Governance structure for sustainability

[ESRS 2 GOV-1; GRI 2-12, 2-13, 2-17]

Corporate Sustainability reports directly to the Managing Board. In addition, an internal management board level ESG committee has been established to accelerate the sustainability agenda in the company, with meetings held on a quarterly basis. Regular alignments on various topics take place with different functions to drive the integration of environmental, social and governance concerns into the company’s business strategy and operations. General information on corporate Governance can be found in the Lenzing Group’s Annual Report 2023 (Corporate Governance Report).

Sustainability organization

* ESG Committee is an internal committee to accelerate sustainability agenda. Members are Managing Board, Global Strategy and M&A, Corporate Sustainability, Global Wood & Pulp, Corporate Audit & Risk, Investor Relations, Global QESH, Corporate HR, Corporate Controlling, Global Procurement, Global Textile Business, Global Nonwoven Business, Corporate Communications, Research & Development, Wood/Pulp commercial, Operations (representative), Works council (representative).

ESG committees

[ESRS 2 GOV-2; GRI 2-12, 2-14, 2-16, 2-18]

Sustainability is a value, business and innovation driver in the Lenzing Group. The company is increasingly leveraging its sustainability work by positioning itself using net-benefit products (e.g. LENZING™ ECOVERO™), key ratings (for investors) and benchmarking tools at the wider industry level. To support these efforts, a management board level ESG committee has been installed to accelerate the sustainability agenda implementation by aligning across functions. This committee meets once a quarter. The key objectives are to formulate and execute the company’s sustainability vision, strategy and ESG benchmarks and tools. The ESG committee (figure “ESG Committee structure”) consists of the Managing Board and heads of different functions, who review the progress of the sustainability targets, evaluate the effectiveness of Lenzing’s approach to managing all aspects of sustainability, including risks and opportunities, and make long-term strategic decisions. The corporate sustainability department is an integral part of the committee and works closely with several functions to ensure the integration of sustainability aspects in various business processes and to respond to stakeholder needs and expectations and prepares the organization to be future-fit. In addition, ESG meetings are seen as a way of advancing the collective knowledge, skills, and experience of its Managing Board on sustainable development.

In 2023, the Supervisory Board established an ESG Committee in order to be able to meet the increasing relevance that ESG topics have in terms of strategy, sustainable business success and transformation. This committee is intended to support the Executive Board, the full Supervisory Board, the Audit Committee and the Strategy, Growth and Innovation Committee on issues relating to non-financial reporting and strategic ESG topics. The first committee meeting took place in November of the reporting year and is intended to take place a minimum of two times a year.

ESG Committee structure

ESG Committee structure (illustration)
For information on the Lenzing Group’s governance structure, please refer to the Lenzing Group’s Annual Report (Corporate Governance Report).

Board remuneration linked to sustainability performance

[ESRS 2 GOV-3]

The Remuneration Policy of Lenzing AG for the performance-based remuneration of the Managing Board is linked to both financial performance and non-financial sustainability criteria (ESG), which further promote the sustainability integration in the business strategy. Therefore, in addition to the existing criteria, the long-term incentive (LTI), which is a variable performance bonus, has been expanded to include sustainability targets for Managing Board members. Further information can be found in the Remuneration Report (available from 21.03.2024).

Specific targets which are connected with the board’s remuneration are the following:

  • Sub-target of “Textile recycling” target: “The Lenzing and Södra collaboration will recycle 25,000 t of textile waste per year at Södra’s Mörrum site.”
  • “ZDHC lyocell” target: “To achieve ‘aspirational’ MMCF level for ZDHC wastewater and responsible production guidelines at Lenzing lyocell facilities by 2028”
  • “Waste water” target: “To improve Lenzing Group’s specific wastewater emissions (COD) by 20 percent by 2024 (baseline 2014)”
  • Sub-target of the “near-term SBT target”: “Lenzing reduces 40 percent of specific GHG emissions per ton of pulp and fiber sold by 2030.”
  • Sub target of “Equity, Diversity and Inclusion” target: “Lenzing increases its proportion of women to 22.5 percent in all positions graded 5a and above by 2025”

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