Analysis of eligibility and alignment

During 2023, Acea carried out the preparatory activities to comply with the disclosure obligations under the Disclosure Delegated Act, carrying out a transversal and synergic project involving the Administration, Finance & Control Function, the Risk Management, Compliance & Sustainability Function and the companies within the scope of the consolidated non-financial statement33.
In particular, the eligibility analysis was updated for the year under review in order to identify the Group’s fully executed activities that match those listed and described in Annexes I and II of the Climate Delegated Act – respectively pertaining to mitigation and adaptation climate objectives – and taking into account the Complementary Delegated Act and the Environmental Delegated Act.

This analysis led to an increase in the scope of eligibility identified the previous year, from 22 activities attributable to five sectors identified by the Regulation, to 24 activities attributable to six sectors34.
Of the eligible activities, 16 can contribute to the achievement of both mitigation and adaptation climate goals, 2 can contribute only to mitigation, 3 can contribute to sustainable use and protection of water and marine resources, 2 can contribute to transition to a circular economy and 1 can contribute to pollution prevention and control.
The increase in the number of eligible activities is due to the introduction of the four new environmental goals and related activities published during 2023, compared to which the group’s eligibility analysis has been updated.
Furthermore, in compliance with the provisions of the Regulation, the alignment to the Taxonomy of Acea’s eligible activities was analysed to identify the Group's environmentally sustainable activities according to three sets of criteria:

  • criteria for substantial contribution35: for each eligible activity, verification of compliance with the technical thresholds has been carried out in order to establish its substantial contribution to the achievement of the reference goal;
  • Do No Significant Harm (DNSH) criteria36: analysis of the technical and regulatory requirements to ensure that the activity not only substantially contributes to at least one Taxonomy goal but also does not cause any significant harm to any of the other environmental goals;
  • minimum safeguards37: analysis to verify that the activities that contribute substantially to at least one environmental goal and do not cause significant harm to the others are carried out in compliance with the minimum social safeguards set out in the Human and Employment Rights Regulation.

The technical screening criteria for a substantial contribution identify quantitative thresholds that establish the limits within which an activity can be considered environmentally sustainable and/or describe the qualitative characteristics that make an activity aligned without the need to meet specific technical thresholds.

For DNSH criteria, these may consist of specific provisions or general “recurring” criteria. In the first case, the requirements are specific to the activity under analysis and limited checks must be carried out. The recurring criteria, on the other hand, are set out in the six Appendices to supplement the annexes governing each objective, and refer mostly to compliance with European or national standards or to carrying out assessment activities.
The Group has adopted two approaches for the DNSH analysis: for the specific criteria, the capacity of each individual activity to meet the requirements was evaluated, while for “recurring criteria” (the Appendices), the best practices available for each business were considered in order to guarantee, where possible, compliance with the requirements for each eligible activity.
To complete the alignment analysis of the Taxonomy-eligible activities, Acea verified the compliance with the minimum safeguards which introduce into the assessment of the environment sustainability of an economic activity, the minimum human and employment rights protections required, as established by the relative international standards38 (see box).

