1、KPMG INavigating EU Taxonomy:Progress and Pathways to Compliance Insights into the EU Taxonomy disclosures for the Financial Year 2023 of 291 European non-financial undertakings 2|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International

2、 entities.KPMG International entities provide no services to clients.All rights reserved.Beginning of 2024,most large public-interest entities have published their EU Taxonomy reports for the third time and since the first year of application reporting requirements have increased gradually.Companies

3、 went from only having to disclose potentially sustainable(Taxonomy-eligible)activities in reports published in 2022,to now having to assess Taxonomy-alignment for the first two environmental objectives as well as eligibility for four more objectives defined by the EU Taxonomy.This not only changed

4、the general amount of effort required for the analysis,but also led to more companies and their business models being covered,potentially bringing clarity into the sustainability efforts of a lot more industries.Therefore,in this years study we provide valuable insights in the EU Taxonomy disclosure

5、s of 291 European large public-interest entities.We analyzed which numbers of eligibility and alignment were reported on average in different sectors and whether those as well as the accompanying qualitative disclosures have improved compared to the previous year.We also analyzed how overall eligibi

6、lity has changed with new activities for the four remaining environmental objectives being introduced.Purpose of this report3|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no servi

7、ces to clients.All rights reserved.Executive summaryTaxonomy-eligible and aligned activities in 2023For companies reporting eligibility greater than zero,the average eligible and aligned turnover were 44%and 21%,the average eligible and aligned CapEx were 48%and 24%and the average eligible and align

8、ed OpEx were 44%and 26%respectively.All averages were higher than in the previous reporting period,with the biggest difference seen in average eligible CapEx that showed an increase of 8 percentage points.Changes due to new activities76%of all companies in our sample reported at least some eligible

9、turnover,which is more than last year when it was only 60%.This indicates that with more environmental objectives and therefore more business activities being covered by the EU Taxonomy,more companies find their revenue generating activities being included in the EU Taxonomys set of potentially sust

10、ainable activities.Qualitative informationQualitative disclosures still varied in length and content,suggesting a still existent lack of best practices.Our analysis overall showed that many companies still do not disclose all required qualitative information,similar to the findings of the previous r

11、eporting period.This is expected to change when more companies obtain assurance on their Taxonomy disclosures.Level of assuranceIn our sample,40%of all companies disclosed that they have commissioned an audit of their EU Taxonomy information,making an increase of only 3 percentage points from last y

12、ear.With the implementation of the Corporate Sustainability Reporting Directive(CSRD),obtaining a limited assurance will become mandatory.Sector insightsDespite improved average eligibility figures compared to last year,many industries still report averages below 50%,suggesting that their business m

13、odels are not fully or only partially covered by the EU Taxonomy.As in the previous reporting year,the Real Estate industry recorded the highest average eligibility,while the Utilities sector reported the highest Taxonomy-aligned turnover.With the addition of activities related to the four other env

14、ironmental objectives in 2023,sectors such as Consumer Products and Services and Health Care have shown significant increases in average eligibility from previously low figures.Contents05Approach and Scope07Regulatory requirements09Insights45Outlook4|Navigating EU Taxonomy:Progress and Pathways to C

15、ompliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookApproach and ScopeApproach and Scope5|Navigating EU Taxonomy:Progress and Pathways t

16、o Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookEU Taxonomy-alignment reporting over financial year 2023For the third year of EU

17、Taxonomy reporting,like in the previous two periods,disclosures were required from companies subject to the Non-Financial Reporting Directive(NFRD),which targets large public-interest entities with more than 500 employees.For reports published in the period 1 January 2024 until 31 December 2024,comp

18、anies again had to report their Turnover,Capital Expenditure(CapEx),and Operating Expenditure(OpEx)in relation to activities defined by the EU Taxonomy.This reporting period,companies had to consider activities from all six environmental objectives for the first time.However,while they had to report

19、 full scope on eligibility and alignment for the previously established activities within the first two environmental objectives,they only had to disclose eligibility for the newly added activities within the remaining four environmental objectives introduced by the Environmental Delegated Act.The s

20、ame applied for activities that were newly added to the first two objectives by the Amended Climate Delegated Act.Details of our analysisWhich companies are included in our analysis?Our study encompasses 291 non-financial companies that are headquartered in the European Union and are included in the

21、 STOXX Europe 600 Index.This provides a diverse sample of companies with varying market capitalizations,including large,mid,and small-cap firms from 15 different EU countries.The sample also represents a broad range of industries,with 17 sectors covered.Thirteen of these sectors,including Industrial

22、 Goods and Services,Healthcare,and Utilities,have been thoroughly analyzed in the relevant subsection for sector-specific insights.Which reports have we reviewed?Our analysis includes a thorough examination of the annual(integrated)reports1 for the financial year 2023,as the EU Taxonomy disclosure s

