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EU Taxonomy 2024 Statement

The European Commission’s action plan on financing sustainable growth led to the creation of an EU classification system for sustainable activities, also known as the EU taxonomy. As a listed company with more than 500 employees, Galapagos is in scope of the EU Taxonomy Regulation8. As indicated in the Delegated Regulation of (EU) 2021/2178, non-financial undertakings shall disclose the proportion of Taxonomy-eligible and alignment of economic activities in their total turnover, capital expenditure (“CapEx”), operational expenditure (“OpEx”) and the qualitative information starting from reporting year 2022, including comparative figures for eligibility related to climate change mitigation and adaptation. Starting in reporting year 2023, the proportion of Taxonomy eligibility has been disclosed for all remaining objectives.

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 European Commission.

The EU 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 of the aforementioned overarching criteria, which includes that such activity should substantially contribute to at least one of the six environmental objectives.

Following a thorough analysis of the EU Taxonomy legal framework9, which was initiated by reviewing our NACE10 codes and core activities in light of the EU Taxonomy identified activities, we do not consider our core business activities of discovering and developing innovative medicines to be in scope of the Climate Delegated Act.

Within the context of our ambition to transition into a low carbon organization by 2028, we screened the related activities and identified the following activities included in the EU Taxonomy:

  • Installation and operation of electric heat pumps;
  • Collection and transport of non-hazardous waste in source segregated fractions;
  • Transport by motorbike, passenger cars, and light commercial vehicles;
  • Installation, maintenance, and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings;
  • Acquisition and ownership of buildings;
  • Consultancy for physical climate risk management and adaptation.

In parallel with our commitment to meeting sustainability obligations and achieving our 2028 aspirations, we seek to fully comply with the minimum safeguards as set out in the EU Taxonomy Regulation. We aim to look holistically at sustainability efforts to ensure that meeting environmental standards does not come at the expense of human rights and fair competition and that we uphold high standards by complying with anti-bribery/anti-corruption and taxation laws. By doing this, we align our policies and activities with the principles set out in the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business & Human Rights, the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights.

For the determination of turnover, CapEx and OpEx, we use the reported data in the 2024 consolidated financial statements included in this report:

  • Turnover covers all continuing activities of Galapagos as of December 31, 2024 and the denominator can be reconciled with the 2024 IFRS total net revenues of €275.6 million as disclosed in note 7, which comprise collaboration revenues and supply revenues.
  • CapEx consists of additions to tangible and intangible assets during the financial year 2024 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 “Additions” disclosed in notes 14 and 15 (total €91.5 million) of the consolidated financial statements. The majority of CapEx is associated with payments for exclusive rights, software and databases, and property, plant and equipment (covering fully-owned and right-of-use assets).
  • 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 expenditure relating to the day-to-day servicing of assets of property, plant and equipment by Galapagos or third-parties 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 of €503.5 million, as disclosed in note 8.

Based on available data and the assessment of requirements, we report 0% Taxonomy eligible Turnover, and therefore 0% Taxonomy aligned. As a result of our 2028 ambition of becoming climate low carbon and the related investments, we report 3.15% Taxonomy eligible CapEx, with 3.03% Taxonomy aligned, and 0.69% Taxonomy eligible and aligned OpEx (as presented in the EU Taxonomy 2024 Tables).

Please refer to the EU Taxonomy 2024 tables for the disclosure on KPIs of non-financial undertakings as required by Annexes II of the Climate Delegated Act.

The limited “eligibility” under the EU Taxonomy refers to the fact that our core activities currently remain outside of the scope of the economic activities for which TSCs have been developed under the Delegated Regulations.

We note that the required disclosures under the EU Taxonomy Regulation will keep evolving and that we will continue to consider their impact as well as future reporting obligations.

8 8Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 establishing additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives.

9 9Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities.

10 10NACE is the “statistical classification of economic activities in the European Community” (NACE is the acronym for “Nomenclature statistique des activités économiques dans la Communauté européenne”) and is the subject of legislation at the European Union level , which imposes the use of the classification uniformly within all the Member States.