Impact, risk and opportunity management

[ESRS E4 ESRS 2 IRO-1; GRI 304-1, 304-2, 304-3]

Assessment: State of Lenzing’s influence and dependencies on biodiversity and ecosystems

The Lenzing Group uses two different types of forestry for its wood sourcing, depending on the global region: sustainable and multi-functional forest management is applied in the Northern hemisphere by Lenzing’s wood and pulp suppliers in Europe and North America. Plantation forestry with high sustainability standards is conducted mainly in the Southern hemisphere by Lenzing’s pulp supplier in South Africa and by the new pulp plant in Brazil. In Lenzing’s joint venture project, LD Celulose, with Dexco (formerly Duratex) in Brazil, wood is sourced from FSC^®-certified plantations of currently more than 90,000 hectares. Plantation forestry can reduce deforestation pressure on natural (primary) forest areas by providing wood at very high yields per unit area as an alternative to sourcing it from natural forests. FSC^® certification entails management criteria to protect biodiversity¹, as determined in detail in the national standards.

Lenzing’s impacts and dependencies

Wood is the most important raw material for Lenzing. The main source of potential impact from the Lenzing Group’s operations and supply chain is therefore connected to land use by forestry. Lenzing also mainly depends on biodiversity and the proper functioning of healthy forest ecosystems that provide the raw material of wood. Negative effects on biodiversity can arise from over-intensified utilization of forests. On the other hand, the positive effects of sustainable forest management on biodiversity and ecosystems are well known² and can be further explored and implemented.

Semi-natural forests do not require irrigation. Plantations of LD Celulose and those of Lenzing’s suppliers are situated in areas with sufficient rainfall, this is a legal requirement for establishing plantations in the respective countries. Therefore, it can be assumed that groundwater levels are not significantly affected and salinity levels in soils are not increased due to wood sourcing in Lenzing’s sphere of influence.

In the case of semi-natural forests, it can be assumed that impacts on native species and on biodiversity will be long lasting, since many areas have been managed in this way for several forest generations. An internal case study from 2022 commissioned by Lenzing on Austrian forests in conjunction with the Austrian environmental NGOs umbrella organization Umweltdachverband has pointed out that there are numerous species living in managed beech forests in Austria, among them also red-list species, which have adapted to the management practices. The study concluded that reversing these semi-natural forests to completely natural forests (stopping all management) could potentially harm these species. For a summary of the findings, see the “Biodiversity and ecosystems” focus paper.

Additional potential impacts on water, soil, and air can arise from production facility emissions or from transportation. For more information, please see the chapters “Pollution”, “Water and marine resources” and “Raw material security”.

At the end of the value chain of textile and nonwoven products, biodiversity impacts can arise from non-degradable materials entering the environment, if those products are not correctly disposed of. For more information on biodegradability of Lenzing’s fibers, please see the “Resource use and circular economy” chapter.

Monitoring

Biodiversity and ecosystem status monitoring in the Lenzing Group is performed in the global regions via two different approaches. These approaches are explained below. Pulp suppliers apply their own monitoring schemes.

In Europe, biodiversity is monitored at a national level according to the Forest Europe Criteria. Results are published regularly in the European overview^3,4.

The pulp mill in Brazil is supplied with wood from plantations owned and maintained by LD Celulose, which is also responsible for monitoring. To ensure that the plantation management maintains compliance with the requirements of the Brazilian Forest Code, LD Celulose has a framework of internal and external processes. There are ongoing biodiversity monitoring projects in which data on local biodiversity and the potential expansion of invasive species is monitored. The internal GIS (Geographic Information System) team collects satellite imagery on an annual basis and evaluates the location, size and status of the Legal Reserve areas (LRs) and Permanent Preservation Areas (APPs) on the managed land. The data is also provided to the field teams in the form of maps. Furthermore, periodic field audits by internal environmental specialists ensure that the quality of LRs and APPs is maintained.

Dexco started its biodiversity research projects in its managed areas in the 1970s. LD Celulose has continued to monitor flora and fauna in the areas that have remained under its management and those directly influenced by the mill site through partnerships with universities⁵, in addition to internal programs. These programs are carried out annually in the dry and rainy seasons and aim to monitor possible impacts on local biodiversity. The programs are also required by the Brazilian environmental agency.

