EU taxonomy
The EU’s Taxonomy Regulation is designed to support the transformation of the EU economy to meet its European Green Deal objectives, including the 2050 climate-neutrality target. The Taxonomy regulation classifies economic activities, which can be potentially aligned with EU’s environmental targets.
At the core of the Taxonomy Regulation is the definition of a sustainable economic activity. This definition is based on two criteria. An activity must:
- Contribute to at least one of six environmental objectives listed in the Taxonomy; and
- Do no significant harm to any of the other objectives, while respecting basic human rights and labor standards.
The tire industry is included in the economic activity groups Manufacture of other low carbon technologies of Climate change mitigation and Remanufacturing of Transition to a circular economy in the EU Taxonomy’s technical screening criteria. After investigating and consulting on EU Taxonomy’s technical screening criteria, following conclusions about Nokian Tyres’ economic activities have been made:
- Tires with low rolling resistance ratings which are manufactured by Nokian Tyres have substantially lower life-cycle carbon footprint than corresponding average tires.
- At this stage, Nokian Tyres has excluded all heavy off-road tires for professional use as there is no solid comparison data available of use phase CO2 emissions for heavy off-road tires for professional use.
- Tire retreading can be included in the Remanufacturing section of the EU Taxonomy’s Transition to circular economy environmental target.
Manufacture of tires with low life-cycle greenhouse gas emissions and tire retreading business activities represented 3.4 percent of Nokian Tyres’ total net sales in 2023. Based on Nokian Tyres’ assessment, these economic activities are either aligned or eligible with the EU Taxonomy. Share of Opex within the same scope of EU Taxonomy was 1.8 percent and share of Capex within the same scope of EU Taxonomy was 1.0 percent.
The Taxonomy reporting scope and criteria may change in coming years as this is only the third reporting round, and therefore also the figures may not be comparable between earlier and future reporting periods.
Nokian Tyres’ approach to calculate the EU Taxonomy eligibility and alignment
Net sales
- A: Amount of aligned or eligible net sales coming from tires having EU Tyre Labelling grade A or B in rolling resistance and grade A in pass-by noise, and from tire retreading business activities. In previous years, the pass-by noise grade was not a criterion and all rolling resistance class C tires were still included, so the figures from 2022 have been restated.
- Heavy off-road tires for professional use will be excluded as there is no solid data (or public benchmark) available for use phase CO2 emissions.
- B: Total amount of net sales
- C: Share of net sales within the scope of EU Taxonomy
- C = A/B%
Capex & Opex
- D: Aligned or eligible tire production companies’ and retreading plants’ Opex: Research and Development and real estate expenses deducted by depreciation & amortization
- E: Group Opex: Research and Development and real estate expenses deducted by depreciation & amortization
- F: Share of Opex within the scope of EU Taxonomy
- F = C*D/E%
- Justification: represents share of Opex used for producing low rolling resistance tires and offering retreading services with reasonable accuracy.
- G: Aligned or eligible tire production companies’ and retreading plants’ tangible Capex
- H: Group Capex including tangible and intangible investments
- I: Share of Capex within the scope of EU Taxonomy
- I = C*G/H%
- Justification: represents share of Capex used for production readiness for low rolling resistance tires and offering retreading services with reasonable accuracy.
- Remark: handpicking and assessing each investment’s relation to EU Taxonomy separately is regarded not to give much additional accuracy.