EU taxonomy regulation

The Regulation (EU) 2020/852 of the European Parliament and of the Council (the Taxonomy Regulation) establishes a classification system of environmentally sustainable economic activities. This shall facilitate the identification of sustainable activities and consequently foster the redirection of financial investments towards green and transition-promoting businesses and technologies – the latter being an important vehicle to meet the objectives of the European Green Deal and the EU’s climate targets.

Under the Taxonomy Regulation, an economic activity is considered environmentally sustainable, if it makes a substantial contribution to at least one of the EU’s six climate and environmental objectives, while at the same time not significantly harming any of these objectives and meeting minimum social safeguards. The six objectives are:

I. climate change mitigation;

II. climate change adaptation;

III. the sustainable use and protection of water and marine resources;

IV. the transition to a circular economy;

V. pollution prevention and control; and

VI. the protection and restoration of biodiversity and ecosystems.

At the time of writing, Taxonomy-eligible activities and respective technical screening criteria have only been defined for the first two climate objectives, in the Climate Delegated Act.

SIG’s Taxonomy-eligible economic activities: manufacturing of low carbon technologies

As a company providing aseptic food and beverage packaging, SIG Group AG plays an active role in the transition towards a low carbon, circular economy. SIG welcomes the establishment of the EU Taxonomy Regulation and recognizes the importance of creating transparency on its share of sustainable activities for stakeholders such as investors. Consequently, SIG has voluntarily conducted a first eligibility analysis of its business activities in light of the EU Taxonomy’s Climate Delegated Act. SIG’s Taxonomy-eligible activities were identified following the Taxonomy framework, mapping SIG’s business activities and NACE Codes with the business activities and NACE Codes listed in the Climate Delegated Act.

The Climate Delegated Act focusses first and foremost on activities and sectors which can drive the transition to zero carbon emissions. The emphasis is on the most carbon-intensive industries, such as the construction, energy, and transport sector, as well as on green innovations, which can significantly contribute to climate change mitigation or adaptation. In this context, the Climate Delegated Act does not list the manufacturing of food and beverage packaging solutions as an eligible activity within the manufacturing sector.

Nevertheless, our preliminary analysis suggests that SIG’s main economic activity – the manufacturing of filling machines and providing of solutions for aseptic carton packaging for our major product categories liquid dairy, non-carbonated soft-drink, and long-life food – corresponds well with the eligible activity 3.6 the manufacturing of other low carbon technologies, as mentioned in Annex 1 to the Climate Delegated Act. It aims at substantial life-cycle GHG emission reductions in other sectors of the economy and can consequently contribute to the goal of climate change mitigation.

The following table shows our Taxonomy-eligibility key performance indicators, i.e. the shares of our activities eligible with respect to the climate change mitigation objective . It is important to note that for 2022, SIG Group AG only assessed the eligibility of its business activities under the EU Taxonomy. Throughout 2023, we plan to assess the alignment of our eligible activities.

Definitions

Article 1(5) of the Disclosures Delegated Act clarifies that “’taxonomy-eligible economic activity’ means an economic activity that is described in the delegated acts adopted pursuant to Article 10(3), Article 11(3), Article 12(2), Article 13(2), Article 14(2), and Article 15(2), of Regulation (EU) 2020/852, irrespective of whether that economic activity meets any or all of the technical screening criteria laid down in those delegated acts”. In turn, a ‘taxonomy-non-eligible economic activity’ means any activity that is not described in the respective delegated acts.

Assessment of our activities’ Taxonomy-eligibility

Our assessment of Taxonomy-eligible activities is focused on our revenue-generating economic activities. Revenue is derived from the sale of goods such as carton packaging sleeves, closures, bag-in-box and spouted pouches with associated materials (barrier film and fitments), filling lines and related equipment as well as the provision of after-market services. Revenue is presented net of returns, trade discounts, volume rebates and other customer incentives. In addition, the Group presents income from the deployment of filling lines and related equipment under contracts that qualify to be accounted for as operating leases as part of revenue.

We consider as Taxonomy-eligible under activity 3.6 the manufacturing and provision of filling machines and aseptic carton packs, which includes the following economic activities: the manufacturing and selling of plastic closures (NACE-Code C22.22), the manufacturing and selling of packs (NACE-Code C17.21), and the manufacturing and selling of all types of filling machines and filling line solutions (NACE-Code C28.29), including activities related to the servicing and maintenance of filling machines (NACE-Code C33.21, M70.1).

