EU Taxonomy

The EU Taxonomy Regulation is a key element of the European Commission’s action plan to redirect capital flows towards a more sustainable economy. As a classification system for environmentally sustainable economic activities, the EU Taxonomy represents an important step towards achieving carbon neutrality by 2050 in line with the EU’s objectives. We report below on the following environmental objectives:

Climate-related environmental objectives:

1) Climate change mitigation

2) Climate change adaptation

Non-climate-related environmental objectives:

1) Sustainable use and protection of water and marine resources

2) Transition to a circular economy

3) Pollution prevention and control

4) Protection and restoration of biodiversity and ecosystems

In the 2024 reporting year, NORMA Group’s economic activities are examined and reported on in respect of their taxonomy eligibility and taxonomy conformity (“alignment”) regarding to the climate-related and non-climate-related environmental objectives.

Taxonomy eligibility is met if a company’s economic activities are described in the Climate Delegated Act or the Environmental Delegated Act. An economic activity is also considered taxonomy-aligned if it makes a substantial contribution to at least one of the climate-related and non-climate-related environmental objectives, complies with minimum social safeguards such as human rights and does not significantly harm the other climate-related and non-climate-related environmental objectives (“do no significant harm”). Economic activities that are not covered by the EU Taxonomy and are therefore not relevant according to the EU Taxonomy are identified in the delegated acts as generally non-taxonomy-eligible.

Based on the procedure established in the 2023 reporting year for identifying NORMA Group’s taxonomy eligible and taxonmy aligned economic activities, the following economic activities were identified in the 2024 reporting year, and the key financial figures were calculated in accordance with the requirements of the EU Taxonomy:

Taxonomy-eligible economic activities of NORMA Group

The following sections present the identified and taxonomy eligible economic activities of NORMA Group.

Climate-related environmental objectives:

NORMA Group has identified the following economic activities as defined in Annex I of the Delegated Act of the EU Taxonomy (EU 2021/2139) as climate-related environmental objectives. The “Climate change mitigation” objective is relevant for NORMA Group; the requirements of the “Climate change adaptation” objective are not met.

Economic activity 3.18 Manufacture of automotive and mobility components

Economic activity 3.18 refers, among other things, to the “Manufacture of automotive and mobility components.” NORMA Group’s activities in the manufacture of electromobility products (connectors, dry brake valves and flex systems) meet this activity description. Certain products can only be installed and used in electric vehicles. NORMA Group’s products are designed to mitigate climate change through their use in electric vehicles and the associated zero-emission automotive and mobility systems and components. Overall, the manufacturing processes thus correspond to economic activity 3.18 described in Annex 1 of the Delegated Act of the EU Taxonomy (2021/2139) in the version adopted on November 21, 2023. The activity is considered to be a separate business activity. Taxonomy-eligible turnover; CapEx and OpEx are reported in this regard.

Economic activity 5.1 Construction, extension and operation of water collection, treatment and supply systems

Economic activity 5.1 is defined by the EU as: “Construction, extension and operation of water collection, treatment and supply systems.” In the Water Management product area, NORMA Group manufactures systems that are used to collect and distribute water, and in some cases also to treat it. The “Drip Irrigation” product area comprises solutions for efficient irrigation and the “Flow Management” product area includes a variety of valves and couplings for a wide range of irrigation and wastewater applications. In both areas, the aim is to find joining solutions for treating and draining wastewater. Overall, the manufacturing processes thus correspond to economic activity 5.1 described in Annex 1 of the Delegated Act of the EU Taxonomy (2021/2139). The activity is considered to be a separate business activity. Taxonomy-eligible turnover, CapEx and OpEx are reported in this regard.

Economic activity 6.5 Transport by motorbikes, passenger cars and light commercial vehicles

Economic activity 6.5 is defined by the EU as: “The purchase, financing, hiring, leasing and operation of vehicles of categories M1, N1, both covered by Regulation (EC) No 715/2007 of the European Parliament and of the Council, or L (two- and three-wheeled vehicles and four-wheeled vehicles).” The leasing of company cars by employees can be assigned to this category. Overall, the activities of NORMA Group thus correspond to economic activity 6.5 described in Annex 1 of the Delegated Act of the EU Taxonomy (2021/2139). This activity is classified as an ancillary activity. Additions to property, plant and equipment, and expenses from short-term leases arise in connection with company car leasing for employees. Taxonomy-eligible CapEx and OpEx are reported in this regard.

Economic activity 7.2 Renovation of existing buildings

Economic activity 7.2 is defined by the EU as: “Construction and civil engineering works or preparation thereof.” NORMA Group fulfills the description of economic activity 7.2 “Renovation of existing buildings” with its renovation work on buildings and can assign itself to the economic activity of Annex 1 of the Delegated Act of the EU Taxonomy (EU 2021/2139) in the reporting year 2023. This activity is classified as an ancillary activity. The taxonomy-eligible CapEx is reported in this regard.

