Main conclusions

• In their 2022 financial reports, large listed companies for the first time had to disclose the degree of compliance of their activities with the EU Taxonomy. The taxonomy is an EU classification system that establishes the criteria for recognizing particular types of activities as environmentally sustainable, from the point of view of their impact on climate change. The taxonomy sets the “gold standard” for the impact on climate of economic activities – failure to comply with this classification does not automatically mean a negative climatic impact.

• Large listed companies and financial institutions must now report their compliance with the EU Taxonomy. Our sample included 111 non-financial companies listed on the Warsaw Stock Exchange. The percentage of turnover (revenue), capital expenditure (CapEx) and operating expenditure (OpEx) compliant with the Taxonomy is disclosed.

• Only 5% of the revenues generated by WSE listed companies covered by the regulation come from Taxonomy-compliant activities. For capital expenditures, this percentage is twice as high (10%). The average values of the ratios reported by the companies, apart from their size, allow us to conclude that the average company listed on the Warsaw Stock Exchange shows 8% of revenues compliant with the Taxonomy and 12% of compliant investment expenditures.

• For each of the three surveyed indicators, approximately half of the companies listed on the Warsaw Stock Exchange report a zero degree of compliance with the Taxonomy. A degree of compliance higher than 2% for each indicator is reported by only about one-third of the companies we surveyed. The reported average values are therefore largely determined by the results of a minority of companies, which, however, are for the most part large energy and industrial companies, which have accounted for a significant part of revenues and capital expenditures in the sample.
  

• The degree of compliance of the activities of the surveyed companies with the Taxonomy varies significantly depending on the sector of activity. A surprisingly high degree of compliance with the Taxonomy is achieved by the Industrial Production and Construction and Assembly sector. The sector reports the highest revenue compliance rate of any industry at 18% and the second highest capital expenditure compliance rate at 10%. This sector is responsible for 7% of the total revenues of the surveyed companies, but as much as 24% of revenues from its activities is in accordance with the Taxonomy. In addition, as many as 9 out of 15 companies declaring the highest degree of turnover compliance come from this sector.

• Companies from the Fuels and Energy sector show revenues in accordance with the Taxonomy in the amount of 5%, i.e. corresponding to the average for the entire sample. This is not surprising, given that this sector accounts for as much as 54% of revenues in the entire sample and therefore strongly influences the average results. A simple average of the reported compliance ratios, in turn, allows us to conclude that the average energy company shows 20% of the turnover in accordance with the Taxonomy. This value, four times higher than the weighted average, results from the presence of companies producing energy from renewable sources, with high average indicators of consistent activity, whose absolute size is small compared to companies focused on conventional energy. The Fuel and Energy sector also has the highest compliant CapEx of all sectors, at 13%. The value of this ratio for an average company in this sector is as much as 48%. At the same time, the Energy and Fuels sector is responsible for 86% of all capital expenditures compliant with the Taxonomy in the sample of surveyed companies. Expenditures on the energy transformation are therefore reflected in the Taxonomy data.

• A comparison of the average values achieved by companies listed on the Warsaw Stock Exchange and companies from the Stoxx 600 index, associating the 600 largest European listed companies, shows that the data reported by companies listed on the Warsaw Stock Exchange do not differ significantly from those of their European counterparts. The average compliant revenue is at the same level of 8%, and the average reported CapEx is 2 p.p. higher (at 14%) among Stoxx 600 companies. However, the average values of the ratios differ much more in individual sectors, sometimes in favor of companies listed on the Warsaw Stock Exchange. On the other hand, the average Taxonomy-compliant CapEx of European energy companies is as much as 9 p.p. higher than in the case of companies listed on the Warsaw Stock Exchange, which suggests a greater involvement of these companies in the energy transformation.

1. General information about the EU Taxonomy 

1.1. What is the EU Taxonomy?

Initiatives undertaken by the European Union in the area of sustainable finance are aimed at supporting environmentally sustainable business activities and encouraging investors to invest funds in those types of actions. The main problem in this context is to define what can be considered an environmentally sustainable activity. The establishment of strict and uniform criteria for “green” activities allows to reduce the risk of the so-called greenwashing for investors who can be sure that a given investment actually has a positive environmental impact if it complies with these criteria. 

Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investments, colloquially referred to as the Taxonomy, is implementing this goal. Taxonomy establishes a single, consistent EU-wide classification of “green” (environmentally sustainable) economic activities. It supports activities that have a positive impact in relation to one of the goals listed in art. 9 of the Environmental Regulation. These are:

1. climate change mitigation;
2. climate change adaptation; 
3. transition to a circular economy; 
4. pollution prevention and control; 
5. zapobieganie zanieczyszczeniu i jego kontrola; 
6. protection and restoration of biodiversity and ecosystems.

At present, assessment criteria have been adopted only for the compliance of activities with the first two objectives (climate change mitigation and adaptation to climate change).

What activities are considered environmentally sustainable under the Taxonomy? Environmentally sustainable activity (in accordance with the Taxonomy) must meet four criteria:

• make a significant contribution to the implementation of one of the environmental objectives indicated above
• do not cause serious damage to other environmental goals (Do No Significant Harm principle)
• meet the technical qualification criteria set out by the European Commission in the delegated acts to the Taxonomy, which specify in detail the conditions for recognizing the activity as compliant (e.g. with regard to the level of greenhouse gas emissions generated in the course of activity or waste generated)
• be carried out in line with minimum social guarantees.

The EU Taxonomy does not prohibit – nor does it require – the financing of certain types of activities. However, it is a tool that, by regulating the disclosure of non-financial companies, can support investors and companies in making informed decisions. In addition, it is important to remember that the fact that an activity does not comply with the Taxonomy does not mean that it is environmentally harmful – the Taxonomy is the “gold standard” of environmental ambition for the activities covered, which communicates the application of the highest environmental standards, and not a tool to determine the negative impact of a given activity.

1.2. Which companies are required to report Taxonomy information?

Companies covered by the non-financial reporting obligation are obliged to report information on the compliance of their activities with the Taxonomy. Currently, these are mainly large financial institutions and listed companies that are obliged to publish non-financial information on the basis of accounting regulations implementing the EU Non-Financial Reporting Directive (the so-called NFRD Directive). Such an obligation applies to the so-called public interest entities, i.e. large listed companies and financial institutions. In our analysis, we focused on listed companies – currently about 140 of such companies are subject to the non-financial reporting obligation.

The scope of entities obliged to report non-financial will soon expand significantly, however, as a result of the introduction of the new EU Financial Reporting Directive – the Corporate Sustainability Reporting Directive (CSRD). The extended scope of entities covered by this obligation also includes large unlisted companies and all listed companies (except micro-enterprises). In Poland, about 3 thousand entities will be covered.

An overview list of companies covered by the non-financial reporting obligation under the CSRD can be found in our database esg.instrat.pl.

1.3. What information must companies covered by the Taxonomy publish?

Companies report two basic types of information about their activities: information about activities that qualify for the Taxonomy and about activities that comply with the Taxonomy.

• Eligible activities are activities that are recognized by the Taxonomy Regulation (and delegated acts) as having an impact on climate and therefore are subject to Taxonomy assessment.
• Taxonomy-compliant activities are activities that meet the Taxonomy (and delegated acts) criteria for environmentally sustainable activities.

On the other hand, financial enterprises are required to publish information on their exposure (through financing) to activities that are eligible and compliant with the Taxonomy, in terms of turnover and capital expenditures of their borrowers. However, in the disclosures for 2022, financial institutions were required to disclose only exposure to activities qualifying for the Taxonomy.

The degree of eligibility and compliance of companies’ activities with the Taxonomy is measured by three key performance indicators (KPIs):

• turnover, 
• capital expenditures (CapEx), 
• operating expenditures (OpEx)

To simplify, the turnover compliance indicator informs about the extent to which the company’s current activities are compliant with the Taxonomy, and the CapEx indicator informs about the extent to which the company’s investments, which may affect its “greenness” in the future, are compliant with the Taxonomy.

For each of the three indicators, companies must disclose the ratio of the value of the indicator eligible or compliant with the Taxonomy to the total value of the indicator in their business (i.e. the ratio of revenues eligible for the Taxonomy to the total revenue of the company and the ratio of revenues compliant with the Taxonomy to total revenue).

In 2022, companies within the scope of the Taxonomy published information about the activities that are eligible for reporting under the Taxonomy. In 2023, as part of the reports for 2022, companies covered by the Taxonomy had to report compliance with the Taxonomy for the first time, and our analysis focuses on these results.

