Making strategic use of the EU Taxonomy – with taxonomy alignment in the core business segment

Nachhaltigkeitsberatung fors.earth

Together with fors.earth, a key technology provider crucial to the decarbonization of industry prepared its first official EU Taxonomy report. A recap of the journey.

CHALLENGE

Comprehensive sustainability reporting obligations and a complex value chain

As a technology specialist, the organization is already positioning itself as a provider of solutions with a recognizable sustainable impact. For the fiscal year 2023/24, the company aimed to publish its first independent audit-proof taxonomy report, thereby also further emphasizing its strategic positioning regarding decarbonization through EU taxonomy reporting. In the previous year, some of the company’s economic activities were already identified as taxonomy eligible. However, processes and structures for conducting the taxonomy process independently were largely still in development.

As a technology provider operating within a complex value and supply chain, the company depends in some cases on third parties to obtain the information required for reporting. This presented to be a challenge in the data collection process at times.

With the support of fors.earth, the company aimed to establish a replicable and scalable process to prepare an EU Taxonomy report in compliance with regulatory requirements so that it could fulfil its reporting obligations independently in the long term. From a strategic perspective, an additional milestone was pursued: to move from taxonomy eligibility to taxonomy alignment within the core business. For those activities already identified as taxonomy-eligible in the previous year, the goal was to meet the strict criteria for taxonomy alignment.

SOLUTION

From theory to practice: a strategic approach to taxonomy alignment

Under the leadership of the company’s ESG team together with representatives from various internal departments – especially Finance - and with the support provided by fors.earth, taxonomy eligibile economic activities were identified and validated. A particular focus was placed on activities in the segment considered especially relevant for the decarbonization. In order to achieve the proclaimed goal of taxonomy alignment within this segment, projects with a particularly high potential were selected. In a second step, the strict taxonomy alignment criteria were reviewed for these projects.

In close dialogue with the auditor, fors.earth and the company’s responsible parties determined the depth and focus of the audit. This step laid the foundation for allocating the company's internal resources appropriately. In order to enable the organization to carry out the process smoothly in future reporting cycles and to be able to perform structural optimizations, e.g. through the implementation of measures to meet alignment criteria that cannot yet be met, the entire process was documented in a guidance document by fors.earth. Beyond functioning as a blueprint and future argumentation basis for decisions made during the process, the documentation also facilitates a transparent audit for the auditor.

Building on this basis, the taxonomy reporting can be continued efficiently and future-oriented in the next reporting year. The company will continue to be supported by fors.earth in fiscal year 2024/25 in further expanding the potential of its core business in light of the EU Taxonomy.

IMPACT

Structured sustainability reporting with a flagship character

The company succeeded in reporting taxonomy alignment within its core business activities for the first time in the 2023/2024 reporting year. The share of taxonomy eligible revenue also increased by over 30%.

With this progress, the company is underlining its maturity in the field of decarbonization and securing a decisive competitive advantage through increased transparency. The taxonomy report not only provides valuable data for existing and future investors, but also emphasizes the overarching goal of the EU taxonomy: the redirection of capital flows towards more sustainable investments.

"The joint project with fors.earth enabled us to precisely structure our activity portfolio in our core business segment and demonstrate taxonomy alignment in various projects. Thanks to the joint project, we were not only able to significantly increase the proportion of taxonomy eligible revenue and report taxonomy alignment, but also to further strengthen our role as a pioneer in decarbonization."

Client's EU Taxonomy Project Lead

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