Alignment of environmentally sustainable activities with the EU Taxonomy

Net turnover recognised in accordance with IAS 1 item 82(a), as defined in Article 2(5) of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013:

‘net turnover’ means the amounts derived from the sale of products and the provision of services after deducting sales rebates and value added tax and other taxes directly linked to turnover.

Accordingly, this included consolidated net turnover (for the most part, recognised in accordance with IFRS 15), including revenue recognised under IFRS 16 (Enea Group identifies itself as a lessor) and compensation due to the Group under the Act of 27 October 2022 on Emergency Measures to Reduce Electricity Prices and Support Certain Consumers in 2023. The Enea Group recognises that these compensations fall within the definition contained in Directive 2013/34/EU.

The relevant amounts can be found in the consolidated statement of comprehensive income, in the revenue from sales and other income item (which consists of net revenue from sales, compensation and revenue from leases and operating subleases) and in note 8 to the consolidated statement of comprehensive income.

Capital expenditures defined as increases in property, plant and equipment and intangible assets, right-of-use assets and investment properties, including those resulting from business combinations, as defined in the relevant IAS/IFRSs:

1. IAS 16 Property, Plant and Equipment,
2. IAS 38 Intangible Assets,
3. IFRS 16 Leases,
4. IAS 40 Investment Property.

This included the period’s consolidated increases in property, plant and equipment, intangible assets and right-of-use assets. In 2023, the Enea Group did not acquire any investment properties.

The relevant amounts are included in the Group’s consolidated financial statements in the Notes to the consolidated statement of financial position, in a manner similar to the items indicated above:

1. note 14. Property, plant and equipment – rows: Acquisition and Settlement of the acquisition of subsidiaries,
2. note 15. Intangible assets and goodwill (where goodwill has been omitted for the purposes of the key performance indicator) – row: Acquisition,
3. note 16. Right-of-use assets – rows: Acquisition and Settlement of the acquisition of subsidiaries,
4. note 17. Investment properties (with negligible increases in this area in 2023).

Operating expenses understood as one of the five categories of direct, uncapitalized costs:

1. related to research and development work,
2. related to building renovation activities,
3. related to short-term leases,
4. related to maintenance and repair work,
5. 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.

This way, the consolidated amounts of costs incurred by the Enea Group in 2023 relating to any of the above categories were taken into account.

As regards the OpEx ratio, given to its specific definition in the Taxonomy, it was not possible to make a direct reference to the consolidated financial statements. In this context, it should be noted that the denominator of the OpEx ratio for the purposes of the EU Taxonomy is not equal to the sum of operating expenses incurred by the Enea Group. The denominator of the OpEx ratio calculated for EU Taxonomy purposes was about PLN 936 million, while the Group’s operating expenses were almost PLN 43.6 billion (as specified in note 9 to the Group’s consolidated financial statements), which means that the basis for calculating the OpEx ratio for EU Taxonomy purposes was only 2% of all operating expenses (without taking any other operating activities into account).

The most important operating expenses (OpEx) in the Enea Group include mainly: repair and maintenance costs (both as consumption of repair and maintenance materials and third-party repair and maintenance services) due to the extensive range of property, plant and equipment owned by the Group, including high-voltage lines, substations, switching stations (owned by Enea Operator), power units with boilers and auxiliary equipment, including the Green Unit (Enea Elektrownia Połaniec), mining pits and world-class machinery at LW Bogdanka or lighting assets such as road lighting (Enea Oświetlenie).

The Enea Group performed an analysis of the various categories included in the definition of operating expenses, observing the disclosure requirements set forth in the Regulation 2021/2178, on the basis of which, within the category of other expenditures relating to the day-to-day servicing of assets of property, plant and equipment, it included in the denominator costs from the following categories: fire protection services and other fire prevention measures, cleaning services, mandatory specialised training for Employees whose professional duties include solely the maintenance of power poles.

