The European Green Deal, introduced by the European Commission in 2019, aims to achieve net-zero greenhouse gas emissions in the European Union by 2050. A key part of this strategy is the EU Taxonomy, a classification system that defines “environmentally sustainable” economic activities. Its purpose is to guide capital flows toward sustainable investments by classifying economic activities based on their contribution to six environmental objectives: (1) “Climate change mitigation,” (2) “Climate change adaptation,” (3) “Sustainable use and protection of water and marine resources,” (4) “Transition to a circular economy,” (5) “Pollution prevention and control,” and (6) “Protection and restoration of biodiversity and ecosystems.”
For fiscal year 2024, HUGO BOSS has conducted a thorough analysis, concluding that, just like in the prior year, no financially material taxonomy-aligned sales, CapEx, or OpEx are to be reported, in particular as our primary economic activities are not yet covered by the EU Taxonomy. The following section contains the mandatory reporting related to the EU Taxonomy, reflecting the most current interpretation available at the time this combined non-financial statement was prepared.
Reporting on “environmentally sustainable” economic activities
The EU Taxonomy requires companies to report on their taxonomy-aligned, or “environmentally sustainable,” economic activities in accordance with EU criteria. This involves disclosing the shares of sales, capital expenditure (CapEx), and operating expenses (OpEx) related to both taxonomy-eligible and taxonomy-aligned economic activities for all six environmental objectives.
Taxonomy-eligible economic activities are those that meet the respective activity descriptions outlined in the EU Taxonomy, regardless of whether they fulfill the technical screening criteria. Economic activities become taxonomy-aligned if they make a significant contribution to the respective environmental objective by complying with the technical screening criteria, do no significant harm (“DNSH”) to the other environmental objectives, and adhere to the minimum safeguards set out by the EU Taxonomy.
The delegated acts published to date in connection with the EU Taxonomy on the six environmental objectives still only cover a limited number of sectors and economic activities. For the primary economic activities of companies in the global apparel market, and thus also of HUGO BOSS, the delegated acts currently only cover a very limited number of potentially relevant economic activities in connection with the objective (4) “Transition to a circular economy,” including the sale of second-hand goods and repair and refurbishment services. While these activities currently only play a minor role in our business model, our primary economic activities are by definition not taxonomy-eligible. However, there are some activities listed in the delegated acts that, while not revenue-generating, are relevant to our Company’s basic infrastructure such as real estate or energy generation facilities.
In light of the broad range of potentially eligible economic activities, HUGO BOSS applies the principle of materiality when reporting on the EU Taxonomy. Consistent with our approach in the prior year, we classify an economic activity as taxonomy-eligible if its KPI value at economic activity level is at least 0.5% of the total sales or total CapEx denominator.
Sales
The core business of HUGO BOSS is not covered by the current EU Taxonomy criteria. Therefore, we report the shares of taxonomy-eligible and taxonomy-aligned sales in fiscal year 2024 as 0%, as in the previous year. Irrespective of this, HUGO BOSS is striving to significantly expand its activities in circularity going forward, having firmly anchored a clear commitment to “Increase Circularity” in its sustainability strategy. Resource Use and Circular Economy
Capital expenditure (CapEx)
For fiscal year 2024, no economic activities were identified with CapEx amounts exceeding the defined materiality threshold, except for the construction of a new office building at our headquarters in Metzingen (Germany), which qualifies under the taxonomy-eligible activity 7.1, “Construction of new buildings.” HUGO BOSS is pursuing platinum certification from the German Sustainable Building Council (DGNB) for the building, with completion expected in 2025. While the DGNB certification reflects a high standard of sustainability, it does not fully cover all EU Taxonomy criteria. As a result, complete evidence of alignment with these specific criteria was unavailable as of the reporting date, and therefore, the CapEx related to the office building project is reported as not taxonomy-aligned for fiscal year 2024.
Consequently, the taxonomy-eligible CapEx for 2024 in relation to the total CapEx incurred of EUR 645 million (“denominator”) amounts to 2% (2023: 0% with a denominator of EUR 537 million). The share of taxonomy-aligned CapEx, again in relation to the denominator, however, amounts to 0% (2023: 0%). In accordance with the taxonomy regulation, the CapEx to be used in determining the denominator mainly comprises additions to property, plant, and equipment and intangible assets before depreciation, amortization, and revaluations, as well as right-of-use asset additions from long-term leases. The amount of the denominator can be reconciled to the disclosures made in the Combined Management Report under “Financial Position” and in the Consolidated Financial Statements under Note 9. Financial Position, Capital Expenditure
Operating expenses (OpEx)
In accordance with the EU Taxonomy, the OpEx used to calculate the denominator primarily includes direct costs relating to research and development, building renovation, short-term leasing, maintenance, and repair. However, the majority of the OpEx of HUGO BOSS, such as sales and marketing, general administration, and logistics expenses, do not fall under this definition. For fiscal year 2024, the OpEx denominator amounts to EUR 128 million (2023: EUR 135 million). In relation to the Company’s total OpEx of EUR 2,299 million for fiscal year 2024 (reconcilable to the operating expenses presented in the consolidated income statement; 2023: EUR 2,171 million), the OpEx denominator is deemed immaterial. Consequently, in line with the specifications in Annex I of the delegated acts on Article 8 of the EU Taxonomy, HUGO BOSS has opted to waive the determination of taxonomy-eligible and taxonomy-aligned OpEx for fiscal year 2024. Accordingly, both shares are reported as 0% (2023: 0%). Earnings Development, Income Statement
Climate risk analysis
HUGO BOSS conducted an analysis of physical climate risks for its key Company locations, meeting the requirements of the EU Taxonomy, and the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), also encompassing the location of the mentioned investment project. The system-based analysis uses the emission reference scenarios established by the Intergovernmental Panel on Climate Change (IPCC). No significant short- to medium-term physical climate risks were identified for the respective project, ensuring there is no significant harm (“DNSH”) to the environmental objective of “climate change adaptation.” As a result, the Company deems that no immediate adaptation measures are required. Climate Change
Social minimum safeguards
Compliance with the social minimum safeguards, which comprise the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the ILO Core Labor Standards and the International Bill of Human Rights, was thoroughly reviewed by topic experts at HUGO BOSS. As in the previous year, HUGO BOSS complies with all the standards outlined. Workers in the Value Chain, Business Conduct
Additional information
For additional information on the taxonomy-eligible and taxonomy-aligned proportions of sales, CapEx, and OpEx, please refer to the section "Additional Disclosures on the EU Taxonomy.” Additional Disclosures to the Combined Non-Financial Statement, Additional Disclosures on the EU Taxonomy