23、hould be part of the non-financial reporting.To ensure compliance with reporting requirements,we have excluded companies with fewer than 500 employees,as they are not obligated to report on the EU Taxonomy.For a comprehensive list of the companies included in our sample,please refer to Appendix 1.Ho

24、w did we perform the analysis?We conducted our benchmarking analysis by starting with a cross sector assessment focusing on disclosed eligibility and alignment KPIs as well as related qualitative disclosures.We further performed sector-specific analyses.Additionally,we compared results to our findin

25、gs from last years study throughout the analysis.The disclosures were reviewed with the help of a checklist developed by KPMG professionals.A certain level of judgment was exercised when reading the disclosures,and we have not verified the information disclosed by companies in our sample.2 Please no

26、te that in our report eligible means eligible and aligned turnover(A.1)plus eligible but not aligned turnover(A.2),the underlying reasoning being that every aligned activity is also eligible.1 The review also covers other reports,as in a few cases the EU Taxonomy disclosures were only provided in an

27、other standalone report(e.g.Sustainability report)and in another few cases high-level EU Taxonomy disclosures were provided in the annual report and more enhanced disclosures were provided in a separate report(e.g.ESG performance report).For most French companies,the Universal Registration Documents

28、(URD),including non-financial reporting,have been reviewed.2 About 39%of companies in the sample obtained assurance on their EU Taxonomy disclosures.Approach and Scope6|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.K

29、PMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookRegulatory requirementsRegulatory requirements7|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG Internation

30、al entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookIn order to reach the objectives of the European Green Deal,it is required to direct investments towards sustainable projects and activities.To achieve t

31、his,a common language and a clear definition of what is sustainable was needed.In this context,the EU Taxonomy Regulation3 entered into force in July 2020.It established a framework to clarify which economic activities can be labeled as environmentally sustainable.Regarding the classification of an

32、activity as environmentally sustainable in terms of the EU Taxonomy,a distinction between Taxonomy-eligibility and Taxonomy-alignment is made.In the first step,it is necessary to examine whether an activity is described in Delegated Regulations,since only those activities are considered Taxonomy-eli

33、gible.Eligible activities are then assessed against certain criteria and can be labeled Taxonomy-aligned(i.e.environmentally sustainable)when they cumulatively meet three conditions:substantially contributing to one or more of six defined environmental objectives;doing no significant harm to any of

34、the other objectives;and complying with the minimum safeguards.Delegated Regulations complement the EU Taxonomy Regulation.They provide technical screening criteria for a list of economic activities with the potential to become environmentally sustainable and specify the content and presentation of

35、information to be disclosed by undertakings subject to the EU Taxonomy Regulation.In the initial stage,the European Commission has enacted the Climate Delegated Act4 focusing on the first two objectives:1 Climate change mitigation and2 Climate change adaptation,officially establishing the correspond

36、ing Technical Screening Criteria for the defined activities as legally binding as well as a Delegated Act supplementing Article 8 of the Taxonomy Regulation,specifying the content and format of the disclosures to be provided(Disclosures Delegated Act5).In March 2022,the Commission presented another

37、regulation,the Complementary Climate Delegated Act6 which has been applicable since January 1st,2023.This Act extends the activities of the first two environmental objectives to include certain activities in the field of nuclear and gas energy.The criteria set for these specific activities align wit

38、h the EUs climate and environmental goals,aiming to facilitate a transition away from fossil fuels towards a climate-neutral future.In June 2023,the European Commission published the Amended Climate Delegated Act7 which amends the technical screening criteria of some existing economic activities of

39、the first two environmental objectives and also adds technical screening criteria for new economic activities within the aforementioned environmental objectives.Also in June 2023,the Environmental Delegated Act8 has been published,finally specifying technical screening criteria for the four environm

40、ental objectives that were not covered by the Climate Delegated Act:3 Sustainable use and protection of water and marine resources;4 Transition to a circular economy;5 Pollution prevention and control;and6 Protection and restoration of biodiversity and ecosystems.The Environmental Delegated Act furt

41、her introduced amendments to the Disclosures Delegated Act,which include,for example,changes to the mandatory reporting templates.The changes and additions were applicable from January 2024.However,for reports published in 2024,companies were only required to report on taxonomy eligibility for the n

42、ewly introduced economic activities.To conclude,the major regulatory developments in the context of the EU Taxonomy mean that with the reports that were analyzed within this study we are,for the first time,looking at disclosures regarding all six environmental objectives.3 EU Taxonomy Regulation Reg

43、ulation(EU)2020/852 of the European Parliament and of the Council4 Climate Delegated Act Commission Delegated Regulation(EU)2021/2139 supplementing Regulation(EU)2020/852 of the European Parliament and of the Council5 Disclosures Delegated Act Commission Delegated Regulation(EU)2021/2178 supplementi