VERIFICATION OF COMPLIANCE WITH THE MINIMUM SAFEGUARDS

Italian human and employment rights law governs these principles and their relative specific aspects such as privacy, health and safety, corruption, fair competition, tax and environmental protection. As well as acting in compliance with the national laws in force, Acea also conducts its business according to a sustainable and inclusive growth strategy, operating in line with the Universal Declaration of Human Rights, the ILO Conventions and the principles issued by the United Nations Global Compact, of which it is a signatory. This commitment is directly reflected in the Group Code of Ethics, drafted with the involvement of internal expertise and external business ethics experts and approved by the Acea Board of Directors on 9 November 2022. The Code represents the set of principles and rules of conduct at the basis of the Organisational, Management and Control Model, which apply to “everyone who, in any capacity, directly or indirectly, permanently or temporarily, in Italy or abroad, operates in the interests of Acea and its subsidiaries”, to which business practices can be traced “towards all stakeholders”. It is stated that: “Acea considers as inalienable in the definition of its values the UN Universal Declaration of Human Rights for the respect of natural and universal rights, the International Labour Conventions and Recommendations issued by the International Labour Organization (ILO), such as those relating to fair treatment and non-discrimination, the protection of child labour, the fight against forced labour, the freedom to form trade unions and the right to collective bargaining, the European Union's Charter of Fundamental Rights, and the Italian Constitution”. In 2023, Acea decided to underline its commitment to the protection of people's basic rights, in order to promote awareness of and further safeguard the issue, by adopting the Human Rights Policy, which was approved by the Board of Directors on 14 December.
The Human Rights Policy, to be understood as a benchmark consistent with the Group Code of Ethics and with the same sphere of influence, is based on the main international documents on the matter; it sets out 20 principles, within the areas of “work” and “Community, Society and Environment”, with relevance to operating context, activities managed and stakeholders, and defines the dissemination, implementation and monitoring arrangements to be implemented for its full effectiveness. The Policy also refers to the prescriptive, organisational and operational tools (such as policies, guidelines, procedures, structures in charge, management and control systems, etc.) already existing in the Group and covering the various human rights-related areas, providing them with a common reference framework. These areas are also fully consistent with the provisions of the minimum safeguards under Article 18 of Regulation 2020/852 and the Final Report on Minimum Safeguards, published by the Sustainable Finance Platform.
The protection of human rights is therefore formalised in the value documents in force – Code of Ethics and Human Rights Policy – which also provide for a confidential and reserved channel for reporting alleged breaches of the principles referred to therein (Whistleblowing Platform) and are supported by a collegiate body – Ethics Officer – which manages the reporting system and monitors compliance with the values. As already mentioned, there are also additional internal legislative instruments and operational structures covering the different aspects of human rights. These include but are not limited to:
Organisation, Management and Control Model: a management system pursuant to Legislative Decree 231/2001 that identifies the procedures developed to mitigate the risk of offences committed by directors, managers or employees in the interest or to the advantage of the Group, which is constantly being revised and updated. The Code of Ethics, the Organisation, Management and Control Model and the relative Oversight Committee each represent an essential component of a broader and more structured Internal Control and Risk Management System (ICRMS) adopted by Acea.
Antitrust Compliance and Consumer Protection Guidelines, Organisational Regulations for Antitrust Compliance and Unfair Business Practices and the Antitrust and Consumer Protection Regulation Compliance Manual: rules and safeguards to prevent and counteract anti-competitive behaviour and to protect the principle of fair competition and the consumer, which must be observed by Group personnel, business counterparties, suppliers and partners.
Customer Experience Measurement and Monitoring Procedure: aimed at regulating customer satisfaction survey procedures; in 2023 Acea obtained the certification of compliance with the ISO10004:2018 guidelines for monitoring and measuring customer satisfaction.
Anti-corruption policy, with an updated version approved in March 2023: a system of rules, controls and safeguards for the prevention of active and passive bribery offences in the public and private sectors, supported by the Corruption Prevention Management System, for which Acea obtained certification under ISO 37001:2016, in September 2023.
Privacy Governance Guidelines: guidelines for implementing policies to protect the personal data of employees, customers, suppliers, shareholders, stakeholders, partners and persons whose personal data are processed by the Group, and who ensure the application of the General Data Protection Regulation (GDPR).
Management and Sustainability Systems Policy, Quality, Environment, Energy and Safety Management Systems: to promote a culture of quality, respect for the environment, occupational health and safety and energy saving.
Equality, Diversity & Inclusion Committee, Equality, Diversity & Inclusion Policy, Diversity & Inclusion Plan and Dashboard: initiatives for assessing risks and actions to be taken to promote diversity, inclusion and equal opportunities, including the gender pay gap issue; employees are also invited to submit their requests and proposals on the subject. In 2022 Acea obtained UNI/PdR 125:2022 certification on gender equality, confirmed also in 2023.
Employee and Participation Charter: a protocol signed between Acea and the trade unions in May 2023 aimed at developing and enhancing the company's professionalism and individual and collective wellbeing, and investing in people's skills and competencies and promoting the quality and stability of work
Health and safety management system, QASER questionnaire, vendor rating, supplier performance measurement procedure, Ecovadis model: tools for managing people's health and safety, both inside the organisation – specialist training, risk assessment and continuous monitoring – and outside the Group, with contracted works and services, aimed at overseeing every stage of the supplier-company relationship, including the assessment of suppliers' performance on punctuality, quality and safety indicators, and in relation to ESG criteria
Tax Management Procedure: outlines and regulates the roles and responsibilities of the parties involved as well as the tax management auditing activities39.