With regard to renovation activities on existing buildings, activity 3.2 of the non-climate-related environmental objective “Sustainable use and protection of water and marine resources” was also taken into consideration and examined. Investment expenditure can be allocated to both activity CCM 7.2 and activity CE 3.2. NORMA sees the more significant contribution in CCM 7.2. When allocating expenditure to the objectives, the amount under both objectives is shown, as required by the EU Commission.

Non-climate-related environmental objectives:

NORMA Group has identified the following economic activities as defined in Annex I of the Delegated Act of the EU Taxonomy (EU 2023/2486) as non-climate-related environmental objectives. The non-climate-related objective “Sustainable use and protection of water and marine resources” is relevant for NORMA Group; the requirements of the other three environmental objectives are not met.

Economic activity 2.3 “Sustainable urban drainage systems (SUDS)”

Economic activity 2.3 “Sustainable urban drainage systems (SUDS)” is defined by the EU as: “Construction, extension, operation and renewal of urban drainage systems facilities that mitigate pollution and flood hazards due to discharges of urban runoff and improve the urban water quality and quantity, by harnessing natural processes, such as infiltration and retention.” NORMA Group’s activities for the production of “Stormwater product solutions” fulfill this activity description in the sections “Construction, expansion and renovation of facilities.” This product category aims to increase the amount of water that can be used and to protect drinking water from contamination. Overall, the manufacturing processes thus correspond to economic activity 2.3 described in the Annex of the Environmental Delegated Act of the EU Taxonomy (EU 2023/2486). The activity is considered to be a separate business activity. Taxonomy-eligible turnover; CapEx and OpEx are reported in this regard.

Changes from the previous year

In the 2024 reporting year, new revenue-generating economic activities were identified based on a different data collection methodology. Until now, they fell below the materiality threshold and are therefore not shown separately in this year's report.

Taxonomy-aligned economic activities of NORMA Group

The requirements of an alignment, such as the fulfilment of the technical assessment criteria (substantial contribution and “do no significant harm” criteria) and the minimum safeguards, are still not fully met.

Performance indicators according to EU Taxonomy

The following section presents Group turnover, capital expenditures (CapEx) and operating expenses (OpEx) for the reporting period 2024, broken down into taxonomy-aligned, taxonomy-eligible as well as non-taxonomy-aligned and non-taxonomy-eligible components.

Turnover KPI (Key Performance Indicator) definition

The taxonomy-aligned share of Group turnover is defined as the share of net turnover in the reporting year 2024 derived from products and services related to taxonomy-aligned economic activities (numerator) divided by net turnover (denominator) (Total turnover correspond to turnover from TABLE T061: CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME). 2024 [denominator]). The taxonomy-eligible share of Group turnover is defined as the share of net turnover in the reporting year 2024 derived from products and services related to taxonomy-eligible economic activities (numerator) divided by net turnover in 2024 (denominator).

For NORMA Group, this numerator results from turnover of certain products of the strategic business unit Mobility & New Energy, which can only be installed in electric vehicles (economic activity CCM 3.18), and from turnover of certain products of the strategic business unit Water Management (economic activity CCM 5.1, WTR 2.3). An analysis of the Water Management products was carried out in relation to the NORMA Group sites NDS (USA), Malaysia and Kimplas (India), as the relevant Water Management products are manufactured at these sites. As the system can only evaluate turnover by product category on a gross basis, i.e. without taking subsequent discounts etc. into account, an imputed key was used to calculate the percentage difference between the gross and net turnover of the respective entities to calculate the taxonomy-eligible net turnover.

In order to further improve data collection, a third method was established in the 2024 financial year to allocate sales to appropriate economic activities. Sales were filtered according to customer market segments and additional sectors in the New Energy and Aviation sectors were allocated. They were not reported in the 2024 reporting year owing to the materiality threshold applied.

The denominator corresponds to NORMA Group’s total net turnover in the fiscal year 2024 from the income statement. When calculating turnover, it was ensured that no turnover was recorded twice by clearly allocating the products to the respective activity.

Information of the following tables in relation to turnover, CapEx and OpEx

(a) The code consists of the abbreviation of the relevant objective to which the economic activity can make a significant contribution and the number of the section of the activity in the relevant Annex that covers the objective; for example, the activity “Reforestation” would have the following code: CCM 1.1. If activities can make a significant contribution to more than one objective, the codes for all objectives should be indicated. For example, if the company reports that the activity “Construction of new buildings” makes a significant contribution to climate protection and the circular economy, the code would read as follows: CCM 7.1./CE 3.1.

