Incorporating the EU Taxonomy

Regulation (EU) 2020/852 (Taxonomy Regulation) and the corresponding delegated acts establish a classification system that defines sustainability criteria for economic activities across six environmental objectives: climate change mitigation, climate change adaptation, sustainable extraction and use of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

In line with the requirements of the regulatory framework, the KION Group discloses the taxonomy-aligned, taxonomy-eligible but not taxonomy-aligned and the taxonomy non-eligible proportion of turnover (revenue), capital expenditure (CapEx), and operating expenditure (OpEx) for the 2024 financial year.

Furthermore, the Climate Delegated Regulation 2022/1214 outlines specific disclosure requirements related to gas and nuclear energy activities. As the KION Group is not engaged in economic activities within these energy sectors, there are no implications for the KION Group’s reporting or for the corresponding taxonomy metrics. The templates specified in the supplementary Delegated Regulation are not applicable and are not included in this report.

Detailed tables in accordance with the Taxonomy Regulation can be found in the notes to the Group sustainability report (see ‘Further disclosures on the EU Taxonomy’).

Taxonomy-eligible economic activities

An interdisciplinary team reviewed the Group’s relevant economic activities and allocated them to the corresponding taxonomy-eligible activities as defined in the Taxonomy Regulation. For the 2024 financial year, the KION Group assessed taxonomy eligibility for economic activities defined in the Climate Delegated Act (Delegated Regulation (EU) 2021/2139), the Complementary Climate Delegated Act (Delegated Regulation (EU) 2022/1214), the Amending Climate Delegated Act (Delegated Regulation (EU) 2023/2485), the Environmental Delegated Act (Delegated Regulation (EU) 2023/2486), and the Disclosures Delegated Act (Delegated Regulation (EU) 2021/2178 as amended on June 27, 2023). The assessment concluded that the KION Group’s economic activities relate to the environmental objectives of climate change mitigation (CCM) and transition to a circular economy (CE). The four remaining environmental objectives were also evaluated for potentially taxonomy-eligible activities, but no taxonomy eligibility was identified.

In addition, Delegated Regulation (EU) 2022/1214 outlines specific disclosure requirements for economic activities related to fossil gas and nuclear energy. As the KION Group is not engaged in economic activities within these energy sectors, there are no implications for the KION Group’s reporting, nor for the corresponding taxonomy metrics. The templates specified in the supplementary Delegated Regulation are not applicable and are not included in this report.

The KION Group’s taxonomy-eligible economic activities are listed in the table below.

Assessment of the taxonomy eligibility of economic activities

For the KION Group, the most relevant economic activities related to the CCM objective are ‘3.2 Manufacture of equipment for the production and use of hydrogen’, ‘3.4 Manufacture of batteries’, ‘3.6 Manufacture of other low-carbon technologies’, and ‘3.10 Manufacture of hydrogen’. The KION Group regards economic activity 3.6 as the most appropriate for its core manufacturing activities, since no industry-specific economic activity has been defined for the intralogistics sector as yet. This activity relates to technologies that demonstrate substantial savings of GHG emissions over their lifecycle compared with the best performing alternative technology available on the market.

In addition, the KION Group identified several activities related to the CE objective as taxonomy-eligible. The activities relevant to the Group under this environmental objective are ‘4.1 Provision of IT/OT data-driven solutions’, ‘5.1 Repair, refurbishment, and remanufacturing’, ‘5.2 Sale of spare parts’, ‘5.4 Sale of second-hand goods’, and ‘5.5 Product-as-a-service and other circular use- and result-oriented service models’.

Assessment of the taxonomy alignment of economic activities

In accordance with the Taxonomy Regulation, the taxonomy alignment of taxonomy-eligible economic activities was assessed on the basis of the following requirements:

• Compliance of the associated economic activity with the technical screening criteria for a substantial contribution,
• Compliance of the associated economic activity with the technical screening criteria for the prevention of significant harm to one or more of the environmental objectives (do-no-significant-harm or DNSH criteria)
• Compliance with minimum safeguards

Compliance with substantial contribution criteria

The taxonomy alignment of activity ‘3.2 Manufacture of equipment for the production and use of hydrogen’ under the CCM objective was assessed, as the KION Group develops and manufactures fuel cells. Since a substantial contribution is inherent in the activity’s description, the manufacturing activity automatically fulfills the criterion.

