Europe’s three primary financial regulatory agencies, the European Supervisory Authorities (ESAs) each announced the release of a series of proposals aimed at simplifying disclosure requirements and reducing the reporting burden for companies, asset managers, banks and insurers under the EU Taxonomy regulation.
The ESAs include The European Securities and Markets Authority (ESMA), The European Banking Authority (EBA), and The European Insurance and Occupational Pensions Authority (EIOPA).
The EU Taxonomy, part of the EU Sustainable Finance Framework, and is aimed at helping to facilitate the flow of capital towards activities that contribute to the EU’s sustainability goals. The taxonomy establishes a classification system for economic activities that play key roles in contributing to at least one of six defined environmental objectives, with criteria for inclusion requiring an activity to contribute substantially to at least one of the objectives, and to cause no significant harm to the other objectives.
The proposals form part of a significant simplification agenda launched by the European Commission last year to reduce administrative and reporting burdens on companies, with the Taxonomy among the first in a series of sustainability reporting regulations targeted in the Commission’s Omnibus I package.
The Commission adopted a series of measures last year to ease the compliance burden of the Taxonomy regulation, including dramatically reducing the number of datapoints in the taxonomy’s reporting templates, and exempting companies from assessing taxonomy alignment for non-material activities. In March 2026, the Commission issued a request for the ESAs to provide technical advice on additional simplification measures, focused on specific KPIs and other potential technical amendments.
In their proposals, each of the ESAs focused on simplifications in their respective sectors, while also presenting a set of joint ESA proposals on cross-sector issues such as group reporting and the use of OpEx by financial institutions.
ESMA’s proposals included a focus on the operational expenditure key performance indicator (OpEX), which requires companies to report the proportion of their OpEx associated with Taxonomy-aligned activities, with the agency noting stakeholder concerns about complexity and reporting burden associated with this requirement. ESMA proposes limiting the OpEx KPI to R&D expenditure, and creating a voluntary ‘OpEx+’ category for other expenditures, such as green procurement.
The EBA’s proposals include narrowing or eliminating some of the Taxonomy’s banking-focused KPIs including the Fees & Commissions KPI, which measure the proportion of advisory and capital markets fee income related to Taxonomy-aligned activities and the Trading Book KPI regarding how much of trading activities involve Taxonomy-aligned securities, with the EBA finding the KPIs have limited relevance relative to their reporting burden.
EIOPA’s proposals include redesigning the Taxonomy’s main insurance underwriting KPI to better measure insurers’ support for Taxonomy-aligned companies and assets, and introducing a new metric to measure green insured activities over the longer term, as well as the elimination of some disclosures that it considers unnecessary.
The ESAs’ publications also included a series of cross-sector proposals, including simplifying sustainability reporting by corporate groups with multiple business lines, and recommending against expanding reporting requirements to incorporate additional operational expenditure metrics that they said would add complexity while providing limited value to investors.
Each of the ESAs launched a consultation on their proposals, which run through August 12, 2026.
Click here to access the proposals by ESMA, EBA and EIOPA.
