2.4. European taxonomy for environmentally sustainable economic activities

According to the environmental taxonomy criteria of the European Union, around 87% of Viscofan's business volume is not eligible under the European taxonomy as it does not have a significant impact on the six environmental objectives.

The activity of cogeneration of heat/cold and electricity based on natural gas is eligible for the objectives of adaptation to and mitigation of climate change and the activity of manufacturing casings, films and bags obtained through the treatment of plastic polymers is eligible for the objective of transition to a circular economy as the manufacture of plastic containers.

In the case of cogeneration, the technical alignment requirements require further development to facilitate the replacement of fossil fuel in line with the pioneering decarbonisation work that the Group is carrying out in Spain.

Regarding casings, films and bags obtained through the treatment of plastic polymers, based on the preliminary analysis carried out, the value chain of this activity has not yet fully progressed to meet the technical alignment criteria established in the regulations, towards which Viscofan is working, particularly the development and promotion of casings with a percentage of recycled material and materials of natural origin.

Foundation

Regulatory evolution

In its notification dated 8 March 2018, the European Commission presented its "Action Plan: Financing Sustainable Growth", which marks the beginning of an ambitious and comprehensive strategy. The objective is for finance to play a fundamental role in acting as an engine to move towards an economy that ensures compliance with the objectives of the Paris Agreement and the 2030 Agenda of the European Union (EU) for Sustainable Development.

In this context, the set of proposed measures defines ten specific actions, with the main focus on redirecting capital flows towards sustainable investments. As a result of the first of these actions, the Taxonomy Regulation was promulgated, specifically Regulation (EU) 2020/852. This regulation aims to establish a classification system that, based on objective criteria, determines which economic activities are considered sustainable.

The Taxonomy Regulations establishes six environmental objectives:

• Climate change mitigation
• Climate change adaptation
• The sustainable use and protection of water and marine resources
• The transition to a circular economy
• Pollution prevention and control
• The protection and restoration of biodiversity and the ecosystems

This regulation has been modified gradually over several years to include the technical selection criteria for the 6 objectives.

One, on 4 June 2021, the Delegated Regulation (EU) 2021/2139 was published on sustainable activities for the objectives to mitigate and adapt to climate change. Therefore, technical selection criteria were established to determine the conditions in which it is considered that an economic activity substantially contributes to these two objectives, and to determine if such economic activity does not cause significant harm to any other environmental objectives.

On 6 July 2021, the Commission adopted the Delegated Regulation (EU) 2021/2178, completing article 8 of the Taxonomy Regulation. This delegated act specifies the content, methodology and presentation of the information that must be disclosed to the financial and non-financial companies in relation to the proportion of environmentally sustainable economic activities with regard to its commercial, investment or lending activities.

On 9 March 2022, the European Commission published Delegated Regulation 2022/1214 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards public disclosure of specific information on these economic activities.

On 27 June 2023, the European Commission adopted Delegated Regulation (EU) 2023/2486, which completes Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical selection criteria to determine in what conditions an economic activity will be considered to contribute substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to the prevention and control of pollution, or to the protection and recovery of biodiversity and ecosystems, and to determine whether such economic activity does not cause significant harm to any of the other environmental objectives. It also introduces amendments to Commission Delegated Regulation (EU) 2021/2178.

In addition, on 27 June 2023, the Commission adopted Delegated Regulation (EU) 2023/2485 amending Delegated Regulation (EU) 2021/2139 which established additional technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives.

Activity classification bases

In order to determine that an activity is "environmentally sustainable", it is necessary to start from the distinction established by the Regulation between two types of activities:

• Eligible activities: those that have a significant impact on the achievement of any of the six environmental objectives set out in the Regulation, irrespective of whether that economic activity meets any or all of the technical selection criteria set out in those delegated acts.
• Aligned activities: Those that have a significant impact on the achievement of any of the six environmental objectives set out in the regulation and in addition:
• Does not cause any detriment to the other environmental objectives set out in the Regulation.
• It complies with technical selection criteria established by the Commission.
• It is carried out in accordance with the minimum guarantees set out in Article 18 of the Regulation.

Reporting obligations for the 2024 financial year

In accordance with the regulations in force at the date of preparation of this management report, Viscofan's obligations with respect to the taxonomy are the reporting of eligible and ineligible activities and whether they are aligned with the taxonomy for the six environmental objectives

Analysis of implications for Viscofan

Analysis of eligibility with respect to the 6 environmental objectives

The Viscofan Group has conducted an analysis to identify the eligibility of the Group's activities with respect to the six environmental objectives:

The Traditional Business division, which represents 83% of the Viscofan Group's business volume (see note 19.1 of the consolidated report), includes the manufacture and distribution of cellulose, fibrous and collagen casings for sausages and other applications. This activity has not been identified by the European Commission as having a significant impact on any of the six environmental objectives, and, therefore, they are not eligible activities that are included in the annexes to the regulations described above.

