Last week, Europe's three primary financial regulators — the European Securities and Markets Authority, the European Banking Authority, and the European Insurance and Occupational Pensions Authority — each published consultations proposing simplifications to the EU Taxonomy reporting requirements. The proposals respond to a March 2026 request from the European Commission, which asked each authority for technical advice on how to reduce the compliance burden of taxonomy reporting while preserving its informational value. The consultation period closes on 12 August 2026, and the advice will inform the Commission's next round of delegated act amendments.
ESMA's focus is the operational expenditure KPI — one of the three key performance indicators companies use to demonstrate how their spending aligns with the EU taxonomy. ESMA proposes narrowing the OpEx KPI to research and development expenditure only, which it argues is the most analytically meaningful component. All other operational expenditure — including green procurement and related spending — would move to a voluntary "OpEx+" category that companies could report but would not be mandatory. The underlying logic is that the current broad definition of OpEx creates a high-volume, low-signal disclosure: companies report large quantities of operational expenditure with taxonomy alignment rates that are difficult to interpret or compare.
The EBA's proposals focus on the banking-specific KPIs that have generated the most compliance cost for limited investor benefit. The EBA proposes narrowing or eliminating the Fees and Commissions KPI — which captures revenue from advisory and transaction services — on the grounds that its scope is broad, its taxonomy alignment rate is inherently low, and the information it produces is not widely used by investors in credit risk or sustainability assessment. The Trading Book KPI faces a similar recommendation: the EBA argues that the short-duration, high-turnover nature of trading book assets makes taxonomy alignment assessment impractical and the resulting metrics hard to act on.
EIOPA's proposals take a different tack. Rather than eliminating the insurance underwriting KPI, EIOPA proposes redesigning it to better capture what it is actually meant to measure: insurers' active support for the low-carbon transition through their underwriting decisions. The current KPI has been criticised for not adequately distinguishing between insurers that are actively enabling green activities and those that simply happen to insure taxonomy-aligned companies. EIOPA also proposes a new metric to track green insured activities over a longer time horizon, to reflect the duration-based nature of insurance contracts.
The joint ESA proposals address cross-sector issues, including simplifying sustainability reporting by corporate groups with multiple regulated entities — a significant pain point for financial conglomerates — and recommending against any expansion of mandatory OpEx reporting requirements that would add compliance complexity without adding proportionate value to investors. The consultations run until 12 August, and each ESA has published detailed technical papers alongside its proposals. Responses will feed into the Commission's next round of taxonomy revisions, expected in late 2026 or early 2027.
For asset managers, banks and insurers currently reporting taxonomy alignment, the consultations represent a meaningful opportunity to provide input before the final architecture is set. For corporate treasury and sustainability teams preparing taxonomy KPI disclosures for FY2026 reports, the proposed simplifications are not yet in force — but they give a clear directional signal for how the reporting burden is expected to evolve.
Sources: EU Regulators Propose EU Taxonomy Simplification Measures — ESG Today ESMA EBA EIOPA