Information unaudited Information ungeprüftEU Taxonomy

With the EU Taxonomy, the European Union (EU) has defined criteria for environmentally sustainable economic activities. Our key taxonomy figures provide information as to the extent to which our central assets are in line with the EUʼs environmental objectives.

The EU Taxonomy sets out science-based criteria for classifying economic activities as environmentally sustainable. In the 2024 reporting year, the disclosure of these criteria has assumed additional significance in the context of the Corporate Sustainability Reporting Directive (CSRD). The number of companies having to file reports has also increased. Apart from “climate protection” and “climate change adaptation”, the focus is on the following four objectives:

• sustainable use and protection of water and marine resources;
• transition to a circular economy;
• pollution prevention and control;
• protection and restoration of biodiversity and ecosystems.

Economic activities that contribute to one of the stated environmental objectives and have no negative impact on any of the others are regarded as environmentally sustainable or taxonomy-aligned. An economic activity covered by the EU Taxonomy, but which does not satisfy all the relevant criteria, should be classed as taxonomy-eligible.

Green asset ratio (GAR)

The core key figure for banks in relation to the EU Taxonomy is the green asset ratio (GAR). It indicates the proportion of balance sheet assets associated with environmentally sustainable economic activities. These include the following: loans; bonds and equity instruments from financial and non-financial companies that have to publish a sustainability statement in accordance with the CSRD; mortgage loans; building refurbishment and car loans to private households; loans to local public authorities (residential construction financing and other specialist financing) as well as other repossessed real estate collateral held for sale.

For the purposes of calculating the GAR, we analysed the relevant assets, along the regulatory scope of consolidation, in line with the regulatory requirements. This was done on the basis of the technical screening criteria for the EU Taxonomy, taking account of the data available. In the case of bonds and equity instruments, we also used information from an established external data provider. Building on this, we weighted the gross carrying amounts of the individual positions with the proportion of revenues and investment expenditure (CapEx) associated with environmentally sustainable economic activities and came up with a total. We adopted a look-through approach to the material LLB funds.¹ A conservative valuation approach was chosen for external funds, and the volumes were subsumed into other assets without being assessed (i.e. not assessed as being either taxonomy-eligible or taxonomy-aligned). For technical reasons, we are currently unable to assess any taxonomy-related information for green bonds, so have not assessed these accordingly.

1The LLB funds where only a portion of the position is held, and where the amounts concerned are not material relative to the total volume, were allocated to other assets without taxonomy values.

As regards our loans, which account for the largest potential proportion of our green asset ratio, it is not yet possible to present an objective picture of environmental sustainability under the EU Taxonomy. This reflects both the current state of data availability, which is typical for the sector, and specific, methodology-related challenges. Therefore, financing activities do not yet support a sufficiently granular allocation to economic activities under the EU Taxonomy, which means a reliable assessment of taxonomy eligibility or alignment is not possible. In addition, for a substantial proportion of our mortgage loans, there are no national thresholds for near zero-energy buildings or corresponding evidence such as energy certificates. This information is essential for the purposes of assessing alignment. Because of this, a conservative approach, without a specific value, is taken to the reporting of loans involving private households and financing for local or regional government.

Overview of Taxonomy KPIs

In addition, there are no loans due from financial and non-financial companies subject to a disclosure obligation at the reporting date. As at 31 December 2024, the LLB Group has one taxonomy-relevant property in its possession that was acquired as a result of default or at auction. This property is shown as taxonomy-eligible.

Overall, there is no improvement in the total GAR compared with the previous year. The proportion of taxonomy-aligned assets (across all activity classes) amounts, as at 31 December 2024, to 0.05 per cent Group-wide in revenue-based terms (31.12.2023: 0.04 %) and 0.06 per cent in investment-related terms (31.12.2023: 0.10 %). We are working on developing a more complete and objective picture of our environmentally sustainable assets. To improve the situation, we have, among other things, launched an internal project that addresses the existing challenges and helps increase data quality. The Detailed EU Taxonomy disclosure section contains further details on taxonomy ratios.

