Energy Company - Climate Change - Opportunities and Taxonomy
E is an energy company generating electricity predominantly from renewable sources (wind, solar, hydroelectric) and partially from natural gas. In 2018-2020, E seeks to raise funds in the capital market and issues Green Bonds that are Taxonomy-aligned. In its 2020 Non-Financial report, E provides data on Taxonomy-aligned:
- investments in plants fuelled by renewable sources (taxonomy-aligned CapEx) providing information on the company’s strategy for improvement;
- earnings from renewable energy generation (taxonomy-aligned turnover) informing on E’s current impact and performance.
The data is provided broken down by source (photovoltaic, hydro, wind) for the past three years.
Space for improvement:
- To align the description of sustainable activities with the requirements pursuant to the EU Taxonomy Regulation, E should:
- break down the information according to the:
- objective and category of impact (climate change mitigation, climate change adaptation);
- NACE code of the activity;
- confirm the compliance with Taxonomy’s technical screening criteria, including:
- metrics and thresholds for significant contribution to the objective in accordance with legislation and standards:
- With regards to E’s business model (solar, wind and hydro electricity generation), there is a technology-agnostic emissions threshold of 100g CO2e / kWh for the electricity generation with respect to the climate change mitigation objective.
- The report should further confirm compliance with additional criteria. In case of hydropower for example:
- the electricity generation facility is a run-of-river plant and does not have an artificial reservoir;
- the power density of the electricity generation facility is above 5 W/m2;
- more stringent GHG intensity limits applicable to hydropower.
- do no significant harm to other environmental objectives, including climate change adaptation by means of assessment of exposure to physical risks, and in case of hydropower, the compliance with the prescribed safeguards to ensure sustainable use of water and marine resources and protection of biodiversity (for more information see chapter 4.5 Electricity generation from hydropower in Annex 1 to the EU Taxonomy Regulation, p. 77-80).
- ensuring minimum safeguards (UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises) by description of the sustainability due diligence process, identified salient issues and prevention and mitigation measures taken.
- reporting on the economic indicators as suggested in ESMA’s Final Report - Advice on Article 8 of the Taxonomy Regulation (p. 163-166) and narrative should contain:
- details on accounting policy
- and commentary on changes and development.
Data on renewable investments and earnings is included in ERG’s Sustainability Report 2019, available here: https://www.erg.eu/c/document_library/get_file?uuid=93608a11-efcf-4ca6-2607-12e2a84fb59e&groupId=10181&version=1.0