Based on the analyses, in 2023 Acea identified, out of a total of 24 eligible activities, 13 fully aligned activities, 6 partially aligned activities40 and 5 non-aligned activities.
There follows a sector breakdown of the activities that are eligible and aligned with the environmental goals of the taxonomy. Note that in the 16 cases where the Group's activity is eligible for the goals of both mitigation and adaptation to climate change, the mitigation goal was deemed prevalent. The results of the analysis of alignment with the climate change adaptation goal, as required by regulatory updates, are reported in Section A.1 of Tables 1 and 6, 8 and 10.

In particular, as regards the Water sector:

  • for climate change mitigation and adaptation goals, 2 activities under the “Water supply, sewerage, waste treatment and remediation” sector of the Climate Delegated Act are confirmed as eligible. After verification of the substantial contribution and DNSH criteria, one activity is fully aligned with the climate change mitigation goal while the other is partially so. However, none of the sector's eligible activities are aligned with the climate change adaptation goal. The CapEx associated with the “Recovery of materials from non-hazardous waste” activity, coupled with the climate change mitigation goal, have been enhanced as part of a CapEx plan aimed at expanding Taxonomy-aligned economic activities. Acea Ato 2 also planned the construction of a treatment plant for the sand from the treatment processes and from the sewage network cleaning, which will make it possible to recover up to 70% of the solid input material. Total CapEx sustained during the year was €415 million, while total investments over the course of the Plan will amount to approximately €8 million. The plant is expected to be completed by 2024 and therefore the aligned economic activity will be expanded, in line with the Regulation, within a period of less than five years;
  • with regard to the goal of Sustainable use and protection of water and marine resources, three activities were eligible, of which one was aligned, one partially aligned and one not aligned
  • Finally, with regard to the Transition to a circular economy goal, the activity identified was found to be eligible but not aligned.

With reference to the Environment sector, which is concerned mainly with waste treatment:

  • with regard to climate change mitigation and adaptation goals, five activities were eligible, with three from the “Water Supply, Sewerage, Waste Treatment and Remediation” sector, one from the “Energy” sector and one from the “Construction and Real Estate” sector. Of these, 4 were aligned with the climate change mitigation goal and one was partially so. Regarding the climate change adaptation goal, 3 activities were partially aligned and 2 were not aligned;
  • An activity eligible for the Transition to a circular economy goal was identified and found to be non-aligned;
  • Finally, one activity was found to be eligible and unaligned for the Pollution Prevention and Control goal.

In line with 2022, the Generation sector is eligible for 8 activities (2 of which contribute only to the climate change mitigation goal, while the others also contribute to the climate change adaptation goal). Consistent with the segment's core business – electricity generation – these activities are mainly attributable to the “Energy” sector (4 activities), but also to “Construction and Real Estate” sector (2 activities) “Transport” (1 activity) and “Professional, Scientific and Technical Activities” (1 activity). Of these, 6 were fully aligned with the climate change mitigation goal, and 2 were not. No eligible activities, however, were aligned with the climate change adaptation goal.

