EU Taxonomy Disclosure Simplification: The 12 August ESMA Deadline

ByOfficer

On 1 July 2026 the three European Supervisory Authorities each opened a consultation on rewriting the Key Performance Indicators that firms disclose under Article 8 of the EU Taxonomy Regulation. ESMA published a Consultation Paper, the European Banking Authority a Discussion Paper, and EIOPA a consultation on the insurance side. All three close on 12 August 2026, and all three feed a single package of technical advice the Commission wants back by the end of October. This is the substance behind the EU Taxonomy disclosure simplification effort that the CSSF flagged to Luxembourg market participants on 6 July 2026.

The stakes are practical. If ESMA gets its way, the Operational Expenditure KPI that non-financial undertakings compute today shrinks to research and development spending only. If the EBA follows its preliminary reasoning, banks keep computing the Green Asset Ratio on turnover and capital expenditure and do not fold operating expenditure into it. Group reporting for mixed groups and financial conglomerates gets reworked. None of this is law yet. But reporting teams that have already built Taxonomy datapoint inventories now know which fields the regulators think add little value, and the window to defend a datapoint you rely on runs out on 12 August.

Related reading: our guide to the revised ESRS and simplified CSRD reporting for 2026.

Dates that matter for the Taxonomy consultation

This is a deadline-driven change, so the calendar comes first.

  • 4 March 2026: the European Commission invited the ESAs to provide targeted technical advice to support the review of the Disclosures Delegated Act under Article 8 of the Taxonomy Regulation.
  • 1 July 2026: ESMA published Consultation Paper ESMA32-846262651-5826, the EBA published Discussion Paper EBA/DP/2026/03, and EIOPA opened its parallel consultation on insurance disclosures.
  • 22 July 2026: ESMA holds a public hearing to present its proposals and take stakeholder questions.
  • 12 August 2026: all three consultations close. ESMA takes comments through an online survey addressing the questions in its Annex I; the EBA uses its own consultation form.
  • End of October 2026: the ESAs deliver final technical advice to the Commission.
  • After that: the Commission decides whether and how to amend the Disclosures Delegated Act. The proposals in these papers become binding only if and when they land in a revised delegated regulation.

Two baseline dates anchor the current regime. The Disclosures Delegated Act, Commission Delegated Regulation (EU) 2021/2178, was adopted on 6 July 2021. The Omnibus Delegated Act, Commission Delegated Regulation (EU) 2026/73 of 4 July 2025, already cut parts of it and was published in the Official Journal on 8 January 2026. The July 2026 consultations sit on top of that Omnibus round, not instead of it.

How the EU Taxonomy disclosure simplification review is structured

Article 8 of the Taxonomy Regulation, Regulation (EU) 2020/852, is the disclosure obligation itself. It requires undertakings caught by the corporate sustainability reporting rules in Articles 19a or 29a of the Accounting Directive to state how, and to what extent, their activities are associated with environmentally sustainable economic activities. The Disclosures Delegated Act is the Level 2 text that turns that one-line obligation into templates, KPIs and methodology. Non-financial undertakings report Turnover, CapEx and OpEx KPIs. Credit institutions report the Green Asset Ratio. Investment firms, asset managers, insurers and reinsurers each report their own tailored ratios built on the underlying non-financial data.

The Commission’s 4 March 2026 call for advice split the work by remit. Some questions went only to ESMA, because they concern issuers and non-financial undertakings. Some went only to the EBA, because they concern banks and investment firms. Some are horizontal, addressed to all three authorities, and the ESAs answer those in coordination so they do not contradict each other. Group-level reporting and the use of OpEx in financial KPIs are the two horizontal issues that appear in both the ESMA and EBA papers.

One point of legal hygiene is worth flagging early. The four Commission Notices that most preparers rely on for interpretation, from the first notice 2022/C 385/01 of 6 October 2022 through to the fourth notice C/2026/2558 of 30 April 2026, are guidance, not legislation. Part of what ESMA is exploring is whether selected clarifications currently living in those FAQ notices should be written into the Level 2 legal text of the Delegated Act, so preparers and auditors get binding legal certainty instead of guidance they have to argue about. That is a quieter change than the KPI cuts, and it matters to anyone who has ever built a control around an FAQ answer.

The OpEx KPI faces the deepest cut

ESMA’s headline proposal is to strip the Operational Expenditure KPI back to research and development expenditure. The reasoning is empirical. In ESMA’s analysis of European Single Electronic Format filings, aligned CapEx is roughly two and a half times larger than aligned OpEx, and aligned Turnover is more than ten times larger. OpEx also correlates tightly with the other two ratios: OpEx to CapEx at 81 percent, OpEx to Turnover at 90 percent. Fewer companies report a non-zero OpEx figure than report non-zero CapEx or Turnover, and aligned OpEx is heavily concentrated. The top fifteen sectors account for more than 90 percent of it, with utilities and motor-vehicle manufacturing alone close to 60 percent. ESMA’s read is that OpEx rarely adds a transition signal that CapEx and Turnover do not already carry.

