Taxonomy KPI advice would narrow mandatory OpEx reporting

The European Securities and Markets Authority has advised the European Commission to narrow the EU Taxonomy operating-expenditure KPI to non-capitalised research and development and to replace the weighted-average group KPI, and issuers and asset managers would apply those changes only once the Commission amends the Disclosures Delegated Act.

Final report ESMA32-846262651-5927, published on 29 October 2026, answers the Commission's call for advice of 4 March 2026. Article 8 of Regulation (EU) 2020/852 still requires turnover, capital-expenditure and operating-expenditure ratios from non-financial undertakings, and an assets-under-management ratio from asset managers. The account below sets out the proposed OpEx formula, the group-reporting map, the disclosures adoption would trigger, and the comparison with the United Kingdom, the United States and Singapore.

Key facts

• On 29 October 2026 ESMA published final report ESMA32-846262651-5927 as technical advice on selected Taxonomy Disclosures Delegated Act KPIs, following the Commission's call of 4 March 2026.
• Consultation ran from 1 July 2026 to 12 August 2026, with 53 valid responses and a public hearing on 22 July 2026, after four empty or mistaken replies were set aside.
• The mandatory OpEx KPI would focus on non-capitalised research and development under IAS 38, or national GAAP, and existing materiality reliefs would stay.
• For EU green-bond proceeds, renovation, short-term leases, and maintenance and repair would remain, and the catch-all "and any other direct expenditures" would be deleted.
• Group reporting would drop the weighted-average KPI, follow the parent regime, and use a cumulative 10% of group turnover test for secondary businesses.
• The Joint Research Centre baseline cited in the report found that 1,358 of 1,773 parent companies are mixed groups.
• The Omnibus Delegated Act, cited as Commission Delegated Regulation (EU) 2026/73 of 4 July 2025, deferred selected financial KPIs to 2028, and ESMA wants five years of monitoring after any further revision applies.

Methodology and the documents behind the advice

The time window is 4 March 2026 to 29 October 2026. Primary texts are ESMA's news release and final report ESMA32-846262651-5927, including Annex III, against Regulation (EU) 2020/852, the Disclosures Delegated Act (EU) 2021/2178 of 6 July 2021, the Corporate Sustainability Reporting Directive and Directive 2013/34/EU. The Joint Research Centre paper by Alessi and Cotignano is taken from the report and the record 10.2760/6901307. Scope is Article 8 reporting by non-financial undertakings and asset managers, coordinated with the other two European Supervisory Authorities. The United Kingdom, the United States and Singapore are comparisons. A later Commission text can depart from the advice. Related letters sit on the regulation desk, including ESMA's CCP collateral call.

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What the OpEx KPI advice would require of issuers

Article 8(2) and Annex I still require taxonomy-eligible and taxonomy-aligned turnover, capital expenditure and operating expenditure. The OpEx denominator mixes non-capitalised research and development, renovation, short-term leases, maintenance and repair, and other direct expenditures on property, plant and equipment. ESMA tested four designs: clarify that hybrid; widen it to operating costs; rebuild it around green procurement; or limit the mandatory ratio to research and development with a voluntary companion.

Of 57 replies, four were set aside, leaving 53 valid responses, 19 of them from non-financial issuers and 13 from issuer bodies. Forty-five answered the exhaustiveness question and 71% said yes, while Annex I counts 29 mentions of weak decision-usefulness and 28 of high burden. ESMA kept a mandatory research core and moved the wider cost list to green-bond projects.

ESMA's mandatory operating-expenditure recommendation, set out in final report ESMA32-846262651-5927, would retarget the OpEx key performance indicator required by Article 8 of Regulation (EU) 2020/852. The denominator would be research and development expenses recognised under IAS 38 Intangible Assets, or under the relevant national GAAP where the undertaking applies that framework in place of IFRS. The numerator would use the operating-expenditure categories already listed in point 1.1.3.2 of Annex I to Commission Delegated Regulation (EU) 2021/2178, limited to the portion that reflects research and development. Existing materiality reliefs would remain available. For eligible use-of-proceeds expenditure under the EU Green Bond Regulation, ESMA would preserve a wider operating-expenditure notion covering non-capitalised research and development, building renovation measures, short-term leases, and maintenance and repair of property, plant and equipment, including work done by an outsourced provider, while removing the catch-all phrase "and any other direct expenditures". The European Commission would have to amend the Disclosures Delegated Act before issuers applied that split.

