EU Taxonomy

Introduction

Regulation (EU) 2020/852 established an EU classification system for ecologically sustainable economic activities (EU Taxonomy) which came into force on July 12, 2020. The EU Taxonomy is part of the European Commission’s Sustainable Growth Financing Action Plan and a key instrument for the EU to encourage companies, investors and policymakers to channel investments to where they are most needed for sustainable development. The EU Taxonomy Regulation will therefore play an important role in scaling up sustainable investments and implementing the European Green Deal.

The EU Taxonomy has six environmental goals

• climate change mitigation
• climate change adaptation
  
• sustainable use and protection of water and marine resources
  
• transition to a circular economy
• pollution prevention and control
• protection and restoration of biodiversity and ecosystems

The EU Taxonomy delegated acts established the technical screening criteria for determining when an economic activity contributes substantially to one of these goals. They also determine if that economic activity does not cause any significant harm to any of the other environmental objectives.

Following a request from the European Parliament, the so-called minimum safeguards stated in point c) of Article 3 of the EU Taxonomy Regulation have been implemented. These safeguards ensure that entities carrying out taxonomy-aligned activities also meet certain minimum governance standards and do not violate social norms, as laid out in Article 18 of the EU Taxonomy Regulation. In other words, companies claiming taxonomy-alignment must comply with certain fundamental social and human rights, labor principles and minimum governance standards. If companies cannot show that they have adopted adequate measures to reduce human rights concerns in accordance with international standards, their “green activities” will not be considered as environmentally sustainable (taxonomy-aligned).

Reporting Requirements According to Regulation (EU) 2020/852

Applying the EU Taxonomy enables Borealis to be transparent about its sustainable economic activities and to demonstrate the sustainability performance of all business areas within the Group.

According to the EU Taxonomy Regulation, Borealis must disclose how, and to what extent, its activities are classified as sustainable. For the Annual Report 2023, Borealis needs to distinguish between three types of economic activities: ¹⁾

• taxonomy-aligned economic activity, which means an economic activity that complies with the requirements laid down in Article 3 of Regulation (EU) 2020/852
• taxonomy-eligible economic activity, which means an economic activity that is described in the delegated acts, irrespective of whether that economic activity meets any or all of the technical screening criteria laid down in the delegated acts
  
• taxonomy-non-eligible economic activity, which means any economic activity that is not described in the delegated acts
  

^{1) See Regulation (EU) 2021/2178.}

Eligible Activities for Borealis and Performance 2023

Borealis’ core business consists primarily of economic activities 3.17 “Manufacture of plastics in primary form” (in the Polyolefin (PO) segment) and 3.14 “Manufacture of organic base chemicals” (in the Base Chemicals segment). The Group also derives revenue from activity 5.9 “Material recovery from non-hazardous waste”.

For Borealis:

• activity 3.17 represents the manufacturing of resins, plastics materials and non-vulcanizable thermoplastic elastomers, as well as the mixing and blending of resins on a custom basis
• activity 3.14 mainly relates to the production of high-value chemicals (ethylene and propylene)
  
• activity 5.9 refers to the turnover for accepting plastic waste as input material for the mechanical recycling of plastics, at mtm plastics GmbH and Ecoplast Kunststoffrecycling GmbH

The installation of a photovoltaic plant in Schwechat is shown under economic activity 4.1 “Electricity generation using solar photovoltaic technology” and the leasing of company cars falls under economic activity 6.5 “Transport by motorbikes, passenger cars and light commercial vehicles”. Parts of Base Chemicals production are non-eligible economic activities, namely the phenol and acetone business, as well as Borealis’ catalyst business and technology transfer.