EU taxonomy for sustainable investments

The taxonomy for environmentally sustainable investments is one of the measures in the EU Action Plan for Financing Sustainable Growth.

Nolato and the taxonomy

The taxonomy enables investors to identify and compare investments that are essential in achieving a sustainable economy. The idea is for it to form the basis of future standards and labelling of sustainable financial products. Companies with more than 500 employees are expected to report sales, capital expenditure and operating expenditure in accordance with the taxonomy. Nolato is likely to be subject to this regulation and the Group may consequently be affected in various ways.

Contributing to environmental goals

In order to be classified as sustainable according to the Taxonomy Regulation, Nolato must make a significant contribution to at least one of the environmental objectives in the table. The contribution can be made via internal measures, such as by phasing out fossil fuels, and/or by Nolato facilitating a contribution from a stakeholder to one of the objectives. One example is Nolato working with a customer to develop a product that is made from bio-based raw material, and reducing its carbon footprint through this work. The separate Sustainability Report includes a number of examples of products that contribute environmental benefit.

The table shows that Nolato is contributing to the environmental objectives, but there is currently a lack of guidance regarding what is meant by ‘significant’ in our industry. To satisfy the taxonomy requirements, Nolato must also report revenue, investments and expenditure that can be linked to environmental objectives.

Not obstructing environmental goals

Nolato must not cause significant harm to any of the objectives detailed above. Several of them are already a priority for Nolato, and we have introduced group-wide targets and action plans. We do not believe the Group’s operations cause significant harm to the objectives, but again there is currently a lack of guidance as to how this is to be determined.

Satisfying fundamental principles and standards

This relates to conventions and guidelines in areas such as health and safety and human rights. In Nolato’s case this requirement is satisfied in that we work according to, and comply with the company’s basic values (The Nolato Spirit), UN Global Compact, OECD Guidelines for Multinational Enterprises, the standard for social responsibility ISO 26000 and other international guidelines. Our sustainability work is reported in line with GRI’s international standards and climate¬≠-related work is reported according to CDP.

Adoption of technical criteria

The taxonomy has specifications and criteria for an activity or product to be regarded as sustainable. Activities that are covered by these criteria include forestry, cement manufacture and energy production. There are criteria for the production of primary plastic¬≠ raw material, but not for activities in which plastic raw material is converted into products. So there are not currently any criteria available that can be applied directly to Nolato’s operations. 

The EU taxonomy for sustainable investments is new and Nolato will not be obliged to produce a complete report until 2022. This will certainly be made easier by the provision of guidance and examples of practical applications. Pending further guidance, we will continue to work with the taxonomy, primarily how to report direct and indirect activities in monetary terms.

Nolato’s contribution

Taxonomy table* Internal measures, for example, energy efficiency improvements, risk analyses, ISO 14001, sustainability targets and waste management.

** Facilitating for stakeholders, for example products with a lower fossil raw material content, saving fuel through use of lighter materials, products used within environmental technology.