The base of three monetary quantities (turnover, capital expenditures (CapEx) and operating expenses (OpEx)) established in such a manner was further analysed for Taxonomy eligibility and then for Taxonomy alignment. Accordingly, the KPIs have the following numerators:

• for the turnover KPI: the net revenues that are included in the denominator and that are associated with Taxonomy-aligned activities, including enabling activities pursuant to Article 11(1)(b) of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020,
• for the CapEx KPI: the capital expenditures that are included in the denominator and that are associated with assets or processes related to Taxonomy-aligned economic activities,
• for the OpEx KPI: the operating expenses that are included in the denominator and that are associated with assets or processes related to Taxonomy-aligned economic activities, including training and other needs related to the adaptation of human resources and direct uncapitalized costs of research and development.

The economic activities that contribute to the KPIs, both in their numerators and in their denominators, are stated in the consolidated form, i.e. including transactions carried out exclusively with entities from outside of the Enea Group. Additionally, all the activities treated as Taxonomy-aligned were matched to only one of the first two environmental objectives, namely climate change mitigation or climate change adaptation (similarly, activities treated as Taxonomy-eligible but non-Taxonomy-aligned were also matched to only one of all six environmental objectives). In other words, no economic activities were identified that would contribute to several environmental objectives at the same time. This ensures that double counting at any stage was avoided when the monetary values were calculated for the KPIs.

Mandatory disclosures for the EU Taxonomy are applicable to companies that meet the criteria set forth in Article 19a or 29a of Directive 2013/34/EU. The Enea Group, as an entity subject to the obligations arising from the Directive, which prepares the non-financial statement in accordance with the amended Accounting Act, is required to make Taxonomy-related disclosures for 2023. The Group’s Taxonomy-related reporting is compliant with Regulation 2020/852 of 18 June 2020 and Commission Delegated Regulations 2021/2178, 2021/2139, 2022/1214, 2023/2485 and 2023/2486 thereto, because it meets the regulator’s requirements for non-financial corporations regarding key performance indicators and accompanying information as defined within Annex I, II and XII of Delegated Regulation 2021/2178.

In the process of assessing its activities for Taxonomy alignment, the Enea Group used its experience acquired during the preparation of last year’s Management Board Report on the Activity of ENEA S.A. and the Enea Capital Group in 2022 and the Taxonomy-related disclosures contained therein. It should be emphasised that in the previous year (that is, from 1 January to 31 December 2022), the rules were in place for verifying activities in the context of requirements for the disclosures of non-financial corporations regarding Taxonomy eligibility and Taxonomy alignment with respect to the objectives of climate change mitigation and adaptation.

This year’s disclosures were prepared on an expanded scope basis, based on an analysis of Taxonomy eligibility and Taxonomy alignment of the activities for the first two environmental objectives (climate change mitigation and adaptation) and eligibility alone for the remaining four environmental objectives (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).

In order to fulfill the obligations under Commission Delegated Regulation (EU) 2021/2178 with respect to the 2023 disclosures, all Enea Group entities were engaged in the process of evaluating their business activities. A number of internal training workshops and consultations were conducted to familiarize and consolidate the knowledge of representatives of the companies with the applicable regulatory requirements to ensure their ability to thoroughly analyse the activities of these companies in terms of the eligibility and alignment of their activities with the Taxonomy.

The analysis of the technical screening criteria and the Do No Significant Harm principle was carried out by the departments and business units responsible for reporting data of those companies in the Enea Group that, in a preliminary analysis, established Taxonomy eligibility of their business activities. Industry experts were also involved to support the analysis of the technical screening criteria and the Do No Significant Harm principle. The Group’s Controlling Department was responsible for the collection and aggregation of data. We have engaged industry experts responsible for technical aspects related to revenue-generating infrastructure, our investments or expenses to confirm the requirements set forth in Commission Delegated Regulation (EU) 2021/2139 and Commission Delegated Regulation (EU) 2022/1214.

