Taxonomy disclosures

Stage 1:  Recording – in order to start the assessment of activities’ eligibility with taxonomy, data on the Group’s activities are collected. All departments are indirectly involved in this process, but the leading role is played by the Corporate Communication and ESG Department, the Controlling Department, the Financial Department, the Corporate Governance Department, the Procurement Department, the Technical and Investment Department and the Maintenance Department.

Stage 2:  Identification – this stage involved reviewing the activities conducted by the Group and determining whether a given type of activity is taxonomy-eligible.  The Group identifies taxonomy-eligible activities on the basis of the descriptions of economic activities contained in the annexes to the delegated regulations establishing the technical screening criteria of the EU Taxonomy. The Group was supported in this respect by an external advisor. In case of doubts, the NACE¹ codes, guidelines and other documents prepared by the European Commission and the Platform for Sustainable Finance were used, primarily the European Commission’s notices containing interpretations of certain legal provisions of delegated acts. In addition, the practice of other European non-financial enterprises in the field of reporting was reviewed, which shows that the taxonomy criteria are still interpreted divergently and it is necessary to further specify them by the EU institutions. The selected activities are taxonomy-eligible but are not environmentally sustainable (taxonomy-non-eligible activities). This non-compliance is related to the failure to meet the Technical Screening Criteria (TSC) for the indicated activities.

As part of the above two stages, five activities were identified in the Śnieżka Group under the environmental objective – Climate Change Mitigation (CCM), and one activity under the environmental objective – transition to a circular economy (CE).

• CCM 6.5 transportation by motorbikes, passenger cars and light commercial vehicles – purchase and rental of passenger cars for management and sales representatives in core Group’s companies,
• CCM 7.3 installation, maintenance, and repair of energy efficiency equipment – replacement of lighting with LEDs in production and warehouse buildings (Śnieżka SA and Poli-Farbe companies) and replacement of the gas boiler in the production building with a new one of higher efficiency (Śnieżka SA),
• CCM 7.5 – installation, maintenance and repair of instruments and devices for measuring, adjusting and controlling the energy performance of a building – installation of a media metering system (installation of smart meters, wiring and connection to the BMS building management system) – Śnieżka SA plants,
• CCM 7.7 acquisition and ownership of buildings – carrying out finishing and installation works in the office part of the Logistics Centre in Zawada, modernisation of laboratory premises in Brzeźnica and Lubzina (locations belonging to Śnieżka SA),
• CCM 6.6 road freight transport services – covers the operation of vehicles for the transport of the Group’s own products,
• CE 4.1 providing data-driven IT/OT solutions to reduce leakages.

_{¹ NACE (Statistical Classification of Economic Activities in the European Community)}

Stage 3:  Verification – to assess whether a given activity is sustainable in the light of the EU Taxonomy criteria, the Group carried out a study of the criteria of substantial contribution and DNSH (do no significant harm) based on TSC.  At this stage, an assessment was also carried out of whether the activity complied with the criteria for DNSH.  An assessment was also performed as to whether the Minimum Safeguards were met.

Based on the verification of the criteria of substantial contribution and DNSH, the Group has concluded that none of its activities can be reported as sustainable.