The mechanics of the proposal are specific. ESMA prefers refocusing the mandatory OpEx KPI on R&D, and pairing it with an optional additional indicator, provisionally called OpEx+, that would capture other operating expenditure relevant to green procurement. It also floats removing “other direct costs” from the OpEx denominator entirely, on the grounds that the phrase is too open to interpretation to control reliably. A further idea is a reporting relief where CapEx is low: below a CapEx ratio of, for example, 10 percent, a non-financial undertaking could be exempted from reporting OpEx at all.

Refocusing the OpEx KPI is not the same as deleting it, and the redesign does not touch financial undertakings the way people assume. Financial undertakings do not compute an OpEx KPI today, and none of the ESMA proposals give them one. Credit institutions and investment firms build their ratios on the Turnover and CapEx KPIs of the companies they finance. The OpEx debate on the financial side is a narrower question about whether banks may voluntarily use a counterparty’s OpEx, which is a different issue covered below.

ESMA is candid that accounting will not rescue the KPI on its own. It notes that IFRS operating-cost concepts closest to the Taxonomy OpEx definition appear in only about 7 percent of ESEF filings, and that even the new IFRS 18 operating category, while it may improve consistency, will not tell a preparer item by item which costs qualify. That is the honest core of the OpEx problem, and it is why ESMA is willing to consider a redesign rather than another round of clarifications.

What the EBA is asking banks and investment firms

The EBA’s Discussion Paper runs on a separate track from ESMA’s, and the stage matters. A Discussion Paper sits earlier in the process than a Consultation Paper: the EBA is testing analysis and options before it commits to draft advice, so banks should read it as early-stage direction, well short of a near-final text. It covers seven issues, and four of them are bank-specific.

Issue 1 is the Fees and Commissions KPI. Issue 2 is the Trading Book KPI. Neither disclosure is due yet: the Omnibus Delegated Act pushed the start date for both, for credit institutions, from 1 January 2026 to 1 January 2028, so this consultation is shaping KPIs banks have not had to report on so far. Issue 3 is the “other services” KPI for investment firms. Each of these asks the same underlying question: does the ratio connect to anything meaningful for capital markets, is it material, and is it worth the cost of producing. Issue 4 is the grandfathering period for financial exposures, where the EBA examines how long a bank can keep treating a legacy exposure under the rules that applied when it was booked, including how that interacts with the EU Green Bond Standard grandfathering rules.

Issue 6 is the horizontal OpEx question, and it is the one to watch if you run a bank’s Taxonomy calculation. The EBA sets out a worked example. A non-financial counterparty reports 18.1 percent aligned CapEx and 32.2 percent aligned OpEx for 2024. Under the current methodology a bank lending to that company uses the CapEx KPI, so the loan is treated as 18 percent aligned. If OpEx were allowed in, the bank could use a combined weighted average of about 27 percent, or for a short-term working-capital loan the 32 percent OpEx figure directly, and its Green Asset Ratio would rise. The EBA’s preliminary view is to say no. Even on a voluntary basis, it argues, folding OpEx financing into bank KPIs would add complexity, burden preparers for marginal user benefit, cut comparability across banks, and widen the room for greenwashing accusations. For anyone tempted to see OpEx inclusion as a free lift to the GAR, the EBA is signalling the opposite conclusion. This connects directly to the mechanics we covered in the EBA ESG Pillar 3 disclosure templates, where the GAR already sits.

Group reporting: where aggregated KPIs break

Group-level reporting is the horizontal issue that appears in both papers, and it is the one most likely to affect large Luxembourg-domiciled groups. The problem is structural. A mixed group can contain non-financial subsidiaries, a bank, an asset manager and an insurer under one parent. The current framework can push such a group toward aggregating heterogeneous KPIs that were never designed to be added together, and the EBA anchors part of its analysis in the prudential scope of consolidation under Regulation (EU) No 575/2013, which does not line up neatly with the accounting consolidation used for sustainability reporting.

Where teams get this wrong is in assuming a group Taxonomy KPI is a simple sum or weighted average of its parts. Add a bank’s Green Asset Ratio to a manufacturer’s Turnover KPI and you produce a number that looks precise and means very little. ESMA’s proposed answer is a primary reporting regime determined at group level, with the dominant business model setting the reporting model, complemented by targeted disclosures so a genuinely material activity does not disappear in the aggregation. The EBA reaches for the same idea from the banking side, including how the equity method should be handled in a credit-institution-led group. The practical takeaway is that the review reaches consolidation logic, well beyond data collection.