44、ng Regulation(EU)2020/852 of the European Parliament and of the Council6 Complementary Climate DA Commission Delegated Regulation(EU)2022/1214 amending Delegated Regulation(EU)2021/2139 and Delegated Regulation(EU)2021/21787 Amended Climate Delegated Act Commission Delegated Regulation(EU)2023/2485

45、amending Delegated Regulation(EU)2021/21398 Environmental Delegated Act Commission Delegated Regulation(EU)2023/2486 supplementing Regulation(EU)2020/852 of the European Parliament and of the Council and amending Commission Delegated Regulation(EU)2021/2178Regulatory requirements8|Navigating EU Taxo

46、nomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookInsightsInsights9|Navigating EU Taxonomy:Progress and

47、 Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookCross Sector Insights Reported activitiesWhile in the first applicatio

48、n years of the EU Taxonomy only the first two environmental objectives Climate change mitigation and Climate change adaptation were in focus,in the last reporting period about financial year 2023 companies also had to include the other four environmental objectives in their analysis for the first ti

49、me.This means,eligibility had to be assessed for all activities listed within the Climate Delegated Act as well as those listed within the newly added Environmental Delegated Act.However,the newly added activities did not have to be assessed regarding their alignment yet,as this only becomes mandato

50、ry from the next reporting period onwards.Companies could,however,report alignment for the newly added activities on a voluntary basis.Therefore,it was particularly interesting to look at whether all companies included the newly added activities within their analyses,which of the environmental objec

51、tives most companies focused on and whether some companies voluntarily not only assessed eligibility but also alignment for the new activities.Our analysis showed that 36%of the companies in our sample did not report eligibility or alignment for any of the newly added activities.While some companies

52、 may simply not have found any eligible activities among the newly added ones,others may have failed to analyze the new set of activities at all.In regard to the environmental objectives the results show that most of the reported activities still fall under the first objective Climate change mitigat

53、ion with 91%of the companies in our sample reporting at least one eligible activity under this objective.The next most common objective was transition to a circular economy,where 43%of the sample companies found at least one eligible activity.29%of the companies found at least one eligible activity

54、for Climate change adaptation,12%for Pollution prevention and control 7%for Sustainable use and protection of water and marine resources and 3%for Protection and restoration of biodiversity and ecosystems.In this context it has to be noted,however,that the number of activities listed under each envi

55、ronmental objective differs considerably,which partly explains why companies may find more eligible activities for certain environmental objectives.While,for example,there is a list of 101 activities with a potential to contribute to Climate change mitigation,the set for the objective Protection and

56、 restoration of biodiversity and ecosystems merely lists two activities.Quantitative disclosures General disclosures and use of reporting templatesThe Disclosures Delegated Act outlines the information companies should disclose and how they should present it.For instance,companies are required to us

57、e the predetermined 36%of the companies in our sample did not report eligibility or alignment for any of the newly added activities.tables displayed in Annex II of the Disclosures Delegated Act to report eligible and aligned percentages of their key KPIs without any modifications.As described above,

58、with the entry into force of the Environmental Delegated Act,changes to the Disclosures Delegated Act were made,which resulted in the predetermined reporting templates changing slightly compared to the previous reporting year.In this respect,it is not only interesting whether companies used the repo

59、rting templates,but also whether they used the latest version of them.Our analysis revealed that most companies(96%)disclosed one template per KPI as required,which is more than last year when we saw only 83%of the sample companies disclosing all three templates.76%of the companies fully met the dis

60、closure Insights10|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookrequirements by

61、disclosing the latest updated templates for all three KPIs without modifications,while another 15%also used the updated templates but with modifications.4%of the companies used the outdated template from the previous reporting period.While last reporting year 10%of the companies did not use the requ

62、ired templates,only 3%of the companies from this years analysis did not display any templates at all.Because of the requirement to now report on all six environmental objectives,companies were also asked to disclose an additional table per KPI showing their proportion of eligible and aligned turnove

63、r per environmental objective(see Disclosures Delegated Act,Annex II,footnote c)to to provide transparency on the total eligibility and alignment per environmental objective including double counting.However,looking for example at the turnover disclosures,only 41%of the companies have disclosed the

64、exact required table,another 4%also showed the table but with modifications.Out of the remaining 55%that did not show the additional table,14%stated in their text that they did not have any double counting,which may be a reason they are not disclosing the table.Out of the remaining 41%(or 119 compan

65、ies)not disclosing the additional table,35 actually reported activities contributing to multiple objectives,which therefore would have made it necessary to disclose the table providing transparency about the allocation.For the rest it remains unclear whether the tables were not disclosed on purpose

66、or whether companies were simply not aware of this new reporting requirement.We saw very similar results for the CapEx and OpEx disclosures respectively.Additionally,as was already the case in the previous reporting period,the Complementary Delegated Act mandated companies to report multiple tables

67、regarding their gas and/or nuclear activities.Even companies that do not have any such activities should disclose the first template included in Annex III to the Complementary Delegated Act.In our sample,55%of the companies did not disclose any information regarding the Complementary Delegated Act,n

