The European Securities and Markets Authority (ESMA) has published final technical advice to the European Commission recommending that mandatory Taxonomy operating expenditure (OpEx) reporting cover only research and development costs that are not capitalised. The recommendations follow its July consultation and build on earlier Omnibus reporting simplifications. Existing materiality reliefs would remain, while a broader, simplified expenditure definition would apply when determining eligible uses of proceeds under the EU Green Bond Regulation. Unlike its preliminary preferred approach, the final advice does not recommend prescribed requirements for a voluntary OpEx+ key performance indicator (KPI). Advice coordinated with the other European Supervisory Authorities would replace the weighted average group KPI with indicators determined primarily by the parent undertaking’s reporting regime. Simplified disclosures would preserve information on material secondary businesses not adequately captured by that regime. These disclosures could be omitted where the businesses’ cumulative consolidated turnover is below 10% of group turnover, where they are already adequately covered or where they exclusively serve internal group needs. For nonfinancial secondary businesses, reporting would be limited to headline turnover and capital expenditure (CapEx) eligibility and alignment KPIs. The coordinated advice also recommends against introducing voluntary use of counterparties’ OpEx in financial undertakings’ disclosures, including those of asset managers. Further recommendations include optional reliefs for acquisitions and disposals, specified information omissions and comparative reporting, alongside permission to reference European Sustainability Reporting Standards disclosures. An optional transition of one year would allow firms to continue using previous requirements following amendments. Newly introduced activities and firms reporting for the first time could disclose eligibility alone in their first financial year, with alignment reporting required subsequently. Other proposed reductions include removing the adjusted turnover KPI for sustainable bonds and introducing a materiality filter for contextual information. CapEx Type C reporting would remain mandatory, while disclosures on enabling and transitional activities would be retained pending completion of the Sustainable Finance Disclosure Regulation review. ESMA has submitted the advice for consideration in the Commission’s review of the Taxonomy Disclosures Delegated Act.
ESMA finalises advice to restrict Taxonomy OpEx reporting to research and development and simplify group disclosures
ESMA has submitted final advice to the European Commission recommending that mandatory Taxonomy operating expenditure reporting cover only research and development costs that are not capitalised. Group reporting would drop the weighted average indicator while retaining simplified disclosures for material secondary businesses, with a cumulative 10% turnover threshold for omissions. Further proposals include optional reporting reliefs, a transition of one year for amendments and eligibility reporting alone in the first year for new activities and new reporters.