ESMA does not recommend introducing prescribed requirements for a voluntary OpEx-plus KPI in the Disclosures Delegated Act, because a prescribed voluntary metric would add complexity and crowd the flexibility voluntary disclosure is meant to keep. The delegated act should say whether a voluntary taxonomy figure may sit in the sustainability statement, given the Article 8 carve-out in the revised European Sustainability Reporting Standards. Where such a figure was allowed, ESMA wants a reconciliation to the mandatory KPI, a breakdown under point 1.2.3.3 (a) and (b) of Annex I, and the alternative-performance-measure guidelines. Progress report ESMA30-1668416927-2498, at paragraphs 57 and 70, had already marked voluntary reporting for supervisors.

How four regimes treat operating spend and sustainability claims

Article 8 is the EU KPI. The Omnibus text cited as Commission Delegated Regulation (EU) 2026/73 of 4 July 2025 already defers selected financial KPIs to 2028. PS23/16 has applied an anti-greenwashing rule since 31 May 2024, Release 6432 is the US benchmark from 25 September 2023, and Singapore's taxonomy is classification guidance.

Sources: Taxonomy Regulation, Disclosures Delegated Act, ESMA32-846262651-5927, FCA PS23/16, SEC press release 2023-194, MAS taxonomy page, FSMA 2000 section 206. Sources last checked on 2 November 2026 against the documents linked in this paragraph.

The EU taxonomy operating-expenditure ratio is an issuer disclosure, and other regimes test the claims around it. An EU issuer that, after adoption, published only a research-and-development OpEx ratio could still be quoted inside a UK fund's consumer disclosure or a Singapore bank's transition classification. The FCA rule that took effect on 31 May 2024 reaches every sustainability claim by an FCA-authorised firm, so a sterling-market manager that stretched an EU research-and-development percentage into a story about maintenance or purchased energy would have to hold the evidence for that wider story. MAS asks institutions to classify activities as green or transitioning, which is closer to the operational spend some EU respondents wanted inside OpEx, and further from a single research-and-development percentage. A US adviser that markets an EU taxonomy share as part of an ESG-integrated strategy remains under sections 206(2) and 206(4). The arbitrage sits in the marketing layer. The EU may simplify the annual ratio while other regimes continue to test the sentence wrapped around it.

"A modern regulatory and supervisory framework must look beyond preserving the core objectives of strong investor protection and stable and orderly markets. We need to achieve these objectives while – at the same time - being much more lean and efficient – eliminating unnecessary duplication and complexity in our regulation and being more risk-based and proportionate in our supervision."

— Verena Ross, Chair, European Securities and Markets Authority (speech, International Conference on Finance, Warsaw, 23 September 2026)

What the DWS order shows about sustainability process claims

On 25 September 2023 the Securities and Exchange Commission issued Investment Advisers Act Release 6432, proceeding 3-21709, against DWS Investment Management Americas, Inc., over an ESG-integration policy marketed from August 2018 until late 2021 and left short of what clients were led to expect. Sections 206(2) and 206(4) and Rules 206(4)-7 and 206(4)-8 are the hooks. DIMA settled the proceeding without admitting or denying the findings, apart from the SEC's jurisdiction, which it admitted, and accepted a censure, a cease-and-desist order and a $19 million civil penalty.

A marketed sustainability process has to be the process that is run, which is why a voluntary EU figure would need a reconciliation and the alternative-performance-measure guidelines. National authorities police misleading regulated disclosure under penalty rules that Article 51 of Directive 2013/34/EU says must be effective, proportionate and dissuasive. ESMA coordinates issuers on regulated markets, the setting of its narrower list for delaying inside information and its cross-border supervisory peer review of BaFin and CySEC.