68、either any of the templates nor verbal explanations.10%did not disclose the tables but stated in their text that they do not have reportable activities in the gas and nuclear sector.Another 24%of the companies had no relevant activities either but disclosed the first template as required.Only 11%of

69、the companies in our sample actually reported activities in the nuclear and gas sector,thereof 8%showing all 5 required templates whereas the remaining 3%only showed the first one.Turnover KPIThe percentage of companies reporting eligible turnover gives us an indication,whether the companies busines

70、s models are,at least in part,covered by the EU Taxonomy or not.We found that 77%of all companies in our sample reported eligible turnover greater than zero,which is more than last year when it was only 60%.This indicates that now,with more environmental objectives and therefore more business activi

71、ties being covered by the EU Taxonomy,more companies find their revenue generating activities being included in the EU Taxonomys set of potentially sustainable activities.Out of the companies that reported eligible turnover greater than zero,the average reported eligible turnover was 43%,which is al

72、so more than last years 37%.The average reported aligned turnover on the other hand was again considerably lower with only 20%,meaning less than half of the eligible activities fulfilled the respective technical screening criteria as well as the minimum safeguard requirements and can therefore We fo

73、und that 77%of all companies in our sample reported eligible turnover greater than zero,which is more than last year when it was only 60%.Insights11|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International en

74、tities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookbe classified as environmentally sustainable.Looking at all companies,including those reporting zero eligible and aligned turnover,the averages were 34%and 10%for eligibility and alignme

75、nt respectively.The following sectors disclosed the highest eligible/aligned turnover.Please note that in our report eligible means eligible and aligned turnover(A.1)plus eligible but not aligned turnover(A.2),the underling reasoning is that every aligned activity is also eligible.In the below avera

76、ges all companies were included(independent of them reporting eligibility/alignment equal to or greater than zero).Average eligible turnoverAverage aligned turnoverReal EstateUtilitiesAutomobiles and Parts Real Estate Construction and Materials Construction and Materials 98%45%74%32%54%21%Insights12

77、|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookCapEx KPINinety-four percent of th

78、e companies in our sample reported eligible CapEx,which is higher than the number for turnover,indicating that even though some companies may not have eligible turnover,they are investing in activities that have the potential to contribute to one or more of the six environmental objectives.Out of th

79、e companies that reported eligible CapEx greater than zero,the average eligible CapEx was 48%and therefore slightly higher than the eligible CapEx last year,when it was 40%on average.The average aligned CapEx was 23%among the companies reporting aligned CapEx greater than zero and 16%among all compa

80、nies regardless of eligible CapEx.Average eligible CapExAverage aligned CapExReal EstateUtilitiesUtilitiesReal Estate Automobiles and Parts Energy98%77%85%42%81%30%The following sectors disclosed the highest eligible/aligned CapEx.In the below averages all companies were included(independent of them

81、 reporting eligibility/alignment equal to or greater than zero).The discrepancy between turnover and CapEx is based on the fact that different categories of investments shall be considered,and CapEx therefore does not have to be linked to revenue(e.g.CapEx category c:purchase of output).In fact,we f

82、ound that 21%of the companies disclosed eligible or aligned CapEx that stems,at least in part,from purchase of output(CapEx category c.).The different CapEx categories also partly explain,why certain Taxonomy-eligible investments could not be classified as aligned.The discrepancy between the eligibi

83、lity and alignment KPIs is not always caused by the companies not meeting the alignment criteria themselves,but in some cases,they could not classify investments as aligned due to not receiving the required information from the supplier.Out of those companies who reported CapEx from purchase of outp

84、ut,28%explained how they evaluated Taxonomy-alignment at the level of the supplier they obtained the output from.18%of the companies reporting CapEx from purchase of output stated that the information required to assess Taxonomy-alignment could not be obtained from the supplier.Another category of C

85、apEx is CapEx category b.which allows companies to report investments that occurred as part of a plan to expand their aligned activities.However,similar to the previous reporting period,85%of the companies in our sample did not report having a CapEx-plan.Some companies may have counted investments t

86、hat occurred as part of a CapEx-plan into their alignment KPI and simply did not disclose this.Others may just not have made use of the possibility to report investments that occurred as part of a CapEx-plan but only reported investments into existing assets.A reason for the companies not being able

87、 to report aligned investments from a CapEx-plan may be that the requirements for such plans,both in terms of the setup of the plan itself and the corresponding disclosure requirements,may be difficult to fulfill.OpEx KPIIn regard to the OpEx KPI we found that 71%of all companies in our sample repor

88、ted eligible OpEx greater than zero,which is more than we found in last years study when it was only 59%.The number is,however,still lower than the number of companies that reported eligible turnover and CapEx.This may be due to some companies making use of the materiality exemption,which allows the