In the case of the economic activities assessed for their substantial contribution to climate change mitigation, we had to conduct an assessment of climate risk and exposure to that risk in order to satisfy the Do No Significant Harm requirement. In the case of economic activities assessed for their substantial contribution to climate change adaptation, the condition for satisfying the significant contribution condition is to conduct an assessment of climate risk and exposure to that risk.

The risk and exposure assessment was carried out by the departments and business units responsible for data reporting in the following entities: Enea SA, Enea Elektrownia Połaniec, Enea Nowa Energia, Enea Pomiary, the LW Bogdanka Capital Group, Enea Operator, Enea Serwis, Enea Centrum, Enea Ciepło, Enea Logistyka, Enea Power&Gas, Enea Trading, Enea Wytwarzanie and MEC Piła. Other Enea Group’s companies did not report any Taxonomy-eligible economic activities. Among the companies mentioned above, the analysis of physical climate risks revealed Taxonomy alignment and a substantial contribution to climate change mitigation by Enea SA, Enea Elektrownia Połaniec, Enea Nowa Energia, Enea Pomiary, the LW Bogdanka Capital Group, Enea Operator, Enea Serwis, Enea Ciepło and Enea Wytwarzanie.

Each of the economic activities reviewed in terms of Taxonomy alignment for climate change mitigation as well as climate change adaptation objectives, was assessed in the context of the twenty-eight physical climate-related hazards listed in the classification in Appendix A to Commission Delegated Regulation (EU) 2021/2139. At the first stage of climate risk assessment, for each activity verified for Taxonomy alignment, the companies identified the existence of appropriate system elements enabling the conduct of the respective activity: product/service manufacturing sites, transportation lines, administrative buildings, critical suppliers, key consumers, necessary utilities, Employees and others. A compilation of system elements was made in terms of their locations determining the exposure to climate-related hazards, and in terms of the recorded realisation of physical climate risks for the respective system element in the past. Based on this information, climate-related hazards that have no effect on the activity subject to the review due to their absence in the locations where the activity is conducted or the absence of a causal link between the harmful effects and the reviewed activity.

After the initial analysis of the exposure to climate-related hazards, we produced a list of hazards identified as relevant to the reviewed activities for each company and each system element. At the second stage of the risk and exposure assessment process, the companies assessed the effects and likelihood of materialization of each relevant risk for the economic activities subject to the assessment. The companies applied the risk assessment criteria defined for Enterprise Risks according to the ENEA Group Enterprise Risk Management Methodology. The analysis of the identified risks was performed for two time horizons required by the Regulation: up to 10 years and from 10 to 30 years. In the analysis process, no risks were assessed as critical or key. The majority of risks were assessed as low, with few risks with a medium rating.

In the case of Miejska Energetyka Cieplna Piła, activity 4.15 Distribution in district heating/cooling systems, which was identified as Taxonomy-eligible with respect to the objective of climate change adaptation, the climate risk and the exposure to climate risk were assessed in a similar manner as under the Do No Significant Harm analysis, and adaptation solutions to mitigate the identified potential risks by adjusting the damming built in the past for hydroelectric power plants in such a way as to ensure that these plants operate safely and do not generate risks have already been implemented in accordance with the requirements of substantial contribution to climate change adaptation.

All other activities considered to be Taxonomy-aligned have demonstrated a substantial contribution to the environmental objective of climate change mitigation. In their case, as mentioned earlier, the assessment of climate risk and exposure to this risk was limited to Do No Significant Harm requirements.

We have also carried out an analysis of compliance of economic activities carried out in 2023 with the minimum safeguards as defined in Article 18 of Regulation (EU) 2020/852. The assessment was overseen by the Enea Group Controlling Department and involved internal units responsible for specific areas relevant to minimum safeguards, such as those responsible for the HR and compliance areas. For the analysis, we used Article 18 of Regulation (EU) 2020/852 of the European Parliament and of the Council as a starting point, while relying on the explanations provided in the Platform on Sustainable Finance (Final Report on Minimum Safeguards), the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles for Business and Human Rights.

