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2021 Annual Report

Progress Arises from Change.

2021 Annual Report

 

Information in Accordance with the EU Taxonomy Regulation

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The EU Taxonomy is a classification system for determining sustainable economic activities in the real economy. The following disclosures are the mandatory disclosures of the Continental Group in accordance with Art. 8 of EU Taxonomy Regulation 2020/852 in conjunction with Art. 10 (2) of Delegated Regulation 2021/2178 for fiscal 2021.

Specific Information on the Implementation of disclosure requirements in accordance with the EU Taxonomy Regulation

There is general uncertainty on Continental’s part with respect to the reporting to be carried out for the first time as per the EU Taxonomy Regulation. This is due on the one hand to the short implementation period, since the specific disclosure requirements and corresponding notes were only resolved or published in the current reporting year or after the reporting year; on the other hand, it is also attributable to the fact that unclear and ambiguous wording continues to be used in the regulations and notes concerning the determination of Taxonomy-eligible economic activities as well as the calculations for key performance indicators for turnover, capital expenditure and operational expenditure.

When it came to preparing the required information, we took into account the information that was available to us up until the statement of the Executive Board on February 22, 2022 (statement of the Executive Board on the preparation, completeness and integrity of the consolidated financial statements and the management report for Continental AG and the Continental Group, and on the other information provided in the annual report). Our assessment with regard to determining the Taxonomy eligibility of economic activities is primarily based on publicly communicated assessments by industry associations in the supplier and automotive industry as well as the answers to frequently asked questions published by the EU Commission. However, these interpretations have only an informative, non-binding nature, and uncertainty over the accounting standards persists.

Taxonomy-eligible economic activities

As part of our sustainability ambition, we strive for carbon neutrality and emission-free mobility and industries by 2050 at the latest (see also the sections on carbon neutrality and on emission-free mobility and industries in this combined non-financial statement) and thus for the expansion of clean and carbon-neutral mobility. With this in mind, we have introduced performance indicators at a corporate level as part of our sustainability scorecard, with the aim of monitoring our progress. From this scorecard, we classify the allocated business with emission-free mobility and industries as the indicator that comprises all economic activities to be disclosed for Continental as Taxonomy-eligible with respect to the environmental target of climate change mitigation in accordance with the EU Taxonomy Regulation. It consists of allocated business with zero-tailpipe-emission vehicles and allocated low-carbon business beyond business with zero-tailpipe-emission vehicles.

All other economic activities of the Continental Group that are not included in the aforementioned economic activities are classified as Taxonomy non-eligible.

The allocated business with zero-tailpipe-emission vehicles therefore falls under category 3.6 (“Manufacture of other low-carbon technologies”) of the delegated regulation for climate change mitigation, since it pursues the goal of developing clean or carbon-neutral mobility in accordance with Art. 10 (1) c) in conjunction with Art. 10 (1) i) of the EU Taxonomy Regulation. This expansion will substantially reduce CO2 emissions from mobility use. The allocated low-carbon business beyond business with zero-tailpipeemission vehicles primarily comprises the manufacture of products for wind turbines and photovoltaic systems, and therefore falls under category 3.1 (“Manufacture of renewable energy technologies”). To a lesser extent, this business also includes the manufacture of products for wastewater treatment and waste recycling plants as well as for infrastructure in the area of low-carbon water transport, which we likewise classify as category 3.6.

Taxonomy-eligible turnover

In fiscal 2021, turnover associated with the Taxonomy-eligible economic activities of the Continental Group described above amounted to 2.9% (PY: n. a.).

Turnover (in %) 2021 2020
A. Taxonomy-eligible    
Continental Group 2.9 n. a.
B. Taxonomy non-eligible    
Continental Group 97.1 n. a.
Total (A + B)    
Continental Group 100 n. a.

The information on turnover is prepared in accordance with section 1.1.1 of Annex 1 to the delegated regulation on disclosure obligations (2021/2178) and in compliance with IFRS accounting regulations. It relates only to continuing operations for the fiscal year and therefore excludes Vitesco Technologies, which was spun off on September 15, 2021.

