defined conditions, adding KPIs for material secondary activities without further aggregation.

The EBA also recommends targeted improvements to the broader disclosure framework, including simplifying and harmonising templates for credit institutions’ asset management activities, asset managers’ activities and investment firms’ activities, as well as simplifying and clarifying the Green Asset Ratio templates for credit institutions.

Next steps

It is now for the European Commission to consider the recommendations in these final reports as part of its review of the Taxonomy Disclosures Delegated Act. According to the call for advice, the Commission intends to adopt the amendments in Q1 2027.

ESMA’s final report is here and press release here.

The EBA’s final report is here and press release here.