EU Taxonomy Reporting

Since the EU Taxonomy Regulation came into force, Beiersdorf has been required to provide information on sales, capital expenditures (CapEx), and operating expenses (OpEx) associated with environmentally sustainable economic activities. The EU Taxonomy Regulation contains criteria for determining whether an economic activity qualifies as sustainable with respect to various environmental objectives. The overarching goal is to create a more sustainable financial sector and channel investments into green and sustainable projects, thereby contributing to the European Green Deal.

With the adoption of Commission Delegated Regulation (EU) 2023/2486 of June 27, 2023, the disclosure obligation for the 2023 reporting year for the first time included four additional environmental objectives: “Water and marine resources,” “Circular economy,” “Pollution,” and “Biodiversity”. Further economic activities in connection with the “Climate change mitigation” and “Climate change adaptation” environmental objectives were also added in this context (Delegated Regulation (EU) 2023/2485).

The reporting forms depicted in Annex 3 of Commission Delegated Regulation (EU) 2022/1214 of March 9, 2022 are not taken into account for the reporting year 2023. This is due to the economic activities related to gas and nuclear listed in the annexes do not fall within the business activities of Beiersdorf.

Taxonomy Impact Analysis procedure¹

Beiersdorf uses a top-down approach to determine the Taxonomy eligibility of certain business activities with the help of the relevant specialist units. To this end, we have assembled an interdisciplinary team consisting of employees from the tesa and Consumer Sustainability departments, Group Accounting and Consolidation (Consumer), and Sustainability Controlling (tesa), who continuously analyze – in close cooperation with the specialist units – whether any Taxonomy-eligible economic activities are being performed.

Taxonomy-eligible activities relevant to Beiersdorf are identified based on the activity descriptions, the referenced NACE codes, and the supplementary publications of the EU Commission and the EU Platform on Sustainable Finance. For the 2023 reporting year, the process for determining and identifying Taxonomy-eligible activities relevant to Beiersdorf was extended to include the four additional environmental objectives listed above.

Identified Taxonomy-eligible economic activities

Beiersdorf’s business model was comprehensively analyzed in connection with the implementation of the EU Taxonomy requirements. The core business activities of Beiersdorf are not covered by the activities listed in the latest version of the Delegated Acts. Only one activity in the tesa Business Segment, which relates to the manufacture of subcomponents for batteries (Activity 3.4), was identified as Taxonomy-eligible. However, this activity is of minor importance compared to Beiersdorf’s core business activities and only makes up a small proportion of the Group’s sales.

In terms of classifying investments and operating expenses, the EU Taxonomy Regulation distinguishes between the following three categories:

• Category A: investments or operating expenses related to assets or processes that are associated with Taxonomy-aligned economic activities.
• Category B: investments or operating expenses that are part of a (CapEx) plan to expand Taxonomy-aligned economic activities or to allow Taxonomy-eligible economic activities to become Taxonomy-aligned.
• Category C: investments or operating expenses related to the purchase of output from Taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions.

Due to Beiersdorf’s business model, no investments or operating expenses other than those related to economic activity 3.4 are allocated to category A. Similarly, as we are not drawing up any investment plans to convert our activities into Taxonomy-aligned economic activities, none of our investments or operating expenses are allocated to category B. Beiersdorf therefore only has to take into account investments or operating expenses relating to the purchase of output from Taxonomy-aligned economic activities and individual measures (category C).

The economic activities reported relate exclusively to the environmental objective of “Climate change mitigation.” Furthermore, in the course of the data collection and reporting process, we make sure that each economic activity is clearly allocated to an EU taxonomy activity. We can thus rule out the possibility of economic activities being allocated twice.

The following economic activities were identified as Taxonomy-eligible:

Information and Communication

• Activity 8.1 “Data processing, hosting and related activities” was identified as relevant for Beiersdorf, since the Consumer Business Segment operates a data center and provides these services to tesa. The acquisition of third-party computing power (cloud computing services) is also taken into account in this context.
• Similarly, Activity 8.2 “Data-driven solutions for GHG emissions reductions” is relevant because Beiersdorf uses the GaBi and SoFi emissions management software as well as other energy management systems.

