The European green taxonomy
Towards sustainable finance
The European Green Taxonomy is a classification of environmentally sustainable economic activities. Its aim is to focus investments on so-called “green” activities.
Definition
Carbon neutrality by 2050
As part of the European Green Deal, the EU has committed to achieving carbon neutrality by 2050. A bold target requiring considerable efforts. The EU taxonomy classifies economic activities with a positive environmental impact in order to encourage private investors to choose these sustainable activities, thereby supporting the transition towards a low-carbon economy.
The European Green Taxonomy focuses on six environmental objectives
To be considered “green”, an activity must make a substantial contribution to at least one of these objectives, while doing no significant harm (DNSH) to the other five and complying with minimum safeguards on social issues and human rights.
Climate change mitigation
Adaptation to climate change
Sustainable use and protection of water and marine resources
Transition to a circular economy
Pollution prevention
Protection and restoration of biodiversity and ecosystems
Impact for Covivio
Covivio activities impacted by EU taxonomy
Covivio is concerned by eight of the activities identified for the application of the taxonomy in terms of its mitigation and adaptation objectives, the only objectives to have been defined by the standards so far.
Those eight activities are:
- construction of new buildings (activity 7.1),
- renovation of existing buildings (activity 7.2),
- installation, maintenance and repair of:
- energy efficiency equipment (activity 7.3),
- charging stations for electric vehicles (activity 7.4),
- instruments and devices for controlling energy performance (activity 7.5),
- renewable energy technologies (activity 7.6),
- acquisition and ownership of buildings (activity 7.7),
- specialised services related to the energy performance of buildings (activity 9.3).
The publication of the Delegated Acts relating to the other four environmental objectives introduced new activities relevant to Covivio’s activity:
- Construction of new buildings* – Circular economy 3.1
- Renovation of existing buildings* – Circular economy 3.2
- Demolition and dismantling of buildings and other structures – Circular economy
- Hotels, tourist accommodation, campsites and similar accommodation – Biodiversity 2.1
* Activities already covered by the climate objectives
Focus on the hotel business as part of the objective of protecting and restoring biodiversity and ecosystems
The Delegated Act on the other four environmental objectives, including the protection of biodiversity, was published in June 2023. It introduces the hotel business within the scope of the taxonomy. For Covivio, this means that the revenue generated by its hotels in operation is eligible for the taxonomy. The alignment calculation, required for the 2024 fiscal year, will require compliance with five technical conditions, which themselves include detailed sub‑criteria:
- contribution to conservation or restoration activities;
- action plan to contribute to nature conservation;
- sustainable supply chain and environmental management system;
- minimum requirements to qualify the performance;
- audit of the above information
In 2023, Covivio initiated the first analysis of these criteria in order to gather information on its Hotel Operating properties from 2024 and be in a position to publish the first information in 2025.
Eligible revenues
Nearly all of Covivio’s eligible revenues are generated by the building acquisition and ownership activity (7.7). Revenues generated by this activity can only be considered green under the climate change mitigation objective.
Substantial contribution criteria to qualify as green revenues under activity 7.7
| 1 Top 15% – kWhpe/m2 | 2 Energy Performance Certificate | 3 Compliance with “Nearly Zero Energy Building” target – 10% reduction guideline for properties built after 31/12/2020 |
|---|---|---|
| Thresholds defined by different entities (OID sustainable real estate observatory in France, Deepki elsewhere) | A rating (B rating accepted where study shows that A+B < 15%) | Country-specific thresholds |
Furthermore, buildings with equipment of over 290 kW must contain a BMS (building management system). A life cycle analysis (LCA) and thermal analysis must be carried out for new non-residential buildings during the construction phase.
Green Capex
Unlike revenues, Capex can be considered “green” in terms of either climate change mitigation or adaptation.
Green Capex definition criteria
| Green Capex “by nature” | Acquisition and construction (all asset-related Capex, regardless of its nature, including developments | Renovation of existing buildings (additional DNSH principles: water, pollution, circular economy) | |
|---|---|---|---|
| Mitigation | Installation, maintenance and repair of energy efficiency equipment (in compliance with best practices), charging stations, for electric vehicles, energy performance management devices or renewable energy technologies | Top 15% in terms of energy performance or DPE class A (B tolerated if a study shows that A+B <15%) NZEB -10% for new buildings (equivalent to RE2020 in France) | 30% increase in energy performance |
| Adaptation | Installation, maintenance and repair of energy efficiency equipment (in compliance with best practices), charging stations, for electric vehicles, energy performance management devices or renewable energy technologies | Top 30% ranking or EPC C rating NZEB for new buildings | Compliance with thermal regulations for renovations |
Covivio indicators
at 31/12/2023
New Covivio indicators
Aware of the yearly requirement to publish the “green” portion of our revenues (turnover) and Capex, we have tailored our indicators to the EU taxonomy.
The taxonomy requires the use of 100% gross revenue, calculated in accordance with IFRS. However, in order to allow for more comparable monitoring from year to year and to get closer to the operational reality, Covivio has also established an operational definition of taxonomy indicators. This definition is based this year solely on the climate objectives before the full application of the four environmental objectives planned for next year. It is calculated on net rental income Group Share and EBITDA for the Flex Office (Wellio) activity and hotels under management. The calculation of the alignment rate according to this operational definition uses only eligible activities in the denominator. Moreover, given that only the eligibility calculation is required in 2023 for the other four environmental objectives, this operational definition only takes into account the climate objectives.
Since only a small proportion of the Group’s total Opex falls under the taxonomy scope (less than 10%), this item is considered non-material.
of revenues eligible
of revenues aligned under mitigation objective (35.6% based on operational definition)
of Capex aligned
