Response to discussion on Technical Advice on selected KPIs under the Taxonomy Disclosures Delegated Act under Article 8 of the Taxonomy Regulation

Q1. Please identify your organisation (if applicable) and indicate the capacity in which you are responding to this consultation:

Other (please specify)

Q2. Do you agree with the analysis presented?

Yes.

In your response, where applicable, please assess whether voluntary disclosure of this KPI would be meaningful and feasible, and hence should be considered.

We agree that the fees and commissions KPI should be reconsidered due to its lack of usefulness. In our experience, this KPI is not generally central to users’ assessment of a credit institution’s exposure to or support for environmentally sustainable economic activities.

The KPI may be difficult to interpret because fees and commissions can arise from a broad range of services, with different relationships to underlying economic activities. In some cases, the link between the fee income and the taxonomy status of the client activity may be too indirect to provide a meaningful signal. The resulting metric may therefore appear precise while masking significant methodological judgement and data limitations.

We would support removing the KPI.

Q4. Should additional items from FINREP Template 22.1 also be included in the revised KPI? Please consider in particular that (i) have been assessed as unrelated to capital market activities, e.g. ‘custody and other related services’, and (ii) those that have not been mapped to the Fees and Commissions KPI, such as ‘structured finance’, ‘loans granted’, ‘commodities’.

Refer to Q3.

Q6.Do you agree with the analysis presented?

Yes.

In your response, where applicable, please assess whether voluntary disclosure of this KPI would be meaningful and feasible, and hence should be considered.

We also question the decision-usefulness of the trading book KPI. Trading book positions are generally held for market-making, liquidity provision, hedging or short-term trading purposes. They may therefore be volatile and may not reflect an institution’s long-term financing of taxonomy-aligned activities.

The KPI risks being misunderstood as an indicator of transition finance or sustainable lending, when it may instead reflect short-term market exposures. In addition, practical challenges arise in linking individual trading positions to taxonomy-aligned activities, particularly where instruments are traded in secondary markets or relate to diversified issuers.

We therefore recommend removing the trading book KPI.

Q9. Do you agree with the analysis presented and the conclusion to narrow down the investment firms’ KPI?

We agree that the other services KPI for investment firms raises similar concerns as for the fees and commission KPI. The breadth and diversity of investment firm services make it difficult to define a KPI that is both operationally workable and analytically meaningful.

A single metric covering heterogeneous services may not provide a clear basis for comparison between firms. Moreover, the connection between service revenues and the taxonomy-alignment of underlying economic activities may be too indirect to provide a meaningful signal or dependent on client-specific information that is not readily available.

We recommend that this KPI be removed unless a narrower and demonstrably useful formulation can be developed. Where information on investment services is considered useful, it may be better provided through targeted narrative disclosures or asset management-related metrics rather than through a broad revenue-based KPI.

Please explain if you think that other services, e.g. execution of orders on behalf of clients, should be included in the revised KPI.

Refer to Q9.

Q13. Do you agree with the analysis presented and proposed conclusions?

Group-level reporting is one important area for clarification. Current requirements can create uncertainty particularly for groups with mixed financial and non-financial activities or activities in multiple financial sectors. We repeat our comment from past consultations that a weighted average KPI is not useful as it artificially combines different concepts. We therefore support the proposal to remove the guidance which is not rooted in the legal text but solely in the non-binding FAQs.

We recommend that the revised framework should:

• clarify at which level of consolidation taxonomy disclosures should be provided;
• avoid overly granular duplicative entity-level and group-level disclosures;
• provide clear rules for mixed groups;
• avoid as much as possible creating inconsistencies between prudential, accounting and sustainability reporting perimeters.

Q16. Do you agree with the analysis presented and the conclusion that OpEx financing should not be explicitly incorporated in the methodology for calculating financial undertakings’ KPIs? Please provide your rationale for supporting the explicit inclusion of provisions allowing financial undertakings, on a voluntary basis, to use the OpEx KPI disclosed by their counterparties when calculating their own KPIs.

In our opinion, demand for the OpEx KPI should not be artificially created by requiring financial undertakings to expand their reporting beyond turnover and CapEx KPIs. We agree with the assessments of the ESAs that a deletion of the OpEx KPI (and subsequently no new OpEx-related KPI for financial undertakings be introduced) would be desirable.

Name of the organization