Following the assessment, we concluded that the Enea Group conducted its activity in 2023 in accordance with the minimum safeguards. The due diligence process in terms of the above guidelines is based in the Group on a number of policies, notably the ENEA Group Compliance Policy establishing the compliance system in the Enea Group, the Code of Ethics of the ENEA Group, the Policy for reporting breaches and protecting whistleblowers in the ENEA Group and the Enea Group Code of Conduct for Contractors, which define the values and principles of conduct adopted by the Enea Group. Their observance is required of both Employees of Enea Group’s companies and their counterparties.

In 2023, three proceedings for the reinstatement of Employees due to Enea SA’s unlawful termination of employment relationships with them were completed. In assessing the impact of these cases on compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, consideration was given to the recommendations of the EU Platform on Sustainable Finance, which indicated that for certain categories of breaches, the status of non-compliance with the minimum safeguards continues until the company proves that measures for improvement have been taken, thus making the recurrence of the breach unlikely¹. Accordingly, it was concluded that the measures taken by the Group’s Human Resources Management Department even before the completion of the proceedings in response to the breaches, aimed at, among other aspects, minimizing the risk of unlawful termination of employment, make the recurrence of the breaches in question unlikely. In addition to the situations described above, in 2023 no other judgments were issued against Enea Group’s companies and no other proceedings were completed with an ascertainment of the existence of breaches related to minimum safeguards (such as breaches in the areas of human rights, labour rights, corruption or fair competition). For this reason, it was inferred that the Enea Group’s operations in 2023 were conducted in accordance with the minimum safeguards.

The Enea Group intends to improve its approach to implementing the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

¹⁾  https://finance.ec.europa.eu/system/files/2022-10/221011-sustainable-finance-platform-finance-report-minimum-safeguards_en.pdf

• After analysing all activities described in the Taxonomy, we concluded that Taxonomy-eligible but non-Taxonomy-aligned turnover represented 11.65% (PLN 5,613 million), while Taxonomy-aligned turnover represented 0.91% (PLN 439 million) of all turnover from the Group’s activities in FY 2023. Accordingly, non-Taxonomy-eligible turnover represents 87.44% (PLN 42,131 million) of all turnover from the Group’s activities in FY 2023.
• Taxonomy-eligible but non-Taxonomy-aligned turnover is derived from the following activities:

• Taxonomy-aligned turnover is derived from the following activities:

