EU Taxonomy

General information on the taxonomy

Since January 1, 2022, listed companies in the EU must classify their economic activities in accordance with the EU Taxonomy Regulation and publish the results thereof in their consolidated non-financial statements or in their consolidated non-financial report (pursuant to the requirements of Section 267a Austrian Commercial Code (Unternehmensgesetzbuch – UGB). In this connection, all economic activities are to be categorized as to their environmental sustainability.

The reporting under the EU Taxonomy Regulation follows a two-step process. It involves determining whether a particular economic activity is “taxonomy eligible” (i.e., whether it is basically covered by the Taxonomy Regulation) and also whether it is “taxonomy compliant” (i.e., whether it complies with the Taxonomy). An entity’s economic activities are considered “taxonomy non-eligible” if the Taxonomy Regulation does not cover them.

This Regulation identifies six environmental goals. In order to be classified as taxonomy compliant, economic activities must make a substantial contribution to one of these goals, at minimum. Furthermore, the given activities may not substantially undermine achievement of the other environmental goals (i.e., “Do No Significant Harm” – DNSH).

a. Climate action
b. Climate change adaptation
c. Sustainable use and protection of water and marine resources
d. Shift to the circular economy
e. Pollution prevention and control
f. Protection and restoration of biodiversity and ecosystems

Solely two environmental goals—“climate action” and “climate change adaptation”—must be included in the considerations as to whether the company’s relevant activities are taxonomy eligible and thus reportable for the business year 2021/22.

The following key performance indicators (KPIs) must be shown for the reporting period:

• Share of revenue associated with economic activities covered by the EU Taxonomy Regulation.
• Share of capital expenditure (CapEx) associated with economic activities covered by the EU Taxonomy Regulation.
• Share of operating expenses (OpEx) associated with economic activities covered by the EU Taxonomy Regulation.

voestalpine’s approach

voestalpine established a project team at the time the EU Taxonomy Regulation and its associated obligations for companies were published. This team comprises employees from the following departments: Finance, Investor Relations, Environment and Corporate Responsibility as well as experts from each division.

External experts were also consulted in order to enable the most comprehensive assessment possible of the subject matter.

An analysis at the Group level was performed to determine taxonomy eligibility. In a first step, this involved carrying out a classification based on the codes under the Nomenclature of Economic Activities (NACE) assigned to the company. Accordingly, the project team analyzed every Group company in turn to verify and/or modify the respective classification. The team also reviewed in this connection whether a single economic activity could be attributed to a given entity or whether it had to be classified as engaging in several economic activities. The selected classification procedure thus ensured that economic activities were not counted twice. The following economic activities were identified as material to the voestalpine Group:

• Manufacture of iron and steel
• Freight rail transport
• Infrastructure for rail transport

Results of the KPIs

Taxonomy-Eligible Revenue

Pursuant to the EU Taxonomy Regulation, revenue as per IAS 1.82(a) must be used to determine taxonomy-eligible revenue. This revenue equates to the revenue shown in the Consolidated Income Statement of the Group’s Annual Report 2021/22 and thus is used as the denominator in the following table to determine the company’s taxonomy eligibility. The numerator comprises the portion of the revenue that is generated from economic activities covered by the EU Taxonomy Regulation. This results in the following classification for the voestalpine Group:

Taxonomy-Eligible Capital Expenditure (CapEx)

Additions to assets—including additions to property, plant and equipment; intangible assets; and right-of-use assets under leases from business combinations—were utilized as the basis for determining the taxonomy-eligible capital expenditure. Investments via joint ventures as well as investments in financial instruments were not taken into account. As the capital expenditure matches the data shown in the “Operating Segments” section of the Annual Report 2021/22, it is used as the denominator. The numerator comprises all capital expenditure generated through economic activities covered by the EU Taxonomy Regulation. This results in the following classification for the voestalpine Group:

Taxonomy-Eligible Operating Expenses (OpEx)

In contrast to the revenue and the capital expenditure, the operating expenses cannot be directly extracted from the company’s Annual Report 2021/22. Only a few select expense categories are relevant to the determination of the denominator for the operating expenses. They include building renovation activities; maintenance and repairs of property, plant and equipment; research and development expenses; employee training expenses; and current lease expenses. The numerator comprises those operating expenses that are generated through economic activities covered by the EU Taxonomy Regulation. This results in the following classification for the voestalpine Group: