As a public interest entity preparing sustainability reporting, the PGE Capital Group is obliged to disclose, for the year 2024, the extent to which its activities can be considered environmentally sustainable. This obligation arises from Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, as well as from Delegated Regulations on the establishment of a framework to facilitate sustainable investment (hereinafter: the EU Environmental Taxonomy, the Taxonomy).
To prepare the disclosures for 2024, an analysis of the activities carried out was conducted, which identified activities that qualify under the Taxonomy framework, namely, those that meet the definitions set out in the Commission Delegated Regulations (EU):
- of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives;
- of 9 March 2022 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities;
- of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 establishing additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives;
- of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities.
The financial data presented in the disclosure for eligible activities includes both:
The recognition of an activity as eligible was based on comparing the actual activity with the description provided in:
- Annex I (Climate Change Mitigation – CCM code) or
- Annex II (Climate Change Adaptation – CCA code)
to Commission Delegated Regulation (EU) 2021/2139, as amended, and:
- Annex I (Sustainable use and protection of water and marine resources – code WTR)
- Annex II (Transition to a circular economy – CE code)
- Annex III (Pollution Prevention and Control – PPC code)
- Annex IV (Protection and restoration of biodiversity and ecosystems – code BIO)
to Commission Delegated Regulation (EU) 2023/2486.
The indicated codes next to each climate target are the required designation under Commission Delegated Regulation (EU) 2023/2486.
The calculations of KPIs related to turnover, capital expenditure (CapEx) and operating expenditure (OpEx) are based on the definitions set out in Annex I of Commission Delegated Regulation (EU) 2021/2178. For the calculation of indicators for the PGE Capital Group, relevant consolidation exclusions were taken into account, based on the methods used in the preparation of the consolidated financial statements.
Taxonomy-eligible economic activity means an economic activity that is described in the Commission Delegated Regulations (EU) 2021/2139, 2023/2485 and 2023/2486.
Taxonomy-aligned activity (hereinafter: “Taxonomy-aligned activity”) is one that makes a substantial contribution to at least one of the environmental objectives, does not significantly harm any of the Taxonomy’s environmental objectives, respects minimum safeguards set out in Article 18 of Regulation 2020/852, and meets the technical screening criteria established by the European Commission.
According to Commission Delegated Regulation (EU) 2021/2178, the first annual reporting period covered the year 2021, for which eligibility indicators were reported. In the second reporting year (i.e. for 2022), indicators were reported for both Taxonomy eligibility and alignment for the environmental objectives CCM and CCA. Subsequently, in 2023, the scope of reporting was extended, pursuant to Commission Delegated Regulation (EU) 2023/2486, to include four additional climate objectives (objectives WTR to BIO). Under these objectives, both eligibility indicators (i.e. for 2024) and alignment indicators are reported, in line with the requirements of Delegated Regulation 2023/2486 concerning objectives WTR to BIO.
As part of this process, the PGE Capital Group carried out the following detailed activities, the results of which are disclosed herein.
The PGE Group’s operations are organised into nine operating segments:
- Renewables
- Gas-fired Generation
- Conventional Generation
- District Heating
- Distribution
- Railway Energy Services
- Supply
- Circular Economy
- Other Operations
Activities occurring in all segments were assessed against the EU environmental taxonomy.
Activities generating revenue as part of business operations – turnover was reported, along with the related CapEx and/or OpEx.
- CCM 4.10: Storage of electricity
- CCM 4.15: District heating/cooling distribution
- CCM 4.20: Cogeneration of heat/cool and power from bioenergy
- CCM 4.21: Production of heat/cool from solar thermal heating
- CCM 4.24: Production of heat/cool from bioenergy
- CCM 4.29: Electricity generation from fossil gaseous fuels
- CCM 4.3: Electricity generation from wind power
- CCM 4.30: High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
- CCM 4.31: Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
- CCM 4.5: Electricity generation from hydropower
- CCM 4.9: Transmission and distribution of electricity
- CCM 5.5: Collection and transport of non-hazardous waste in source segregated fractions
- CCM 6.14: Infrastructure for rail transport
- CCM 7.6: Installation, maintenance and repair of renewable energy technologies
Other purchasing operations:
- CCM 4.1: Electricity generation using solar photovoltaic technology
- CCM 4.10: Storage of electricity
- CCM 4.15: District heating/cooling distribution
- CCM 4.21: Production of heat/cool from solar thermal heating
- CCM 4.24: Production of heat/cool from bioenergy
- CCM 4.29: Electricity generation from fossil gaseous fuels
- CCM 4.30: High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
- CCM 4.31: Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
- CCM 4.9: Transmission and distribution of electricity
- CCM 5.4: Renewal of waste water collection and treatment
- CCM 8.1: Data processing, hosting and related activities
- CE 5.1: Repair, refurbishment and remanufacturing
The calculation of the Taxonomy indicators required for 2024 disclosure was based on financial data that enabled the allocation of specific values to the identified eligible activities.
Each type of activity was assigned to only one Taxonomy-eligible activity. No part of revenue, CapEx, and OpEx was double counted. Where an activity generating revenue (turnover) was recognised as Taxonomy-eligible, the associated CapEx and OpEx were fully allocated to that activity and were not assessed for eligibility under any other activity. The remaining CapEx and OpEx values (not related to revenue-generating eligible activities) were assessed for potential classification under the category of purchases from eligible activities. Individual CapEx and OpEx expenses were attributed to only one activity. In cases where allocation to more than one activity was possible, the most appropriate one was selected.
To calculate the indicators, the denominator included the value of turnover and CapEx (tangible and acquisition-related) as stated in the consolidated financial statements of the PGE Capital Group for the period ended 31 December 2024. The OpEx denominator was calculated based on the accounts that record expenses meeting the definition of OpEx under Regulation 2021/2178.
Turnover of the PGE Capital Group eligible under the EU Environmental Taxonomy
This refers to the value of turnover generated from the sale of products or services related to an economic activity recognised as eligible under the Taxonomy in relation to one of the following climate objectives “Objectives I–VI”:
- I (CCM Climate Change Mitigation)
- II (CCA Climate Change Adaptation)
- III (WTR Sustainable use and protection of water and marine resources)
- IV (CE Transition to a circular economy)
- V (PPC Pollution Prevention and Control)
- VI (BIO Protection and restoration of biodiversity and ecosystems)
Numerator of the indicator includes eligible, including Taxonomy-aligned, revenue from customer contracts in accordance with IFRS 15. The denominator represents total revenue from sales reported in the consolidated statement of comprehensive income.
Capital expenditure (CapEx) of the PGE Capital Group eligible under the EU Environmental Taxonomy
As defined in Regulation 2021/2178, capital expenditure refers to additions to tangible and intangible assets during the financial year considered before depreciation, amortisation and any re-measurements, including those resulting from revaluations and impairments, for the relevant financial year and excluding fair value changes. This value also covers additions to tangible and intangible assets resulting from business combinations.
The numerator of the indicator includes eligible, including Taxonomy-aligned, CapEx, while the denominator is the total CapEx reported in the consolidated financial statements – Note 6.1 Operating Segments.
Given the significant reduction in the list of eligible activities for the next four climate targets under Delegated Regulation 2023/2486 compared to the announced changes and the published draft, particularly for the climate target: Circular Economy, it has become impossible to make a disclosure in the PGE Group’s Circular Economy segment for activities including sorting and processing of by-products and the generation of products, by-products and waste in combination with the generation of electricity and heat.
Operating expenditure (OpEx) of the PGE Capital Group eligible under the EU Environmental Taxonomy
Regulation 2021/2178 defines OpEx as direct non-capitalised costs that relate to research and development, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets.
Taxonomy-related analyses of OpEx mainly included accounts where costs related to maintenance, overhauls, repairs, and off-balance sheet leases are recognised, in line with the interpretation guidelines on OpEx published by the European Commission in the Official Journal of the EU in October 2022. The total turnover of these accounts, taking into account consolidation exclusions, constitutes the denominator.
The numerator is the part of the denominator corresponding to activities that have been deemed Taxonomy-eligible for objectives I–VI.
Taxonomy alignment assessment
Taxonomy-aligned activity is one that makes a substantial contribution to at least one of the environmental objectives, does not significantly harm any of the Taxonomy’s environmental objectives, respects minimum safeguards set out in Article 18 of Regulation 2020/852, and meets the technical screening criteria established by the European Commission.
The conformity assessment of the identified eligible activities listed above, as a first step, involved an analysis of the technical eligibility criteria relevant to each activity, as included in the Delegated Regulations: 2021/2139, 2023/2485, and 2023/2486 — with regard to both the substantial contribution criteria and the 'do no significant harm’ principle.
A due diligence exercise was carried out to analyse the degree of compliance of the PGE Group’s economic activities with the requirements, i.e. the minimum safeguards, set out in Article 3(c) in conjunction with Article 18 of Regulation 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment. As defined in Article 18 of the above-mentioned Regulation, the minimum safeguards are procedures implemented by an undertaking that is carrying out an economic activity to ensure the alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights.
In line with the guidelines of the PSF Report (Platform on Sustainable Finance)[1], due diligence was carried out based on the following methodology:
- a procedure-based test, i.e. an assessment of the internal regulations and procedures of the PGE Capital Group in the context of compliance with applicable regulations and guidelines, carried out on the basis of documentation provided by the PGE Capital Group,
- a results-based test, focusing on final convictions or penalties in each of the examined areas, taking into account their materiality, and the preventive measures implemented to avoid the risk of recurrence, conducted based on statements made by the PGE Capital Group,
- an analysis of databases based on publicly available information in the registers of the Business and Human Rights Resource Centre (‘BHRRC’) and the National Contact Point established in accordance with the OECD Guidelines for Multinational Enterprises,
- a general review of publicly available information concerning the activities of the PGE Capital Group.
Accordingly:
- the procedure-based test was carried out using the documentation available within the companies of the PGE Capital Group,
- the database analysis was conducted on the basis of publicly available registers,
- the general review was carried out based on publicly available information.
- disclosure of strategic and internal matters,
- human rights,
- labour rights,
- anti-corruption and anti-bribery measures,
- consumer and competition protection,
- science, technology and innovation,
- tax policy,
- environmental policy.
In the areas listed above, the PGE Capital Group has adopted procedures that align with the standards set out in the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights. In addition, it applies comprehensive measures in accordance with both applicable national law and international regulations.
No allegations have been raised against PGE CG by the BHRRC. Two notifications concerning companies within the PGE Capital Group have been submitted to the OECD National Contact Point established in accordance with the OECD Guidelines for Multinational Enterprises; as of the disclosure date, these cases have not yet been concluded.
The assessment carried out did not identify any negative findings indicating a failure to ensure the minimum safeguards, which are listed in the PSF Report as risk factors.
PGE Capital Group indicators
The PGE Group’s indicators for 2024 are presented in the tables below, prepared on the basis of the formulas included in Regulation 2023/2486, whereby:
- Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective
- N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective
- N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective.
Percentage of turnover from products or services related to economic activities in accordance with the taxonomy
Final Report on Minimum Safeguards, Platform on Sustainable Finance; https://finance.ec.europa.eu/system/files/2022-10/221011-sustainable-finance-platform-finance-report-minimum-safeguards_en.pdf