89、m to not report their eligible and aligned percentages when OpEx is deemed not material for their business model.We found that 20%of the companies in 94%of the companies in our sample reported eligible CapEx,which is higher than the number for turnover,indicating that even though some companies may

90、not have eligible turnover,they are investing in activities that have the potential to contribute to one or more of the six environmental objectives.Insights13|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG Inter

91、national entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookour sample stated that they have used the materiality exemption and therefore have not reported their OpEx KPIs.Out of the companies that did show eligible OpEx greater than z

92、ero,the average reported eligible OpEx was 45%and the average reported aligned OpEx was 25%.Those numbers are similar to the ones we found for the last reporting period,where it was 41%and 27%respectively.Looking at all companies,including those reporting zero eligible and aligned OpEx,the averages

93、were 32%and 12%for eligibility and alignment respectively.The following sectors disclosed the highest eligible/aligned OpEx.In the below averages all companies were included(independent of them reporting eligibility/alignment equal to or greater than zero).KPIs overall and industry coverageOur analy

94、sis of reported KPIs showed that companies whose core business activities are not Taxonomy-eligible may still find that they have eligible and potentially aligned CapEx and OpEx.We found that 74%of all companies in our sample reported eligible CapEx and/or OpEx in activities for which they did not r

95、eport any eligible turnover.This indicates that most companies evaluate all KPIs independently from each other,instead of only disclosing CapEx and OpEx for their main turnover generating activities.Nevertheless,we were also looking at which industries core business activities were covered by the EU

96、 Taxonomy,meaning they could report eligible and potentially aligned turnover,and which were not.It was particularly of interest,whether considerable changes can be observed since the introduction of the four new environmental objectives.Average eligible OpExAverage aligned OpExReal EstateUtilitiesA

97、utomobiles and Parts Real Estate UtilitiesAutomobiles and Parts 91%65%79%28%75%23%74%of all companies in our sample reported eligible CapEx and/or OpEx in activities for which they did not report any eligible turnover.Insights14|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyrig

98、ht owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookThe table below shows a comparison between the average reported eligible turnover in FY 2023 and the avera

99、ge reported eligible turnover in the previous reporting period,FY 2022.The averages only include KPIs that were greater than zero.IndustryAverage eligible turnover 2023Average eligible turnover 2022Difference between 2023 and 2022Automobiles and Parts74%62%+12ppBasic Resources35%26%+9ppChemicals21%2

100、5%-4ppConstruction and Materials54%47%+7ppConsumer Products and Services34%17%+17ppEnergy26%30%-4ppFood,Beverage and Tobacco4%7%-3ppHealth Care52%1%+51ppIndustrial Goods and Services46%36%+10ppReal Estate98%95%+3ppTechnology40%20%+20ppTelecommunications13%4%+9ppUtilities52%51%+1ppIn last years study

101、 on the disclosures for reporting year 2022,the sectors Health Care,Telecommunications and Food,Beverage and Tobacco showed extremely low numbers for eligible turnover(1%,4%and 7%respectively),which indicated that their business model was effectively not covered by the EU taxonomy when it only inclu

102、ded activities for the objectives Climate change mitigation and Climate change adaptation.With the introduction of activities in relation to the four other objectives for the reporting year 2023,we see that Health Care shows much higher eligibility numbers,while the Telecommunications numbers only r

103、ose slightly and Food,Beverage and Tobacco shows an even lower average eligible turnover close to zero.We overall see,however,that most industries report higher average eligible turnover than last year,indicating that overall,more business activities are now covered by the EU taxonomy.Besides Health

104、 Care,especially the industries Consumer Products and Services,Industrial Goods and Services and Technology show considerably higher average eligibility compared to the previous reporting period.Insights15|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more

105、 of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookThe graphic below shows the average turnover KPIs for Taxonomy-eligibility and alignment for the different industries.The average

106、s only include KPIs that were greater than zero.0%10%20%30%40%50%60%70%0%10%20%30%50%60%70%80%90%100%Average eligibilityAverage turnover KPIs per industryAutomobiles and PartsBasic ResourcesChemicalsConstruction and MaterialsConsumer Products and ServicesEnergyFood,Beverage and TobaccoHealth CareInd

107、ustrial Goods and Services Real EstateTechnologyTelecommunicationsUtilities40%Average alignmentInsights16|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All r

108、ights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookDespite overall higher average eligibility numbers compared to the previous reporting period,many industry averages can still be found in the lower left corner of the diagram,indicating that a lot of industries business models ar

109、e still not or only partly covered by the EU Taxonomy.The Real Estate sector showing in the far right with an average eligible turnover of over 90%,like last year,shows the highest average eligibility.The sectors Utilities and Consumer Products and Services can be found in the middle of the diagram,

110、showing an average eligible turnover of 52%and 34%respectively and a comparably high share of Taxonomy-aligned turnover.This indicates that those sectors not only have the potential,but actually contribute to the Taxonomys environmental objectives.In contrast,the Automobiles and Parts sector has a h

