EU Regulators Finalize Taxonomy Reporting Cuts for Banks, Insurers

Europe's three financial regulators have finalized advice that would scrap or shrink several of the EU Taxonomy's most burdensome reporting KPIs for banks, insurers and asset managers — including a recommendation to limit the mandatory OpEx KPI to non-capitalized R&D spending only.

The European Supervisory Authorities (ESAs) — the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) — published their finalized technical advice in October, closing a consultation cycle that began with proposals in July 2026.

The advice responds to a March 2026 request from the European Commission for additional simplification measures targeting specific KPIs and technical amendments. That request built on the Commission's Omnibus I package adopted last year, which already cut the number of datapoints in taxonomy reporting templates dramatically and exempted companies from assessing alignment for non-material activities.

For practitioners, the headline changes land on three fronts.

What happens to the OpEx KPI?

ESMA found that consultation respondents considered the operational expenditure KPI — which requires companies to report the share of OpEx tied to taxonomy-aligned activities — a disproportionate reporting burden delivering limited incremental information. ESMA recommended limiting the mandatory KPI to non-capitalized R&D expenditure.

Notably, the final advice drops a voluntary "OpEx+" KPI that ESMA had floated in its initial proposal, over concerns about comparability and costs.

Which banking KPIs would disappear?

The EBA's advice calls for eliminating taxonomy KPIs built specifically for banks:

• The Fees & Commissions KPI, which measures the proportion of advisory and capital markets fee income related to taxonomy-aligned activities.
• The Trading Book KPI, which tracks how much of trading activity involves taxonomy-aligned securities.

Consultation respondents agreed both metrics carry high implementation costs with limited decision-usefulness — a judgment that effectively concedes the data wasn't informing investment decisions.

What changes for insurers?

EIOPA recommended revising the taxonomy's main insurance underwriting KPI to improve the accuracy and comparability of disclosures on insurers' climate adaptation activities. But it advised against introducing a new metric to measure green insured activities that had been under consideration, after stakeholder opposition — with a recommendation to revisit the option in five years.

Joint recommendations cut across sectors

The ESAs also issued joint advice. They recommended against a voluntary OpEx KPI that would have let financial institutions fold the OpEx KPI reported by non-financial companies into their own taxonomy KPIs, citing increased cost and complexity and reduced comparability.

On group reporting, the regulators advised replacing the weighted-average group KPI with a parent-level KPI, complemented by simplified disclosures for material subsidiaries. For conglomerate financial groups, that removes a calculation layer that has been a persistent compliance headache since the taxonomy's disclosure regime took effect.

The context matters here. The EU Taxonomy is the classification backbone of the Sustainable Finance Framework, defining which economic activities contribute substantially to at least one of six environmental objectives while causing no significant harm to the others. But its reporting architecture — particularly for financial institutions whose alignment is computed from thousands of counterparty disclosures — has drawn sustained criticism for producing numbers users don't trust or use.

The ESA advice keeps that critique intact while trimming the metrics most exposed to it. What happens next sits with the European Commission, which must decide whether to translate the recommendations into delegated act amendments — the milestone that will determine which KPIs financial institutions actually report in the next disclosure cycle.