The Energy Infrastructure sector ia eligible for 3 activities included in the Climate Delegated Act, two of which relate to “Construction and Real Estate” and one to the “Energy” sector. Both activities in the “Construction and Real Estate” sector are fully aligned with the climate change mitigation goal but not aligned with the climate change adaptation goal. In contrast, the “Energy” sector is partially aligned with both climate goals.

The Engineering and Services sector – engaged in research, innovation, design and laboratory work for Group companies41 – is eligible for an activity of the “Water Supply, Sewerage, Waste Treatment and Remediation” sector of the Climate Delegated Act. This activity is fully aligned for the climate change mitigation goal but not for that of adaptation.

Finally, the Commercial sector is eligible for four activities under the Climate Delegated Act, two of them in “Construction and Real Estate”, one in “Water Supply, Sewerage, Waste Treatment and Remediation”42, and one in “Transport”. In relation to the climate change mitigation goal, two are fully aligned and one is partially aligned. However, no activities were found to be in line with the climate change adaptation goal. It should be noted that the core business of electricity sales, which accounts for 43 % of 2023 Group turnover, is excluded, as these sales are not currently included in the activities listed in the taxonomy.

In general, with respect to the disclosure published on the 2022 data, the following should be noted:

  • With regard to the Water sector, part of the eligibility and/or alignment share was transferred from the Climate Change Mitigation goal to the Sustainable Use and Protection of Water and Marine Resources and Transition to a Circular Economy goals;
  • for the year under review, Activity 7.3 “Installation, maintenance and repair of energy efficiency equipment” was not aligned, un- like the previous year, with the climate change mitigation goal due to non-fulfilment of the “Do Not Significant Harm” criterion as regards the pollution prevention and control goal, due to a change in the Regulation in 2023. In particular, the amendment led to a tightening – subsequent failure to exceed – the criteria set out in Appendix C of the Climate Delegated Act of June 2023.

32 See Disclosing sustainability: methodological note for the process of defining the scope and the list of companies therein. Note that these Companies, identified for their adequate representation of the performance and the impacts generated by the Group (pursuant to Italian Legislative Decree no. 254/2016), cover, with reference to the KPIs set out by Regulation (EU) 2020/852, over 89% of the turnover, 96% of the CapEx and 91% of the OpEx of the full list of consolidated companies.
33In particular, the activities managed by the Group, considered eligible, fall under the following sectors: Energy; Water supply, sewerage, waste treatment and remediation; Transport; Construction and real estate; Professional, scientific and technical activities; Information and communication.
34 Articles 10, 11, 12, 13, 14, 15, 16, 19 of Regulation (EU) 2020/852.
35 Article 17 of Regulation (EU) 2020/852.
36 Article 18, section 1 and 2 of Regulation (EU) 2020/852, specifically, OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight core conventions identified in the ILO Declaration on Fundamental Principles and Rights at Work and the International Bill of Human Rights.
37 Please also consult the Final Report on Minimum Safeguards, published by the Platform on Sustainable Finance in October 2022.
38 Please also consult the Final Report on Minimum Safeguards, published by the Platform on Sustainable Finance in October 2022.
39 In the Final Report on Minimum Safeguards, published in October 2022 by the Platform on Sustainable Finance, the topic of taxation considered the OECD Guidelines for Multinational Enterprises and was considered relevant to risk management purposes. In view of this, while not directly applicable to Acea given the nature of its business, the matter is also discussed here (see also the chapter on Institutions and Business for more details).
40 Partial alignment may occur when some group companies are aligned with a certain activity and others are not, or when, for different group companies, the activity meets the technical screening criteria for only a proportion of plants /structures.
41 Intercompany activities are removed from the accounting of the KPIs, in accordance with the Regulation.
42 For the operation of the mini composting plants (Smart Comp), linked to the Composting of organic waste.