The New Business division represents 12% of the Viscofan Group's business volume and encompasses several activities. Of these, the activity of manufacturing casings, films and bags obtained through the treatment of plastic polymers is included as an eligible activity in the objective of transition to a circular economy as the manufacturing of plastic containers. The rest of the division's activities are not eligible according to the taxonomy or are of little relevance.

Energy sales account for 5% of the Viscofan Group's business volume. They include the cogeneration activity, which in the Viscofan Group consists of the sale to third parties of the electricity that the Group does not use in the production process of its main activity. It is included in Annexes 1 and 2 of the Regulation as an eligible activity with respect to the objectives of climate change mitigation and climate change adaptation. The rest of the energy sales correspond to income from the sale of electricity transformed at the Zacapu facilities (Mexico), an activity that is not eligible according to the taxonomy.

With the exception of those detailed above, none of Viscofan's economic activities have been identified as directly linked to the specific activities related to the six environmental objectives. In certain complementary or support operations carried out in the production plants of the main activity, such as water or waste treatment, the corresponding analysis has not been carried out as they are not business activities that generate income, and their turnover indicator is null. Also, the investments and operating expenses that correspond to these cross-cutting activities are, in some cases, included in the corresponding items for the facilities of the main activity. There is not sufficient detail as they are integrated into general items and there is not the evidence needed to assign them to specific objectives and be classified as eligible.

Alignment analysis of environmental objectives

Cogeneration

Viscofan has carried out alignment analysis of the cogeneration activity based on the provisions of Annex I of the Regulation, which includes the criteria that this activity must meet in order to be considered as making a substantial contribution to climate change mitigation.

In this regard, the technical criteria for selection of substantial contribution set out in section 4.30 (High efficiency cogeneration of heat/cold and electricity from gaseous fossil fuels) of this Annex set a minimum level of greenhouse gas emissions for a cogeneration activity to be aligned that is technically impossible to achieve with the use of 100% fossil fuel, requiring the blending of non-fossil fuels and the development of new technologies that would allow such consumption.

In this respect, while striving for the decarbonisation of its processes, Viscofan is being a pioneer, has cogeneration engines with the capacity to use green hydrogen as fuel, and has successfully completed tests using this renewable energy source. Although a regular continuous supply of green hydrogen is not currently available, Viscofan is prepared for a rapid transition when such a supply becomes available.

Manufacture of casings, films and bags through the treatment of plastic polymers

Viscofan has carried out alignment analysis of this activity based on the provisions of Annex II of the Regulation, which includes the criteria that this activity must meet in order to be considered as making a substantial contribution to the transition to a circular economy.

Based on this analysis, the activity of manufacturing casings, films and bags through the treatment of plastic polymers does not meet the established technical criteria of circularity and reuse.

However, Viscofan, within its objective of promoting a circular economy, has developed the eFAN casing, which contains up to 95% recycled or bio-based plastic material. Current sales of this product are low, but Viscofan is seeking to increase their importance through commercial promotion and by improving supply sources. In addition, the Group's main plastic extrusion and converting centres are ISCC PLUS certified, a sustainability certification programme for bio-based and circular (recycled) raw materials.

Calculation of indicators

The main key performance indicators have been calculated in accordance with the EU Commission Delegated Regulation, which complements Regulation (EU) 2020/852 of the European Parliament and of the Council. This regulation details the content and presentation of the information that must be disclosed by companies subject to articles 19 bis or 29 bis of Directive 2013/34/EU in relation to sustainable economic activities from an environmental perspective. It specifies the method for complying with the obligation to disclose information about the presentation of data related to economically sustainable activities from an environmental point of view.

Calculation of the key performance indicator relating to turnover, and change

For the calculation of the indicator, the accounts required by the Regulation have been identified in the denominator, which are 100% of the turnover recorded under the heading "net turnover" and which is detailed in the consolidated financial statements of the Viscofan Group in accordance with IFRS-EU (see note 19.1 of the consolidated financial statements).

For the calculation of the numerator, the amount of sales and service provision of the eligible activities has been used.

Calculation of the key performance indicator for capital expenditure (CapEx)

For the calculation of the CapEx indicator, the denominator includes the total investments in intangible fixed assets, investments in property, plant and equipment and investments in assets for rights of use of the Viscofan Group, considered before depreciation, amortization and possible new valuations, including those resulting from revaluations and impairments, corresponding to the relevant year, and excluding changes in fair value. The denominator also includes additions to tangible and intangible assets resulting from business combinations. See notes 5, 6 and 7 of the consolidated financial statements.

For the numerator, projects carried out during the year that can be considered as eligible activities for the CapEx indicator as indicated in Article 8 of the Regulation are taken into account.

Calculation of the key performance indicator for operating expenses (OpEx)

To calculate the OpEx indicator, the Viscofan Group's accounting accounts for research and development expenses, building renovation measures, short-term leasing expenses and maintenance and repairs or expenses to ensure the proper functioning of the assets have been identified. The sum of these accounts is the denominator.