The taxonomy alignment of the manufacture of selected electric trucks (e-trucks) was also assessed, in reference to activity ‘3.6 Manufacture of other low-carbon technologies’ under the CCM objective. These particular trucks represent the only available technology solution in their power range currently on the market that enables the electrification of outdoor logistics handling. In previous years, an externally verified lifecycle assessment (LCA) showed that e-truck technology can produce substantially lower GHG emissions over its lifecycle compared to conventional internal combustion (IC) trucks. This LCA was performed on the basis of ISO 14040 and ISO 14044. It does not currently meet the material contribution criterion. In the reporting year, the KION Group also completed a carbon footprint analysis based on the ISO 14067 standard, in accordance with the relevant requirements, although this has not yet been verified by a third party.

Assessments were also carried out for the taxonomy alignment of activities ‘3.4 Manufacture of batteries’ and ‘3.10 Manufacture of hydrogen’ under the CCM objective. The manufacture of lithium-ion batteries contributes substantially to the reduction of GHG emissions due to their greater energy efficiency compared with lead-acid batteries. In addition, batteries pave the way for a substantial number of low-carbon technologies in other sectors and industrial applications. The reduction of lifecycle GHG emissions calculated for economic activity 3.10 has not been verified and therefore does not meet the substantial contribution criterion.

The economic activities ‘6.5 Transport by motorbikes, passenger cars and light commercial vehicles’ and ‘7.7 Acquisition and ownership of buildings’ under CCM cannot fulfill the substantial contribution criterion at this time. With respect to activity CCM 6.5, electric vehicles currently do not constitute a material portion of the overall Group fleet; the KION Group therefore did not pursue the assessment of substantial contribution requirements further. Regarding activity CCM 7.7, the assessment confirmed that the requirements have not been met, either due to the buildings’ energy performance or because the energy performance certificates do not meet the requirements of the Taxonomy Regulation. Consequently, these economic activities can only be classified as taxonomy-eligible for the 2024 financial year.

The taxonomy alignment for economic activities under the CE objective was assessed for the first time in 2024.

Within economic activity ‘4.1 Provision of IT/OT data-driven solutions’, the KION Group develops software inhouse and sells it along with third-party hardware, which is used to operate this software. The requirements for a substantial contribution were deemed to have been met with respect to at least two of the software functions listed. However, the requirements related to the hardware materials and to the reuse, recovery, or recycling at the end of life could not be met. The KION Group is only a reseller of hardware manufactured by third parties, who control the materials used in components and the design. Furthermore, the hardware’s end of life is managed by the customers and not by the KION Group. As the software and the hardware are currently sold under the same performance obligation pursuant to IFRS 15, it was not possible to consider the software for alignment in isolation. The activity can therefore only be considered as taxonomy-eligible, but not as taxonomy-aligned.

With respect to economic activity ‘5.1 Repair, refurbishment, and remanufacturing’, assessment of the substantial contribution criteria focused on sales contracts and waste management. The KION Group selected and assessed a sample of service contracts from the Industrial Trucks & Services segment and the Supply Chain Solutions segment that were deemed to be representative. Based on this assessment, the activity was confirmed to fulfill the necessary requirements. Waste management processes were assessed separately, taking refurbishment and repair activities into account. In the Industrial Trucks & Services segment, the analysis focused on the waste management plans of the refurbishment sites. With respect to repair activities, the criteria were deemed not to be applicable to either segment since the repairs (and therefore the related handling of waste) occur primarily at customer sites.