Attempts to quantify impacts from land use on biodiversity usually consist of two components: the quantity of land (forest) area used and the intensity of use. The land area of plantations managed by LD Celulose in Brazil is known exactly (table “Quantitative description of areas managed and influenced by LD Celulose”). The estimation of the other lands’ area used for Lenzing’s wood sourcing is part of the initiated “Biodiversity concept” project. Variations in data availability and data quality can arise depending on the forest type, the land ownership, the sourcing area and the supply chain position (wood or pulp sourcing to Lenzing) (table “Quantity of forest area used for Lenzing’s wood sourcing”). In 2023, first attempts to estimate forest area use in the direct wood supply to Lenzing’s European pulp mills were started. The work is still ongoing so no results can currently be shared.

Conservation within LD Celulose’s plantations

The plantation managed by LD Celulose contains a proportion of conservation area dedicated to biodiversity protection in accordance with legal requirements and FSC^® standards, known as a High Conservation Value Area (HCVA). LD Celulose’s forestry unit is supervised by ecology and environmental specialists who were also responsible for identifying the HCVA. The area contains Pseudopaludicola facureae, a species of frog found only in this region of Minas Gerais. This means that a higher level of monitoring is necessary as well as extra precautions for fire protection. It is a KPI (key performance indicator) for LD Celulose to protect endemic species and their habitat. The forestry unit constantly works to identify any areas that need to be classified as HCVA to ensure the protection of animal and plant species. For more information, please see the “Biodiversity and ecosystems” focus paper.

Brazilian environmental law determines the maintenance of Permanent Preservation Areas (APPs) and Legal Reserve (LR) areas. APPs are specific areas of vegetation, such as ciliary forests, areas of vegetation adjacent to water courses and areas of vegetation on slopes. Legal Reserve areas meet the obligation to preserve at least 20 percent of a property in a rural area. At the moment, 19,884 hectares of LD Celulose are protected areas (table “Quantitative description of areas managed and influenced by LD Celulose”).

In terms of conservation units that are outside the managed areas but close to the LD Celulose planting area, Parque Estadual do Páu Furado is located some 30 kilometers from the plantation. At this distance, the conservation unit is not impacted by LD Celulose’s activities. The plantation is roughly 800 kilometers away from the Amazonas.

The main direct land use areas of the Lenzing Group are the plantations in Brazil, currently covering a total of 90,200 hectares (902 km²). These areas were converted to agricultural land several decades ago. Large areas nearby are generally used for planting soy and coffee or grazing livestock. The trees within the plantation are eucalyptus species. A breeding and cloning selections program is continuing to improve the yield and robustness of the trees. LD Celulose does not use genetically modified organisms (GMOs).

Approximately 200 species of flora and 450 species of fauna were identified in the forest management units of LD Celulose. Among these species, the presence of animals such as the maned wolf and the giant anteater, which are characteristic of the region, is particularly noteworthy. No significant reduction in species has been registered in LD Celulose’s plantation since the beginning of monitoring efforts

Policies

[ESRS E4-2; GRI 3-3c]

Lenzing Group’s Wood and Pulp Policy

In its Wood and Pulp Policy, Lenzing is committed to procuring wood and dissolving wood pulp exclusively from non-controversial sources.

In order to protect the world’s remaining ancient and endangered forests as well as the biodiversity and ecosystems’ integrity within these forests, Lenzing is committed to avoiding the use of wood and pulp containing wood sourced from regions such as the Canadian and Russian Boreal Forests, Coastal Temperate Rainforests, tropical forests and peatlands of Indonesia, the Amazon and West Africa. Lenzing states in its Wood and Pulp Policy that it is not procuring wood from plantations established after 1994 through the significant conversion of natural forests.

Regular risk assessments, audits, on-site visits, and independent third-party certification of sustainable forest management programs ensure compliance with the policy and Lenzing’s commitment to no-deforestation. For more information, please see the “Wood and pulp” focus paper.

Additionally, Lenzing implemented a bioenergy policy in 2023 as an extension to its wood and pulp policy. This policy further ensures that no biomass connected to deforestation is used for energy use in the Lenzing Group.

Lenzing’s actions

[ESRS E4-3; GRI 3-3d]

A summary of the “Actions taken” can be found in the management approach at the beginning of this chapter.