It should be noted however that the companies themselves determine and disclose the degree of compliance of their activities with the Taxonomy. Their findings are also not subject to external verification – for the time being, as the CSRD Directive is to introduce changes in this respect. Also as part of this study, we did not verify in any way whether the information disclosed by the companies is true and correct.

2. Scope of the study

2.1. Number of companies covered by the study

As part of the analysis, we analysed the reports for 2022. 193 companies listed on the WSE, guided by the size of the companies as measured by capitalisation (in this respect, we analysed the disclosures of companies from the main WIG indices – WIG20, mWIG40 and sWIG80) and whether the companies had made non-financial disclosures in previous years. As a result, we identified 122 companies that provided taxonomy disclosures for the year 2022. The information collected was taken from companies’ annual reports or non-financial reports published between 1 January 2023 and 30 June 2023.

The reporting companies were divided into non-financial and financial companies, due to the different information obligations under the Taxonomy for these two groups of companies. The former group included 111 non-financial companies, while the latter category included 11 financial institutions – commercial banks and insurance companies. However, the group of non-financial companies still included a few companies classified in the financial sector that are not engaged in lending and are not financial institutions (e.g. WSEs and debt collection companies).

Furthermore, we identified 20 companies that, despite having published non-financial information reports, did not – in our opinion – include adequate information regarding the Taxonomy in their reports, which prevented them from being included in the sample. In addition, we identified 5 companies that are subject to non-financial reporting obligations, but which, due to a different financial year, have not yet published reports with data on their compliance with the Taxonomy.

2.2. Breakdown of non-financial companies by sector

Non-financial companies covered eight macro market sectors, as classified by the Stock Exchange. These were: chemicals and raw materials, consumer goods, finance (covering companies in capital market, debt and investment activities), trading and services, fuels and energy, industrial production and construction, healthcare and technology. The most numerous sector of the survey was industrial and construction production, which included 40 companies. Data on the size of the sectors included in the survey are presented in Figure 1.

However, the share of sectors in the sample differs when the revenue size of individual companies is taken into account. More than half of the revenue of the entire group for 2022 was accounted for by companies in the Fuels and Energy sector (54%). By contrast, Chemicals and Raw Materials was the second largest revenue sector, accounting for 14% of the entire group’s revenue. The Industrial Manufacturing sector was the most numerous, accounting for only 7% of revenues.

3. Taxonomy disclosures of non-financial companies

3.1. Taxonomy-compliant and Taxonomy-eligible activities

We present Taxonomy-compliant activity by comparing the ratio of Taxonomy-compliant turnover, CapEx and OpEx to the total value of these indicators for the companies studied. In other words, this is therefore the average value of the Taxonomy-compliant indicators weighted by the size of the reported results. At the same time, we present the total value of activities qualifying for the Taxonomy, but not complying with it, for each indicator. The sum of these two values represents the value of activity eligible for the Taxonomy.

Only 5% of the revenues of the surveyed companies come from activities that are in line with the Taxonomy, and 7% are revenues from activities that qualify for the Taxonomy but are not in line with it. This means that WSE companies are not predominantly engaged in climate-relevant activities, and when they are, less than half of such activities meet the criteria of the Taxonomy.

By far the higher values for compliance and eligibility of activities to the Taxonomy are taken by the capital expenditure (CapEx) indicator. This is an indicator that relates to investment and therefore indicates the direction in which the activities of the companies surveyed are heading. From this perspective, it is positive that the CapEx capital expenditure compliance indicator takes on a value twice as high as the Taxonomy turnover compliance indicator. At the same time, as much as two-thirds of the capital expenditures of the surveyed companies were allocated to activities that qualify for the Taxonomy. This means that the vast majority of the capital expenditures of the surveyed companies were allocated in 2022 to activities for which compliance with the Taxonomy can be assessed, but among these expenditures, only one in five PLN was spent in a manner consistent with the EU systematics. The higher eligibility for CapEx may be due to several factors. Firstly, capital expenditures often include investments in fixed assets (purchase of vehicles, machinery or buildings), which are more heavily considered in the Taxonomy due to their more ‘physical’ nature, compared to some of the companies’ core activities (such as trading activities), which do not have obvious climate implications.