• For CCM 6.5 activity Transportation by motorbikes, passenger cars and light commercial vehicles – the car fleet owned by the Śnieżka Group companies was assessed in terms of the emissions of individual vehicles. Due to the fact that all vehicles in the Group have combustion engines that do not meet the emission standards set out in the TSC, it was not possible to demonstrate compliance with the criterion of a substantial contribution to climate change mitigation. Due to the failure to meet the criterion of substantial contribution, an analysis of compliance with the DNSH criteria was not performed.
• For CCM activity 7.3 Installation, maintenance and repair of energy efficiency equipment– replacement of lighting, ventilation and air conditioning in production and administrative buildings – the installed light sources were assessed in terms of energy class. The lighting replaced did not feature energy class A and on this basis it was found that it did not meet the criterion of a substantial contribution to climate change mitigation. In addition, it was found that the installed ventilation and air conditioning (HVAC) is not technologically highly efficient, i.e. it does not belong to the highest energy efficiency classes. The heating systems replaced also do not meet the criterion of a substantial contribution.  Due to the failure to meet the criterion of substantial contribution, an analysis of compliance with the DNSH criteria was not performed.
• For CCM 6.5 activity Installation, maintenance and repair of instruments and devices for measuring, adjusting and controlling the energy performance of a building – an assessment was made of whether the instruments and devices related to energy efficiency installed in 2024 meet the criterion of a substantial contribution.  The installation, maintenance and repair of smart meters for gas, heating, cooling and electricity consumption were identified as meeting the criterion of a substantial contribution. Next, the DNSH criterion was analysed and due to the lack of implementation of the criteria concerning climate change adaptation (Appendix A), it was found that the activity did not meet the criteria specified in the TSC.
• For CCM activity 7.7 Acquisition and ownership of buildings – the building “Zawada Logistics Centre” (being a building for which a building permit was issued before December 30, 2020) was assessed against the substantial contribution criteria and determined to be among the 15% most energy efficient non-residential buildings in Poland. This assessment was made based on the guidelines of the Ministry of Development and Technology. Following monitoring and assessment of the energy performance of the building, it was found that it is operated efficiently. Next, the DNSH criterion was analysed and due to the lack of implementation of the criteria concerning climate change adaptation (Appendix A), it was found that the activity did not meet the criteria specified in the TSC.
• For CCM 6.6 activity Road freight transport services – an assessment was made of lorries used for the transport of the Group’s own products. These vehicles are not low emission ones and therefore do not meet the climate change mitigation criterion, therefore an analysis of compliance with the DNSH criteria was not carried out.
• For CE 4.1 activity Providing data-driven IT/OT solutions to reduce leakages – an assessment was made of remote monitoring and predictive maintenance software. The software does not meet the criterion of making a substantial contribution to the transition to a circular economy and therefore the DNSH criteria was not analysed.

Stage 4:  Allocation – it involves assigning the following values ​​to the activities identified in the second stage: turnover, capital expenditure and operating expenses. The allocation rules are described in the Accounting Principles chapter.

Stage 5:  Calculation – Based on the information obtained during the process of assessing the eligibility and compliance of the activities with the Taxonomy, the Group prepared tables containing the required information and developed supplementary information in accordance with the requirements of the annexes to Commission Delegated Regulation (EU) 2021/2178.   The entire reporting procedure was overseen by an appointed member of the Management Board.

For an economic activity to be taxonomy-eligible, it must be carried out in accordance with the minimum safeguards set out in Article 18 of the EU Taxonomy, i.e.:

• OECD guidelines for multinational enterprises,
• UN guiding principles on business and human rights,
• and be conducted taking into account the “do no significant harm” principle referred to in sec. 17 of Article 2 of Regulation (EU) 2019/2088.

The Group assesses the compliance of its activities with the above-mentioned documents based on their content and the applicable guidelines of the European Commission and the Platform on Sustainable Finance.

In accordance with the declaration made as part of the 2023 report, the Group has implemented changes resulting from the update of the OECD guidelines for multinational enterprises. Based on the assessment made as part of the preparation of disclosures for the 2024 report, the conducted activities were found to be in compliance with the minimum safeguards.

Detailed issues relevant to the implementation of the above guidelines are described in the following sections of this report or are included in other documents:

• due diligence process – chapter ESG in the Group, Double Materiality Assessment section,
• respect for human rights – chapter People, Area Management section,
• respect for workers’ rights – chapter People, Area Management section,
• protection of consumer rights – Code of Ethics,
• respect for the principles of fair competition – Code of Ethics,
• counteracting corruption – chapter Business, Area Management section,
• tax policy – ​​Tax Strategy.