111、igher average eligible turnover but a significantly lower average aligned turnover.Qualitative disclosuresWithin their EU Taxonomy reports,companies are obliged to provide accompanying qualitative information alongside their disclosures about the share of eligible and aligned turnover,CapEx and OpEx

112、.The details of the requested qualitative disclosures are also specified in the Disclosures Delegated Act.For instance,companies are supposed to elaborate on their accounting policy to shed light on how the KPIs were determined,they should also explain the process of how the technical screening crit

113、eria were assessed,and they should give other contextual information relevant for understanding the nature of the KPIs disclosed.In our previous study on EU Taxonomy disclosures about financial year 2022,we found that there was a great variation in the length and quality of companies qualitative dis

114、closures,although several FAQ documents addressing questions regarding the disclosure requirements had been published by the EU Commission.This studys analysis of the most recent disclosures showed that the degree of detail in which the assessment of the technical screening criteria was described st

115、ill varied significantly.We found,for example,that a lot of companies still provide no description as to how they assessed the generic DNSH criteria laid out in Appendix A,B,C and D of the Climate and Environmental Delegated Act.For instance,190companies in the sample reported aligned activities und

116、er an environmental objective other than Climate change adaptation and were therefore obliged to explain how they conducted the necessary climate risk and vulnerability assessment described in Appendix A as the DNSH criterion for Climate change adaptation.However,out of those companies only 128 or 6

117、7%provided the required description of their climate risk and vulnerability assessment.The other 43%therefore did not fulfill this qualitative disclosure requirement.To report Taxonomy-alignment,companies must not only fulfill the technical screening criteria related to their eligible activities,but

118、 they also have to ensure compliance with the minimum safeguards which cover the substantive topics human rights(including labor and consumer rights),bribery,bribe solicitation and extortion,taxation and fair competition.83%of the companies in our sample that reported aligned activities described ho

119、w they ensured compliance with the minimum safeguard requirements,which is no significant improvement compared to last year,when we found that 82%of companies provided this mandatory information.Non-financial undertakings are further required to provide contextual information about their KPIs.For in

120、stance,companies reporting aligned turnover must provide information about their revenue composition,explaining whether there are other sources of income aside The Real Estate sector showing in the far right with an average eligible turnover of over 90%,like last year,shows the highest average eligi

121、bility.Insights17|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookfrom contracts wi

122、th customers that drive changes in turnover.Only 69 of the 160 companies reporting aligned turnover,so roughly 43%,provided such information.They are further required to provide contextual information regarding the amounts related to Taxonomy-aligned activities pursued for internal consumption.Only

123、16 companies,so 1%percent of the companies reporting aligned turnover,have provided this required contextual information.It remains an open question if companies did in fact have no internal consumption or if they were not aware of the requirement to disclose this information.Further,companies have

124、to explain changes in their turnover KPI compared to the previous reporting period.91 companies,so 31%of all samplecompanies or 57%of those reporting aligned turnover have explained such changes.The rest either did not disclose whether there were changes at all or stated that there were no changes.I

125、n regard to their CapEx KPI,companies are supposed to report a breakdown of the CapEx numerator by assets,differentiating between additions to property,plant and equipment(PPE),intangible assets,investment properties and capitalized right-of-use assets.The undertaking shall separately present additi

126、ons from business combinations.Of 190 companies reporting aligned activities only 43 companies,so 23%,reported such a breakdown.Companies are further required to disclose which share of their taxonomy-aligned expenses incurred as part of a CapEx-plan.248 companies did not disclose having a CapEx-pla

127、n.Out of the remaining 43companies that did,20 companies(so about 47%)provided the required breakdown.Most of them only separated the CapEx-plan activities(CapEx category b.)from the rest,while 3 companies provided a detailed breakdown into all three CapEx categories(a.,b.,and c.).Like for turnover,

128、companies also must explain changes in their CapEx KPI compared to the previous reporting period.129 companies,so 44%of all companies in our sample have explained such changes.The rest either did not disclose whether there were changes at all or stated that there were no changes.For OpEx,companies a

129、re obliged to provide contextual information about the composition of the numerator to illustrate the key elements of their OpEx KPI.Out of the 134 companies reporting aligned OpEx,only 26 companies(19%)explained the key elements of their OpEx numerator.65 companies,so 22%of all companies in the sam

130、ple have explained changes regarding their OpEx.The rest either did not disclose whether there were changes at all or stated that there were no changes.Overall,our analysis on the completeness and quality of the mandatory qualitative disclosures showed that most companies still do not disclose all t

131、he qualitative information they are supposed to publish alongside their quantitative disclosures.We did not see an improvement in that regard compared to the previous reporting period.Currently,many companies still seem to focus more on their quantitative figures(i.e.their disclosed KPIs)while,to a