Information on the Continental Group’s total turnover can be found in the consolidated statement of income under the “Sales” item on page 110 of this annual report.

Taxonomy-eligible capital expenditure and operational expenditure

Capital expenditure associated with the Taxonomy-eligible economic activities of the Continental Group amounted to 3.0% in fiscal 2021 (PY: n. a.).

Capital expenditure (in %) 2021 2020
A. Taxonomy-eligible    
Continental Group 3.0 n. a.
B. Taxonomy non-eligible    
Continental Group 97.0 n. a.
Total (A + B)    
Continental Group 100 n. a.

Operational expenditure associated with the Taxonomy-eligible economic activities of the Continental Group amounted to 2.9% in fiscal 2021 (PY: n. a.).

Operational expenditure (in %) 2021 2020
A. Taxonomy-eligible    
Continental Group 2.9 n. a.
B. Taxonomy non-eligible    
Continental Group 97.1 n. a.
Total (A + B)    
Continental Group 100 n. a.

The figures for Taxonomy-eligible capital expenditure and operational expenditure are allocations based on the proportion of Taxonomy-eligible sales at business area level. For reasons connected to the business model, the equipment, machinery and buildings of the Continental Group are thus used both for Taxonomy-eligible economic activities and for other economic activities. This applies both to capital expenditure and operational expenditure for assets or processes that are associated with Taxonomy-eligible economic activities (category a), their expansion (category b) and the acquisition of products from Taxonomy-aligned economic activities as well as the described individual measures (category c) in accordance with sections 1.1.2.2 and 1.1.3.2 of Annex 1 to the delegated regulation on disclosure obligations (2021/2178). The allocation selected by Continental ensures that double counting of capital expenditure and operational expenditure is avoided. In its interpretation of the required disclosure of Taxonomy-eligible capital expenditure and operational expenditure, Continental reasonably assumed as part of the reporting process that no capital expenditure or operational expenditure as set out in category c) needed to be disclosed for Taxonomy non-eligible economic activities, as no reliable statements on the Taxonomy alignment of our suppliers’ production are available and there is no obligation to assess the Taxonomy alignment of our individual measures. Furthermore, owing to the calculation method used, the other direct operational expenditure according to 1.1.3.1 or 1.2.3.3. of Annex 1 to the delegated regulation on disclosure obligations (2021/2178) were not specified further.

The short-term nature of the interpretation regarding capital expenditure and operational expenditure for category c), which, contrary to our original interpretation, is based solely on Taxonomy eligibility, and the associated ambiguity of the interpretation of Taxonomy eligibility arising from the non-binding statement by the EU Commission on frequently asked questions dated February 2, 2022, meant that it was factually impossible to determine this information by the time of the statement of the Executive Board on February 22, 2022. As a result, no further capital expenditure and operational expenditure as set out in category c) were identified.

The information on capital expenditure is prepared in accordance with section 1.1.2 of Annex 1 to the delegated regulation on disclosure obligations (2021/2178) in compliance with IFRS accounting regulations. Information on the Continental Group’s total capital expenditure can be found in the notes to the consolidated financial statements in the segment reporting (Note 1) under the "Investments" item starting on page 117 of this annual report. As presented in the notes to the consolidated financial statements, the capital expenditure comprises intangible assets (Note 15, page 154), property, plant and equipment (Note 16, pages 156 and 157), leases (Note 17, page 158) and investment property (Note 18, page 162) However, the figures referenced in the notes to the consolidated financial statements relate to both continuing and discontinued operations.

Operational expenditure is defined in accordance with section 1.1.3 of Annex 1 to the delegated regulation on disclosure obligations (2021/2178) and have been calculated on an imputed basis as described above.

Capital expenditure and operational expenditure relate only to continuing operations for the fiscal year and therefore exclude Vitesco Technologies, which was spun off on September 15, 2021.