EU Taxonomy

The EU Taxonomy regulation (EU) 2020/852 is a new regulation within the European union (EU) and serves as a classification system to determine whether an economic activity is to be considered environmentally sustainable. The regulation was established to contribute to the fulfillment of the targets within the European Green Deal by shifting investments in the financial markets towards environmentally sustainable activities.

Through common definitions and criteria for which economic activities can be assessed as environmentally sustainable, it becomes easier for investors to make sustainable investments as the transparency of activities’ environmental impact increases. In this way, environmentally sustainable activities will attract investors which also creates incentives for companies to become more climate-friendly.

BE Group is covered by the Non-Financial Reporting Directive (NFRD) and is thus subject to the reporting requirements from the EU Taxonomy. To comply with the regulation, a company must report its eligible -and non-eligible activities through Key Performance Indicators (KPI) and their alignment with the Technical Screening Criteria (TSC) for the fiscal year. For analysis of economic activities linked to the TSC, the Delegated regulation (EU) 2021/2139 of 4 June 2021 has been used. KPI´s used is Turnover, Capital expenditure (CAPEX) and Operating expenditure (OPEX).

The EU Taxonomy covers a total of six environmental objectives that are subject to an assessment: Climate change mitigation, Climate change adaption, Sustainable use of water and marine resources, Circular economy, Pollution prevention and Healthy ecosystems. For an economic activity to be classified as environmentally sustainable, the activity needs to contribute significantly to at least one of the environmental objectives, not cause damage to any of the other environmental objectives and comply with the minimum safeguards relating to social sustainability.

For the taxonomy report of the fiscal year 2022, the first two objectives is a requirement to report on, according to the Article 8 of the Taxonomy Regulation (EU) 2020/852 and the associated Delegated regulation (EU) 2021/2178 of 6 July 2021 whereas the remaining four is a requirement first in the report for 2023.

Eligibility assessment

BE Group is an independent steel distributor that buys materials from the steel mills and sells them on to customers with some processing in the form of production services, such as cutting, sawing, blasting and painting. BE Group has no impact in the production of the materials and does not sell finished products. BE Group has reviewed the operations based on the EU Taxonomy and has not identified any applicable sales linked to its criteria’s at present.

As a steel distributor, the main economic activities are not bound by any TSC and are therefore not covered by the EU Taxonomy for now. The EU Taxonomy focuses on sectors with the highest possibility to contribute to the Sustainable Development Goals (SDG), which means that the regulation does not currently include BE Groups main operation, something that might however change in the near future. This leads to reduced disclosure requirements this year but with the awareness that the regulation will expand over more businesses and activities in the future.

To gather information and report in accordance with the EU Taxonomy, an internal working group was put together consisting of the CFO, Group Accountant and Finance Managers in Sweden and Finland. Together with external consultants the working group mapped the business and its activities for the analysis with guidance from the Delegated regulation C (2021) 2800 final, Annex 1, Technical screening criteria (TSC) as well as the NACE Codes (EU classification of Economic Activities). When necessary, information needed for the analysis was received by experts within the company.

Below activities were deemed eligible:

  • Transport by motorbikes, passenger cars and light commercial vehicles (6.5)
  • Acquisition and ownership of buildings (7.7)

Derivation of figures

The analysis from the working group concludes that the Group’s Turnover and OPEX cannot be connected to any activity within the scope of the TSC. The total of the Group’s Turnover and OPEX is consequently non-eligible, Turnover 0% Eligible, OPEX 0% Eligible. The Group’s total Turnover can be found in the Income Statement on the row net sales. However, activities with connected TSC were identified for CAPEX.

CAPEX related to assets applicable in the taxonomy can be divided into different activities. The working group has identified and reviewed applicable activities based on the CAPEX that occurred during the fiscal year. According to Annex 1 in the Delegated regulation CAPEX for the financial year ended December 31, 2022 is calculated as follows:, Taxonomy-eligible CAPEX divided by total CAPEX. Total CAPEX for BE Group is thus the sum of the acquisitions reported in note 13 – Other intangible assets and note 14 – Tangible assets (Acquisitions), note 14 – Tangible assets (Acquisitions of subsidiaries – Building and land) and note 15 – Right of use assets (additional rights of use) in accordance with IFRS 16 which can be found in the Annual Report.

