EU regulators recommend narrower Taxonomy KPIs for banks, insurers

The European Supervisory Authorities sent the European Commission final advice on Nov. 4 to simplify EU Taxonomy reporting for asset managers, banks and insurers, according to ESG Today.

ESMA recommended limiting the mandatory operating-expenditure (OpEx) KPI to non-capitalized research and development spending, saying its consultation found the measure a disproportionate burden with limited extra information. The EBA recommended eliminating the Fees & Commissions KPI, which measures the share of advisory and capital markets fee income tied to Taxonomy-aligned activities, and the Trading Book KPI, which measures how much of trading activity involves aligned securities.

For fund selectors, the result is fewer mandatory datapoints to compare across European banks and companies. If the Commission adopts the EBA's recommendation, the fee-income and trading-book figures fall out of bank disclosures and alignment comparisons rest on fewer ratios. Under ESMA's version, the expense-side number measures non-capitalized R&D rather than total operating spend.

The advice is technical input, not an amendment: the Commission requested it in March 2026 and the rules change only when the Commission amends them. The ESAs consulted on their proposals in July.

The recommendations extend a sequence of simplification measures the Commission adopted last year under its Omnibus I initiative, which cut the number of datapoints in the Taxonomy's reporting templates and exempted companies from assessing alignment for non-material activities. EIOPA's contribution also recommends revisions to the reporting requirements it covers.

ESMA is also tightening disclosure expectations elsewhere: in October it set double materiality and balanced impact disclosure as enforcement priorities, as ESG Capital Daily previously reported.

The Taxonomy itself is unchanged by the advice. It still classifies activities against six environmental objectives, and inclusion still requires a substantial contribution to at least one and no significant harm to the others. What the Commission writes into its amendments will determine whether the two banking KPIs and the full operating-expenditure measure survive.