132、certain degree,omitting necessary contextual information that would help explain the respective KPIs.Taxonomy disclosure in context and level of assuranceInterestingly,we saw a discrepancy between quantitative and qualitative disclosures and the degree of respective improvements compared to the prev

133、ious reporting period.Overall,more companies report eligible as well as aligned activities,averages of reported KPIs have risen and more companies have used the mandatory reporting templates,which indicates that additional efforts have been taken in eligibility and alignment assessments as well as p

134、reparation of the reports in general.However,we found no considerable improvements in regard to the preparation of qualitative disclosures.In this context,it will be interesting to see,whether the completeness of the qualitative disclosures will improve as well,once more companies have their taxonom

135、y disclosures assured.For the reporting period considered in this study,the level of assurance remained similar to last year with around 39%of the sample companies obtaining limited assurance and around 60%obtaining no assurance.These numbers will likely change,however,when a limited assurance will

136、become mandatory from next year onwards with the entry into force of the Corporate Sustainability Reporting Directive(CSRD).Reasonable assuranceLimited assuranceNo assurance38.8%1.0%60.1%Level of assuranceInsights18|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by o

137、ne or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookSector specific insights0%20%40%60%80%100%Automobiles and partsTurnoverTurnover distributionAll entities74%74%10%14%Ent

138、ities reporting 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=

139、7525x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525

140、x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=50

141、0 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x

142、0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eli

143、gible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eligible turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x 0Eligibl

144、e turnoverAligned turnover75x50 x=7525x=500 x 0Eligible CapExAligned CapEx75x50 x=7525x=500 x 0Eligible OpExAligned OpEx75x50 x=7525x=500 x=25=00%20%40%60%80%100%A1.OpExAligned(%)A1+A2=A.OpExEligible total(%)37%21%37%5%5%52%45%52%45%77%85%77%75%65%75%65%26%26%5%42%53%0%20%40%60%80%100%26%16%21%79%58

145、%Insights43|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookThe Utilities sector-sa

146、mple comprises 19 companies,including 12 electricity providers and 7 other utility companies,such as gas,water,and multi-utilities providers.Consistent with last years findings,the Utilities sector continues to exhibit a higher proportion of eligible and aligned KPIs compared to other sectors.It lea

147、ds all 17 sectors in terms of aligned turnover,CapEx,and OpEx.Additionally,it ranks second in eligible CapEx,third in eligible OpEx,and fourth in eligible turnover.For 2023,the average eligible turnover and average aligned turnover of the Utility industry were 52%and 45%respectively,which are slight

148、ly lower values than for CapEx and OpEx.The reported aligned turnover represented a very large range between just over 0%and 99.4%.All 19 companies included in the sample could report at least some aligned turnover-generating activities.Not surprisingly for the Utilities sector,most of the aligned t

149、urnover-generating activities were found for the climate change mitigation objective,particularly within energy related activities.Hence,the most common aligned activities were:CCM 4.1 Electricity generation using solar photovoltaic technology(14 companies),4.9.Transmission and distribution of elect

150、ricity(11 companies),CCM 4.3 Electricity generation from wind power(11 companies)and CCM 4.5 Electricity generation from hydropower(9 companies).CapEx in the Utilities sector was reported with an average eligibility of 85%and an average alignment of 77%.These figures demonstrate that a substantial p

151、ortion of the investments within this industry go into activities that not only have the potential to contribute to an environmental objective,but also meet the criteria for taxonomy-alignment and can therefore be considered sustainable.The reported activities address a broad spectrum of environment

152、al objectives,including climate change mitigation,climate change adaptation,the circular economy,pollution prevention and control,as well as water and marine resources.OpEx showed similarly high KPIs as CapEx,with an average eligibility of 75%and average alignment of 65%.All companies reported activ

153、ities with aligned CapEx and OpEx greater than 0%,with the highest alignment again stemming from energy-related activities.The most frequently reported activities for both aligned CapEx and OpEx were CCM 4.1 Electricity generation using solar photovoltaic technology(11 companies),CCM 4.3 Electricity

154、 generation from wind power(9 companies),CCM 4.9 Transmission and distribution of electricity(7 companies),and CCM 4.5 Electricity generation from hydropower(6 companies).In this years study,8 companies(42%)indicated that they had CapEx plans,a notable increase from last year when no company reporte

155、d such plans.However,only 2 of these companies provided detailed contextual information about their CapEx plans.Notably,10 companies(53%)explicitly linked their EU Taxonomy disclosures to their business strategies,with 5 of these companies setting specific EU Taxonomy targets related to CapEx for th

156、e upcoming reporting period.This further demonstrates a growing ambition within the Utilities sector to expand environmentally sustainable economic activities.For activities that were eligible but not aligned,13 companies(68%)provided specific reasons.The most common reasons cited were a lack of sub

157、stantial contribution,failure to meet the DNSH criteria,and a lack of assessment due to insufficient information.In terms of assurance,15 companies(79%)obtained limited assurance,one company(5%)obtained reasonable assurance,and three companies(16%)did not obtain any assurance.Overall,the Utilities s

