The business model of Škoda Auto encompasses the entire process of vehicle development, production, and marketing, along with related activities. As per the EU Taxonomy Regulation, these activities have the potential to significantly contribute to the environmental objective of climate change mitigation by promoting clean and climate-neutral mobility.

The Company has categorised all its itemised activities under the economic activity of “Manufacture of low carbon technologies for transport” in line with the environmental objective of climate change mitigation. This categorisation applies to all cars produced, regardless of the drive technology used, and includes genuine parts.

However, hedging transactions and activities of subordinate importance that are reported as other sales revenue in Škoda Auto’s financial statements are not considered eligible according to the EU Taxonomy.

Although certain activities directly associated with the vehicle-related business should also be categorised under this economic activity, they are not currently classified as Taxonomy-eligible due to uncertainty around the appropriate economic activity as per the EU Taxonomy. These activities include the sale of engines, powertrains, parts deliveries, and production under licence by third parties, which are also reported as other sales revenue.

As the objectives of the Taxonomy Regulation overlap with the topics of disclosure requirements of the ESRS, relevant details regarding Škoda Auto’s substantial contribution to those objectives, as well as the context of avoiding any harm to them, can be found in the sections of this report dedicated to respective sustainability topics.

 

Substantial Contribution

The screening criteria for assessing Škoda Auto’s fulfilment of key performance indicators pertains to the CO₂ emissionsof the vehicles produced by the Company. A comprehensive analysis of the CO₂ emissions was conducted and associated with each vehicle model and powertrain technology manufactured, in accordance with the Worldwide Harmonized Light Vehicles Test Procedure (WLTP). This analysis enables vehicles to identify which vehicles meet the screening criteria among all Taxonomy-eligible vehicles and contribute substantially to climate change mitigation.

During the reporting period, the BEV model series of Škoda Enyaq and Škoda Enyaq Coupé fulfilled the criterion of CO₂ emissions equal to 0 g/km. Moreover, during the reporting period, the PHEV model series of Škoda Superb and Škoda Octavia fulfilled the criterion of CO₂ emissions of less than 50 g/km.

 

Do no Significant Harm

In accordance with the EU Taxonomy, ecologically sustainable economic activities are expected to contribute to one or more of the defined environmental goals while ensuring that no adverse effects are imposed on other environmental objectives. To exclude any significant harm to these goals, economic activities must adhere to the “do no significant harm” criteria (DNSH).

During the review period, a thorough analysis of the DNSH criteria for the economic activity of “Manufacture of low-carbon technologies for transport” was carried out at the Group level for Škoda Auto. For vehicle-related business, the analysis was conducted at the individual production sites responsible for manufacturing or planning to manufacture Škoda vehicles that meet the screening criteria or are anticipated to do so in accordance with the five-year plan.

The Group’s Annual Report features the primary interpretations and analyses employed by the Group to evaluate any potential harm to other environmental goals. As per these assessments, the Škoda Auto vehicle-producing sites fulfilled the DNSH criteria during the review period.

 

Key Performance Indicators

To present the details of eligibility and alignment of Škoda Auto’s activities with the screening criteria, DNSH and the minimum safeguards required by the Taxonomy Regulation, the Company presents the key performance indicators of the turnover (here sales revenue in accordance with IFRS), Capital expenditure (CapEx) and Operating expenditure (OpEx) using the template provided in Annex II to the Disclosures Delegated Act (see following tables).

Revenues are directly assigned to an economic activity based on a direct connection to the vehicles that can be established in accordance with the screening criteria.

CapEx and OpEx without a direct connection to vehicles are broken down using an allocation formula to fulfil the screening criteria. The allocation formulas used are based on the long-term sales plan and the planned capacity utilisation at individual sites. The data and planning figures used are part of the medium-term financial planning for the next five years agreed by the Board of Management and the Supervisory Board of Škoda Auto.

 

Sales Revenue

The definition of turnover in the EU Taxonomy corresponds to sales revenues as reported in the IFRS financial statements published in the Annual Reports. This amounted to CZK 444,229 million in the fiscal year 2022. Of this total, CZK 425,728, or 95.8% of sales, was attributable to economic activity “3.3 Manufacture of low-carbon technologies for transport“ and was classified as Taxonomy-eligible. This includes sales revenues from the sale of new and used vehicles, fromn genuine parts (after-sales allowances), and from extended warranties.

Of the Taxonomy-eligible sales revenues, CZK 69,776 million (15.7%) meet the screening criteria used to measure a substantial contribution to climate change mitigation. This includes all of the Company´s all-electric vehicles and the plug-in hybrids.

CZK 69,776 million (15.7%)
taxonomy-aligned revenues with  substantial contribution to climate change mitigation in 2022

 

Capital Expenditure

In line with the EU Taxonomy, capital expenditure relates to specific items indicated in the IFRS financial statements, namely intangible assets and property, plant, and equipment additions. These are to be disclosed in the “Intangible assets” and “Property, plant, and equipment” sections of the Annual Report’s financial statements. The entirety of the capital expenditureis included in the category ‘Manufacture of low-carbon technologies for transport”. No other significant capital expenditure was allocated to the other categories related to business activity, such as engine and
parts deliveries, that were not initially included. Consequently, the Taxonomy-eligible capital expenditure amounted to CZK 24,898 million.

To calculate the substantial contribution, Škoda Auto identified all capital expenditure that directly relates to vehicles meeting the screening criteria. This expenditure was then entirely assigned to Taxonomy-aligned expenses. For capital expenditure that was not explicitly assigned to a particular vehicle, allocation formulas were utilised to account for them on a proportional basis.

The allocation formula for capital expenditures was established by the Group for each model and brand based on the long-term sales plan or planned capacity and utilisation. It applies to all expenditures made at sites that will produce only qualifying vehicles for the next five years according to taxonomy.

Capital expenditure relating to vehicles that meet the screening criteria amounted to CZK 6,844 million. Considering the DNSH criteria and minimum safeguards, 27.5% of total capital expenditure was Taxonomy-aligned in 2022.

CZK 6,844 million (27.5%)
taxonomy-aligned capital expenditure with substantial contribution to climate change mitigation in 2022

Operating Expenditure

The operating expenses disclosed in accordance with the EU Taxonomy consist of research and development costs that have not been capitalised. These costs can be found in the “Intangible assets” section of the notes in the Annual Reports.

Furthermore, all operating expenses related to Škoda’s vehicle business fall under economic activity “3.3 Manufacture of low-carbon technologies for transport”. As such, these expenses have been categorised as eligible under the EU Taxonomy.

Where possible, non-capitalized research and development costs were directly attributed to vehicles. Operating expenses for vehicles with a significant contribution to climate change mitigation were included. Any non-capitalized research and development costs directly attributable to vehicles that do not meet the screening criteria were not included. Non-capitalized research and development costs that were not clearly attributable to a particular vehicle were considered on a proportionate basis using allocation formulas. For these and other operating expenses, allocation formulas were used, similarly to capital expenditure. As a result, CZK 1,573 million (19.9%) of operating expenditure was found Taxonomy-aligned in 2022.

CZK 1,573 million (19.9 %)
taxonomy-aligned operating expenditure with substantial contribution to climate change mitigation in 2022