C8 Sector Exposure and Related Revenue: How to Determine the Correct Boundary

C8 is an own-activity test followed by a related-revenue calculation.

C8 can be misapplied in both directions. A diversified group may omit a small but real sector activity because it is not its main NACE code, while a bank, software provider or logistics company may incorrectly report customer-industry exposure as if it were revenue from its own fossil-fuel or tobacco activity.

The disclosure is short, but the control work is not. The reporting team needs an activity map, product and revenue-account evidence, a documented consolidation boundary and a clear distinction between own operating revenue and exposure to another entity’s sector.

REQUIREMENT BOUNDARY / C8 says “if the undertaking is active” in a listed sector, it discloses “related revenues derived from activities” in that sector. The wording supports an activity-and-revenue test. It does not instruct every undertaking to look through to the sectors of customers, borrowers, investees or suppliers and report those counterparties’ revenue as its own.

Customer industry is a contextual fact, not a substitute for the own-activity test.

Lock the reporting basis. Confirm whether the sustainability report is individual or consolidated and list the entities and operations included.

Build an activity inventory. Use actual products, services, production processes, licences, contracts and sites—not only the principal registered NACE code.

Map each activity to a C8 category. Record the classification source, product description, legal entity and reviewer judgement.

Identify related revenue accounts. Trace product or service revenue to the general ledger and financial-statement revenue definition.

Aggregate and eliminate consistently. For a consolidated report, remove intragroup revenue and avoid double counting mixed products or bundled contracts.

Disaggregate fossil-fuel revenue. Separate coal, oil and gas on a documented basis and explain material estimation or allocation methods.

Approve the conclusion. Finance, legal/compliance and the reporting owner should sign off the activity classification, amount and public wording.

The Standard does not prescribe a new revenue-recognition system. A proportionate approach starts from the undertaking’s financial-accounting revenue and identifies the portion derived from the in-scope activity. The calculation should therefore use the same reporting period, entity perimeter and currency as the report, subject to a documented conversion or reconciliation where necessary.

Historical Recommendation guidance reproduced thresholds used for excluding companies from EU Paris-aligned Benchmarks, including revenue thresholds for coal, oil, gaseous fuels and high-intensity electricity generation. The current C8 text is framed differently: if the undertaking is active in the listed sector, it discloses related revenue. Unless current official guidance expressly imports a threshold into C8, the historical benchmark thresholds should not be used as an automatic de minimis exemption from the current disclosure.

DO NOT SAY / “Our fossil-fuel revenue is below the historical benchmark threshold, so C8 does not apply.” A safer process records the historical threshold as contextual information, applies the current own-activity wording, and seeks technical/legal review where the classification remains uncertain.

ILLUSTRATIVE SCENARIO / A consolidated group has four subsidiaries: an agrochemical manufacturer producing pesticides; a packaging company supplying cigarette producers; a renewable-energy developer with a small natural-gas trading desk; and a finance subsidiary lending to coal producers. The group includes pesticide revenue under specified chemicals and the gas-trading margin or revenue under gas using its approved accounting basis. It does not classify tobacco-packaging revenue as tobacco cultivation or production, and it does not classify lending income as coal revenue. It documents both exclusions, reports gas separately from any oil or coal revenue, eliminates intragroup sales and retains product, contract and ledger evidence. This scenario illustrates the logic; classification must be tested against the final legal text and facts.

A group activity map preserves included and excluded judgements and prevents double counting.

ADAPT TO FACTS / During 2026, the Group derived €4.8 million of external revenue from activities classified within chemicals production Division 20.2 and €1.2 million from natural-gas trading. It derived no revenue from prohibited weapons, tobacco cultivation or production, coal or oil activities. The calculation covers the consolidated entities listed in B1, uses revenue recognised in the financial ledger, eliminates intragroup sales and directly tags products and contracts where available. Gas trading revenue is reported separately from other energy activities. Revenue from financial services provided to customers operating in fossil-fuel sectors is excluded because it does not arise from the Group’s own fossil-fuel activity; this boundary judgement was reviewed by Finance and Legal.

MYTH / REALITY / Myth: “If our customers operate in oil and gas, C8 requires us to report all revenue from those customers as fossil-fuel revenue.” Reality: C8 is framed around the undertaking being active in a listed sector and revenue derived from that activity. Customer-sector information can be useful elsewhere, but it should not be relabelled as the undertaking’s own C8 revenue without a supported basis.