158、ector has a significant portion of its activities covered by the EU Taxonomy,as shown by the high eligibility KPIs.The particularly high alignment numbers for CapEx and OpEx demonstrate a commitment to transition into more sustainable activities,although average aligned turnover so far has only slig

159、htly risen by 4%compared to the previous reporting period.Consistent with last years findings,the Utilities sector continues to exhibit a higher proportion of eligible and aligned KPIs compared to other sectors.Insights44|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owne

160、d by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookOutlook45|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the K

161、PMG International entities.KPMG International entities provide no services to clients.All rights reserved.Approach and ScopeRegulatory requirementsInsightsOutlookThe results of this study show that the EU taxonomy has evolved,and companies are responding accordingly.As expected,now that the activiti

162、es for the remaining four environmental objectives Sustainable use and protection of water and marine resources,Transition to a circular economy,Pollution prevention and control,and Protection and restoration of biodiversity and ecosystems have been established,more companies were able to report tax

163、onomy-eligible activities.Sectors,like Health Care,that could report little to no taxonomy-eligible turnover in the first few years have now been able to identify taxonomy-eligible activities within their turnover-generating business activities for the first time.At the same time,however,there are s

164、till sectors that are barely covered by the EU taxonomy,such as Food,Beverages,and Tobacco.There were also positive developments among companies that did not identify any taxonomy-eligible activities among the new additions.We generally saw that,on average,higher taxonomy-alignment was achieved for

165、the previously existing activities from the Climate Delegated Act.This underlines that the alignment criteria are demanding and,in some cases,not immediately implementable,which may be why alignment had not been achieved in the first reporting years.However,we see that companies are continuously str

166、iving to increase their share of taxonomy-aligned turnover,CapEx and OpEx.It will be interesting to see the developments in reported KPIs when next year alignment must also be assessed for the newly added activities.It also remains a question how the accompanying qualitative disclosures will develop

167、 when all companies have to get limited assurance on their taxonomy disclosures when the CSRD enters into force.Sectors,like Health Care,that could report little to no taxonomy-eligible turnover in the first few years have now been able to identify taxonomy-eligible activities within their turnover-

168、generating business activities for the first time.Outlook46|Navigating EU Taxonomy:Progress and Pathways to Compliance 2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.The information contained herei

169、n is of a general nature and is not intended to address the circumstances of any particular individual or entity.Although we endeavor to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be ac

170、curate in the future.No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.Throughout this document,“we”,“KPMG”,“us”and“our”refers to the global organization or to one or more of the member firms of KPMG International L

171、imited(“KPMG International”),each of which is a separate legal entity.2024 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.KPMG refers to the global organization or to one or more of the member firms of

172、KPMG International Limited(“KPMG International”),each of which is a separate legal entity.KPMG International Limited is a private English company limited by guarantee and does not provide services to clients.For more detail about our structure please visit KPMG name and logo are trademarks used unde

173、r license by the independent member firms of the KPMG global organization.Designed by Evalueserve.Publication name:Navigating EU Taxonomy:Progress and Pathways to Compliance|Publication number:139589-G|Publication date:September ContactsSome or all of the services described herein may not be permiss

174、ible for KPMG audit clients and their affiliates or related entities.Siddharth BothraSenior Manager,Accounting Advisory ServicesKPMG in the UKE:siddharth.bothrakpmg.co.ukIwona Galbierz-Sztrauch Partner,ESG LeaderKPMG in Poland E:igalbierzkpmg.plGijs de Graaff Director Capital Markets Accounting Advi

175、sory ServicesKPMG in the Netherlands E:degraaff.gijskpmg.nlJerusalem Hernndez Partner Sustainability and Corporate GovernanceKPMG in Spain E:jerusalemhernandezkpmg.esConor Holland DirectorKPMG in Ireland E:conor.hollandkpmg.ieWalter Jacob Senior CounselKPMG in Belgium E:wjacobkpmglaw.beBrice Javaux

176、Partner Sustainability ServicesKPMG in Francebjavauxkpmg.E:bjavauxkpmg.frImran Raja Senior Manager,DPP&ESG Center of ExcellenceKPMG in France E:imranrajakpmg.frMarina Luggauer Manager Sustainability ServicesKPMG in Austria E:mluggauerkpmg.atJane Thorhauge MoellmannDirector DPPKPMG in DenmarkE:Markus

177、 Joas Senior Manager,Corporate Sustainability&Sustainable FinanceKPMG in Finland E:markus.joaskpmg.fiLorenzo Solimene Director Sustainability&Climate Changes ServicesKPMG in Italy E:lsolimenekpmg.itRuediger Schmidt Senior Manager Accounting&Process AdvisoryKPMG in Germany E:Torbjrn Westman Partner,Head of Sustainability AssuranceKPMG in Sweden E:torbjorn.westmankpmg.se