The values of compliant and Taxonomy-eligible activities for the operating expenditure indicator are similar to those for revenue. In addition, 15 per cent of reporting companies stated – in line with the possibility envisaged by the Taxonomy Regulation – the general irrelevance of this indicator for their business and thus did not include it in the Taxonomy reporting (for these companies we assumed zero qualifying and compliant OpEx ratios).

In addition to analysing the aggregate values of the indicators for all the companies included in the study, it is also reasonable to look at the simple average values of the indicators achieved by the companies at the individual level, abstracting from their size. Such an analysis, based on simple arithmetic averages, does not take into account, as already pointed out, differences in the size of individual companies, which take into account the aggregate data presented above. However, irrespective of a company’s size, the individual degree of compliance and eligibility of its activities to the Taxonomy (measured by revenue, CapEx and OpEx) can inform the degree of a company’s climate ambition. In other words – simple averages of the reported percentages are also relevant, as it is desirable for any company – regardless of its size – to report the highest possible compliance scores to the Taxonomy.

3.3. Eligible and Taxonomy compliant activities by sector

Below, we show the shares of Taxonomy-compliant (as well as non-compliant but eligible) activity by sector, for each of the three indicators. The indicators for both qualifying and taxonomy-compliant activities vary significantly by sector..

The degree of activity in line with the Taxonomy varies significantly between sectors. Measured by turnover, it is highest for companies in the Industrial Production and Construction & Assembly sectors. where it was 18%. A high percentage was also recorded by the Chemicals and Raw Materials (7%), Fuels and Energy and Technology (5%) sectors. A result above 1% was also recorded by companies in the Trade and Services sector, while it was below this value in the others. It is worth noting, however, that in the case of the Healthcare sector, the total turnover achieved is not covered by the Taxonomy.

For CapEx, the leading sectors are again Industrial Manufacturing and Construction (10%) and Fuels and Energy (13%). A high share of capital expenditure in line with the Taxonomy, compared to all sectors, was also recorded for Healthcare (7%). For the remaining sectors, the percentage was below 5%, and the Financial sector did not report any taxonomy-compliant outlays.

In terms of the compliance rate for operating expenditure, the highest score was recorded by the Chemicals and Raw Materials sector (34%). Good results were also recorded by the Healthcare sector (8%) and Industrial Manufacturing and Construction (6%). The remaining sectors showed a percentage of operating expenditure compliance with the Taxonomy of less than 5%, and the Financial sector was again the only one with no expenditure compliant with the Taxonomy.

As we have done for the values of the main compliance indicators of the Taxonomy for the total companies analysed, we also present below the simple average compliance indicators achieved by the companies in the sector (not taking into account the size of the individual companies’ reported compliant revenues and expenditures).

In the case of average Taxonomy compliant turnover, the highest percentage was recorded by the fuel and energy sector (20.5%). The average compliant values for capital expenditure and operating expenditure were also the highest for this type of activity (48% and 45% respectively). The high values for this sector are most likely due to energy companies’ investments in energy transition activities, affecting a large part of the climate goals described in the Taxonomy. The rest of the sectors showed much lower concordance values for all KPIs – no other sector exceeded 20% concordance of either turnover or CapEx, with only Chemicals and Raw Materials achieving 22% concordance of operating expenditure. We recorded the lowest concordance values for the Finance and Consumer Goods sectors, across every indicator.

3.4 Share of each sector in Taxonomy-compliant turnover, CapEx and OpEx

As part of the sectoral analysis, we also analysed the share of each sector in the analysed sample of companies, measured both by the overall value of the relevant indicators (total turnover, CapEx and OpEx) and by the value for the given indicators achieved from activities in line with the Taxonomy. This makes it possible to determine which sectors participate disproportionately to their share in the analysed group in the revenue from activities in line with the Taxonomy and in the CapEx and OpEx for such activities. 

As can be seen from the above visualisations, in terms of revenue and capital expenditure, the Fuel and Energy sector, due to the size of the companies that comprise it, clearly dominates the sample analysed. Its share of revenues from activities in line with the Taxonomy (51%) is slightly lower than the participation of this sector in the revenues of the companies studied in general (54%). In contrast, in the case of taxonomy-compliant capital expenditure, the fuels sector, with a share of 86%, is over-represented in relation to its share of capital expenditure in general (65%). This type of company, however, reports lower compliant operational expenditure relative to its share of total OpEx.