Insurers and asset managers get a lighter review

EIOPA’s consultation covers the insurance and reinsurance disclosures under the same Delegated Act, reviewing the KPIs those undertakings compute on their underwriting and investment activities. It is the third leg of the same Commission mandate, and it closes on the same 12 August 2026 date. Insurers should treat it as their channel to comment on the parts of the framework that bite specifically on underwriting and investment KPIs.

Asset managers get relatively gentle treatment, and the reason is timing. ESMA points out that the Omnibus process already simplified the asset-management annex, that reporting under the revised annex has barely begun, and that the same Omnibus round sharply reduced how many firms are in scope for corporate sustainability reporting in the first place, which cuts the number of asset managers pulled into Taxonomy reporting through that door. ESMA’s starting position is therefore not to reopen the asset-manager template wholesale. The EBA does float one tidy-up that touches this space: merging the two templates used for credit institutions’ asset-management services and for standalone asset managers into a single template, on the view that the activities are similar enough that two templates create more confusion than clarity. If you manage assets inside a banking group, that merge is worth a comment.

The plumbing: ESRS, IFRS 8, materiality and the digital taxonomy

ESMA’s fourth topic is a grab-bag of connective simplifications, and it is where the long-term direction of the framework shows. Several threads run through it.

The first is connectivity with the European Sustainability Reporting Standards. ESMA wants closer alignment between Taxonomy reporting and the ESRS, including selected reliefs, so that a preparer producing a sustainability statement is not answering the same question twice in two incompatible shapes. The Omnibus simplification has already reshaped the CSRD side, and the interaction is best read alongside the CSRD Omnibus value-chain cap and the broader move to CSRD sustainability reporting.

The second is the interaction with IFRS 8 operating segments and materiality. Taxonomy materiality and IFRS 8 segment reporting do not map one to one, especially where segments are drawn geographically or bundle several economic activities. An activity can be immaterial for Turnover yet material for CapEx or OpEx. ESMA is asking whether IFRS 8 information should be used mainly as contextual or consistency input, and whether a general materiality filter should apply to the qualitative and quantitative information disclosed outside the templates in Annex I.

The third is a set of targeted burden cuts inside Annex I. ESMA raises making CapEx “type C”, the category tied to purchasing output from Taxonomy-aligned activities and to measures that must be operational within 18 months, optional instead of mandatory. It raises making the Turnover KPI on internal consumption voluntary. It questions the adjusted Turnover KPI for sustainable bond issuance in Annex I section 1.2.3.1, which preparers find hard to calculate without leaning on assumptions. And it wants a clearly defined list of Annex I datapoints so the information can be tagged for a future digital taxonomy. These fields are unglamorous, and they are exactly where a reporting team spends its closing days fighting.

What reporting teams should do before 12 August

The immediate job is analytical. Work out what you would lose or gain if each proposal became law, and say so while the authorities are still listening. Nobody has to rebuild a system yet.

Start with an exposure map. For a non-financial undertaking, that means identifying how much of your Taxonomy alignment story currently rides on OpEx, and whether the R&D-only redesign or the low-CapEx exemption would erase a number you use in investor communication. When I map a Taxonomy reporting inventory, the OpEx numerator is the line that generates the most internal back-and-forth, because “other direct costs” has never had a clean general-ledger equivalent, so ESMA’s plan to delete that phrase is one of the few proposals that would actually simplify a closing. For a bank, the exposure map is the GAR: model whether the EBA’s fees and commissions, trading book and OpEx-in-GAR positions change your published ratio, because the EBA is currently minded to keep OpEx out.

Then respect the difference between a proposal and a rule. Everything in these three papers is consultation material. The Disclosures Delegated Act as amended by the Omnibus Delegated Act remains the text you report under for the current cycle. Building systems to a preferred option that has not cleared the Commission is how teams waste a budget. The safe posture is to comment now, track the end-October technical advice, and wait for a revised delegated regulation before you change a control. The banking framework changes here are adjacent to, and should be read with, the wider prudential disclosure agenda in the CRR3 Pillar 3 ESG disclosure ITS.

Finally, treat the horizontal issues as the ones most worth your ink. OpEx-in-financial-KPIs and group-level reporting are being decided across all three authorities at once, so a well-argued response there carries further than a comment on a single bank-specific ratio. If your group aggregates KPIs across a bank, a manager and a manufacturer today, the group-reporting proposal is the one that could change how your consolidated Taxonomy number is even constructed.

Frequently Asked Questions

Is the OpEx KPI being abolished?

No. ESMA’s preliminary preference is to refocus the mandatory Operational Expenditure KPI on research and development expenditure, and to offer an optional OpEx+ indicator for green procurement and similar costs. It is a redesign under consultation that stops well short of deletion, and nothing changes until the Commission amends the Disclosures Delegated Act.

Does this consultation change the current reporting cycle?