According to the EU Taxonomy Compass, Activity 6.5 – Transport by motorbikes, passenger cars and light commercial vehicles include leasing of vehicles designated as passenger vehicles. BE Group is leasing right-of-use automotive assets (leased cars) and therefore includes the activity as the numerator in the reporting for eligible activities. The leased cars used within the Group have been checked whether they are fulfilling the requirements to be aligned with the taxonomy or not. None of the cars acquired during the year are aligned with the taxonomy since the requirements from the first two objectives with reference to the TSC have not been fulfilled. Currently, mainly diesel cars are leased within BE Group and no electric cars, which means that the criteria from the TSC are not met.

CAPEX derived from the leased cars added during the year has been summarized and put in relation to the total CAPEX for the Group and is included in the reporting for intangible, tangible and right-of-use assets, see note 13, 14 and 15 in the Annual report. The CAPEX for activity 6.5 amounts to SEK 5 M 2022 (3,2% of total CAPEX) and to SEK 2 M 2021 (4,7% of the total CAPEX), for which 2021 are revised figures from the previous year’s report since the activity in the report for 2021 was deemed not eligible. The reason for the revised figures is the increasingly in-depth analysis that was performed in 2022, compared to 2021, regarding how the group is covered by the EU Taxonomy, which resulted in an new assessment of which activities are eligible and need to be reported.

Furthermore, an acquisition was in place on September 1, 2022, which included a building, whereas the building itself was valued to SEK 7 M (4,5% of total CAPEX). The building does not meet the requirement from the TSC and is therefore not aligned with the taxonomy, see note 14 – Tangible assets under acquisition of subsidiaries – Buildings and Land in the Annual Report. The building is the only building owned by the Group.

The activity 6.6 – Freight transport services by road have also been subject to assessment but with a conclusion that the activity is non-eligible. The vehicles used for this purpose cannot be connected to the TSC since the group does not own, finance, leases, rent or have any operations connected to the vehicles used for the purpose since it is a matter of a purchased service regarding delivery from suppliers. Thus, the responsibility of the vehicles is held by suppliers. Read more about how BE Group handles transports in the sustainability report.

Since the activities above are few and clearly separated in our reporting there is no risk for double counting, which has been ensured throughout the conducted analysis. The result from the 2022 reporting will constitute as the base for the coming years (N-1).

The activities covered by the EU taxonomy in the table for CAPEX are presented below, neither of which are aligned with the taxonomy regulation. BE Group has no eligible economic activities for turnover or OPEX, which is presented in the tables below.

BE Group’s sustainability work is prioritized and an important part of the overall strategy. In the Sustainability report which is a part of the Annual Report you can read more about how BE Group work to reduce the company’s environmental impact and to be an economically, socially and ethically responsible actor.

