EU taxonomy
reporting
For 2023 the taxonomy reporting covers the following substantial contribution criteria:
– Climate change mitigation
– Climate change adaptation
– Sustainable use and protection of water and marine resources
– Pollution prevention and control
– Transition to a circular economy
– Protection and restoration of biodiversity and ecosystems
Alfa Laval has concluded that the company does not have activities related to “Pollution prevention and control” and “Protection and restoration of biodiversity and ecosystems”.
The company:
– does not perform,
– does not finance and
– is not exposed to research, development, demonstration and expansion, erection, renovation, operation or safe operation concerning
nuclear related or fossil gas related activities. The company is however selling components and service to companies covered by the above description.
Alfa Laval has after a thorough analysis arrived at the conclusion that the company does not have any environmentally sustainable activities that are covered by the economic activities specified in the taxonomy or meets the technical screening criteria or fulfils the Do Not Substantially Harm (DNSH) criteria. The reason for this is that the EU taxonomy does not really fit for a manufacturing company. As an example, the EU taxonomy works well for companies that produce biodiesel, but it does not at all work for a company that manufactures the equipment that the biodiesel producers need for their production. The same thing applies for the service that Alfa Laval sells to biodiesel producers. The first problem is that the economic activities listed in the taxonomy are not covering all business activities of Alfa Laval, which makes it impossible to report them as environmentally sustainable despite that our products are helping our customers to reduce their energy consumption and carbon emission. Many of the technical screening and DNSH criteria are also very difficult for a manufacturing company to fulfil, simply because they usually are designed for the producers and not the equipment manufacturers that sell to the producers.
In addition, Alfa Laval and not the least the Marine Division sells products and systems into the fossil energy area to reduce energy consumption and carbon emission, but these important contributions to environmental sustainability are outside the scope of the EU taxonomy.
In summary, the products and systems that Alfa Laval manufacture and sell have a very important role in reducing energy consumption and carbon emissions – BUT the taxonomy does not cover this!
During 2023 a work has been done to better identify the net sales, the operational expenses and the investments that fits within the economic activities specified in the taxonomy. Earlier only an end-market based (industry based) approach was used, but that has now been supplemented by a more product oriented approach. This has increased the coverage within 3.6 “Manufacturing of other low carbon technologies” with about 3 percentage units. For the new area “Circular economy” also specific after market offerings have been identified, which has replaced what was earlier reported on 5.1 “Construction, extension and operation of water collection, treatment and supply systems” and 7.3 “Installation, maintenance and repair of energy efficiency equipment” within “Climate change mitigation”. The reason for this change was that the new area better fits Alfa Laval’s aftermarket business. It is foremostly the addition of the economic activity 5.1 “Repair, refurbishment and re-manufacturing” within “Circular economy” that accounts for the large increase in the coverage within the taxonomy.
The key performance indicators according to the EU taxonomy are presented in the following tables.
Net sales
The taxonomy eligible economic activities in Alfa Laval that are covered by the taxonomy have primarily been identified based on what end-markets (industries) each division sell into. For the economic activity 3.6 ”Manufacturing of other low carbon technologies” within ”Climate change mitigation” a more product oriented approach has however also been used, where primarily sales of brazed, gasketed and welded heat exchangers have been included provided that they are not sold to nuclear or fossil fuels or already are covered by the identified end-markets (industries). Specific products have also been used to identify sales within 8.2 ”Data-driven solutions for GHG emissions reductions” and 8.4 ” Software enabling physical climate risk management and adaptation”. For 5.1 ”Repair, refurbishment and re-manufacturing” a selection of aftermarket offerings have been used to identify the sales that qualify within ”Circular economy”.
The net sales figures relate to contracts with customers. The bulk of the taxonomy eligible economic activities are primarily relating to the Energy Division and secondly to the Food & Water Division.
The above table on net sales can be summarized as follows:
| Consolidated | Proportion of net sales / Total net sales | |
| 2023 | Environmentally | Taxonomy-eligible but not environmentally sustainable |
| Climate change mitigation (CCM) | – | 22.9% |
| Climate change adaptation (CCA) | – | 0.2% |
| Water and marine resourses (W) | – | 1.3% |
| Pollution (P) | – | – |
| Circular economy (CE) | – | 24.1% |
| Biodiversity and ecosystems (BE) | – | – |
| Total | – | 48.5% |
Operational expenditure
Operational expenditure relates to direct costs for:
– training and other HR adaptation (conversion and transformation) needs,
– research and development,
– building renovation,
– short term lease,
– maintenance and repair and
– other direct expenditures for day-to-day servicing of assets or property, plant & equipment by Alfa Laval or third parties.
The above table on operational expenditure can be summarized as follows:
| Consolidated | Proportion of net sales / Total net sales | |
| 2023 | Environmentally | Taxonomy-eligible but not environmentally sustainable |
| Climate change mitigation (CCM) | – | 16.0% |
| Climate change adaptation (CCA) | – | 0.0% |
| Water and marine resourses (W) | – | 4.5% |
| Pollution (P) | – | – |
| Circular economy (CE) | – | 3.4% |
| Biodiversity and ecosystems (BE) | – | – |
| Total | – | 23.9% |
The following table shows how the eligible operational expenditure has developed from 2022 to 2023.
| Consolidated | Operational expenditure split on cost types | |
| SEK millions | 2023 | 2022 |
| Training and other HR adaptation (conversion and transformation) needs | 0 | 0 |
| Research and development | 311 | 107 |
| Building renovation | 25 | 5 |
| Short term lease | 27 | 5 |
| Maintenance and repair | 45 | 25 |
| Other direct expenditures for day-to-day servicing of assets or property, plant & equipment by Alfa Laval or third parties | 23 | 10 |
| Total | 431 | 152 |
The major part of the operational expenditure refer to research and development, which is a high priority area to support the company’s future growth in the sustainability area. The largest part of the increase in operational expenses is due to an increased spending on research and development within the sustainability area.
Investments
Investments are defined as the sum of purchased and leased capital investments.
Taxonomy eligible investments and operational expenditure relate to:
– assets or processes associated with taxonomy eligible economic activities and
– purchase of output from taxonomy eligible economic activities and individual measures to become low-carbon or reduce greenhouse gas provided that the measures are implemented and operational within 18 months.
The above table on investments can be summarized as follows:
| Consolidated | Proportion of net sales / Total net sales | |
| 2023 | Environmentally | Taxonomy-eligible but not environmentally sustainable |
| Climate change mitigation (CCM) | – | 33.9% |
| Climate change adaptation (CCA) | – | 0.8% |
| Water and marine resourses (W) | – | 2.2% |
| Pollution (P) | – | – |
| Circular economy (CE) | – | 3.8% |
| Biodiversity and ecosystems (BE) | – | – |
| Total | – | 40.7% |
The following table shows how the eligible investments have developed from 2022 to 2023.
| Consolidated | Investments split on assets | |
| SEK millions | 2023 | 2022 |
| Property, plant & equipment | 1,153 | 173 |
| Internally generated intangible assets | 36 | 5 |
| Licenses and other intellectual property rights | 0 | 0 |
| Capitalised right-of-use assets | 27 | 12 |
| Total | 1,216 | 190 |
The increase in investments is partly due to a more product oriented way to identify which investments that taxonomy eligible than last year. The increase is however primarily a reflection of Alfa Laval’s intention to grow in the environmental and sustainability area. Internally generated intangible assets are relating to capitalised development costs within research and development and IT.
The investments are mainly focusing on increasing production capacity for existing and new products that reduce energy consumption and carbon emissions for our customers and to reduce Alfa Laval’s own energy consumption and carbon emissions.