No. Firms still report under Commission Delegated Regulation (EU) 2021/2178 as amended by the Omnibus Delegated Act (EU) 2026/73. The July 2026 papers gather feedback for technical advice due end-October 2026. Any binding change would come later, through a revised delegated regulation.

Would including OpEx raise a bank’s Green Asset Ratio?

Mechanically it could. In the EBA’s own example, a counterparty with 18 percent aligned CapEx and 32 percent aligned OpEx would let a bank use a combined figure of about 27 percent instead of 18 percent. The EBA’s preliminary view, though, is that OpEx should not be folded into financial undertakings’ KPIs, even voluntarily, because it adds complexity and greenwashing risk and cuts comparability.

What is the difference between the ESMA and EBA documents?

ESMA published a Consultation Paper with preliminary preferred options. The EBA published a Discussion Paper, which sits one stage earlier and tests analysis and options before committing to draft advice. EIOPA ran a parallel consultation on insurance disclosures. All three answer the same Commission call for advice and close on 12 August 2026.

Who has to respond, and how?

Responding is voluntary and open to any stakeholder: issuers, banks, investment firms, asset managers, insurers, auditors, trade bodies and investors. ESMA collects responses through an online survey covering the questions in its Annex I. The EBA uses the send-your-comments form on its consultation page. The deadline for both is 12 August 2026.

Does the group-reporting proposal affect financial conglomerates in Luxembourg?

It is aimed squarely at mixed groups and financial conglomerates. The proposal would set a primary reporting regime at group level based on the dominant business model, with targeted disclosures so material activities are not lost. Large Luxembourg groups that today aggregate a bank, a manager and non-financial subsidiaries are the clearest case for commenting.

What happens to the Commission FAQ notices?

They remain interpretive guidance. ESMA is exploring whether selected clarifications, for example on eligibility for climate-change adaptation activities, should be written into Annex I of the Delegated Act so preparers can anchor those points in the Level 2 legal text, with the FAQ no longer the sole reference.

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Key Takeaways

  • ESMA, the EBA and EIOPA opened three parallel consultations on 1 July 2026, all closing 12 August 2026, feeding one set of technical advice to the Commission due end-October 2026.
  • ESMA’s headline proposal refocuses the non-financial OpEx KPI on research and development, with an optional OpEx+ indicator for green procurement, and floats removing “other direct costs” from the denominator.
  • The EBA is minded to keep OpEx out of banks’ Green Asset Ratio, even voluntarily, despite the example showing it could lift a loan’s alignment from 18 percent to about 27 percent.
  • Group-level reporting for mixed groups and financial conglomerates is a horizontal issue in both the ESMA and EBA papers, with a proposed primary reporting regime set at group level.
  • The EBA document is a Discussion Paper, an earlier stage than ESMA’s Consultation Paper, so bank-specific KPI options are still at a directional, early stage.
  • Nothing changes for the current cycle: firms still report under Delegated Regulation (EU) 2021/2178 as amended by the Omnibus Delegated Act (EU) 2026/73.
  • The strongest comments target the horizontal issues, OpEx-in-financial-KPIs and group reporting, because they are being decided across all three authorities at once.

Sources and References

  • Regulation (EU) 2020/852 (EU Taxonomy Regulation), Article 8: EUR-Lex
  • Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 (Disclosures Delegated Act): EUR-Lex
  • Commission Delegated Regulation (EU) 2026/73 of 4 July 2025 (Omnibus Delegated Act amending the DDA): EUR-Lex
  • ESMA Consultation Paper ESMA32-846262651-5826, Technical Advice on selected KPIs under the Taxonomy Disclosures Delegated Act, 1 July 2026: ESMA consultation page and consultation paper (PDF)
  • ESMA press release, ESMA consults on simplifying EU Taxonomy disclosure framework: ESMA
  • EBA Discussion Paper EBA/DP/2026/03 on certain Taxonomy KPIs and other aspects of the Disclosures Delegated Act, 1 July 2026: EBA (PDF)
  • EIOPA consultation on the review of insurance disclosures under the Taxonomy Disclosures Delegated Act: EIOPA
  • CSSF notice, Public consultation by ESMA until 12 August 2026 on simplifying EU Taxonomy disclosure framework, 6 July 2026: CSSF

Reading the Taxonomy simplification signal

The direction of travel is clear even if the destination is not. The regulators have stopped defending every KPI on principle and started asking, ratio by ratio, whether the number earns the cost of producing it. OpEx is the clearest casualty of that shift, and the Green Asset Ratio is being probed for the same reason. A reporting team that reads these papers as a preview rather than a rulebook gets two things: a shortlist of the datapoints most likely to be simplified away, and one last chance before 12 August to argue for any of them it actually uses. The teams that comment on the horizontal issues will have the most influence on what the revised Delegated Act looks like.

Last updated: July 2026

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.

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