Many businesses wrongly believe the taxonomy does not affect them
The Norwegian economy got off to a roaring start in 2023. This is because on 1 January, a new law came into force in Norway, implementing EU taxonomy for environmentally sustainable economic activities. As the largest procurement system in the Nordics for the food service industry, Millum has several clients who come under the reporting requirement, and even more who are indirectly affected by the new law.
All listed companies and large enterprises (with more than 500 employees and defined as large under the EU Accounting Directive), as well as banks and insurance companies, must now report their sustainable activities and how they comply with the taxonomy. Millum knows that many businesses find it hard to get to grips with the requirements, and to compile all the necessary information required for reporting. We have therefore made a conscious decision to help our clients with just that.
Taxonomy for environmentally sustainable economic activities
Previously, there was no standardised definition of an environmentally sustainable business operation on the financial market in Europe or Norway. In an attempt to create a better general understanding of what activities are deemed sustainable in the transition to a low-carbon economy, in 2020 the EU introduced its Taxonomy Regulation – a classification system that does exactly that.
Under the taxonomy, an economic activity is environmentally sustainable if it meets three requirements:
- Makes a substantial contribution to at least one of the EU’s climate and environmental objectives:
- Climate change mitigation
- Climate change adaptation
- The sustainable use and protection of water and marine resources
- The transition to a circular economy
- Pollution prevention and control
- The protection and restoration of biodiversity and ecosystems
- Doing no significant harm to any of the other five environmental objectives
- Complying with minimum safeguards
Taxonomy – what does it mean for your business?
Is your business one of the many that has not had time to familiarise itself with the EU taxonomy? While your business may not be directly affected, it is still a good idea not to ignore it,
as it may impact on you anyway. When it comes to the social and governance aspect of the taxonomy, businesses with a reporting obligation have to assess not only their own operation, but also their entire supply chain and all business connections.
This will be of major significance to canteens and staff restaurants that use Millum’s procurement system. Many of them bid for contracts with large and publicly listed companies, and they must be able to document and demonstrate that they meet the requirements imposed by the taxonomy if they want to be in with a chance of winning those contracts.
If they do not already meet the requirements, it is crucial that they can prove measures have been taken to implement changes. If this is not done, they are likely to lose out on major contracts as well as other business connections. There will also be other financial consequences. One of the most immediate consequences of having a low score in a taxonomy assessment is less access to cheap capital and financing, and in some cases banks may even refuse to provide capital.
It is therefore essential to position your business as an environmentally friendly, socially responsible corporate citizen. Now and for the foreseeable future, this will be one of the main criteria for companies subject to reporting obligations as they embark on new business relations.
Millum helps clients by working with Factlines, Klimato and others
If you are a company in the food service industry and use a Millum system, you need not worry too much about the new law and its implications for your business. We are ready to help you compile the information you need for your reporting. Thanks to our cooperation with Factlines, businesses registered in Millum Commerce (our sales portal for suppliers) can easily document and demonstrate their corporate social responsibility towards purchasers. This means that if you are registered as a supplier in our system and have opted to use the Factlines tool, the job of assuring all your suppliers has essentially already been done.
Factlines began mapping suppliers for Norwegian companies back in 2012, long before the taxonomy came along. Even back then it was important to these companies that they could document their compliance around environmental issues, as well as social and ethical aspects in their supply chain.
When you start mapping your suppliers, you get help with conducting a systematic review of your operation. This reveals which areas you have under control, and where there might be room for improvement. Based on this risk analysis, you can then either work on risk reduction or improvement projects, all in a goal-oriented way. After that there’s periodic monitoring and reporting, so that both the company itself and its customers can keep an eye on performance. CEO of Factlines
When you start mapping your suppliers, you get help with conducting a systematic review of your operation. This reveals which areas you have under control, and where there might be room for improvement. Based on this risk analysis, you can then either work on risk reduction or improvement projects, all in a goal-oriented way. After that there’s periodic monitoring and reporting, so that both the company itself and its customers can keep an eye on performance.
CEO of Factlines
In other words, Factlines is just the kind of tool needed to submit taxonomy-compliant reports in a simple, time-efficient manner.
When it comes to reporting climate and environmental goals under the taxonomy, Millum has a solution that’s tailored to our industry, and therefore our clients. The first two environmental objectives relate to mitigating and adapting to climate emissions. We have therefore developed a module for calculating the climate impact of dishes and menus – thus enabling clients to know what kind of footprint the food they intend to serve will have. We previously entered into an agreement with RISE for access to templates for CO2 equivalents by product type, and we are now also working with Swedish company Klimato – which means our clients now have more options to choose from as regards source data. Both RISE and Klimato have the ambition to reduce climate impact from food and drink, by helping all kinds of food service companies to calculate the climate impact of their offering. They can also help these companies to achieve their own climate goals through reporting and monitoring. In addition, they help to communicate climate impact data from the food the restaurants’ guests choose, to encourage them to make climate-friendly choices.
Environmentally sustainable activities pay over time
Even though the taxonomy is far from fully evolved, the EU is constantly working to develop and implement it. The scope of the regulation will gradually expand to encompass more sectors and businesses. By being proactive in the starting phase, businesses can position themselves to meet the requirements for a sustainable operation, and benefit from the ever-increasing interest and demand for sustainable products and services.
Please feel free to contact Millum’s Business Developer, Knut Øksby, to find out more about how Millum can help you and your business.
Mobile: +47 900 90 064