What adoption would mean for issuers, managers and groups

Adoption would rebuild OpEx and leave turnover and capital expenditure in place. The denominator would follow IAS 38 or national GAAP, and the numerator would use the Annex I research categories. The adjusted turnover KPI in section 1.2.3.1 would come out, internal-sales turnover would be a voluntary companion, and CapEx Type C would stay with a request for clearer boundaries. IFRS 8 would remain a consistency check, contextual items would pass a materiality filter, and FAQ 5 of the First Commission Notice of 6 October 2022 would move into the act as the adaptation clarification.

Reliefs would be optional and explained beside the KPIs. Acquisitions and disposals would follow revised ESRS 1 and the accounting denominator. Omissions could follow Articles 19a and 29a with the ESRS relevance safeguard. Comparatives would start in the second reporting year, amendments could be taken from the second financial year after entry into force, and a first year in scope could show eligibility alone.

Groups would drop the weighted KPI and follow the parent, whether that parent is non-financial, an asset manager, a credit institution, an investment firm or an insurer. A conglomerate under Directive 2002/87/EC would use the leading entity's KPIs. A financial holding outside that test would follow Article 4(1)(20) of Regulation (EU) 575/2013 where that prudential regime applies, and the non-financial templates in other cases. BaFin's ancillary-services circular shows why the holding-company label is a legal conclusion. ESMA also asks whether paragraph 7a of Article 29a, read with Article 1(2)(c) of the Taxonomy Regulation, lets a qualifying financial holding step out of consolidated taxonomy KPIs together with the ESRS.

A shorter secondary template, still computed on the proper business rules, would be due once cumulative consolidated turnover reaches 10% of the group and the main template leaves the profile thin. Captives and activities already visible in the main template could be omitted, and two businesses could drop together only while their combined turnover stays under the cumulative line. Non-financial secondary lines would show turnover and capital-expenditure eligibility and alignment at consolidated level, unless a subsidiary split is more useful, and the Commission would still have to insert the template.

Asset managers would keep the assets-under-management share tied to investee eligibility and alignment. The three European Supervisory Authorities do not recommend introducing voluntary use of the OpEx KPI in the taxonomy disclosures of financial undertakings, and within ESMA's remit that recommendation is aimed at asset managers. Turnover and capital expenditure would stay central for Sustainable Finance Disclosure Regulation analysis. The annex would stay in its Omnibus form, including enabling, transitional, counterparty-type, and nuclear and fossil-gas rows, until the SFDR review makes a fresh template worth the build cost.

Brokers, venues and crypto-asset service providers sit outside the Article 8 preparer set. They still read green-bond use-of-proceeds files and manager KPIs, while assurance teams map research and development to IAS 38 and record the parent regime, the conglomerate test and the 10% screen.

"Whether advertising how they incorporate ESG factors into investment recommendations or making any other representation that is material to investors, investment advisers must ensure that their actions conform to their words. Here, DWS advertised that ESG was in its “DNA,” but, as the SEC’s order finds, its investment professionals failed to follow the ESG investment processes that it marketed."

— Sanjay Wadhwa, Deputy Director of the SEC's Division of Enforcement and head of its Climate and ESG Task Force, on 25 September 2023 (SEC press release 2023-194; Release 6432)

What the Commission still has to decide

The report is with the Commission, which could let undertakings apply amendments from the second financial year after entry into force, ideally in one package, and then watch the KPIs for five years.

The parent rule won on stability, with the conglomerate override, even though 1,358 of 1,773 parents in the Joint Research Centre baseline are mixed groups and need the secondary template as a backstop. ESMA would watch the 10% Omnibus-style gate before writing a general materiality principle, and enabling lines plus any new manager annex wait on the SFDR review. Value-chain testing, an undue-cost exemption and a cleaner FAQ set remain open, while tax incentives in the 22 May 2024 position paper sit outside this mandate. The duty arises when the Commission tables the text and scrutiny leaves it standing.

