EU Taxonomy

The EU taxonomy is a classification system that establishes a list of environmentally sustainable economic activities aimed at fulfilling the EU's climate and energy targets for 2030 and advancing the objectives of the European Green Deal. It provides clear definitions of which economic activities are considered to be "environmentally sustainable".

For an economic activity to be identified as environmentally sustainable, it must contribute to the achievement of certain environmental objectives. The Taxonomy Regulation establishes six environmental objectives:

1. Mitigation of climate change.
2. Adaptation to climate change.
3. Sustainable use and protection of water and marine resources.
4. Transition to a circular economy.
5. Pollution prevention and control.
6. Protection and restoration of biodiversity and ecosystems.

Regulation (EU) 2020/852 established a phased implementation of the regulation, starting with simpler regulatory requirements in 2022 and extending them from January 2023. From 1 January 2024, all disclosure obligations of the Taxonomy for Mitigation and Adaptation targets come into force, obliging reporting on the basis of Annexes I and II of the Article 8 Delegated Act.

To evaluate the environmental sustainability of the company, a study was conducted in 2022, confirmed and validated in 2023, to identify the main business units and the specific economic activities for each of the them. The result was the following list with the necessary details to achieve the definition of a specific NACE.

Taxonomy Eligibility and alignment assessment per activity

In the eligibility analysis, the activities have been classified according to the KPIs (Operating Income, CapEx and OpEx) as some activities only appear in some of the defined items

• Operating income from eligible economic activities based on those proposed in the Climate Delegated Act, and the Environmental Delegated Act
• Capital Expenditures (CapEx): Investments made by Cellnex relating to activities eligible under the Taxonomy.
• Operating Expenditures (OpEx): Cellnex has not computed this eligible indicator, as it is not considered material to the company's activities.

To qualify as environmentally sustainable, activities must satisfy these criteria concurrently.

To assess alignment, each activity underwent initial eligibility screening, followed by checks for compliance with the following criteria:

• Compliance with the Technical Screening Criteria (TSC).
• Do No Significant Harm (DNSH) to any of the other environmental objectives.
• Implementation in accordance with the minimum established guarantees.

Changes compared to 2022

Compared to 2022, notable advancements have been made, including enhanced identification of IoT activity and mission-critical functions, as well as improvements in IoT reporting. Moreover, new studies conducted in 2023 have been initiated to analyse compliance in CTS, DNSH, and Minimum Guarantees. Additionally, the adoption of the latest Taxonomy tables has been implemented in accordance with the new regulations, specifically The Supplementary Delegated Disclosure Act.

Results

Cellnex has followed a conservative approach in reporting eligibility and alignment according to the Taxonomy, refraining from imposing definitions on activities that lack clear sustainability criteria. As a result, the level of eligibility remains low, mirroring that of the previous year. Of the total operating income, 2.49% is established as eligible based on the Taxonomy. 37.29% of this 2.49% is considered aligned - in other words, 0.93% of total operating income.

On the other hand, 2.78% of the CapEx is considered eligible. 8.17% of this 2.78% is considered aligned - in other words, 0.23% of total CapEx.

Cellnex aims to enhance the company's alignment with the TSC and DNSH principles of its eligible activities, and to maintain those classified as "aligned" during 2023. Additionally, efforts will be made to enhance methodologies and procedures to improve the applicability and usability of the EU Taxonomy.

The Annex 7 provides further details of the EU Taxonomy analysis performed by Cellnex.