(b) The abbreviations in the tables have the following meaning:

•Y – Yes, taxonomy-eligible and taxonomy-aligned activity regarding the relevant environmental objective

•N – No, taxonomy-eligible activity, but non-taxonomy-aligned regarding the relevant environmental objective

•N/EL – not eligible, i.e., non-taxonomy-eligible activity regarding the relevant environmental objective

Capex KPI definition

The CapEx KPI is defined as the share of taxonomy-aligned capital expenditure (CapEx) in the numerator, which is broken down into three categories (a-c) as defined by the EU, divided by total Group CapEx (see the corresponding additions to property, plant and equipment and intangible assets before depreciation, amortization and impairment losses and remeasurements excluding goodwill) under TABLE 098 GOODWILL AND OTHER INTANGIBLE ASSETS and TABLE 099 DEVELOPMENT OF PROPERTY, PLANT AND EQUIPMENT for the reporting year 2024 as a denominator.

The total CapEx of category (c) was calculated on the basis of the CapEx requests approved for the reporting year by allocating the CapEx requests to an economic activity. These are the activities CCM 3.18, CCM 6.5, CCM 7.2.

In addition to the direct allocation of capitalized costs, the imputed turnover key “Technical machine equipment” was used to determine CapEx in relation to activity CCM 3.18 on a pro rata basis.

To calculate CapEx in relation to the taxonomy-eligible Water Management products, an imputed turnover key was applied to the capitalized costs of the Water Management sites and allocated to CCM 5.1, CCM 6.13 and WTR 2.3. A report was created in the accounting system and corresponding formulas were stored to avoid accounting for investments twice.

CapEx category a)

CapEx category a) is defined according to the EU as capital expenditures “related to assets or processes that are associated with taxonomy-aligned economic activities;” As NORMA Group cannot report taxonomy-aligned activities in the reporting year 2024, no taxonomy-aligned CapEx is reported. However, we have reported on our taxonomy-eligible activities CCM 3.18, CCM 5.1, WTR 2.3.

CapEx category b)

CapEx category b) is defined by the EU as capital expenditures as “part of a plan to expand taxonomy-aligned economic activities or to allow taxonomy-eligible economic activities to become taxonomy-aligned.” No such investments were made in the reporting year 2024.

CapEx category c)

CapEx category c) is defined according to the EU as capital expenditures related to the purchase of products and services from taxonomy-aligned economic activities and individual measures that enable the target activities to become low-carbon or lead to greenhouse gas reductions. As NORMA Group has not yet been able to identify any taxonomy-aligned activities among third parties in this reporting year, taxonomy-aligned CapEx cannot be reported. However, we have reported on our taxonomy-eligible activities CCM 7.2.

OpEx KPI definition

The OpEx KPI is defined as the share of taxonomy-aligned operating expenses (OpEx), which is broken down into three categories (a-c) in accordance with the EU definition (see more detailed explanation in the following sections). Direct, non-capitalized expenses, in particular for research and development, building renovation measures, short-term leasing and maintenance and repairs, are to be included in the denominator and proportionately in the numerator. Based on the relevance analysis, account mapping was carried out and the OpEx for category (c) comprising was verified by manual queries. This concerns the activity CCM 6.5.

In order to determine the OpEx in relation to the activity CCM 3.18, the operating expenses for the maintenance of production equipment were also taken into account on a pro rata basis using the imputed turnover key in addition to the allocation of the calculated average R&D costs.

To calculate the OpEx in relation to the taxonomy-eligible Water Management products, an imputed turnover key was applied to the capitalized costs of the Water Management sites and allocated to CCM 5.1, CCM 6.13 and WTR 2.3. A report was created in the accounting system and corresponding formulas were stored to avoid accounting for investments twice.

OpEx category a)

OpEx category a) is defined by the EU as operational expenditures “related to assets or processes associated with taxonomy-aligned economic activities, including training and other human resource adaptation requirements and direct non-capitalized costs that represent research and development.” Since NORMA Group cannot report any taxonomy-aligned activities in 2024, no taxonomy-aligned OpEx is reported. However, we have reported on our taxonomy-eligible activities CCM 3.18, CCM 5.1 and WTR 2.3.

OpEx category b)

OpEx category b) is defined by the EU as operational expenditures that are part of a OpEx plan to expand taxonomy-aligned economic activities or enable taxonomy-eligible economic activities to become taxonomy-aligned. No such operating expenses were incurred in the reporting year 2024.

OpEx category c)

OpEx category c) is defined by the EU as operational expenditures “related to the purchase of output from taxonomy-aligned economic activities and to individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions as well as individual building renovation measures as identified in the delegated acts.” As NORMA Group has not yet been able to identify any taxonomy-aligned activities among third parties in this reporting year, taxonomy-aligned OpEx cannot be reported. However, we have reported on our taxonomy-eligible activity CCM 6.5.