• The most important activity, accounting for nearly 90% of the numerator of the key performance indicator related to turnover (and 0.82% of its denominator), is activity 4.8. Electricity generation from bioenergy (environmental objective: climate change mitigation). Enea Elektrownia Połaniec, following a comprehensive analysis, determined Taxonomy alignment of revenue from activities related to the operation of the Green Unit at the Połaniec Power Plant. Given that the activities related to the Green Unit consist of the electricity generation and sales to wholesale and other Customers, including Regulatory System Services, revenues in this respect were also recognised in accordance with IFRS 15. In 2023, the value of revenue from this activity clearly increased compared to the previous year, as did its share in the indicator’s numerator – as the company generated a greater volume of electricity in the Green Unit. Energy prices in the market also exceeded those prevailing in 2022, which additionally also translated into an increase in turnover.
• The second most valuable Taxonomy-aligned activity of the Enea Group in terms of revenue generated is activity 4.3. Electricity generation from wind energy (environmental objective: climate change mitigation). Enea Nowa Energia, having conducted a complete analysis, ascertained Taxonomy alignment with regard to revenues generated by its wind farms, primarily in Bardy in Zachodniopomorskie Voivodship (to a lesser extent in Darżyno and Lubno). In 2023, these revenues increased in absolute terms compared to 2022, but due to the significantly greater percentage increase in the denominator of this key performance indicator, their share in the revenues of the Enea Group as a whole declined. The finance departments recognised the turnover in question in accordance with IFRS 15.
• At the same time, the predominant activity recognised as Taxonomy-eligible but non-Taxonomy-aligned was activity 4.9. Transmission and distribution of electricity, which accounts for more than 11% of the denominator of the turnover KPI. Enea Operator generates revenue from licensed activities, i.e. sales of distribution services to end users and revenue from grid connection fees. These are revenues originating from the grid assets held and are recognised for the most part under IFRS 15, where the main groups of contracts are contracts for distribution services. In these contracts, the service is provided on a continuous basis and the amount of turnover depends on the amount of distribution fees calculated in accordance with the DSO’s tariff. The share of this turnover in the total is at a level similar to that of the previous year.
• A small contribution to the amount of turnover eligible for but not aligned with the Taxonomy is also provided by Enea Ciepło as part of its activity described as 4.15. Distribution in heating/cooling systems. The company has its own heat networks, primarily in Białystok, with which it provides facilities across the city with district heating flowing from nearby heat plants (including the Białystok CHP Plant owned by Enea Ciepło) – accordingly, the turnover included in this instance consists of revenue from heat transmission and distribution. As before, here too the main accounting standard used for revenue recognition is IFRS 15. The share of this activity in the denominator of the turnover KPI declined compared to 2022 despite the fact that in absolute terms the company generated more revenue than the year before – which was due to the large increase in total revenue from sales generated by the Enea Group.
• The denominator of the turnover ratio is PLN 48,183 million. The noticeable increase in consolidated revenues generated by the Enea Group (leading to an increase in the denominator of the turnover KPI compared to 2022) is explained in the Management Board Report on the Activity of ENEA S.A. and the ENEA Capital Group in 2023.

• An analysis of all capital expenditures (CapEx) shows that Taxonomy-eligible but non-Taxonomy-aligned expenditures represent 52.77% (PLN 1,911 million), while Taxonomy-aligned CapEx represent 3.20% (PLN 116 million) of the denominator of this key performance indicator of the Enea Group in FY 2023. Accordingly, non-Taxonomy-eligible CapEx represent 44.03% (PLN 1,594 million) of the Group’s total CapEx in FY 2023.
• Taxonomy-eligible but non-Taxonomy-aligned capital expenditures were incurred in the following activities:

• Taxonomy-aligned capital expenditures (CapEx) are incurred in the following activities:

• The most important Taxonomy-aligned activity is activity 4.1. Generation of electricity using photovoltaic technology (environmental objective: climate change mitigation), which accounts for over 64% of the numerator of the CapEx KPI. Enea Nowa Energia, after a full analysis, ascertained Taxonomy alignment with regard to capital expenditures in photovoltaic farms, and these expenditures themselves were significantly greater than in 2022. Investments in farms, both in the form of acquisitions and own investments, constitute a strategic element of the company’s operations. Accordingly, large subsequent increases in fixed assets related to broadly construed renewable energy sources are expected. In addition to Enea Nowa Energia, the LW Bogdanka Group also indicated the year’s capital expenditures of a similar kind as Taxonomy-aligned. This resulted in activity 4.1. accounting for 2.06% of the denominator of the key performance indicator in 2023, compared to only 0.14% a year earlier. These increases were accounted for mostly in accordance with IAS 16 Property, Plant and Equipment.
• Another significant activity, accounting for over 22% of the numerator of the CapEx KPI, is activity 4.8. Electricity generation from bioenergy (environmental objective: climate change mitigation), while the share of capital expenditures in the total decreased significantly during the year. This was because in 2022 Enea Elektrownia Połaniec incurred expenditures for the overhaul of the Green Unit and the adaptation of its units to the BAT conclusions – in turn, in 2023, capital expenditures were no longer incurred at a similar level. Those that were incurred were mostly accounted for in accordance with IAS 16 Property, Plant and Equipment.
• The predominant share among the activities considered eligible for but not aligned with the Taxonomy is attributable to activity 4.9. Transmission and distribution of electricity, accounting for nearly half of all capital expenditures (CapEx denominator) of the entire Enea Group. The company carrying out the transmission activity is Enea Operator, whose grid investments include, among others: connection of new Customers, new sources and the associated construction of new networks, the upgrading and rehabilitation of existing assets, meters and metering systems, and ICT infrastructure forming an integral part of the distribution grid operated by the company. In 2023, the company incurred much greater expenditures in fixed assets than in the previous year, because the investments incurred on the cost side were significantly more expensive and larger scopes were realised. Difficulties were experienced in the market in terms of access to ed equipment, including difficulties on the part of the contractors themselves in securing appropriate human resources; on top of that, labour costs are also constantly on the rise. The expenditures required to carry out new assignments are at historically high levels. The vast majority of capital expenditures incurred in this way have been accounted for in accordance with IAS 16 Property, Plant and Equipment.
• The denominator of the CapEx ratio is PLN 3,621 million. It increased relative to 2022, with the capital expenditures of Enea Operator (described above) accounting for the largest portion, but also with noticeably greater capital expenditures incurred by the LW Bogdanka Capital Group and the Enea Group’s acquisition of control over several farms (including, most notably, the Genowefa photovoltaic farm in Wielkopolskie Voivodship and the Bejsce wind farm in Świętokrzyskie Voivodship). This confirms the Group’s intended direction of growth, which is towards increasing generation capacity from renewable sources, which in turn, from the Taxonomy’s perspective, provides an opportunity to improve the KPIs to be reported on in future years.
• All significant values in the numerator of the CapEx key performance indicator resulted from increases recorded by the Enea Group’s existing companies. In other words, no significant amounts related to asset acquisitions resulting from business combinations within the meaning of IFRS 3 were included as Taxonomy-aligned or Taxonomy-eligible but non-Taxonomy-aligned.

• An analysis of all operating expenses (OpEx) shows that Taxonomy-eligible but non-Taxonomy-aligned expenditures represent 31.24% (PLN 292 million), while Taxonomy-aligned operating expenses represent 4.83% (PLN 45 million) of the Group’s denominator in FY 2023. Non-Taxonomy-eligible OpEx therefore represented 63.93% (PLN 598 million) of the Group’s total OpEx in FY 2023.
• Taxonomy-eligible but non-Taxonomy-aligned operating expenses were incurred in the following activities:

• Taxonomy-aligned operating expenses (OpEx) were incurred in the following activities:

• The largest Taxonomy-aligned operating expenses by value are those incurred in connection with activity 4.8. Generation of electricity from bioenergy (environmental objective: climate change mitigation), accounting for slightly more than 34% of the value of the numerator of the OpEx key performance indicator. Enea Elektrownia Połaniec, following a comprehensive analysis, determined Taxonomy alignment of operating expenses (OpEx) related to the operation of the Green Unit. Their share in the denominator decreased as expenditures of a lower value were incurred compared to 2022.
• The second-largest share, accounting for more than 32% of the numerator of the OpEx KPI, is also held by Enea Nowa Energia due to expenses for repair and maintenance services of the generating units in activity 4.3. Electricity generation from wind energy (environmental objective: climate change mitigation; maintenance of wind turbines at farms, such as those in Darżyno and Bardy). Last year, these costs were lower in absolute terms (due to inflation, among other factors), but still their share declined as a result of the rising OpEx denominator.
• In addition to activity 4.3. described above, Enea Nowa Energia also incurred operating expenses it considered, after a full analysis, to be Taxonomy-aligned as part of activity 4.5. Electricity generation from hydropower (environmental objective: climate change mitigation). The company operates hydro power plants in Poland’s four voivodships, and the expenditures posted relate to the maintenance of the assets therein. As before, as a result of the increasing OpEx denominator, the share of this activity in the denominator decreased compared to 2022.
• In the context of operating expenses, activity 4.9. Transmission and distribution of electricity, accounts for 26.43% of the denominator of the OpEx KPI and is considered a Taxonomy-eligible but non-Taxonomy-aligned activity of the Group. This is largely attributable to Enea Operator, which incurs expenditures related to repair and maintenance work on its grid assets, costs of in-house work and related costs indispensable for the operation of the grid (without which the assets would be unable to perform their functions effectively). The most important category among these costs are without a doubt staff costs (payroll fund, social security contributions, charges for the Company Social Benefit Fund) linked to maintenance and repair workers.
• The denominator of the OpEx KPI is PLN 936 million, a major hike compared to the denominator of the same ratio in 2022 (taking account of the restatement of comparable data). Most Enea Group’s companies reported increases in their expenditures incurred for repairs and maintenance of assets in proper technical condition related to the general price increases across the economy.

