REPORTING IN ACCORDANCE WITH THE EU TAXONOMY REGULATION

TAXONOMY OBJECTIVES

The Taxonomy Regulation (EU) 2020/852 (in the following “Taxonomy”) entered into force on 22 June 2020. The purpose of this new regulation is to provide a definition for what constitutes a sustainable economic activity and to redirect capital flows into companies which are aligning their business models towards such sustainable economic activities. The focus of the Taxonomy lies on 6 environmental objectives:

• Climate change mitigation
• Climate change adaptation
• Sustainability and protection of water and marine resources
• Pollution prevention and control
• Protection and restoration of biodiversity and ecosystems
• Transition to a circular economy

The Taxonomy has identified eligible economic activities that substantially contribute to each of these environmental objectives. Linked to these eligible activities are technical screening criteria that define whether the activity is considered sustainable or not (aligned).

The Delegated Regulation (EU) 2021/2178 as of July 6, 2021 on the climate objectives (climate change mitigation (Annex I) and climate change adaptation (Annex II)) (in the following “Climate Delegated Act”), was published in the Official Journal on December 9, 2021 and entered into force on January 1, 2022 ((EU) 2021/2139). Further delegated acts for the remaining objectives will be published at the earliest in 2023.

NEW DISCLOSURE REQUIREMENTS FOR NON-FINANCIAL UNDERTAKINGS

According to Articles 2 Climate Delegated Act and 8 of the Taxonomy any undertaking subject to the Non-Financial Reporting Directive (NFRD) must provide information on “environmentally sustainable” revenues, investments (capital expenditure) and operating expenses (opex).

According to Article 10 of the Climate Delegated Act for reports published from January 1, 2022 until December 31, 2022, non-financial undertakings shall only disclose the proportion of Taxonomy-eligible and Taxonomy non-eligible economic activities in their total turnover, capital and operational expenditure. Eligibility of activities implies that an activity is included in the Climate Delegated Act. Whether an activity is Taxonomy-eligible or not says nothing about the (un)sustainability of that activity. Being Taxonomy-eligible is merely an indication that a certain activity makes a substantial contribution to one of the six environmental objectives of the Taxonomy. From January 1, 2023, the disclosure shall also include information on taxonomy alignment, meaning that the economic activity in question fulfils the alignment criteria of the technical screening criteria Annex I and Annex II.

TAXONOMY-ELIGIBILITY OF PUMA’S ECONOMIC ACTIVITIES IN RESPECT OF CLIMATE CHANGE MITIGATION AND CLIMATE CHANGE ADAPTATION

The technical screening criteria in Annex I and Annex II of the Delegated Regulation (EU) 2021/2139 as of June 4, 2021 for the first two environmental objectives, namely climate change mitigation and climate change adaptation, do not list any business activities that are linked to the production and sale of footwear, apparel and accessories. This means that PUMA’s business activities so far do not qualify as contributing substantially to climate change mitigation or climate change adaptation. Therefore, PUMA’s business activities in this regard are not considered Taxonomy-eligible (so far). Since PUMA does not have any economic activities related to nuclear power or power generation from gas, PUMA will not report the related standard forms from the delegated act (EU 2022/1214).

ELIGIBLE CAPITAL EXPENDITURE

PUMA understands that the Taxonomy and the Climate Delegated Act including its Annexes nonetheless asks non-financial undertakings with Taxonomy non-eligible economic activities to report on the part of the capital expenditure related to the purchase of output from taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions.

In this regard PUMA reviewed the so-called cross-cutting activities that are not directly related to PUMA’s primary business activity and are not revenue-generating for PUMA but still are relevant to support PUMA’s sustainability efforts. Taxonomy-eligible capital expenditure could be identified with regard to “Transport” and “Real Estate Activities”.

The key figures are determined on the basis of Delegated Regulations (EU) 2020/852, 2021/2139 and 2021/2178 in conjunction with the accounting policies to be applied to the consolidated financial statements. In order to avoid double counting, expenditure has been allocated to only one economic activity.

In 2022 PUMA started operations in several newly rented buildings with high requirements on energy-efficiency, such as, for example:

• A new office space in Singapore,
• a new warehouse in Mexico,
• and leasing contracts for several stores in the United States.

The technical screening criteria of Annex I and II define a taxonomy-aligned investment in buildings only for those buildings that are ranked among the top 15% of their regional building stock in terms of Primary Energy Demand (PED).

Since there is no precise definition of these 15%, for example in terms of area covered or primary energy demand per m2, and as the rental of buildings is not material to PUMA’s business performance in terms of CO2 emissions, we have decided to report the taxonomy-aligned investment in buildings for 2022 as zero.

This does not mean that PUMA is not investing in lowering CO2 emissions from its own entities. As described in the Climate section of this report, our Scope 1 and 2 emissions have been reduced by 86% compared to our baseline in 2017, mainly through green electricity tariffs or renewable energy attribute certificates.

In 2022 PUMA also invested in 24 charging stations for electric cars, which do fall under the taxonomy alignment criteria for climate mitigation. The total investment in these charging stations was 79 TEUR.

As part of PUMA’s 10FOR25 sustainability targets, PUMA is transitioning its car fleet to more sustainable transport vehicles. Therefore, in 2022 PUMA invested in the lease of 64 low or zero emission vehicles.

Unlike buildings, the technical screening criteria for CO2 emissions for taxonomy alignments are clearly defined as below 50 g CO2/km.

We can confirm that 64 cars added to our car fleet are taxonomy-aligned with the technical screening criteria in their CO2 emission footprint, equaling an investment of 1,521 TEUR. Considering the do-no-significant harm criteria of tires for passenger cars, not all those cars can be considered as fully taxonomy-aligned, as many of the standard tires used for our new electric cars from Tesla, Volkswagen, Hyundai, Mercedes and BMW do not fulfil the criteria for noise emissions and therefore the reported taxonomy aligned investment in vehicles for the year 2022 is 293 TEUR.

The total capital expenditure (IAS 16, 38 and IFRS 16) of the PUMA Group amounts to 669,382 TEUR for the financial year 2022. The eligible capital expenditure regarding “Transport” amounts to 5,427 TEUR and “Real Estate Activities” amounts to 376,996 TEUR. The Taxonomy-aligned capital expenditure from investment in low or zero emission cars and charging stations for electric cars was 372 TEUR.

ELIGIBLE OPERATIONAL EXPENDITURE

PUMA understands that the Taxonomy and the Climate Delegated Act including its Annexes nonetheless asks non-financial undertakings with Taxonomy non-eligible activities to report on the part of the operational expenditure related to the purchase of output from taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions.

Due to the nature of our business model, which is the design, development, marketing and sale of footwear, apparel and accessories, the eligible operational expenditure is not material in the context of the first two environmental objectives of the Taxonomy, therefore we report the numerator of our taxonomy-eligible operational expenditure as zero.

For the denominator, Article 2, Annex 1 Section 1.1.3.1. of the Climate Delegated Act asks for reporting on the total operational expenditure derived from the categories “research and development, building renovation measures, short-term lease, maintenance and repair and any other direct expenditures related to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such asset.” The total operational expenditure from these categories amounts to 103.6 TEUR for the financial year 2022.

OUTLOOK

PUMA expects that its business activities will be defined to contribute significantly to the “Transition to a circular economy” objective. Therefore, we anticipate a more detailed Taxonomy reporting once the technical screening criteria for this objective have been finalized by the European Union.