EU Taxonomy Regulation
The European Union’s Action Plan on Financing Sustainable Growth set out to establish a classification system for sustainable economic activities, formalized in the EU Taxonomy Regulation. This system is intended to help companies subject to the obligation to publish a non-financial report to identify environmentally sustainable activities and standardize their reporting. The taxonomy is intended to play a role in the transition to sustainable finance in that it strengthens the reliability and comparability of sustainability information. EU delegated acts governing fiduciary duties, and investment and insurance advice are designed to advance the European Green Deal’s goal of achieving climate neutrality by 2050 by directing capital toward sustainable activities. In its Taxonomy Regulation, the EU has defined six environmental objectives which, in the EU’s view, companies can use to determine which of their economic activities may be classified as sustainable. This section addresses the first two objectives that are obligatory for disclosure in the reporting year, namely climate change mitigation and climate change adaptation.
In the 2021 reporting year, we already made these additional disclosures as required by the EU Taxonomy Regulation in line with our obligation to prepare and publish a non-financial report as defined in Sections 289c and 315c of the German Commercial Code (HGB). In accordance with Article 8 (2) of the EU Taxonomy Regulation, we disclosed the proportion of sales (in the sense of turnover as per Regulation (EU) 2021/2178), capital expenditure and operating expenditure classified as environmentally sustainable.
The methodology for the classification of economic activities follows Annex I of Commission Delegated Regulation (EU) 2021/2139 and Commission Delegated Regulation (EU) 2022/1214 supplementing Regulation (EU) 2020/852, with the aid of the NACE codes cited.
The economic activities we have identified fall under the environmental objective “climate change mitigation.” We have not identified any economic activities that fall under the environmental objective “climate change adaptation.”
Because we identified only those eligible activities falling under the climate change mitigation objective, there is no duplication of eligible sales, CapEx and OpEx in other environmental objectives. In addition, because these KPIs relate to consolidated figures, there is also no duplication across various economic activities.
Economic activities identified as taxonomy-eligible included, in particular, those from the “Manufacture of plastics in primary form” category. This category covers economic activities performed by WACKER POLYMERS (finished products based on polyvinyl acetate), WACKER SILICONES (silicone-based products such as silicone sealants and pyrogenic silica as insulation material) and WACKER BIOSOLUTIONS (the sale of PVAc-based gum base for chewing gum). In addition, the company was able to assign wastewater treatment activities to the economic activity “Construction expansion and operation of wastewater collection and treatment systems,” the hydroelectric power plant at Burghausen to the economic activity “Electricity generation from hydropower” and also, as of 2022, the Burghausen power plant to the economic activity “Highly efficient combined heat and power with gaseous fossil fuels.”
On the basis of the activities identified as taxonomy-eligible, we assessed the taxonomy alignment of these activities, during the 2022 review period, using defined technical assessment criteria. In this context, a company must prove, firstly, that the relevant activity makes a substantial contribution to climate change mitigation. If this substantial contribution can be demonstrated, the activity must meet additional DNSH (Do No Significant Harm) criteria to ensure that the activity does no significant harm to any other environmental objectives. And finally, proof must be provided that defined social standards known as “minimum safeguards” are observed. These minimum social safeguards have to be verified and ensured for the individual activities in the areas of human rights, corruption, fair competition, and taxation.