Performance indicator for off-balance-sheet exposure

The GAR only includes balance sheet exposures. The Taxonomy Regulation envisages a separate performance indicator (key performance indicator, KPI) for off-balance-sheet exposure (financial guarantees to companies and assets under management). It relates to the proportion of assets under management and financial guarantees associated with economic activities deemed to be environmentally sustainable under the EU Taxonomy to the assets under management or financial guarantees.

The proportion of off-balance-sheet exposures associated with economic activities deemed to be environmentally sustainable under the EU Taxonomy, as at 31 December 2024, comes to 7.95 per cent based on revenue (31.12.2023: 4.01 %) and 13.02 per cent in investment-related terms (31.12.2023: 8.66 %). This ratio is due to assets under management.² In relation to this, we took a similar approach to balance sheet exposures for the calculation and used an external data provider for bonds and equity instruments. As regards external funds, it was technically impossible to distinguish, as to amounts involved, between disclosure-relevant volumes. For this reason, we have not included the associated book values in the amount of CHF 1.7 billion in the total volume. At the reporting date, we do not hold any relevant financial guarantees.³ The Detailed EU Taxonomy disclosure section has further details.

Other economic activities and assets

The economic activities defined under the EU Taxonomy relating to nuclear energy and fossil gas are presented in terms of revenue and investment in the Detailed EU Taxonomy disclosure (nuclear energy and fossil gas) section. The ratios are calculated analogously to the key figures listed for the green asset ratio, which takes account of loans, bonds and equity instruments. Off-balance-sheet exposures (financial guarantees and assets under management) are also shown on a consolidated basis. It is clear from this that the LLB Group has a non-material portion of exposures in the areas of nuclear energy and fossil gas. In terms of own investments, we have decided on an almost total phase-out from companies in the fossil fuel sector (see chapter on Climate change mitigation).

Business activities in the areas of nuclear energy and fossil gas

2Asset management mandates (LLB Comfort and wiLLBe) including own funds within the LLB Group. Investment advisory mandates were not the focus in the 2024 reporting year.

3Liabilities from credit guarantees, warranties and calls on shares and other equities.

LLB Immo Kapitalanlagegesellschaft m.b.H., a subsidiary of Liechtensteinische Landesbank (Österreich) AG, places emphasis on the integration of sustainability criteria in relation to management of the real estate portfolio. Some of its funds have already been awarded the Austrian Ecolabel or have a report from the Austrian Society for Environment and Technology. Currently, four real estate funds with a total volume of EUR 1.1 billion are under management. Real estate assets amount to around EUR 1.5 billion. Of these, 99.35 per cent were classed as taxonomy-eligible and 25.25 as taxonomy-aligned.

We were helped with the classification by an established external service provider, who specialises in the analysis and presentation of sustainable real estate data. As at the reporting date, the real estate volume of the LLB Semper Real Estate fund came to EUR 965.7 million, of which 98.97 per cent was classified as taxonomy-eligible and 13.26 per cent as taxonomy-aligned. The LLB Group has invested around CHF 13.7 million in this mutual real estate fund via its financial investments. The position was allocated to other assets.

Challenges and outlook

The information provided is based on current legislation and extensive discussions in the industry. We have ensured, for example, that no double counting has occurred and no estimates have been used for disclosure purposes. We have also established, in the course of our quality assurance process, that there are some discrepancies in the underlying data, both in comparison with another established data provider and also in connection with the information explicitly disclosed by the counterparties. Given the complexity and the amount of work involved, as well as to ensure uniformity of the data basis for consistent reporting, the information has been presented unchanged and in its original form. In light of the challenges involved, a conservative disclosure approach was preferred overall.

It must be stressed that implementation, on account of fast-moving legal developments, is an ongoing task and that data quality – and therefore the objective sustainability situation – is being continuously improved over time. The EU Taxonomy is supporting the LLB Groupʼs ambitious sustainability strategy in this respect and can be integrated into the product / service landscape with increasing relevance. Despite the challenges referred to in terms of data collection, as well as the methodological and regulatory uncertainties, we are continuing to work on ensuring our green asset ratio matches the objective situation of our green assets in coming years. Currently, this is still not possible due to the wider conditions referred to and a lack of customer information / evidence – for example, in the lending business. Our commitment to embedding these sustainability aspects within our business activities remains unchanged and will be further strengthened in collaboration with customers, authorities and relevant market participants.