Construction and Real Estate

• Activities 7.3 “Installation, maintenance and repair of energy efficiency equipment”, 7.5 “Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings”, and 7.6 “Installation, maintenance and repair of renewable energy technologies” are part of our building management; they also include the installation, maintenance, and repair of heating, ventilation, and cooling systems, photovoltaic systems as well as measuring systems and energy-efficiency control units in our administrative buildings and production facilities.
• Activity 7.4 “Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)” was identified as relevant, as there are vehicle-charging stations on our premises that are operated by a third party.
• Based on the recommendation of the EU Commission (FAQ 2022), reporting related to Activity 7.7, “Acquisition and Ownership of Buildings,” will be conducted for the first time for the fiscal year 2023. This activity covers investment activities in connection with the construction or expansion of our production and administrative buildings. The construction of these buildings are carried out by external construction companies. Capitalization of right-of-use assets from leases (IFRS 16) for rented office buildings is also reported under Activity 7.7. In the previous year, these activities were reported as not Taxonomy-eligible.

Energy

• In this area, Activity 4.25 “Production of heat/cool using waste heat” and Activity 4.30 “High-efficiency co-generation of heat/cool and power from fossil gaseous fuels” were identified as Taxonomy-eligible. This is because Beiersdorf uses waste heat for internal heating processes. Other activities from this area, e.g., with respect to the production of renewable energy, have been recorded under “Construction and Real Estate” in accordance with the EU Taxonomy Regulation.

Transport

• Our transportation activities are generally outsourced to service providers, meaning we do not conduct any Taxonomy-eligible activities in this area. Our own fleet of company cars falls under Activity 6.5 “Transport by motorbikes, passenger cars and light commercial vehicles.”

Manufacturing Industry/Goods Manufacturing

• The manufacture and sale of products from the Consumer Business Segment do not fall within the scope of the EU Taxonomy. With the manufacture of subcomponents for batteries (Activity 3.4, “Manufacture of batteries”), only a small proportion of the tesa Business Segment’s economic activity qualifies as Taxonomy-eligible. Its other activities do not generate Taxonomy-eligible sales. For example, tesa does not manufacture plastics in primary form, but sources them from suppliers.

The data basis for determining the key figures (sales, capital expenditure, and operating expenses) for Taxonomy-eligible and Taxonomy-aligned economic activities (numerator) and their corresponding reference figures (denominator) is generally derived from Beiersdorf’s financial controlling systems.

Taxonomy-eligible sales

The denominator for the purposes of the EU Taxonomy is determined in line with the definition of sales in the consolidated financial statements (see Notes to the Consolidated Financial Statements, Income Statement, Note 01).

For the 2023 reporting year, sales relating to the manufacture of subcomponents for batteries are reported under Activity 3.4 “Manufacture of batteries”. The sales generated in this area are attributable entirely to the tesa Business Segment. These transactions amount to €16 million (prior year: €16 million) and therefore represent 0.2% (prior year: 0.2%) of our Group sales of €9,447 million.

Taxonomy-eligible capital expenditure (CapEx)

The reference figure (denominator) of our Taxonomy-eligible activities is determined in accordance with the requirements of the EU Taxonomy Regulation. For the 2023 reporting year, the reference figure is €634 million. In addition to the investments in intangible assets (Note 11 to the consolidated financial statements) and property, plant, and equipment (Note 12 to the consolidated financial statements) reported in the annual report, this figure also includes investments related to right-of-use assets from leases (Note 12 to the consolidated financial statements).

Capital expenditure for projects and long-term leases is allocated to the activities identified as Taxonomy-eligible with the help of Beiersdorf’s financial controlling systems and interviews with the responsible specialist units. For the 2023 reporting year, capital expenditure amounting to €182 million – a share of 28.6% – is attributable to Activity 7.7 “Acquisition and ownership of buildings.”

In total, our Taxonomy-eligible capital expenditure amounts to €209 million (prior year: €17 million). This corresponds to a share of 33% (prior year: 2.7%) of the total capital expenditure (denominator) of €634 million for the 2023 reporting year. The change compared to the previous year is primarily attributed to capital expenditures, which are reported for the first time in connection with activity 7.7 for the fiscal year 2023.

Taxonomy-eligible operating expenses (OpEx)

The data basis for calculating the reference figure (denominator) for Taxonomy-eligible operating expenses for the 2023 reporting year is derived from Beiersdorf’s financial controlling systems. Interviews, analyses, and detailed queries addressed to the respective Controlling functions round off the data collection process and ensure the quality of the data. The reference figure is the sum of the following cost components:

• Research and development costs
• Costs in connection with short-term and low-value leases
• Maintenance and repair costs, including all direct expenses in connection with the day-to-day maintenance of property, plant, and equipment by the company or third parties

Where possible, operating expenses were allocated directly to the identified Taxonomy-eligible activities using data from our financial systems. In cases where it was not possible to directly allocate percentage shares, these shares were broken down and, if necessary, allocated using appropriate keys (e.g., capital expenditure for Taxonomy-eligible activities).