For the numerator, the breakdown of the accounts by Cost Centre has been extracted by analysing the nature of the expenditure in order to identify whether it is associated with an eligible activity as indicated in Article 8 of the Regulation.

Main changes in the current year compared to the previous year

The turnover of eligible and non-aligned activities amounted to €152.4 million in 2024 (12.7% of the Group's total turnover) and corresponds to the sales of cogeneration electricity in Spain and the sales of casings, films and bags through the treatment of plastic polymers. They are lower than in 2023 (15.4%) due to lower revenues from the sale of cogeneration electricity in Spain in a context of lower electricity prices in the Spanish electricity market and lower electricity production at the plant, and also due to the decrease in sales of plastic casings. In this market, the reduction in raw material costs is rapidly being passed on to market prices. The denominator figure, the total turnover of the Viscofan Group, stands at €1,204.0 million (see explanation of the variation in the analysis of the financial evolution of the consolidated management report).

The CapEx of eligible and non-aligned activities stands at €11.3 million (14.6% of the Group's total CapEx) and corresponds mainly to investments in the manufacturing of casings, films and bags through the treatment of plastic polymers in different Group production plants and, to a lesser extent, to the investment in the cogeneration plant in Cáseda (Spain). The indicator goes up compared to the previous year (9.2%) due to the increase in capacity of one of the families of plastic products, as well as investments in optimisation of cogeneration engines at the Cáseda plant (Spain).

The OpEx of eligible and non-aligned activities is €3.9 million euros (10.0% of the Group's total OpEx) compared to 11.2% in the previous year due to a greater relevance of OpEx in other non-eligible activities.

Economic indicators

This section includes the indicators by economic activity in relation to their eligibility and alignment with the Taxonomy of Sustainable Finance. They have been presented following the templates included in Commission Delegated Regulation (EU) 2021/2178, of 6 July 2021, modified by Commission Delegated Regulation (EU) 2023/2486, of 27 June 2023:

Turnover

Legend: Y: YES; N:No; EL: Eligible; N/EL: Not eligible; F: Facilitator; T; Transition CCM: Climate change mitigation; CE: Circular economy

CapEx. Investments in intangible assets, property, plant and equipment and right-of-use assets

OpEx

Summary, scope, eligibility and adjustment by environmental objective
	Proportion of turnover/ total turnover			CapEx/Total CapEx ratio			OpEx/Total OpEx ratio
	that complies with the taxonomy by objective	eligible according to the taxonomy by objective		that complies with the taxonomy by objective	eligible according to the taxonomy by objective		that complies with the taxonomy by objective	eligible according to the taxonomy by objective
CCM	-%	4.3%		-%	2.8%		-%	5.6%
CCA	n.a.	n.a.		n.a.	n.a.		n.a.	n.a.
WTR	n.a.	n.a.		n.a.	n.a.		n.a.	n.a.
CE	-%	8.4%		-%	11.7%		-%	4.4%
PPC	n.a.	n.a.		n.a.	n.a.		n.a.	n.a.
BIO	n.a.	n.a.		n.a.	n.a.		n.a.	n.a.

Leyend: CCM: Climate change mitigation; CCA: Climate change adaptation; WTR: Water and marine resources; CE: Circular economy; PPC: Pollution prevention and control; BIO: Biodiversity and ecosystems.

Information about activities related to fossil gas

This information responds to the reporting requirements of Delegated Regulation (EU) 2022/1214 of 9 March 2022 for the key performance indicators applicable to activities related to fossil gas. In particular for Viscofan. the cogeneration activity referred to in section 4.30 of Annexes I and II of Delegated Regulation (EU) 2021/2139. Viscofan has no activities related to nuclear energy.

	Nuclear-related activities	Revenue	Capex	Opex
1	The company conducts, finances or has exposures to the research, development, demonstration and deployment of innovative power generation facilities that produce energy from nuclear processes with minimal fuel cycle waste.	No	No	No
2	The company conducts, finances or has exposures to the construction and safe operation of new nuclear facilities to produce electricity or process heat, including for district heating purposes or industrial processes such as hydrogen production, as well as their safety improvements, using the best available technologies.	No	No	No
3	The company conducts, finances or has exposures to the safe operation of existing nuclear facilities that produce electricity or process heat, including for district heating purposes or industrial processes such as the production of hydrogen from nuclear energy, as well as their safety improvements.	No	No	No
	Fossil gas activities	Revenue	Capex	Opex
4	The company carries out, finances or has exposures to the construction or operation of electricity generation facilities that produce electricity from gaseous fossil fuels.	No	No	No
5	The company carries out, finances or has exposures to the construction, renovation and operation of combined heat/cold and power generation facilities using gaseous fossil fuels.	Yes	Yes	Yes
6	The company carries out, finances or has exposures to the construction, renovation and operation of heat generation facilities producing heat/cooling from gaseous fossil fuels.	No	No	No