The KION Group also assessed the substantial contribution criteria for economic activities ‘5.2 Sale of spare parts’, ‘5.4 Sale of second-hand goods’, and ‘5.5 Product-as-a-service and other circular use- and result-oriented service models’, with a particular focus on requirements related to sales contracts and packaging. Samples of service contracts covering the sale of spare parts, from both the Industrial Trucks & Services segment and the Supply Chain Solutions segment, as well as contracts covering industrial truck leasing and the sale of used trucks, were deemed to fulfill the necessary requirements. With respect to packaging, the criteria were mainly assessed for activity CE 5.2, where partial alignment could be confirmed for some packaging suppliers. For activities CE 5.4 and CE 5.5, a preliminary assessment showed that the main materials required for shipping industrial trucks are only for protective purposes (such as foam), while common packaging (such as pallets or plastics covers) is used very rarely and could be considered not to be material. However, a more detailed assessment would be required to fully confirm fulfillment of the criteria, and such an assessment would also have to be performed if the activities are to fulfill the DNSH requirements in Appendix C.

Compliance with DNSH criteria

The KION Group also assessed the DNSH criteria, which are designed to ensure that the risk of considerable impairment toward another environmental objective is avoided.

An assessment of climate risk and vulnerability was carried out in line with Appendix A of Annex 1 to the Delegated Regulation (EU) 2021/2139 in order to determine whether the Group’s economic activities do no significant harm to the ‘Climate change adaptation’ objective. The focus was on KION Group sites where taxonomy-eligible activities related to the core business (CCM 3.2, CCM 3.4 and CCM 3.10) are performed. Overall, no material climate-related physical risks were identified.

To review the other overarching DNSH criteria, workshops were held with HSE managers of the Operating Units in relation to the KION Group’s affected economic activities. The analysis initially focused on activities CCM 3.2, CCM 3.4, and CCM 3.10. Compliance with the DNSH criteria is ensured primarily by employing established environmental management systems that adhere to ISO 14001 standards. In addition, the KION Group sites relevant to taxonomy alignment were analyzed with respect to their proximity to biodiversity-sensitive areas. The base data for this assessment was provided by the European Environmental Agency’s Natura 2000 Network Viewer. The analysis found that none of the KION Group sites where taxonomy-eligible economic activities related to the ‘Climate change mitigation’ objective take place are located in or near these sensitive areas. The assessment of the DNSH criteria in accordance with Appendices B and D of Annex 1 to the Delegated Regulation (EU) 2021/2139 therefore concluded that the aforementioned activities and the associated sites fulfill these criteria.

In the reporting year, the Group also investigated whether its activities fulfill the DNSH criteria with regard to the objective of a transition to a circular economy. For activity CE 5.1, the assessment considered repair and refurbishment activities separately. With respect to the refurbishment activities, the analysis evaluated selected refurbishment centers, which were confirmed to comply with the criteria set out in Appendix B, since they are assessing and tracking water-related impacts in a dedicated register as part of the ISO 14001 certification process. The criteria in Appendix B were deemed not to be applicable to repair activities in either segment, since repairs (and the relevant water-related impacts) mainly occur at customer sites. With respect to activities CE 5.2, CE 5.4, and CE 5.5, spare parts warehouse sites (both for the Industrial Trucks & Services segment and the Supply Chain Solutions segment) and manufacturing sites (for the Industrial Trucks & Services segment) were identified as relevant locations for the KION Group. Given that 99 percent of the Group’s sites (100% for the manufacturing sites of the Industrial Trucks & Services segment) are ISO 14001 certified, the Group considers this to be an indication that the criteria set out in Appendix B have potentially been met. The criteria set out in Appendix D are not applicable to activity CE 5.1 and were therefore not considered.