Substantial contribution criteria

Economic activities
Code(s)
Absolute CAPEX (MSEK)
Proportion of CAPEX (%)
Climate change mitigation (%)
Climate change adaption (%)
Water & Marine resources (%)
Circular economy (%)
Pollution (%)
Biodiversity & ecosystems (%)
A – TAXONOMY-ELIGIBLE ACTIVITIES
A.1 – Environmentally sustainable activities (Taxonomy-Aligned)
A2 – Taxonomy-Eligible but not Taxonomy-Aligned activities
A2 – Transport by motorbikes, passenger cars & light commercial vehicles (N77.1.1) 6.5 5 3.2% 0% 0% 0% 0% 0% 0%
A2 – Acquisition and ownership of buildings (L68) 7.7 7 4.5% 0% 0% 0% 0% 0% 0%
CAPEX of Taxonomy-eligible but not Taxonomy-aligned activities (A.2) 12 7.7%
Total A1 + A2 12 7.7%        
B – TAXONOMY-NON-ELIGIBLE ACTIVITIES
B – CAPEX of Taxonomy-non-eligible activities   144 92.3%
A + B Total   156 100%
DNSH criteria
Economic activities
Climate change mitigation
Climate change adaption
Water & Marine resources
Circular economy
Pollution
Biodiversity & ecosystems
Minimum safeguards
Taxonomy-aligned proportion of CAPEX, year N Taxonomy-aligned proportion of CAPEX, year N-1 Category (Enabling activity) Category (Transitional activity)
A – TAXONOMY-ELIGIBLE ACTIVITIES
A.1 – Environmentally sustainable activities (Taxonomy-Aligned)
A2 – Taxonomy-Eligible but not Taxonomy-Aligned activities
A2 – Transport by motorbikes, passenger cars & light commercial vehicles (6.5) 0%
A2 – Acquisition and ownership of buildings (7.7) 0%
CAPEX of Taxonomy-eligible but not Taxonomy-aligned activities (A.2)
Total A1 + A2 0%

Table for CAPEX used from Annex II in the Delegated regulation (EU) 2021/2178.

Substantial contribution criteria

Economic activities
Code(s)
Absolute turnover (MSEK)
Proportion of turnover (%)
Climate change mitigation (%)
Climate change adaption (%)
Water & Marine resources (%)
Circular economy (%)
Pollution (%)
Biodiversity & ecosystems (%)
A – TAXONOMY-ELIGIBLE ACTIVITIES
A.1 – Turnover of environmentally sustainable activities (Taxonomy-Aligned) 0%
A2 – Turnover of taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned) 0%
Total A1 + A2 0%        
B – TAXONOMY-NON-ELIGIBLE ACTIVITIES
B – Turnover of Taxonomy-non-eligible activities   6.875 100%
A + B Total   6.875 100%
DNSH criteria
Economic activities
Climate change mitigation
Climate change adaption
Water & Marine resources
Circular economy
Pollution
Biodiversity & ecosystems
Minimum safeguards
Taxonomy-aligned proportion of turnover, year N Taxonomy-aligned proportion of turnover, year N-1 Category (Enabling activity) Category (Transitional activity)
A – TAXONOMY-ELIGIBLE ACTIVITIES
A.1 – Turnover of environmentally sustainable activities (Taxonomy-Aligned)
A2 – Turnover of taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned)
Total A1 + A2

Table for turnover used from Annex II in the Delegated regulation (EU) 2021/2178.

Substantial contribution criteria

Economic activities
Code(s)
Absolute OPEX (MSEK)
Proportion of OPEX (%)
Climate change mitigation (%)
Climate change adaption (%)
Water & Marine resources (%)
Circular economy (%)
Pollution (%)
Biodiversity & ecosystems (%)
A – TAXONOMY-ELIGIBLE ACTIVITIES
A.1 – OPEX of environmentally sustainable activities (Taxonomy-Aligned) 0%
A2 – OPEX of taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned) 0%
Total A1 + A2 0%        
B – TAXONOMY-NON-ELIGIBLE ACTIVITIES
B – OPEX of Taxonomy-non-eligible activities   48 100%
A + B Total   48 100%
DNSH criteria
Economic activities
Climate change mitigation
Climate change adaption
Water & Marine resources
Circular economy
Pollution
Biodiversity & ecosystems
Minimum safeguards
Taxonomy-aligned proportion of OpEx, year N Taxonomy-aligned proportion of OpEx, year N-1 Category (Enabling activity) Category (Transitional activity)
A – TAXONOMY-ELIGIBLE ACTIVITIES
A.1 – OPEX of environmentally sustainable activities (Taxonomy-Aligned)
A2 – OPEX of taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned)
Total A1 + A2

Table for OPEX used from Annex II in the Delegated regulation (EU) 2021/2178.