EU Taxonomy CapEx Plan Evidence Workflow

The first control is to confirm that the expenditure is being treated as a CapEx plan item, not as ordinary aligned CapEx or as an individual measure. Annex I to the Disclosures Delegated Act allows the CapEx numerator to include expenditure that is part of a plan to expand Taxonomy-aligned activities or to allow Taxonomy-eligible activities to become Taxonomy-aligned, subject to the plan conditions in that annex.

The workflow should force a clear choice between three numerator paths: CapEx already related to aligned assets or processes, CapEx under a qualifying CapEx plan, or CapEx for purchases of aligned output and individual measures. Mixing those paths makes later KPI explanations and assurance review harder.

A defensible CapEx plan file should prove the conditions that make the plan countable. The Disclosures Delegated Act requires the plan to aim at expansion of aligned activities or upgrade of eligible activities to alignment within five years, with a longer period allowed only where objectively justified by specific features of the activity and upgrade, up to a maximum of ten years.

The same source requires disclosure at economic-activity aggregated level and approval by the management body of the non-financial undertaking, either directly or by delegation. Commission guidance says the five-to-ten-year period starts from that approval, and recommends integrating CapEx plans into CSRD transition plans.

The evidence workflow must connect Taxonomy conclusions to the accounting CapEx base. Annex I defines the CapEx denominator by reference to additions to tangible and intangible assets during the financial year before depreciation, amortisation, re-measurements, revaluations, impairments, and fair-value changes, and also includes additions from business combinations.

Where an asset may be used for both aligned and non-aligned projects, Commission guidance says only the proportion of CapEx effectively helping to carry out Taxonomy-aligned activities should be allocated as aligned, using a non-financial metric based on verifiable evidence. Prepayments should not be treated as eligible or aligned CapEx before the relevant CapEx is recognised under the applicable accounting standards.

CapEx plan evidence cannot stop at approval. If the relevant technical screening criteria are amended before completion, the undertaking must either update the plan within two years so the activities are aligned with the amended criteria upon completion or restate the CapEx KPI numerator. If the plan no longer meets the CapEx plan conditions, previously published CapEx KPIs must be restated.

Annex I also requires disclosure of material changes during the reporting period in relation to implementation of disclosed CapEx plans. The evidence workflow should capture what changed, why it changed, the impact on the plan, and any restatement of CapEx and OpEx KPIs for past reporting years when the change affects those KPIs.

Before the annual report, Article 8 table, investor explanation, or internal dashboard is finalized, run stop checks that are specific to CapEx plans. The aim is to avoid counting expenditure because a roadmap exists, while missing the legal evidence that the roadmap is an approved CapEx plan for Taxonomy purposes.

The workflow should also prevent overclaiming. Eligibility does not prove alignment, financing source does not prove alignment, a prepayment is not enough before accounting recognition, and an allocation to mixed-use assets must be supported by verifiable evidence.