Platform response to EC consultation on the Taxonomy Disclosures Delegated Act

The EU Platform on Sustainable Finance, an advisory body to the European Commission (EC), has published a brief setting out its views on the European Securities and Markets Authority's (ESMA) consultation on proposed reforms to certain key performance indicators (KPIs) and other provisions of the Disclosures Delegated Act under the Taxonomy Regulation (EU) 2020/852. The consultation forms part of the EC's broader Omnibus simplification agenda and follows its March call for technical advice from the European Supervisory Authorities (ESAs) on the review of the Taxonomy reporting framework.

ESMA's consultation covered potential simplifications relating to: (i) the operational expenditure (OpEx) KPI; (ii) voluntary use of the OpEx KPI by financial undertakings; (iii) group Taxonomy reporting; and (iv) additional possible simplifications.

The Platform makes four main recommendations:

• OpEx KPI: to adopt a two-tier approach consisting of: (i) a mandatory OpEx KPI limited to research and development (R&D) expenditure; and (ii) a voluntary opt in broader OpEx KPI based on the current denominator for companies wishing to disclose additional transition related operational expenditure.
• Group reporting: to remove the weighted average consolidated KPI. If a single KPI is required, the KPI arising from the group's main reporting regime should be used, with the regime to be determined based on the group's prevalent activity.
• Climate change adaptation: to incorporate certain clarifications directly into the Disclosures Delegated Act, as suggested by ESMA.
• Capital expenditure type C (CapEx C): to retain this as a mandatory metric. The Platform is working on a proposal to improve its definition by clarifying its scope and application.

Return to main website.