The key change arising from the improved processes within the Enea Group made during the preparation of the Taxonomy disclosures for 2023 relative to 2022 is the reclassification of activity 4.9. Transmission and distribution of electricity (environmental objective: climate change mitigation). In the process of assessing the compliance of operations classified as activity 4.9., in 2023 Enea Operator adopted a prudent approach of not reporting any Taxonomy alignment. This resulted from the absence of a consistent approach to interpreting the technical screening criteria for activity 4.9. and a lack of guidance on possible supporting documentation, reports and documents to establish, with certainty and for the whole grid, compliance with the technical screening criteria for a substantial contribution to one of the environmental objectives and the Do No Significant Harm principle vis-à-vis the other environmental objectives. Activity 4.9. is also reported on by Enea Serwis, which also prudentially deemed it Taxonomy-eligible (but non-Taxonomy-aligned) for the same reasons.

Due to the Enea Group’s position as a leader in the energy market and the associated obligation to set best practices in its reports, including Taxonomy disclosures, for 2023, activity 4.9. Electricity transmission and distribution was prudentially recognised by Enea Operator and Enea Serwis as Taxonomy-eligible but non-Taxonomy-aligned. Along with expected upcoming progress in market practices related to evaluation of the fulfillment of technical screening criteria for activity 4.9. and the collection of relevant supporting documentation, it will likely be possible to change the status of this activity in the future. At the same time, an adjustment was made in this regard taking into account comparative data (for 2022). In the event that Enea Operator and Enea Serwis consider activity 4.9. to be Taxonomy-aligned, they would report the following indicators:

Moreover, a major difference related to the analysis of Taxonomy eligibility of activities carried out by Enea Oświetlenie is, compared to the 2022 disclosure, the removal of activity 7.3. Installation, maintenance and repair of energy efficiency equipment from the list of Taxonomy-eligible activities. Enea Oświetlenie is not involved in any maintenance or upkeep of buildings or any real estate-related activities. Its business is focused on road infrastructure activities, which, according to the provisions of the Regulation, are not classified as Taxonomy-eligible activities. Accordingly, the comparative figures were adjusted in this regard as well.

Another significant change in the Enea Group’s approach related to improving the process of identifying activities that are Taxonomy-eligible, and thus to preparing disclosures for 2023 relative to 2022, is the allocation of operating expenses (OpEx) resulting from the costs of materials related to building maintenance, real estate operating expenses, building administration expenses (building cleaning costs, janitorial services, excluding greenery cleaning services, solid and liquid waste removal and garbage collection) to activity 7.7. Acquisition and ownership of buildings. The year before, corresponding expenses were allocated to activity 7.2. Renovation of existing buildings.

In addition to the foregoing, as a result of the increasing understanding and the questions and answers published by the European Commission regarding the understanding of specific concepts in the Taxonomy, Enea Wytwarzanie identified that the denominator of its OpEx key performance indicator was understated by nearly PLN 103 million in 2022 as a result of the omission of certain expense categories recommended by the European Commission to be included therein. Consequently, the comparative data for 2022 were adjusted in this regard as well.