In the reporting year 2022, we reported on the EU Taxonomy eligibility and, for the first time, on the EU Taxonomy alignment of our economic activities for the environmental objectives of climate change mitigation and adaptation.

For the fiscal year 2023, mandatory reporting is extended to the EU Taxonomy eligibility of the economic activities of the four remaining environmental objectives, namely sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems as well as the new activities that have been added to the environmental objectives climate change mitigation and climate change adaptation. The assessment of EU Taxonomy alignment of those activities will be mandatory as of the reporting year 2024.

The EU Taxonomy reporting is conducted in accordance with the mandatory disclosures required by the EU Taxonomy Regulation (EU) 2020 / 852 of June 18, 2020 and the supplementing delegated acts.

In the reporting year 2023, the deconsolidation of Fresenius Medical Care impacts the EU Taxonomy reporting. In accordance with the FAQ (Commission Notice C / 2023 / 305) published in the Official Journal of the European Union on October 20, 2023, revenue of Fresenius Medical Care is not included in the revenue key performance indicators (KPIs), as revenue from discontinued operations must be presented separately from continuing operations (IFRS 5.33) and is therefore not included in the revenue line item as required by IAS 1.82(a). From the FAQ and its reference to IFRS 5.33, it can be implied that Opex from Fresenius Medical Care is also not part of the Opex KPIs as Opex from discontinued operations must also be presented separately. In contrast, investments of Fresenius Medical Care are part of the Capex KPIs for the period from January 1, 2023 to June 30, 2023. Capex are therefore presented in line with the financial details. Further information can be found in the Notes on pages 272 ff.

We again compared the descriptions of economic activities from Annex I (climate change mitigation) and Annex II (climate change adaptation) to the Climate Delegated Act with our products and services, investment expenditures and expenses. Additionally, we assessed whether our business activities correspond to the new economic activities listed in Annex I (sustainable use and protection of water and marine resources), Annex II (transition to a circular economy), Annex III (pollution prevention and control) and Annex IV (protection and restoration of biodiversity and ecosystems) to the Environmental Delegated Act.

For this purpose, further information on the revenue, Capex, and Opex KPIs has been discussed, collected and consolidated at business segment level and their divisions in a multi-stage process. The determination of the EU Taxonomy KPIs was based on our financial reporting system to ensure a complete and unambiguous reconciliation to the corresponding items in the annual financial statements and to avoid double counting.

This process confirmed that, as in the previous years, we can focus on analysing the requirements relating to the environmental objective climate change mitigation. Analysis has confirmed that none of the activities is considered an enabling activity under climate change adaptation, as only specific investments for so-called adapted activities are relevant, which have not been made in the reporting period. Further, due to the reasons mentioned before, the activities are treated as non-eligible under climate change adaptation because no such specific Capex has been incurred and turnover cannot be shown under climate change adaptation for adapted activities. Furthermore, economic activities from the new environmental objectives must only be assessed regarding their EU Taxonomy alignment as of the reporting year 2024.

In contrast to previous years, parts of our core business activities performed by Fresenius Kabi are now covered by the EU Taxonomy due to the extension of environmental objectives to be applied to date. This is reflected in the increased EU Taxonomy-eligible revenue share. However, as a global healthcare Group with products and services for dialysis, hospital and outpatient care, some of our core business activities are still not covered by the environmental objectives.

Our EU Taxonomy-eligible investments cover assets and processes that are directly related to EU Taxonomy-eligible revenue activities as well as the purchase of output of from EU Taxonomy-eligible activities such as existing and new building infrastructure. For our Opex, EU Taxonomy-eligible shares solely relate to assets and processes associated with EU Taxonomy-eligible revenue activities at Fresenius Kabi (especially research and development (R & D) expenses).

In addition, we again assessed our EU Taxonomy-eligible economic activities for the environmental objective of climate change mitigation regarding their compliance with the alignment criteria, consisting of technical screening criteria for a substantial contribution to one of the environmental objectives and the avoidance of significant harm to the other environmental objectives, as well as the minimum safeguards. For this purpose, current construction projects of the business segments were analysed with the relevant technical experts to determine the applicability and level of compliance with the EU Taxonomy requirements. Substantial contribution criteria for building activities under the environmental objective of climate change mitigation focus on energy efficiency. Some of these criteria exceed current legal requirements substantially and are also not adjusted to the healthcare sector and the operational requirements for hospitals and healthcare facilities.