Taxonomy-eligible operating expenses amounted to €26 million (prior year: €18 million). Compared with the investment expenditure reference figure of €481 million, this is equivalent to a share of 5.4% (prior year: 4.2%). The change compared to the previous year is primarily attributed to operating expenditures, which are reported for the first time in connection with activity 7.7 for the fiscal year 2023.

Approach and results of the alignment analysis

To assess whether the Taxonomy-eligible activities relevant to Beiersdorf are Taxonomy-aligned, we conducted a comprehensive analysis of the relevant technical screening criteria as set out in the annexes to the Delegated Acts on the EU Taxonomy. For a Taxonomy-eligible activity to be classified as Taxonomy-aligned, the following requirements must be satisfied cumulatively:

• Compliance with the technical screening criteria for a substantial contribution to the respective environmental objective
• Compliance with the technical screening criteria to avoid material adverse effects on other environmental objectives (do no significant harm, DNSH)
• Compliance with minimum safeguards

In principle, compliance with the technical screening criteria is checked and documented individually for each activity. DNSH compliance regarding Appendix A (“Climate change adaptation”) is verified centrally for the relevant Taxonomy-eligible activities with the help of climate risk and vulnerability analyses for each site.

Beiersdorf relies on processes, documents, and guidelines that are established within the Group to review and comply with the minimum protection requirements (see section Respect for human rights and Compliance). Beiersdorf actively promotes compliance with laws, codes of conduct, and human rights. Our annual risk management process includes an assessment of human rights violations by our employees and in our supply chain. Beiersdorf stands up for fair competition and actively prevents corruption through a number of compliance programs. Through appropriate monitoring measures, Beiersdorf ensures that the minimum protection requirements of the EU Taxonomy are met.

Based on our analyses we have identified a Taxonomy-aligned share for the following activities:

• Activity 6.5 “Transport by motorbikes, passenger cars and light commercial vehicles”
• Activity 7.5 “Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings”
• Activity 7.6 “Installation, maintenance and repair of renewable energy technologies”
• Activity 7.7 “Acquisition and ownership of buildings”

To check our compliance with the technical screening criteria in connection with Activity 7.7 “Acquisition and ownership of buildings”, we primarily relied on the available energy performance certificates (EPCs) and the primary energy demand listed therein. In the event that no energy performance certificate was available, we used alternative external confirmations that provide appropriate evidence of compliance with the limits specified in the technical screening criteria (e.g., energy class A).

The majority of Beiersdorf’s Taxonomy-eligible activities involve products and services obtained from suppliers and service providers. In some cases, there were no third-party evidence and confirmations available for these economic activities to conclusively assess their potential Taxonomy-alignment. For other economic activities, the technical screening criteria could not be fully met, resulting in no Taxonomy-aligned disclosure for this portion. This particularly applies to portions of investment and operating expenses for activities 6.5 and 7.7.

The 2023 reporting year again posed considerable challenges for both Beiersdorf and its suppliers in terms of proving the Taxonomy-alignment of the identified Taxonomy-eligible activities. In some cases, the technical screening criteria for the Taxonomy-alignment of individual activities had not yet been published or sufficiently clarified at the time the investment projects were planned. This complicated the analysis and verification process, particularly in the case of long-term investment projects (e.g., investments in administrative buildings or plant expansions) for which the project and planning phase had been completed well before the technical screening criteria were published. With a view to 2024 and subsequent years, Beiersdorf will continue to work on improving individual reporting processes for verifying the Taxonomy-alignment of the identified Taxonomy-eligible activities, and will also draw on the findings from the analyses for the 2023 reporting year for this purpose.

¹ Given the ongoing, dynamic development of the formulations contained within the EU Taxonomy Regulation, also in consideration of the supplementary publications of the EU Commission and the EU Platform on Sustainable Finance, uncertainties persist regarding the interpretation of its wording and terms. As a result, we may make changes to our Taxonomy Impact Analysis in the future.

Key figures EU Taxonomy Reporting