ESMA Consultation Paper on Technical Advice on selected KPIs under the Taxonomy Disclosures Delegated Act
Accountancy Europe responded to the European Securities and Markets Authority (ESMA) consultation paper on Technical Advice on selected KPIs under the Taxonomy Disclosures Delegated Act (DDA). Our main messages:
Revising the OpEx KPI
Accountancy Europe:
- considers the current OpEx definition overly broad, as OpEx is not widely used by financial institutions as a key decision-making metric.
- supports an approach whereby the OpEx KPI focuses only on R&D as the key expenditure relevant for OpEx, complementing CapEx while reducing the reporting burden.
- does not support the introduction of a standardised voluntary OpEx+ KPI, as its value depends on its uptake and use by financial undertakings. Without such use, it would add reporting costs without a corresponding benefit.
Group Taxonomy Reporting
Accountancy Europe:
- notes, based on the accountancy profession’s experience, that a single blended KPI for mixed groups or financial conglomerates is neither demanded by users nor analytically useful. A weighted-average figure combining KPIs from materially different reporting regimes – such as banking, insurance and non-financial corporate activities – produces a number that is difficult to interpret, compare or use for decision-making.
- supports using the KPI of the group’s main reporting regime where a single KPI is required, with the main regime determined by the group’s prevalent economic activity rather than the parent’s legal classification.
- supports introducing a materiality threshold in principle as a practical mechanism for excluding non-material activities from group-level Taxonomy reporting, but considers the proposed approach too complex for practical application. A primary condition should be aggregated turnover by activity type, with minimal additional conditions.
- supports a single set of consolidated KPIs, based on the same perimeter as the group’s financial statements, as the default approach, with more granular information provided only where useful to explain the group’s overall Taxonomy profile.
Additional simplification suggestions
Accountancy Europe:
- supports aligning Taxonomy and ESRS reporting where this reduces duplication and the reporting burden, including through cross-references and incorporation by reference where definitions and methodologies are compatible. Importing ESRS concepts or methodologies that are not directly compatible with the Taxonomy framework should be avoided.
- supports ESMA’s proposal to clarify that IFRS 8 information should primarily serve as a consistency check, alongside further guidance and practical examples on its interaction with Taxonomy materiality assessments.
- calls for:
- clearer DDA provisions on minimum safeguards for financial undertakings;
- amendments to the EU Taxonomy delegated acts to address critical issues identified in the FAQs where these reflect shortcomings in the legal texts or create legal uncertainty – see Accountancy Europe’s letter.