Compliance with the EU Taxonomy criteria would therefore be partly contradictory to adherence with the hygiene and quality standards applicable to Fresenius. As a result, even the most energy-efficient hospitals and healthcare facilities do not currently meet the criteria of substantial contribution and Do No Significant Harm (DNSH) (e. g., primary energy demand lower than that of nearly zero-energy buildings, thresholds for water flow rates of water appliances, etc.). As in the reporting year 2022 and 2023, our analyses thus showed that the substantial contribution and DNSH criteria cannot yet be implemented or substantiated at the current time in the economic activities applicable to us, namely new construction of buildings, renovation of buildings and acquisition of buildings.

In the future, we will continue to review and implement the EU Taxonomy alignment criteria in our construction projects, where feasible. EU Taxonomy alignment for the new economic activities of the Environmental Delegated Act must be initially reported for the fiscal year 2024.

Compliance with the minimum safeguards is assessed for all activities by using a Group-wide approach. The criteria for minimum safeguards are applied on the basis of the Final Report on Minimum Safeguards of the Platform on Sustainable Finance from October 2022. Key topics are human and labour rights, bribery and corruption, fair competition, and taxation. Information on these topics can be found in the Group Non-financial Report and in the Notes on pages 179 ff., 169 ff. and 278 f.

For the detailed tables in accordance with the EU Taxonomy Regulation, please refer to ESG KPIs and standards.

Revenue

Total revenue in fiscal year 2023 forms the denominator of the revenue KPIs and can be taken from the consolidated Group’s income statement prepared in accordance with IAS 1. The EU Taxonomy-eligible revenue in 2023 (26.1%) relates to external revenue generated by Fresenius Kabi with the manufacture of medicinal products, manufacture of active pharmaceutical ingredients and medical electronic equipment as well as Fresenius Vamed in the project business with healthcare facilities (according to IFRS 15). Of the Group's total amount €5,822 million, the majority of €5,088 million are related to the economic activity manufacture of medicinal products (1.2 pollution prevention and control) performed by Fresenius Kabi. In addition, €147 million are associated with the manufacture of active pharmaceutical ingredients (1.1 pollution prevention and control) and €170 million with the manufacture of electrical and electronic equipment (1.2 transition to a circular economy). At Fresenius Vamed, €411 million are related to the economic activity construction of new buildings (7.1 climate change mitigation) and the remaining part to renovation of buildings (7.2 climate change mitigation). For the reporting year 2023, no further EU Taxonomy-eligible economic activities are relevant for Fresenius. The EU Taxonomy-eligible economic activities of Annex I to the Climate Delegated Act do not currently meet the substantial contribution criteria and are therefore not EU Taxonomy-aligned. For the mentioned EU Taxonomy-eligible economic activities of the Environmental Delegated Act, the assessment of EU Taxonomy-alignment is not necessary in fiscal year 2023.

Capex

The amounts used to calculate the Capex KPI (denominator) are based on the capital expenditures reported in the consolidated financial statements resulting from additions in the fiscal year to property, plant, and equipment (IAS 16) and intangible assets (IAS 38) excluding goodwill. In addition, the EU Taxonomy KPI takes into account right-of-use assets (IFRS 16). That also includes the additions from business combinations. This information can be found in the Notes on pages 305, 307, and 329.

For the identification of the EU Taxonomy-eligible share (numerator), the Capex projects of the business segments were examined in more detail on the basis of this definition. This was done by allocating the value-based components to the relevant economic activities. In accordance with the Capex definitions of the EU Taxonomy Regulation, we determined production-related Capex directly allocable to an EU Taxonomy-eligible revenue activity as well as Capex associated with the purchase of products and services from an EU Taxonomy-eligible economic activity as applicable. Production-related EU Taxonomy-eligible Capex relate in particular to the manufacture of medicinal (1.2 pollution prevention and control) as well as active pharmaceutical ingredients (1.1 pollution prevention and control) and electrical and electronic equipment (1.2 transition to a circular economy). Capex associated with the purchase of products and services from a EU Taxonomy-eligible economic activity relate essentially to the renovation of buildings (7.2 climate change mitigation) and the construction of new buildings, as well as for leasing projects, the acquisition of buildings (7.7 climate change mitigation).

