The European Commission’s action plan on financing sustainable growth led to the creation of an EU classification system for sustainable activities, being an EU taxonomy. As a listed company with more than 500 employees, Galapagos is in scope of the EU Taxonomy Regulation26. For reporting over the fiscal year 2022, Galapagos has to disclose the proportion of its 2022 turnover, capital expenditures (‘CapEx’), and operating expenses (‘OpEx’) eligible and aligned under the EU Taxonomy on sustainable activities.
The EU Taxonomy introduces a classification system for environmentally sustainable activities and an activity is deemed environmentally sustainable if it meets all of the following overarching criteria:
substantially contributing to at least one of the six environmental objectives of the EU Taxonomy Regulation: (i) climate change mitigation; (ii) climate change adaptation; (iii) sustainable use and protection of water and marine resources; (iv) transition to a circular economy, (v) pollution prevention and control; and (vi) protection and restoration of biodiversity and ecosystems;
not significantly harming any of these environmental objectives;
complying with minimum safeguards; and
complying with certain scientifically based technical screening criteria (‘TSCs’) established by the EU Commission.
The EU has published a catalog of economic activities that can be considered as Taxonomy-eligible activities; the determination of eligibility happens on the basis of the description of activities. An eligible activity becomes Taxonomy-aligned when it meets all the aforementioned overarching criteria, which includes that such activity should substantially contribute to at least one of the six environmental objectives. However, only activities that contribute to the two first environmental objectives (climate change mitigation (“CCM”) and climate change adaptation (“CCA”)) have been formally adopted so far.
Following thorough analysis of the EU Taxonomy legal framework27, we do not consider our core business activities, being discovering, developing and commercializing innovative medicines, to be in scope of the Climate Delegated Act. Our core economic activities qualify as EU Taxonomy non-eligible economic activities, and do not substantially contribute neither to CCM nor to CCA, and are therefore are not EU Taxonomy-aligned.
For the determination of turnover, CapEx and OpEx during this analysis, we use the reported data in the 2022 consolidated financial statements included in this report:
Turnover covers all business activities of Galapagos at 31 December 2022 and the denominator can be reconciled with the 2022 IFRS total net revenues recognized pursuant to €505.3 million and disclosed in note 6, being the revenues from commercial sales and collaboration activities.
CapEx consists of additions to tangible and intangible assets during the financial year 2022 considered before depreciation, amortization and any re-measurements recognized by Galapagos pursuant to IAS 38. The denominator (total CapEx) can be reconciled with the sum of the lines ‘Impact of acquisitions of businesses’ and ‘Additions’ disclosed in notes 13 and 14 (total €170.0 million) of the consolidated financial statements. The majority of CapEx is associated with licences, rights, technology and in-process R&D acquired through a business combination, and building costs of new office spaces in Belgium and the Netherlands.
OpEx, according to the EU Taxonomy, is determined by the direct non-capitalized costs of research and development, building renovation measures, short-term leases, maintenance and repair and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third-party outsources that are necessary to ensure the continued and effective functioning of such assets. These costs are for the majority associated with our R&D expenditure, as disclosed in note 7 (total €515.1 million).
Based on available data and the assessment of requirements, we have no eligible activities to report. Taxonomy eligible Turnover, CapEx and OpEx is 0%, and as a result each are 100% Taxonomy not eligible, therefore not EU Taxonomy-aligned.
Please refer to the Annexes to this Annual Report for the disclosure on KPIs of non-financial undertakings as required by Annexes II of the Climate Delegated Act.
The “non-eligibility” under the EU Taxonomy refers to the fact that our activities currently remain outside of the scope of the economic activities for which TSCs have been developed under the Delegated Regulations. We want to clarify that revenues, CapEx and OpEx currently considered non-eligible under the EU Taxonomy Regulation should not be interpreted as an indication of our performance in pursuing or achieving certain corporate sustainability objectives or our “greenness”.
We note that the required disclosures under the EU Taxonomy Regulation will keep evolving and that we will continue to consider its impact as well as future reporting obligations.
Proportion of turnover from products or services associated with Taxonomy-aligned economic – 2022
Taxonomy- aligned proportion of turnover, year N (18)
Taxonomy- aligned proportion of turnover, year N-1 (19)
Category (enabling activity or) (20)
Category (transitional activity) (21)
In thousands of €
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1)
N/A
Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)
N/A
Total (A.1 + A.2)
N/A
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities (B)
505,280
100%
Total (A + B)
505,280
100%
(1)
We disclose the tables in accordance with Annex II of Article 8 Climate Delegated Act and Article 2 of the Complementary Climate Delegated Act, although Galapagos concluded that our core economic activities qualify as taxonomy-non-eligible activities (concurrently resulting in the absence of any taxonomy-eligible activities) and nil alignment with the environmental objectives listed under the EU Taxonomy Regulation; hence we consider the informational value of this tables minimal. In addition, Galapagos does not perform any fossil gas and nuclear energy related activities, as covered by the Complementary Climate Delegated Act.
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – 2022
The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.
NO
2.
The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.
NO
3.
The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.
NO
Fossil gas related activities
4.
The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.
NO
5.
The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.
NO
6.
The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.
Amount and proportion (the information is to be presented in monetary amounts and as percentages)
CCM + CCA
Climate change mitigation (CCM)
Climate change adaptation (CCA)
Row
Economic activities
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KP
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
4.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
6.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI
Amount and proportion (the information is to be presented in monetary amounts and as percentages)
CCM + CCA
Climate change mitigation (CCM)
Climate change adaptation (CCA)
Row
Economic activities
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the nominator of the applicable KP
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the nominator of the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the nominator of the applicable KPI
-
-
-
-
-
-
4.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the nominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the nominator of the applicable KPI
-
-
-
-
-
-
6.
Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the nominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the nominator of the applicable KPI
-
-
-
-
-
-
8.
Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI
-
-
-
-
-
-
Taxonomy-eligible but not taxonomy-aligned economic activities
Amount and proportion (the information is to be presented in monetary amounts and as percentages)
CCM + CCA
Climate change mitigation (CCM)
Climate change adaptation (CCA)
Row
Economic activities
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-eligible but non taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KP
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-eligible but non taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of taxonomy-eligible but non taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
4.
Amount and proportion of taxonomy-eligible but non taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of taxonomy-eligible but non taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
6.
Amount and proportion of taxonomy-eligible but non taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI
-
-
-
-
-
-
8.
Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI
Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
2.
Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
4.
Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
6.
Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI
505,280
100%
170,015
100%
515,083
100%
8.
Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI
505,280
100%
170,015
100%
515,083
100%
Development
All activities required to bring a new drug to the market. This includes preclinical and clinical development research, chemical and pharmaceutical development and regulatory filings of product candidates
2626 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088.
2727Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation, and the legislation set forth under footnote 1-3.
