EU Taxonomy Regulation What should teams do about CapEx plans?

Use the CapEx plan route only when the CapEx KPI numerator is relying on Annex I Section 1.1.2.2 point (b): expenditure that is part of a plan to expand Taxonomy-aligned activities or upgrade Taxonomy-eligible activities so they become Taxonomy-aligned.

Do not use the label for every sustainability budget. Annex I also has separate CapEx numerator routes for assets or processes already associated with Taxonomy-aligned activities and for certain purchases of Taxonomy-aligned output or individual measures. The file should identify which route is being used before the amount is reported.

The plan must aim either to expand Taxonomy-aligned economic activities or to upgrade Taxonomy-eligible economic activities so they become Taxonomy-aligned within five years. A longer period is allowed only where objectively justified by specific features of the activity and upgrade, with a maximum of 10 years.

The plan also has to be disclosed at economic-activity aggregated level and approved by the management body of the non-financial undertaking, directly or by delegation. Commission guidance says the five-to-ten-year period starts from that approval.

The evidence should connect the legal route to the accounting amount. Annex I defines the CapEx denominator by reference to additions to tangible and intangible assets during the financial year, and the undertaking should explain how CapEx was determined, allocated to the numerator, and linked to related line items.

For CapEx plan items, keep a register that can be read at activity level. The Commission Notice says different CapEx items under points (a), (b), and (c) of Section 1.1.2.2 must be presented at activity level, with values explained in the specifications and contextual information.

If relevant technical screening criteria are amended before completion of the CapEx plan, Annex I requires the undertaking either to update the plan within two years so the activities are aligned with the amended criteria at completion, or to restate the CapEx KPI numerator. Updating the plan restarts the plan period.

If the CapEx plan fails to meet the stated conditions, the previously published CapEx KPI must be restated. Teams should therefore monitor delegated-act changes, plan delays, scope changes, and implementation changes during each reporting cycle.

The main mistake is treating a broad transition budget, green-finance deck, or capital-allocation narrative as a Taxonomy CapEx plan without the Annex I evidence. A useful public answer should say which activity is affected, which CapEx route applies, what approval exists, what measures are planned, and how the amount flows into the KPI.

Teams should also avoid overclaiming. Eligibility does not prove alignment, a financing source does not make CapEx aligned, and prepayments should not be counted until the related CapEx is recognised under the relevant accounting standards.