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The EU taxonomy represents a classification of guidelines that define which economic activities can be considered sustainable. The objective of the EU taxonomy is to promote sustainable economic activity, channel investment against sustainable offerings and prevent 'greenwashing' by establishing precise standards for what can be labeled as sustainable within the EU.

The EU taxonomy already affects financial institutions, publicly traded companies, investment funds, and public authorities. Non-publicly traded companies are not directly bound by the taxonomy, but they can expect that their financial institutions will request data as part of their reporting obligations.

However, starting from the financial year 2025, it will be mandatory for companies to report if they meet at least two of the following three criteria: a balance sheet totaling more than 20 mio. EUR, an annual turnover exceeding 40 mio. EUR, or employing over 250 employees.

The reason for this is that Article 8 (1) specifies that companies subject to reporting requirements under the CSRD are also obliged to report according to the EU taxonomy to indicate the extent of their involvement in environmentally sustainable activities. The company's NACE code will form the basis for this process, and there will also be a requirement to report key performance indicators (KPIs) related to revenue, capital expenditures (CapEx), and operating expenses (OpEx).

Read more about the EU taxonomy here:
https://ec.europa.eu/sustainable-finance-taxonomy/

Find your NACE code here:
https://ec.europa.eu/competition/mergers/cases/index/nace_all.html

From October 1, 2023, it became mandatory for all companies that import the goods listed below to report the nitrogen emissions (CO2) associated with the production of the product.

CBAM aims to reduce the risk of EU companies relocating their production to countries with lower climate and environmental standards, known as 'carbon leakage.' The duty applies to the following raw materials:

CEMENT – IRON/STEEL – ALUMINUM – FERTILIZER – ELECTRICITY AND HYDROGEN

The reporting obligation falls on the importing company, which means that Damstahl's customers do not need to make their own reports, as Damstahl constitutes the importing link in the value chain.

The European Commission will collect data from October 1, 2023, to December 31, 2025, to calculate a forthcoming tax for any additional emissions from non-European products. This tax will come into effect on January 1, 2026, and importers will be required to purchase CO2 certificates through the EU's Emission Trading System (EU ETS) corresponding to the excess emissions. We, therefore, anticipate that it will result in an increased product price for non-European materials from 2026.

Read more about CBAM legislation here:
https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en

The EU has set an ambitious goal: By 2030, CO2 emissions from road transport must be reduced by 30% (compared to 2005). Therefore, the German Government has decided to increase road tolls for trucks on December 1, 2023.

The increase applies to trucks with a total weight exceeding 7.5 tons. The amount of the fee increase depends on the individual vehicle's specifications. Similar to the current road toll rates, the surcharge will be levied as an amount in euro cents per kilometer driven and will be billed as a total fee.

Specifically, the vehicle's CO2 emission class, weight, number of axles, and pollution class are crucial factors determining the amount of the surcharge.

Starting from July 1, 2024, road tolls will also apply to trucks with a total weight as low as 3.5 tons. In addition, the following countries are working on similar legal changes: Austria, Czech Republic, Denmark, Hungary, and Switzerland.

Read more about the CO2 charges for trucks in Germany:
https://www.dkv-mobility.com/en/toll/toll-services-by-country/germany/co2-toll/

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2023%3A88%3AFIN&qid=1676495219269

Corporate Sustainability Reporting Directive & European Sustainability Reporting Standards

CSRD and the associated reporting standards (ESRS) establish a new framework for sustainability reporting for companies. Overall, CSRD aims to enhance sustainability reporting for companies and promote a more responsible and transparent approach to ESG information in the EU. The accompanying ESRS standards constitute a 'checklist' of topics that are relevant to consider when assessing which issues are material for your company to report on. Therefore, your CSRD reporting should start with a thorough (double) materiality analysis, as it will guide you on which of the many data points in the 10 standards (E1-5, S1-4, G1) you are required to report on.

CSRD will gradually come into effect for different companies between 2024 and 2028:

• From January 1, 2024, and thus reporting in 2025: Companies of public interest (mainly publicly traded companies, banks, and insurance companies) with over 500 full-time employees.
  
  
• From January 1, 2025, and reporting in 2026: Other large companies with more than 250 full-time employees and/or with a net turnover exceeding 40 million EUR and/or a balance sheet total of over 20 million EUR. Companies under 750 employees are subject to less stringent reporting requirements in first and second year of reporting.
  
  
• From January 1, 2026, and reporting in 2027, publicly traded SMEs will be covered. Especially for SMEs, they can, however, choose to postpone reporting until 2028.

Read more about CSRD here:https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/deloitte-nl-sustainability-eu-tax-csrd-timeline-june-2022.pdf

Read more about ESRS here:
https://efrag.org/lab6

The EU's PPWD directive aims to minimize the negative environmental impact of packaging and promote a circular economy by regulating packaging materials, promoting reuse and recyclability, and establishing responsible management mechanisms for packaging waste.

Specifically, this means that all packaging must be recyclable or reusable in an economically sustainable manner by 2030.

Before that, there are several interim targets to be met by December 31, 2025, with an average target of 65% recycled materials. Subsequently, further improvement requirements must be implemented by the end of 2030 to meet the European Commission's goal of an average recycling rate of 70%.

By the end of 2024, each EU country must establish producer responsibility schemes for all packaging covered by the directive. This will have an impact on you as a packaging user in the future.

Read more about PPWD here:
https://environment.ec.europa.eu/topics/waste-and-recycling/packaging-waste_en

(under development)

The Ecodesign for Sustainable Products Regulation is an EU legislation initiative aimed at promoting environmentally friendly product design to reduce environmental impact throughout the product's lifecycle.

The directive proposes the introduction of digital product passports for all regulated products and labeling requirements that disclose the product's environmental impacts.

Read more about ESPR here:
https://ecochain.com/blog/espr-2023-overview/

'Fit for 55' is the European Commission's proposal for a series of new initiatives that, when combined, can achieve a 55% reduction in greenhouse gas emissions by 2030 compared to the 1990 levels.

The above legislation is all part of the measures designed to help reach the goal of 55%, which has been put in place to meet the targets set in the Paris Agreement.

The aim is to make the EU 'climate-neutral' by 2050 and is known as "The European Green Deal."

Read more about 'Fit for 55' here:
https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en

As many companies today market themselves as 'green,' in 2020, the European Commission initiated a study that revealed that 53.3% of the assessed environmental claims in the EU were unclear, inaccurate, or unsubstantiated.

The proposed directive aims to establish an EU framework for the substantiation of 'Green Claims.' The proposal includes guidelines to ensure that environmental claims are accompanied by additional information about the company. Moreover, it obliges companies to produce documentation to support the environmental claims they make and includes precise requirements for what this documentation should entail.

If the directive proposal is approved in its current form, it requires member states to implement appropriate sanctions for violations of the "green claims" rules. The sanctions should be equitable and might involve fines that effectively eliminate the financial benefits gained through the violation.

Read more about the European Green Claims Directive here:
https://www.europarl.europa.eu/RegData/etudes/BRIE/2023/753958/EPRS_BRI(2023)753958_EN.pdf