Our aseptic cartons play a key role in minimizing carbon emissions by keeping food safe and fresh for long periods without the need for refrigeration in the supply chain. They have a 28–70% lower carbon footprint than other packaging formats, such as plastic and glass bottles or cans – and solutions in our innovative SIGNATURE portfolio lower this up to 58% further. They are made with renewable energy and mainly from renewable materials. We source the fibre used to make their main raw material, liquid packaging board, from sustainably-managed forests that act as important carbon sinks. We are committed to continuing to offer the lowest carbon alternative to other types of packaging in each major category: liquid dairy, non-carbonated soft-drinks, and long-life food; and increase uptake of our lowest carbon solutions, supported by critically reviewed life-cycle analyses based on international standards such as ISO 14040. For more information on the sustainability and carbon-performance of our filing machines and packs, please refer to our Climate+ chapter.

Our KPIs and accounting policies

SIG’s Taxonomy disclosures follow the EU Commission’s Art. 8 Delegated Act supplementing the EU Taxonomy Regulation by specifying the content and presentation of information to be disclosed. The Key Performance Indicators (KPIs) disclosed cover the 12 month period which ended on 31 December 2022. As the technical screening criteria for the remaining four environmental objectives have not been adopted at the time of drafting this report, the following only cover eligibility with respect to the objectives of climate change mitigation and climate change adaptation.

Turnover KPI

The proportion of Taxonomy-eligible economic activities in our total turnover has been calculated as the part of net turnover (“revenue”) derived from products and services associated with Taxonomy-eligible economic activities (numerator) divided by the net turnover (denominator), in each case for the financial year from 1 January 2022 to 31 December 2022.

The denominator of the turnover KPI is based on our revenue, excluding the acquisition of Scholle IPN and Evergreen Asia. For further details on our accounting policies regarding our revenue, see note 6 of the consolidated financial statements for the year ended 31 December 2022.

The numerator of the turnover KPI is defined as the revenue derived from products and services associated with Taxonomy-eligible economic activities.

Capital expenditure KPI

The capital expenditure KPI is defined as Taxonomy-eligible capital expenditure (numerator) divided by our net capital expenditure (denominator).

Net capital expenditure consists of additions to tangible and intangible fixed assets during the year ended 31 December 2022, before depreciation, amortisation and any re-measurements. The total of net capital expenditure does not include the acquisitions of Scholle IPN and Evergreen Asia. It includes acquisitions of tangible fixed assets (IAS 16), intangible fixed assets (IAS 38), right-of-use-assets (IFRS 16) and investment properties (IAS 40). Upfront cash has been included as a reduction of capital expenditure. For further details on our definition of net capital expenditure, and our additions to tangible and intangible fixed assets during the year ended 31 December 2022, see note 11, note 12 and note 14 of the consolidated financial statements for the year ended December 2022.

The numerator consists of net capital expenditure related to assets or processes that are associated with Taxonomy-eligible economic activities. We consider that assets and processes are associated with Taxonomy-eligible economic activities when they are essential components necessary to execute an economic activity.

Operating expenditure

The operating expenditure KPI is defined as Taxonomy-eligible operating expenditure (numerator) divided by our total operating expenditure (denominator). Total operating expenditure consists of our cost of sales, selling marketing and distribution expenses and general and administrative expenses and excludes the acquisitions of Scholle IPN and Evergreen Asia. The numbers reported have been derived from the financial reporting system that is used as a source for preparing our consolidated statements of profit or loss and other comprehensive income, in our consolidated financial statements for the year ended 31 December 2022.

Outlook

We plan to assess the alignment of our manufacturing of filling machines and packs in our key markets and for our major product categories (dairy, non-carbonated soft drinks and long-life food) with the EU Taxonomy’s climate objectives throughout 2023. As concerns eligibility and alignment with the remaining four environmental objectives, it is important to note that policy-makers are still in the process of defining activities and technical screening criteria. Particularly with respect to the circular economy objective, we expect an expansion into economic sectors and activities relevant to our products and operations. Consequently, our assessment may evolve and we will ensure to update our reporting accordingly and in line with updated information from the European Commission.