In accordance with the FAQ (Commission Notice C / 2023 / 267) published in the Official Journal of the European Union on October 20, 2023, Capex in the construction of new buildings for own use can be covered under the economic activity construction of new buildings (7.1 climate change mitigation) or under the economic activity acquisition and ownership of buildings (7.7 climate change mitigation). As of the reporting year 2023, investments in the construction of new buildings for own use are reported under economic activity acquisition and ownership of buildings (7.7 climate change mitigation) instead of construction of new buildings (7.1 climate change mitigation). This change to an economic activity whose alignment criteria better reflect Fresenius' hospital business in particular creates the prerequisite for possible future EU Taxonomy alignment.

The EU Taxonomy-eligible Capex share 2023 (44.3%) essentially relates to investments of all business segments in new construction and renovation of buildings, such as clinics or production facilities. In 2022, the share was 36.7%. The increase in the reporting year is mainly due to the additional EU Taxonomy-eligible economic activities of the manufacture of medicinal products and active pharmaceutical ingredients as well as the manufacture of electrical and electronic equipment at Fresenius Kabi for which associated Capex now also qualify as EU Taxonomy-eligible.

Of the total amount €843 million in 2023, €196 million are related to the economic activity manufacture of medicinal products (1.2 pollution prevention and control), €5 million are associated with the manufacture of active pharmaceutical ingredients (1.1 pollution prevention and control) and €63 million with the manufacture of electrical and electronic equipment (1.2 transition to a circular economy). For Capex associated with the purchase of products and services from an EU Taxonomy-eligible economic activity, €183 million relate to the renovation of buildings (7.2 climate change mitigation), consisting entirely of additions to buildings and additions to assets under construction. Furthermore, €396 million relate to the construction and acquisition of buildings (7.7 climate change mitigation), also consisting of additions to buildings and additions to assets under construction in the amount of €193 million and additionally of right-of-use assets (IFRS 16) in the amount of €203 million. Of the total EU Taxonomy-eligible Capex share €0 million resulted from business combinations. For the reporting year 2023, no further EU Taxonomy-eligible economic activities are relevant for Fresenius. The EU Taxonomy-eligible economic activities of Annex I to the Climate Delegated Act do not currently meet the alignment criteria and are therefore not EU Taxonomy-aligned. For the mentioned EU Taxonomy-eligible economic activities of the Environmental Delegated Act, the assessment of EU Taxonomy-alignment is not necessary in fiscal year 2023.

Opex

The amounts used to calculate the Opex KPI (denominator) are based on the direct costs of research and development reported in the consolidated financial statements (Notes, page 298) and the costs of short-term leases (Notes, page 329). In addition, the cost of maintenance and repair including repair materials, were queried from the local management reporting systems for all business segments.

For the identification of EU Taxonomy-eligible shares (numerators), the above line items were matched with the descriptions of the economic activities. After analysing the Opex definitions of the EU Taxonomy Regulation, we determined the portion of operating expenses related to assets and processes associated with EU Taxonomy-eligible revenue as well as the portion of operating expenses related to the purchase of products and services from an EU Taxonomy-eligible economic activity to be applicable. As part of the analysis, we identified that material EU Taxonomy-eligible Opex components relate in particular to non-capitalized R & D costs as well as costs of short-term leases and costs of maintenance and repair which are directly attributable to EU Taxonomy-eligible revenue. The main expenditures for the maintenance of our building infrastructure, however, are capitalized and are thus reflected in the EU Taxonomy-eligible Capex share.

Of the total Opex amount €641 million in 2023, €562 million are related to the economic activity manufacture of medicinal products (1.2 pollution prevention and control), while €28 million are associated with the manufacture of active pharmaceutical ingredients (1.1 pollution prevention and control) and €52 million with the manufacture of electrical and electronic equipment (1.2 transition to a circular economy). For the mentioned EU Taxonomy-eligible economic activities of the Environmental Delegated Act, the assessment of EU Taxonomy-alignment is not necessary in fiscal year 2023.

Fossil gas related activities

Fresenius Kabi and Fresenius Helios operate gas turbines, and combined heat and power plants to generate electricity, heat, and steam from fossil fuels for own use. Fresenius' activities in the area of the operation of combined heat, cool and power generation facilities using fossil gaseous fuels are not material. Fresenius does not carry out any other nuclear and fossil gas related activities.