European Taxonomy

The Green Deal is Europe’s strategy to become a carbon-neutral society by 2050, protect the health and well-being of its citizens, and conserve and enhance natural capital and biodiversity. This challenge requires not only public funds (such as those from Next Generation EU), but also private funds. For this reason, as part of the Action Plan for Sustainable Finance, the European Commission has defined the Taxonomy (EU Regulation 2020/852), a single system of classification of economic activities that defines the criteria for assessing environmental sustainability, encouraging companies to make their models more environmentally sustainable, implementing investments in this direction, and to provide disclosure of information related to the environment and climate.

The Taxonomy determines six environmental objectives to identify sustainable economic activities: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

An economic activity is aligned with the Taxonomy, and therefore considered sustainable, if it meets three basic principles:

  • substantially contribute to at least one of the six environmental objectives by meeting activity-specific technical screening criteria (substantially contribute);
  • Do Not Significant Harm (DNSH) to any of the environmental objectives;
  • comply with the minimum safeguards set out in the OECD Guidelines for Multinational Enterprises1 and the United Nations Guiding Principles on Business and Human2 (UNGPs) (comply with minimum safeguards).

Companies required to publish the Non-Financial Statement (NFS) must report three indicators (KPIs): revenue, operating expenses (OpEx) and capital expenditures (CapEx), related to activities aligned with the Taxonomy.

On 09 December 2021, the EU Delegated Regulation (2021/2139) – the so-called Climate Delegated Act – was published in the Official Journal, defining the technical criteria for the first two objectives (mitigation and adaptation to climate change), and the Delegated Acts for the other four objectives are expected to be published during 2022.

Iren Group, sharing the aims of the Taxonomy as a tool for the homogenisation, security and transparency of information towards all stakeholders, actively participated in the various consultation processes, providing input through the sector associations and the Corporate Forum on Sustainable Finance (CFSF) in which the Group participates.


Adoption of the European Taxonomy

The Taxonomy envisages that for the first year of application (2022) only the share of economic activities eligible and non-eligible for the Taxonomy itself in terms of turnover, capital expenditure and operating expenditure will be reported in relation to the previous year (2021) (EU Delegated Regulation 2021/2178), while from 2023 the reporting will have to cover the KPIs relating to the activities aligned with the Taxonomy. An economic activity eligible for the Taxonomy is defined as an activity described in the Climate Delegation Act, regardless of whether it meets the technical screening criteria established for it. Eligible activities, therefore, constitute the basic universe of activities that have the potential to align with the technical screening criteria. Conversely, a non-eligible economic activity is defined as an activity not described in the Climate Delegation Act.

In order to implement the European Taxonomy in its own monitoring and reporting system, at the beginning of 2021, Iren Group launched a process and a cross-functional work team (Business Units, Corporate Social Responsibility and Local Committees, Management Control, Regulatory Affairs, Corporate Affairs, Finance and ICT Departments) that carried out the analysis of all economic activities managed, verified their consistency with the Taxonomy, in the extension in force to date, and identified eligible activities and non-eligible activities. It is important to note that two different types of non-eligible activities are actually included:

  • activities that are not included in the Delegated Acts adopted to date, bearing in mind that the expected evolution and dynamism of the Taxonomy should, in particular by including other environmental objectives, broaden the scope of eligible activities (e.g. energy production from natural gas, waste management in a circular economy perspective);
  • activities excluded because they are not considered to produce significant impacts on the environmental objectives considered by the Taxonomy. For example, one of the excluded activities is the sale of electricity to end customers, which, according to Iren Group’s evaluations, could contribute significantly to the mitigation of climate change in a logic of progressive electrification of consumption, oriented towards the sale of electricity produced 100% from renewable sources.

Following the analysis of the activities, an account coding system was defined, in order to calculate the KPIs required by the Taxonomy, and the verification of the alignment of the activities was undertaken, according to the technical screening criteria and DNSH.

In the process of implementing the Taxonomy, also in view of the need to define homogeneous interpretative criteria, it was essential to compare notes with other players in the sector, both directly and through association working groups (e.g. Utilitalia, Assonime).


Portions of activities Taxonomy-eligible and non-eligible

The portions of eligible and non-eligible activities related to the three KPIs required by the Taxonomy are represented below.

It should be noted that the development of the Delegated Acts for the four environmental objectives relating to sustainable use and protection of water and marine resources, transition to circular economy, prevention and control of pollution, protection and restoration of biodiversity and ecosystems, should strengthen the adherence of Iren Group’s business model to the Taxonomy, considering that the current analysis only covers the objectives of climate change mitigation and climate change adaptation.

More detailed information on eligible and non-eligible activities, as well as the criteria for calculating the relative share of turnover, operating expenditures and capital expenditures, can be found in the table on page 296.



The total turnover assumed to define the indicator (denominator) are those reported in the Consolidated Financial Statements, in compliance with International Accounting Standards, with the neutralisation of the effects deriving from assets under concession (IFRIC 12). In calculating the indicator, only revenues from external sales were considered in the numerator. By adopting said criteria, the share of turnover relating to Taxonomy-eligible activities, for the objectives of climate change mitigation and climate change adaptation, stands at 30.7% of turnover in 2021 equal to over 1,450 million Euro, mainly relating to the areas of energy networks, integrated water service and waste collection and treatment in material recovery plants.


It should be pointed out that the taxonomy does not include activities that are of considerable importance for the Group, such as, for example, the sale of commodities (around 38% of consolidated turnover), which could, in fact, have a positive impact on climate change mitigation if geared towards the sale of electricity from renewable sources or low carbon gas. By neutralising the effects of this activity, the proportion of turnover related to green activities would be 50%.

Operating Expenditures (OpEx)

In line with the interpretations provided by the European Commission3, the operating expenditures considered for the purposes of calculating the indicator do not include the following expenses: overheads, raw materials, personnel for the management of activities, management of research and development projects, electricity, fluids or reagents necessary for the operation of property, plant and equipment.



52.9% of operating expenditures (OpEx) in 2021, or approximately 472 million Euro, relate to eligible-activities for climate change mitigation and adaptation objectives. These expenditures mainly refer to the areas of waste collection and treatment in material recovery plants, smart solutions and integrated water service.

Capital Expenditure (CapEx)

The capital expenditure used to define the indicator includes, at the denominator, increases in tangible and intangible assets before depreciation, amortisation, impairment and any revaluation, including also increases resulting from business combinations and capitalised long-term leases (IFRS 16).


59.2 percent of capital expenditures (CapEx) in 2021, or more than 508 million Euro, relate to eligible activities for climate change mitigation and adaptation goals. The largest share of this percentage relates to the areas of integrated water service, energy networks, district heating, electricity and gas distribution and waste collection and treatment in material recovery plants.

1 OECD Guidelines for Multinational Enterprises – rivolti alle imprese multinazionali che operano in Paesi aderenti all’Organizzazione per la cooperazione e lo sviluppo economico (OECD) – forniscono principi e standard, non vincolanti, per una condotta commerciale responsabile in base alle leggi applicabili e agli standard riconosciuti a livello internazionale.

2 United Nations Guiding Principles on Business and Human Rights (UNGPs) sono uno strumento, formato da 31 principi, che attuano il framework “Proteggi, rispetta e rimedia” delle Nazioni Unite per ciò che riguarda i diritti umani all’interno dei business.

3 Draft Commission notice on the interpretation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of eligible economic activities and assets 2/2/2022.