The DNSH criteria for pollution prevention and control outlined in Appendix C of Annex 1 to the Delegated Regulation (EU) 2021/2139 require that economic activities do not lead to the manufacture, placing on the market or use of restricted substances subject to current European legislation on chemicals, or of other groups of substances (as defined under point (f)) in Appendix C. Due to the EU Commission’s amendments to Appendix C within the Delegated Regulation (EU) 2023/2485, the requirements under point (f) are currently not fulfilled for activities CCM 3.2, CCM 3.4, CCM 3.6, and CCM 3.10. With respect to activity CE 5.1, only the labor portion of the repair activities fulfilled the criteria, the materials used in the repairs did not. This distinction was only possible for the Industrial Trucks & Services segment. Repair activities in the Supply Chain Solutions segment therefore have to be considered in total, and are considered not taxonomy-aligned. Similar to activities CCM 3.4 and CCM 3.6, activities CE 5.2, CE 5.4, and CE 5.5 do not currently comply with the requirements outlined in Appendix C either. Overall, only a clearly defined portion of activity CE 5.1 currently fulfills the DNSH criteria set out in Appendix C, while all other activities mentioned above do not fulfill these criteria and are therefore shown as taxonomy-eligible but not taxonomy-aligned.

With regard to the objective of a transition to a circular economy, assessment of the DNSH criteria is focused on reuse and the use of secondary raw materials, design for greater durability and recyclability, and the provision of information on materials throughout the lifecycle of the manufactured products. Fulfilment of these requirements was assessed and found to be met. Analysis of activity CCM 3.4 demonstrated that batteries produced by the KION Group are designed for high durability and easy disassembly. The KION Group is also legally obliged to ensure that batteries can be returned and recycled. Furthermore, the steel used in industrial trucks can be easily recycled, meaning that a high proportion of this material can be reused, in line with the principles of the circular economy.

DNSH requirements related to the CCM objective apply to activities CE 5.2, CE 5.4, and CE 5.5 only. The criteria are not applicable with respect to the KION Group’s CE 5.1 activity, as there is no on-site generation of heating or cooling, nor any cogeneration, including power. Further analysis regarding activities CE 5.2, CE 5.4, and CE 5.5 would have to be carried out at a later stage to see if these activities fulfill the DNSH requirements in Appendix C.

Compliance with minimum safeguards

The Taxonomy Regulation requires undertakings to implement processes that ensure compliance with the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles (UNGP) on Business and Human Rights, the eight fundamental conventions of the International Labour Organization, and the International Bill of Human Rights. These minimum safeguards primarily cover human rights, bribery and corruption, fair competition, and taxation. To ensure compliance with these minimum safeguards, the KION Group is establishing appropriate processes (including due diligence and risk assessments) and setting groupwide guidelines and policies, the use of which is monitored. The actions taken with regard to the aforementioned topics are analyzed in order to identify, prevent, and monitor risks and manage any associated negative impacts. The KION Group also verified that there were no confirmed violations in any of the aforementioned areas during the reporting year.

[[With respect to human rights, the KION Group has an established Human rights assessment and due diligence (HRDD) process, based on the six steps of human rights due diligence defined by UNGP, which was assessed to confirm compliance with the minimum safeguards in this area.]]

Calculation of key figures for the EU taxonomy

The collection of revenue, capital expenditure (CapEx), and operating expenditure (OpEx) data was carried out in accordance with the Delegated Regulation on Article 8 of the Taxonomy Regulation, with reference to the guidance on applying Article 8 of the Taxonomy Regulation.

The subsidiaries’ financial reporting was used as the basis for collecting and consolidating the taxonomy-relevant data, which was validated and consolidated centrally. Where no revenue, CapEx, or OpEx was reported for a particular economic activity, they were deemed as not being applicable to that economic activity within the scope of this data collection.

To determine the taxonomy-eligible and taxonomy-aligned proportion of consolidated revenue, the revenue from all eligible and aligned economic activities was calculated in relation to the KION Group’s total revenue. The taxonomy-eligible revenue was taken from financial accounting and internal reporting on the relevant taxonomy-eligible economic activities, while total revenue corresponds to the sum of the consolidated net revenue of all consolidated subsidiaries (see consolidated income statement in the consolidated financial statements of this annual report; [ESRS 1.123]).

