Materiality exemption of the OpEx KPI

What is the OpEx materiality exemption?

Under the EU Taxonomy, companies must report Operational Expenditure (OpEx) KPI, which includes non-capitalized costs linked to sustainable activities (e.g., maintenance, R&D, short-term leases). However, if taxonomy-aligned OpEx is immaterial, companies can exclude the numerator and only disclose the total OpEx denominator:

"Where the operational expenditure is not material for the business model of non-financial undertakings, those undertakings shall:

(a) be exempted from the calculation of the numerator of the OpEX KPI in accordance with point 1.1.3.2 and disclose that numerator as being equal to zero;

(b) disclose the total value of the OpEx denominator calculated in accordance with point 1.1.3.1;

(c) explain the absence of materiality of operational expenditure in their business model."

The EU Commission makes it clear that companies cannot use the OpEx materiality exemption if they have a large total OpEx (denominator) but only a small portion of it is taxonomy-aligned or -eligible (numerator) [FAQ 13].

In other words, if your company spends a lot on operations overall, but only a small part qualifies as sustainable, you must still report the taxonomy-aligned OpEx—you cannot claim it is immaterial just because it is small compared to total OpEx.

When would you use this?

A company can apply this exclusion if taxonomy-related OpEx is not material or neglible compared to total expenses. While no strict threshold exists, your company can decide themselves on an appropriate threshold:

• Below 1-2% of total expenses → Often considered immaterial.

According to KPMG, 20% of the companies analyzed made use of the materiality exemption of the OpEx KPI.

Example

A large renewable energy company, GreenPower Ltd., invests heavily in building and maintaining wind farms, with €500 million in CAPEX but only €5 million in total OPEX (1% of total expenses). Since the total OPEX itself is immaterial compared to the company's financials, GreenPower Ltd. applies the materiality exemption and does not report an OPEX KPI under the EU Taxonomy.