Using the German Sustainability Code (DNK) for reporting in accordance with the EU taxonomy

All undertakings that already have reporting obligations under the German CSR Directive Implementing Act (CSR-RUG) have been subject to the provisions of the EU Taxonomy Regulation since 1 January 2022. An additional reporting option for the EU taxonomy has been added to the Sustainability Code so that all undertakings within the real economy and the financial system with a reporting obligation can use the Sustainability Code to comply with those requirements.

 

Implementation in the Sustainability Code database

 

A flexible option for the individual publication of each of the disclosures required under the EU Taxonomy Regulation has been created within the Sustainability Code database.
 

If you wish to provide disclosures in line with the EU taxonomy, select the corresponding setting under “General information” in your declaration. Additional content is displayed in the database under criteria 11-13 (“Environmental issues”).

Response fields for the following aspects are provided in the Sustainability Code:
 
1.    The key performance indicators (KPI) relevant to the taxonomy for publication can be displayed in a manner specific for each undertaking and in table form;
2.    The approach adopted and the process descriptions (in particular the qualitative information in line with the EU Taxonomy Regulation) described in text form;
3.    Depending on the undertaking, any supplementary information pursuant to the Taxonomy Regulation can be uploaded (e.g. KPI templates).

The content of points 1 and 2 appears in the PDF of the final Sustainability Code declaration approved by the Sustainability Code office pursuant to criteria 11–13 (“Environmental aspects”). Any appendices from point 3 that may need to be uploaded appear as an annex at the end of the PDF document.

The Sustainability Code database as described enables all undertakings with reporting requirements to disclose all information and KPIs they need to publish in a standardised manner. Both non-financial undertakings that are required to provide disclosures on capital expenditure (CaPex), operating expenditure (OpEx) and sales revenue as well as financial undertakings with the asset-orientated disclosures (including the green asset ratio) can specify in the Sustainability Code database which information about their EU taxonomy obligations they publish in each case.

The reporting option in the Sustainability Code database has a deliberately open design. Non-financial undertakings and financial undertakings use the same format – irrespective of the KPIs and qualitative information requiring publication.
 
As such, the Sustainability Code can also be used in future for preparing reports in line with the EU taxonomy: over the coming years it will be possible both to compare KPIs from multiple reporting years and also present additional reportable KPIs, qualitative information and other explanations.

The process of implementation into the Sustainability Code was supported by an academic expert and has been reviewed by a lawyer.

The German Council for Sustainable Development (RNE) commissioned an academic expert opinion that assesses the Sustainability Code as a frame of reference in the context of the EU’s current measures for regulating sustainability measures and the SDGs. The report was produced by Prof. Kerstin Lopatta (University of Hamburg). The possibility of integrating the EU taxonomy into the Sustainability Code was also considered. The expert opinion confirms that the Sustainability Code is suitable for integrating a reporting option for the EU taxonomy and that such an option can be helpful for undertakings.

Accordingly, the RNE  has added an optional reporting capability to the Sustainability Code, following criteria 11–13 (“Environmental issues”). This implementation has been reviewed from a legal perspective. The expert legal opinion was prepared by Mr. Andreas Hecker,  LL. M. oec., lawyer at Hoffmann Liebs Partnerschaft von Rechtsanwälten mbB.

The expert legal opinion concludes that the positioning with respect to the individual criteria of the Sustainability Code is appropriate and consistent and that the Sustainability Code permits reporting on the EU Taxonomy Regulation. The opinion notes that a meaningful context is created by embedding into the corresponding explanations the EU taxonomy disclosures that will be required in future following the further statements on the environmental issues. At the same time, a uniform standard is established for the undertakings with a reporting obligation that prepare reports pursuant to the Sustainability Code.
In line with the CSR-RUG and the EU Taxonomy Regulation, undertakings with a reporting obligation may also continue to rely on the German Sustainability Code for the preparation of their non-financial declarations and non-financial reports.

 

 

Facts about the EU taxonomy

Since 1 January 2022, the German CSR Directive Implementing Act (CSR-RUG) has required undertakings with a reporting obligation in Germany to report on the EU taxonomy in their non-financial declaration for the first time. The content and methodology of the required reporting was defined more specifically via the legislative act published on 6 July 2021 by way of supplement to Article 8 of the Taxonomy Regulation.
We have summarised the relevant content in our factsheet about the EU taxonomy (in German).