ESMA moves to shrink EU Taxonomy reporting burden with narrower OpEx KPI

The European Securities and Markets Authority has told the European Commission to narrow the mandatory operating expenditure key performance indicator under the EU Taxonomy to non-capitalised research and development spending, in a set of proposals aimed at cutting the reporting burden on issuers.

In a final report published on 29 October, ESMA also recommended simplifying group-level Taxonomy reporting, including removing the weighted-average KPI, alongside targeted measures it said would make disclosures more proportionate, clearer and easier to use. The regulator said the changes keep reporting focused on information useful for decision-making while preserving the relevance, comparability and reliability of Taxonomy disclosures.

ESMA said it coordinated the technical advice with the other European Supervisory Authorities, particularly on the voluntary use of counterparties' operating expenditure information and on how groups report Taxonomy figures. The proposals sit within the regulator's wider simplification and burden-reduction objectives.

The final report and technical advice now go to the European Commission, which will consider them in its review of the Taxonomy Disclosures Delegated Act. Any change to the KPI regime would follow that review, not ESMA's publication.

The EU Taxonomy is the bloc's classification system for environmentally sustainable economic activities, and the disclosures delegated act sets out how companies subject to it must report the share of their turnover, capital expenditure and operating expenditure that qualifies.