One of the most common sources of confusion in Article 8 reporting is the distinction between eligible, aligned, enabling, and transitional KPIs (i.e., Turnover, CapEx and OpEx).

Here is a breakdown:

⭕ Eligible activity – is “in scope”

Turnover (or CapEx or OpEx) is eligible when it comes from an economic activity listed in the EU Taxonomy (i.e., it appears in the Climate Delegated Act or Environmental Delegated Act), regardless of whether the company meets the technical screening criteria.

➡️ Eligibility = in scope, not green. It is the first filter in Article 8: companies must disclose the share of turnover, CapEx, OpEx associated with Taxonomy‑eligible activities before assessing alignment.

⭕ Aligned activity – is “fully compliant”

Turnover (or CapEx or OpEx) is aligned when the activity:

🌿 Substantially contributes to one EU environmental objective

🌿 Does no significant harm to the other environmental objectives

🌿 Complies with the technical screening criteria

🌿 Meets minimum safeguards (on an enterprise level)

➡️ Alignment = fully Taxonomy‑compliant. This is the KPI investors look at to understand how “green” a company truly is.

⭕ Enabling activity – “makes others green”

Enabling activities generate turnover (or CapEx or OpEx) by helping other activities achieve substantial contribution (e.g., components for wind turbines, low‑carbon inputs). They are not green on their own, but they are essential to green outcomes.

➡️ Enabling activities are a subset of aligned activities – not an alternative.

Financial products must disclose enabling activities separately.

⭕ Transitional activity – is “on the pathway”

Transitional activities apply where no low‑carbon alternative exists yet, but the activity is on a credible decarbonisation pathway. They must:

▪️ Have lower emissions than the sector average
▪️ Avoid lock‑in
▪️ Not hinder low‑carbon alternatives
▪️ Tighten criteria over time

➡️ Transitional = necessary interim activities on the path to net zero. Also disclosed separately in financial product reporting.

👉 How they fit together in Article 8 KPI reporting:

▪️ Eligible = activity appears in the Taxonomy

▪️ Aligned = meets all SC + DNSH + safeguards + TSC

▪️ Enabling = subset of aligned

▪️ Transitional = subset of aligned

Enabling and transitional activities do not replace alignment – they refine it.

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