TL;DR

Final report ESMA32-846262651-5927, dated 29 October 2026, advises the European Commission on selected Taxonomy Disclosures Delegated Act KPIs. The mandatory operating-expenditure ratio would be limited to non-capitalised research and development under IAS 38, while turnover and capital expenditure would remain, and a wider operating-expenditure notion would survive for EU green-bond proceeds. Joint advice would drop the weighted-average group KPI, follow the parent regime, and call for simplified secondary-business disclosures once cumulative turnover reaches 10% of the group. Asset managers would stay with investee turnover and capital expenditure. The Joint Research Centre baseline cited in the report finds that 1,358 of 1,773 parent companies are mixed groups, which is why that secondary template matters. A Commission amendment is still required, with an optional second-year start and five years of monitoring after application.

Frequently asked questions

What would the mandatory OpEx KPI cover if the Commission adopted the advice?

It would cover non-capitalised research and development. The denominator would follow IAS 38 or national GAAP, and the numerator would use point 1.1.3.2 of Annex I only where the category is research and development. Materiality reliefs, turnover and capital expenditure would continue. Green-bond files would still count renovation, short-term leases, and maintenance and repair once "and any other direct expenditures" was deleted. The split would apply only after an amendment of Commission Delegated Regulation (EU) 2021/2178 itself took effect.

How would mixed groups report taxonomy figures under the joint advice?

They would drop the weighted-average KPI and follow the parent, or the leading entity under Directive 2002/87/EC. A financial holding would use Article 4(1)(20) of the Capital Requirements Regulation where that regime applies, and the non-financial templates otherwise. A shorter template would be added when cumulative secondary turnover reaches 10% of the group and the main template leaves the profile thin. Non-financial secondary lines would show turnover and capital-expenditure eligibility and alignment. A captive serving only the group could be omitted with a brief statement.

What taxonomy inputs would asset managers keep using?

Managers would keep the assets-under-management share in the Disclosures Delegated Act, built from investee eligibility and alignment. ESMA wants turnover and capital expenditure at the centre. Counterparties' operating expenditure would stay off that official KPI. The annex would remain the Omnibus version, with enabling and transitional rows, the non-financial and financial split, and nuclear and fossil-gas rows, until the Sustainable Finance Disclosure Regulation review justifies a new template and the system work that comes with it.

How would a voluntary taxonomy metric have to be presented?

The delegated act would say whether a voluntary taxonomy figure may enter the sustainability statement and how it relates to the European Sustainability Reporting Standards. A prescribed OpEx-plus line would stay off the statute book. An allowed voluntary figure would be reconciled to the mandatory KPI, broken out under point 1.2.3.3 (a) and (b) of Annex I, and run under ESMA's alternative-performance-measure guidelines. The same safeguards answer the 2023 greenwashing progress report and the UK anti-greenwashing rule in force since 31 May 2024.

Which reliefs could an issuer elect in the first years after an amendment?

Each relief would be optional and explained in the Annex I contextual information. Screening or delegated-act amendments could apply from the second financial year after entry into force. A first year in scope, or the first year of a new activity, could show eligibility alone, with alignment in the following year. Comparatives would begin in the second year of taxonomy reporting. Acquisition and disposal reliefs would follow revised ESRS 1 and the accounting denominator, and omission grounds in Articles 19a and 29a would keep the relevance safeguard from the standards.

How do UK labels and the Singapore taxonomy differ from Article 8?

PS23/16 is a claims and labels regime. The anti-greenwashing rule has applied since 31 May 2024 and four labels since 31 July 2024. Article 8 remains the EU issuer and manager KPI for turnover, capital expenditure and operating expenditure. Singapore's taxonomy is guidance for classifying financed activities as green or transitioning, a different job from the research-and-development percentage recommended in ESMA32-846262651-5927.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.