NF11 EU taxonomy

The EU taxonomy identifies specific activities in certain sectors that contribute significantly to at least one of the EU’s environmental goals. These activities must also avoid causing significant harm to any of the other objectives and adhere to minimum social safeguards (taxonomy aligned). Sandvik has assessed its operations to determine applicable eligible activities, as outlined by the criteria in the EU delegated acts and supporting NACE code information. Applying the precautionary principle, any activities not clearly defined in the EU taxonomy have been left out. As the mining sector falls outside the scope of the EU taxonomy, our mining equipment business is exempt from the reporting requirements. Similarly, the manufacturing of Sandvik Machining Solutions is not eligible under the EU taxonomy.

Throughout the year, we have examined the four new environmental objectives to identify any eligible activities as well as additions to the existing objectives. For the newly added objectives, the initial eligibility assessment shows that we have activities associated with the transition to a circular economy within Sorting and material recovery of non-hazardous waste and Repair, refurbishment and remanufacturing. For these activities only eligibility is reported for FY2023. When it comes to reporting on climate change mitigation and adaptation, only a few Sandvik activities qualify. Parts of the business area Sandvik Rock Processing are included within Manufacture of steel, however the majority of the Group’s eligible activities are related to owned and leased facilities (real estate). Energy efficiency and solar panels are considered separate activities related to real estate, as activities deemed eligible are focused on climate mitigation. Certain limitations in the evaluation stem from the non-global application of European reporting standards, affecting the full review of owned facilities and energy efficiency activities. In such cases, activities are deemed eligible but not fully aligned.

The assessment of aligned activities, including turnover, capital expenditures (CapEx), and operational expenditures (OpEx), has been determined by reviewing the EU criteria for substantial contribution. Validation has been carried out through relevant documents such as certificates, product specifications, and other supporting materials. Changes in aligned actvities from previous reporting year include the addition of activity 7.5 for CapEx. Each eligible activity meeting the substantial contribution criteria has been subject to a review of applicable Do No Significant Harm (DNSH) criteria, aligning with EU requirements. Validation in this regard has been supported by documentation such as Climate Scenario Analysis, Life Cycle Analysis, and environmental documentation.

Sandvik has used the Platform on Sustainable Finance’s Final report on Minimum Safeguards to assess compliance with the minimum safeguards laid down in Article 18 in Regulation (EU) 2020/852. There are processes in place to secure minimum safeguards relating to anti-corruption, fair competition and taxation as well as following the OECD’s six steps for due diligence of human rights. For more information, see Sustainability governance and notes NF3, NF4, NF5. There have been no court convictions in any of these areas.

Proportion of Taxonomy-aligned economic activities