Information on environmentally sustainable economic activities according to the EU Taxonomy Regulation

According to the Regulations (EU) 2020/852 of the European Commission as of June 18, 2020, (EU) 2021/2139 of the European Commission as of June 4, 2021, (EU) 2021/2178 of the European Commission as of July 6, 2021, (EU) 2022/1214 of the European Commission as of March 9, 2022 and the adaption of the Environmental Delegated Act (EU) 2023/2485 and 2023/2486 as of June 27, 2023, the Lenzing Group is required to disclose three key performance indicators, turnover, CapEx and OpEx. For the 2023 financial year, the taxonomy-eligibility and taxonomy-alignment of the Lenzing Group’s economic activities must be disclosed for the environmental objectives 1-2. For the environmental objectives 3-6, only taxonomy compliance. The Lenzing Group designed an EU-Taxonomy accounting guideline for describing the methodology for reporting the three KPIs by following the time sequence and requirements as outlined in the Delegated Act dated January 1, 2023. 

To determine the Taxonomy-eligible activities, the Lenzing Group assessed all economic activities listed in the EU-Taxonomy for all consolidated group companies. The taxonomy-eligibility was determined on the basis of the description of the economic activities. Due to the current state of EU legislation, not all economic activities and industries are covered by the six currently applicable environmental objectives. In 2022, the first two environmental targets were reported, which did not include Lenzing Group’s core business activities (wood-based fiber production, dissolving wood pulp production and supporting activities). The publication of the four additional environmental objectives and the adaptation of the existing goals has not changed this situation. Thus, the information on Taxonomy-eligible economic activities for 2023 covers only a very small portion of activities within the Lenzing Group.  

The following activities are identified as Taxonomy-eligible: Manufacture of soda ash (CCM 3.12.), Transmission and distribution of electricity (CCM 4.9.), Cogeneration of heat/cool and power from renewable non-fossil gaseous and liquid fuels (CCM 4.19.), cogeneration of heat/cool and power from bioenergy (CCM 4.20.). Future developments in legislation may change the scope of the Taxonomy-eligible activities. 

Forest management (CCM 1.3.)

The forest industry is not at the core of the current EU Taxonomy legislation. Tree plantations in South America are not included in the activity Forest management (CCM 1.3.). The output of the activity, the grown wood, is used mostly internally in Lenzing’s own operations. In this report, the term ‘forests’ has been used in a general sense and the definition changes from country to country based on domestic laws. For example, some countries do not consider ‘tree plantations’ as forests whereas some do consider them as forests.

Cogeneration of heat/cool and power from renewable non-fossil gaseous and liquid fuels (CCM 4.19.)

The operation of the Cogeneration of heat/cool and power is conducted for the most part from renewable non-fossil gaseous and liquid fuels, e.g. (e.g. thick liquor, beech bark). Due to lack of relatability of the respective fuel to the sold Energy, the calculation of eligibility is conducted based on key for mostly used fuels.

Following economic activities supporting the Core Business are physically tightly integrated and therefore cannot be assessed separately with reasonable efforts and are as such considered not eligible: High-efficiency co-generation of heat/cool and power from fossil gaseous fuels (CCM 4.30.), Freight rail transport (CCM 6.2.), Construction, extension and operation of waste water collection and treatment (CCM 5.3.) and Data processing, hosting and related activities (CCM 8.1.) 

Capital expenditure from the taxonomy-eligible output in category “C” was measured and reported accordingly (e.g. Acquisition and ownership of buildings CCM 7.7.).

Taxonomy-conformity refers to economic activities that are defined as such in the Taxonomy Regulation. Taxonomy-alignment goes beyond eligibility and implies a positive assessment of the applicable technical screening criteria. This includes a substantial contribution to at least one of the 6 Taxonomy’s environmental objectives, no significant harm to any other objectives and compliance with the minimum safeguards. 

For the identified eligible economic activities, an assessment for Taxonomy-alignment was performed. The Lenzing Group began the alignment assessment by screening the technical critieria, including the substantial contribution, the Minimum Safeguards and DNSH (Does Not Significantly Harm) criteria. During the screening, the Lenzing Group came to the conclusion that the requirements of Annex A (climate risk and vulnerability assessment) as well as other elements cannot yet be fullfilled. As a consequence of this assessment, further in-depth DNSH assessment was deemed unnecessary for the reporting year. All identified economic activities are reported as Taxonomy-eligible, but not Taxonomy-aligned. 

The Lenzing Group avoids any double counting by evaluating the data for each key performance indicator independently. All identified economic activities only count once for the environmental objective of “Climate Change Mitigation”. The Lenzing Group calculates the 3 KPIs (turnover, CapEx and OpEx) according to the definition of the Delegated Regulation (EU) 2021/2178.

Compared to 2022 the revenue for cogeneration of heat/cool and power from renewable non-fossil gaseous and liquid fuels (CCM 4.19.) decreased due to changed energy prices.

In 2023 a new biomass power plant was acquired at site Heiligenkreuz with CapEx investments under cogeneration of heat/cool and power from bioenergy (CCM 4.20.). Capital expenditure from taxonomy-eligible output in category “C” was measured and reported accordingly (e.g. Acquisition and ownership of buildings CCM 7.7.).

No major changes in the OpEx for 2023 in comparison to 2022.

The total turnover covers the revenue recognized pursuant to International Accounting Standard (IAS) 1.82 (a), as adopted by Commission Regulation (EC) 1126/2008 and is reported in the consolidated financial statements 2023 (see consolidated income statement position “revenue”). The turnover derived from products or services, including intangibles, associated with Taxonomy-eligible and -aligned economic activities, is presented in relation to the total turnover.

The total CapEx covers book (not cash-effective) additions to property, plant and equipment, intangible assets, biological assets and right of use assets. The CapEx related to assets or processes associated with Taxonomy-eligible and -aligned economic activities, is presented in relation to the total CapEx. In the 2023 reporting year, the only capital expenditure related to acquisitions through business combinations was made for the biomass power plant at the Heiligenkreuz site amounting to EUR 18.3 million (%).

The total OpEx covers direct non-capitalized operating expenses that relate to research and development, building renovation measures, short-term leasing, maintenance and repair. Maintenance and repair expenses relate to the day-to-day servicing of property, plant and equipment assets (including maintenance material). Operating expenses associated with taxonomy-eligible economic activities are presented in relation to total operating expenses.