Of all the sectors, the Industrial Manufacturing and Assembly and Construction sector is the most over-represented in the mix of revenues compliant with the Taxonomy, relative to its participation in the revenues of the surveyed companies in general. Although it accounts for only 7% of the revenues of the surveyed companies, it simultaneously accounts for as much as 24% of the revenues from Taxonomy-compliant activities. The share of the Trade and Services sector, on the other hand, drops from 11% for revenues in general, to only 1% for revenues in line with the Taxonomy.

With regard to capital expenditure, the mix of revenues consistent with the Taxonomy is dominated, as already indicated, by the Energy sector. Industry maintains its share, while less than proportional to their CapEx overall, is the Taxonomy-compliant CapEx of the Trade and Services and Chemicals and Raw Materials sectors.

These relationships can also be seen in the set of companies presented in para. 3.6. the list of companies reporting the highest percentage of compliance with the Taxonomy – in terms of revenue, the industrial sector dominates, while in the list of companies with the highest compliant CapEx, it is energy and industrial companies.

In contrast, the Chemicals and Raw Materials sector records the most disproportionate share of Taxonomy compliant operating expenditure, relative to its share of total operating expenditure. In terms of capital expenditure, by contrast, the Trade and Services sector records a disproportionately low share of compliant expenditure (1%), compared to its overall expenditure (12%).

3.5. Taxonomy compliant activity – comparison of companies from the WSE and the Stoxx 600 Europe index

The study compares the performance of companies from the WSE and the Stoxx 600 Europe index, which groups the largest listed companies in Europe. Data for the index companies was obtained from Bloomberg, which provides taxonomy data for 286 index companies. Due to limitations in data availability, the comparative analysis is only concerned with the average, unweighted ratios reported by the companies and not with the overall values of consensus revenues and expenses.

Between the WSE-listed companies and the Stoxx 600 index, there are no significant differences in terms of KPI compliance, calculated on the basis of arithmetic averages. The companies included in the study, listed on the WSE and in the Stoxx 600 index, achieved the same results in terms of compliance of turnover with the Taxonomy and compliance of operating expenses. Only in terms of compliance of capital expenditure, this percentage among Polish companies was slightly lower. 

WSE companies therefore slightly lag behind their European counterparts in terms of investment activity in line with the Taxonomy. This may be due to several issues. Firstly, the Stoxx 600 index is made up of stocks of the largest European listed companies, among which the energy and industrial sectors are largely over-represented and which, according to the data for the WSE, have an above-average record of compliance with the Taxonomy. In addition, the Stoxx 600 aggregates the largest European companies, which are arguably more climate-conscious than the WSE companies and pay more attention to their own environmental impact.

It should be borne in mind that due to the differences in the composition of the two indices and incomplete data for the Stoxx 600 index, the comparability of the overall average results between the surveyed WSE companies and companies from the European index may be limited. The results for Stoxx 600 index companies may also be unreliable due to the availability of data for only around half of the constituent entities. As an aside, it is worth noting that the data we present for the Stoxx 600 is lower than the publicly available Taxonomy compliance analyses for this index – available e.g. here or in this European Commission document – due to the fact that these analyses exclude companies declaring zero compliance with the Taxonomy from the calculated averages. In our view, there is no justification for this approach and hence we include these companies in the scope of the analysis.

A slightly more meaningful comparison is possible by looking at the average performance by sector in the sample of companies surveyed from the WSE and the Stoxx 600 index, which we present below.

In the sectoral comparison in terms of trading compliance with the Taxonomy, a fairly significant divergence is apparent between WSE companies and the Stoxx 600. For some sectors, the results in both groups are similar. This is the case for the Fuels & Energy, Technology and Industrial & Construction Manufacturing sectors. In the others, the results are much more varied. WSE companies reported significantly higher percentages of trading compliance with the Taxonomy in the Chemicals and Raw Materials, Consumer Goods and Healthcare sectors. In contrast, the percentages were significantly lower than among the Stoxx 600 index companies in the Trade and Services and Finance sectors.