To determine the taxonomy-eligible and taxonomy-aligned proportion of capital expenditure, the capital expenditure in all eligible and aligned economic activities was calculated in relation to the KION Group’s total CapEx. The total CapEx corresponds to the sum of operational CapEx (see notes to the consolidated financial statements, note [39]; [ESRS 1.123]) in the additions to the assets held for lease and rental, and right-of-use assets in other property, plant and equipment, primarily from procurement leases for buildings and company cars (see notes [17], [18], and [19] in the notes to the consolidated financial statements; [ESRS 1.123]).

To determine the taxonomy-eligible and taxonomy-aligned proportion of OpEx, the relevant operating expenditure for all eligible and aligned economic activities was calculated in relation to the total operating expenditure of the KION Group in accordance with the Delegated Act supplementing Article 8 of the Taxonomy Regulation. Total OpEx corresponds to the sum of all relevant non-capitalized expenditure related to research and development, building renovation, short-term leases, maintenance and repair, and all other direct expenses related to the day-to-day maintenance of property, plant, and equipment by the Group, or third parties to whom activities are outsourced, and which are necessary to ensure the continuous and effective functioning of these assets.

The reporting approach for economic activity CCM 3.4 was revised due to its relevance and contribution to the KION Group’s revenue, and economic activity CE 4.1 is now reported separately. From 2024 onward, intragroup revenue and external revenue will be shown as a total for activity CCM 3.4. Revenue from intragroup supply relationships will be deducted for activity CCM 3.6 to avoid double counting for the taxonomy alignment. Total revenue is also shown for activity CE 4.1, with the revenue from intragroup supply relationships deducted from the total taxonomy-non-eligible consolidated revenue, as this proportion is not allocated to any other economic activity.

Additionally, clear definitions and processes were established to ensure consistent allocation of financial accounting data to the relevant activities and to prevent double counting of revenue, CapEx, and OpEx from economic activities that contribute to more than one economic activity.

Taxonomy-eligible and taxonomy-aligned activities are therefore allocated either to the ‘Climate change mitigation’ objective or to the objective of the transition to a circular economy, which further reduces the risk of double counting.

The following provides an overview of taxonomy-eligible and taxonomy-aligned activities with regard to the financial metrics revenue, CapEx, and OpEx for 2024 and the comparative period of 2023.

The percentage of taxonomy eligibility in the financial metrics revenue, CapEx, and OpEx in accordance with the EU Taxonomy did not change significantly year on year. The economic activity CE ‘4.1 Provision of IT/OT data-driven solutions’ was identified as taxonomy-eligible and included in 2024. With regard to taxonomy alignment, the economic activities were assessed under the environmental objective ‘Transition to a circular economy’ for the first time in 2024. As a result, the proportion of taxonomy-aligned revenue rose from 0.0 percent in 2023 to 3.2 percent in 2024. Despite the stricter DNSH criteria following the changes in 2024 to Appendix C (paragraph f) in Annex I to the Delegated Regulation (EU) 2021/2139, a clearly defined part – under the environmental objective ‘Transition to a circular economy’ – of economic activity CE 5.1 was considered taxonomy-aligned.

Further notes on the EU Taxonomy Regulation

The Taxonomy Regulation is dynamic and evolving, indicating ongoing amendments, adjustments and extensions over time. The KION Group is convinced that the Group and its portfolio, consisting of efficient products and solutions in both segments, can make a major contribution to the objectives defined in the regulation. The current version of the Taxonomy Regulation does not provide sufficiently detailed descriptions of the economic activities nor appropriate technical screening criteria for all activities. For example, due to the complexity and individual nature of automated supply chain solutions there is currently no dedicated EU Taxonomy economic activity against which to assess their eligibility and alignment. The sustainability strategy complies with the specifications and objectives of the Taxonomy Regulation, which are incorporated into the Group’s activities, along with other requirements. The detailed descriptions of the activities contained within the relevant chapters of this report provide an overview of the KION Group’s commitment in the area of sustainability and its performance.