This week, I turn to the industry classification system that matters most for regulation and reporting across Europe: NACE, short for nomenclature statistique des activités économiques dans la Communauté européenne. Developed and maintained by Eurostat, NACE is the EU’s official classification framework for economic activities.
You’ll encounter NACE almost any time regulatory or statistical reporting enters the picture. Here’s how it comes together:
Primary use
Regulatory and statistical reporting to the EU and national authorities.
Concept
NACE builds on the UN’s ISIC framework but adds greater detail to reflect Europe’s economic structure. Companies can register multiple NACE codes if they have distinct activities, with the primary code typically linked to their largest contributor to gross value added (GVA).
Issuance
National statistical institutes assign NACE codes at incorporation, or firms self‑register them through the relevant authority (such as a national trade registry).
Regional use
Mandatory across EU member states and widely used in ESS‑partner countries, including the EFTA states.
Regulatory application
NACE codes play a central role in European regulation — from the EU Taxonomy and SFDR to prudential and statistical frameworks such as FINREP and AnaCredit. They underpin risk, sustainability, and compliance reporting across the financial sector.
Data vendor adoption
All major financial data providers carry NACE across their entity datasets to support clients’ regulatory obligations.
Standard published
You can find the official source material at Eurostat, along with the manual for the latest Rev. 2.1.
Structure
Like GICS, NACE follows a four‑level hierarchy. The top tier, “Sections,” uses letters, followed by numerical “Divisions,” “Groups,” and “Classes”:
Lifecycle
Launched in 1970, NACE has evolved steadily through multiple revisions, the most recent being NACE Rev. 2.1 (2025).
Example
F Construction
– 43 Specialized construction activities
– 43.3 Building completion and finishing
– 43.34 Painting and glazing
Takeaway
For any organization active in or with the EU, NACE is not just another classification — it’s the regulatory backbone for how economic activity is defined and reported. While updates are infrequent and carefully documented, some national variations do exist, usually extending detail rather than altering structure.
And for the UK? Since Brexit, it has continued to align closely through its own derivative, UK SIC.
NACE’s enduring role underscores how structure and regulation move hand in hand across markets. Next week, I’ll turn to another framework that addresses a different set of priorities, but is equally influential in global data systems.