In the case of the Capital Expenditure Taxonomy compliance indicator, the performance of the WSE companies and the Stoxx 600 index was slightly more similar than in the case of the turnover compliance. Strong disparities in favour of the WSE companies were evident in the areas of Chemicals and Raw Materials, Healthcare and Technology. The Stoxx 600 companies, on the other hand, had a much higher ratio in the Finance sectors. Their indices were also noticeably higher in the Fuels and Energy (by as much as 9 percentage points) and Industrial Production and Construction sectors. These differences are significant, as it is the capital expenditures of these two sectors that are key to decarbonisation.

The results of the comparison between WSE and Stoxx 600 companies in the area of compliance of operating expenses with the Taxonomy, are similar to the other indicators. The WSE companies were characterised by significantly better performance in the Chemicals and Raw Materials, Consumer Goods and Healthcare sectors. In contrast, their performance was markedly worse in the Finance sector, while it remained similar in the other sectors.

A comparison of sectoral performance between WSE companies and the Stoxx 600, shows that Polish companies are not significantly outperforming their European competitors.

However, in other sectors (Healthcare, Chemicals and Raw Materials), WSE companies are a step ahead of the European average. One sector in which WSE companies diverge significantly from European companies is Finance. Overall, however, the sectoral comparison is quite favourable for the WSE.

3.6. Companies reporting the highest rates of compliance with the Taxonomy 

Analysis of the companies reporting the highest compliance rates with the Taxonomy also provides interesting information.

With regard to the turnover indicator, the list of 15 companies with activities most in line with the Taxonomy is dominated by construction companies (as many as 5 entities), steel companies (3 entities) and companies from the electrical machinery industry (3 entities).

The company with the highest percentage of compliance, as much as 99%, was Alumetal. The company operates in the chemical and metallurgical sector, specialising in the production of secondary aluminium casting and primary alloys. This activity, which accounts for more than 97% of the group’s total revenue, is fully compliant with the EU Taxonomy, as it has a significant positive impact on aluminium production. In second place in terms of turnover compliance with the Taxonomy, was RES infrastructure contractor ONDE, with a score of 91%. This was followed by rolling stock manufacturer Newag (89% compliance), steel products manufacturer Cognor (75%) and general contractor for investments in the construction industry Erbud (69%). The company closing the top 15 entities with the highest compliance of turnover percentage with the Taxonomy was Polimex Mostostal, an engineering and construction company, with a score of 20%.

It is worth noting the relatively low result of, for example, PKP Cargo (34%). It is the result of, among other things, the use of locomotives based on conventional internal combustion engines, as well as revenues generated from the transport of fossil fuels.

Such a comparison is slightly different for the compliance of capital expenditure with the Taxonomy. Alumetal showed the highest compliance, at the level of as much as 98%. This is because this company allocates capital expenditure to optimising the recycling of aluminium products, as well as to reducing gas and electricity consumption. The same result can be boasted by the energy company ZE PAK. In third place was the energy company Polenergia, with a 97% compliance of capital expenditure with the Taxonomy. Further places were taken by electromagnetic relay manufacturer Relpol (87%), construction company Budimex (75%) and Newag (75%). The list is closed by Apator, a manufacturer of industrial automation equipment and technology, with a result of 36%.

In the comparison of compliance of capital expenditure with the Taxonomy, companies from the energy industry (5 entities) and the electrical machinery industry (4 entities) dominate. It is noteworthy that the performance of the companies in this ranking is significantly higher than in the case of the compatibility of the percentage of turnover with the Taxonomy. This is a result of the nature of these expenditures, which are easier to shape than revenue sources. A large part of the capital expenditures of the above-mentioned companies are allocated to energy transition activities.

The last list we compiled is a ranking of the companies reporting the highest compliance of the percentage of operating expenses with the Taxonomy. This was headed by the already mentioned Alumetal, with a score of 99%. It is followed by companies already mentioned in previous lists – Onde (97% compliance of operating expenses with Taxonomy), Newag (95%), Polenergia (91%), Cognor (86%) and Erbud (86%). The list is closed by the construction company Pekabex, which achieved a score of 32%.

Like the previous list, this one is also dominated by energy companies (five entities) and construction companies (three entities).. 

The authors of the analysis are: Stanisław Stefaniak, Anna Padiasek and Michał Kulbacki.