In the presentation of Lenzing’s biodiversity and ecosystem related actions, the AR³T framework (Avoid, Reduce, Restore, Regenerate, Transform) is considered a useful sorting scheme. In the following it can be seen how Lenzing implements this framework within its own sphere of influence. While Lenzing supports several restoration and regeneration projects across the world, within and outside of its value chain, it does not make use of biodiversity offsetting.

Avoid: Biodiversity due diligence via sustainable sourcing

Wood and dissolving wood pulp are Lenzing’s most important raw materials. The Lenzing Group assumes responsibility by focusing on sustainable sourcing. Lenzing only sources wood and dissolving wood pulp from semi-natural forests and plantations (as defined by the Food and Agriculture Organization of the United Nations⁶). Moreover, it does not source materials from natural or ancient and endangered forests.

Forest certificates

Lenzing’s wood procurement management system ensures that all wood is sourced from legal and sustainably managed sources. Lenzing demonstrates that wood sourcing complies with its high standards through verification based on FSC^® and PEFC certification systems. All wood and dissolving wood pulp used by the Lenzing Group is either certified by FSC^® and PEFC or controlled in line with these standards (see figures “Certification status”, “Certification status – overall certified and controlled wood” and “Certification status – FSC® Mix and FSC® controlled wood” in the “Business conduct” chapter).

The forest certificates held by the Lenzing Group cover general criteria for biodiversity and forest ecosystem protection according to international standards. Additional criteria can be found in the national standards, which vary between countries. For example, the percentage of area set aside for conservation varies between countries and even regions within countries. For details on wood and pulp certification, see the “Business conduct” chapter.

Reduce: Via circular economy approaches and climate targets

The aim is to use fewer inputs from natural resources, and to minimize the impact of greenhouse gas (GHG) emissions and pollution.

Pollution prevention

In accordance with the strategic focus area of “Greening the value chain”, the Lenzing Group has targets and programs in place to reduce emissions (including GHG emissions) affecting water and air. This is achieved by investing in cleaner energy or creating closed loop cycles e.g. for chemicals. For more information please see the “Climate change” and the “Pollution” chapter.

Resource use

Lenzing is committed to the cascading use of wood. This means that different qualities of wood are utilized for different applications in a hierarchy of their value. Lenzing uses timber generated from small trees through thinning, and from parts of large trees, that are unsuitable for high-grade products, such as furniture or construction. Furthermore, wood chips that are a by-product of saw mills are also used.

Lenzing’s biorefineries produce dissolving pulp as the main product, as well as several biorefinery products and renewable energy. This results in 100 percent utilization of the wood. For details, please see the “Responsible production” focus paper and the “Resource use and circular economy” chapter.

¹ FSC Global Development GmbH (2014). FSC^® and Plantations. FSC’s position on plantations. Available at: https://ic.fsc.org/download.fscs-engagement-with-plantations.a-1296.pdf [Accessed 6 February 2024]

² Kunz 2007: Artenschutz durch Habitatmanagement. chapter 6.2 Wiley-VCH

³ Forest Europe 2015, and 2020: State of Europe’s Forest 2015. Ministerial Conference on the Protection of Forests in Europe, June 2016., and 2020, State of Europe´s Forest 2020. https://foresteurope.org/publications/

⁴ Indicators of sustainable forest management in Austria reports from 2017 and 2020. https://info.bmlrt.gv.at/themen/wald/walddialog/dokumente.html, Czech Republic and Slovakia forest reports: Ministry of Agriculture of the Czech Republic, Information on Forests and Forestry in the Czech Republic by 2017 (English), Zpráva o stavu lesa a lesního hospodářství České republiky v roce 2020 (Czech). Ministry of Agriculture and Rural Development of the Slovak Republic, Report on the Forest Sector of the Slovak Republic 2020.

⁵ Duratex Annual Report 2018. Available at: https://www.dex.co/noticias/duratex-divulga-relatorio-anual-2018/ [Accessed 15 February 2021]

⁶ Carle, J., and Holmgren, P. (2003). Working paper 79. Definitions Related to Planted Forests. In: Food and Agriculture Organization of the United Nations (2003). Forest Resources Assessment Program Working paper series. Available at: http://www.fao.org/forestry/25853-0d4f50dd8626f4bd6248009fc68f892fb.pdf [Accessed February 15, 2021]