Management approach

Material topic: Climate change

[GRI 3-3]

Dissolving wood pulp and fiber production are energy-intensive processes that present a challenge for Lenzing. Where possible, the company has eliminated fossil-based energy or replaced it with renewable sources. Investments in state-of-the-art technologies and low-carbon production processes at all Lenzing sites have helped to increase energy efficiency and positively influence the company’s carbon emissions. Climate risks present opportunities for innovation and investment that make Lenzing more resilient to the changing regulatory landscape. The company demonstrates industry leadership as recognized in 2023 by the environmental non-profit organization CDP, which awarded Lenzing a triple “A” rating for Climate Change, Water Security and Forests for the third time. Lenzing is one of only 10 companies worldwide to achieve this rating. This sustained environmental effort has kept the company on track to meet its GHG emissions reduction targets of 42 percent in Scope 1 and 2 by 2030 and 25 percent in Scope 3 (baseline 2021), which also support the bigger goal of achieving a net-zero future by 2050 in line with the Paris Agreement.

Actual and potential negative and positive impacts, risks and opportunities

Positive

• Driving the transition to fossil-free production through a circular business model and innovation along the whole value chain
• Offering end consumers a truly sustainable option: textiles and nonwovens made from regenerated cellulosic fibers
• Future-proofing Lenzing’s growth with the implementation of carbon-neutral technologies and low-carbon products
• Becoming more resilient to the changing regulatory (e.g. tax) and business environment
• Strengthening credible sustainability leadership among all stakeholders, securing product differentiation and price premiums
• Collaborating with stakeholders and supply chain partners
• Attracting new and long-term impact investors

Negative

Own activities:

• Lenzing cannot contribute to its customers’ GHG targets if products no longer meet customers’ definition of sustainable raw materials
• Any climate-related disruption in one of the production sites (e.g. severe weather events, supply chain disruptions)
• Not meeting new regulations, technological problems with regard to transition to renewable energy sources (e.g. green hydrogen)
• Fossil-based energy and energy-intensive technologies carry potential regulatory, technology, market and corporate reputation risks
• Inefficient energy conversion technologies have a potential impact on CO₂ emissions

Business relationships:

• Risks of wood unavailability due to forest degradation (diseases, pests, etc.) as a direct consequence of higher average temperatures
• Potential regulatory, technology, market and corporate reputational risks
• Any climate-related disruption at one of the production sites would impact the business model and its success
• Implementation of regional and national emissions trading schemes
• Energy shortage could compromise Lenzing’s operations
• Financial impacts of potential cost increases in energy prices

Policies and commitments

• “Naturally Positive” sustainability strategy with “Decarbonization” and “Partnering for systemic change” as focus areas
• Implementation of science-based targets (SBTs)
• Commitment to UN Fashion Industry Charter for Climate Action
• ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 system certifications for the Lenzing Group
• Group Environmental Standard
• Bioenergy Policy
• Policy for Safety, Health and Environment (SHE) Policy

Actions taken

• Update and validation of science-based targets (SBTs)
• Update of roadmaps for group-level and site-level targets
• Governance and steering committee in place
• Inclusion of products made at Lenzing’s Prachinburi (Thailand) site in low-carbon portfolio
• Two additional production sites in the Lenzing Group use 100 percent renewable electricity from the grid, upping the number of sites relying solely on renewable electricity to six
• Purchase of a biomass power plant
• Power purchase agreements (PPA) with providers of renewable energy
• Continuous improvement of energy consumption
• CDP Climate Change “A” rating
• Environmental management system in accordance with ISO 14001:2015 (including risk assessment and internal audits to ensure the effectiveness of the measures implemented)

Sustainability targets, measures and progress

• “Near-term science-based target”
• “Long-term science-based net-zero target”

Stakeholders

• UN Fashion Charter
• Roadmap to Zero
• Renewable Carbon Initiative (RCI)
• GHG Protocol and CEPI
• Customers
• Suppliers

Responsible

• Board member: CPO/CTO
• VP Corporate Sustainability
• Senior Manager Carbon Strategy

Supporting

• Corporate Communications & Public Affairs
• Global Controlling
• Global Supply Chain/Purchasing
• Corporate Audit & Risk
• Global QESH
• Global Strategy and M&A
• Performance.Improvement.Technology
• Site managers