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 by strengthening 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 net zero 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.
The methodology for the classification of economic activities follows Annex I of Commission Delegated Regulations (EU) 2021/2139, (EU) 2023/2485 and (EU) 2023/2086, Commission Delegated Regulations (EU) 2022/1214, 2023/3850 and (EU) 2023/3851 supplementing Regulation (EU) 2020/852, with the aid of the NACE codes cited.
The economic activities we have identified relate to the environmental objectives “Climate change mitigation” and “Pollution prevention.” We did not identify any activities under “Climate change adaptation,” “Water,” “Circular economy” or “Biodiversity.”
Since we identified only those eligible activities falling under the “Climate change mitigation” and “Pollution prevention” objectives, there is no duplication of taxonomy-eligible sales, CapEx or 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 under the “Climate change mitigation” objective included, in particular, those from the “Manufacture of plastics in primary form” category. This category covers economic activities performed by the Silicones business division with silicone-based products such as silicone sealants and pyrogenic silica as insulation material, the Polymers business division with downstream products based on polyvinyl acetate, and the Biosolutions business division with the sale of PVAc-based gum base for chewing gum. We are also reporting the “Manufacture of active pharmaceutical ingredients” as a taxonomy-eligible economic activity in relation to the “Pollution prevention” objective. This category covers activities in the Biosolutions and Silicones divisions, which manufacture active pharmaceutical ingredients (APIs) as end products.
In addition to the above-mentioned economic activities that we classify as our core business — the production of chemical-pharmaceutical products — we have identified production-related services that can be attributed to the following activities defined in the EU Taxonomy: “Construction, extension and operation of waste water collection and treatment,” “Electricity generation from hydropower,” “Electricity generation using solar photovoltaic technology,” “Construction, extension and operation of water collection, treatment and supply systems,” “Collection and transport of non-hazardous waste in source segregated fractions,” “Treatment of hazardous waste,” and “Remediation of contaminated sites and areas.” A cost-benefit analysis found all these production-related services to be insignificant and as a result they have not been reported on. By analogy, we have classified the only activity – “High-efficiency co-generation of heat/cool and power from fossil gaseous fuels” – identified in accordance with Commission Delegated Regulation (EU) 2022/1214 in relation to economic activities in certain energy sectors as being immaterial based on a cost-benefit analysis. That is why we will not be reporting on this separate template.
In the 2024 reporting period, we checked the taxonomy conformity of the activities identified as taxonomy-eligible for the environmental objectives “Climate change mitigation” and “Pollution prevention” using defined technical screening criteria. In this context, a company must prove, firstly, that the relevant activity makes a substantial contribution to the environmental objective. 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. The minimum safeguards defined in Art. 18 of Regulation 2020/852 must then, furthermore, be demonstrated. In accordance with Art. 18 (1), appropriate due diligence and remedy procedures must be implemented to ensure alignment with those CSR standards cited in the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. In accordance with Art. 18 (2), it must be demonstrated as part of these due diligence and remedy procedures that account is taken of the principal adverse impact indicators on Employment and Social Affairs, Respect for Human Rights and Combating Bribery and Corruption.
