Sourcing

[ESRS G1-2; GRI 2-16, 204-1, 308-1, 414-1]

All of the directives and polices come into action in the daily contact with suppliers. In this Lenzing can lead as a role model in business conduct within the industry, but also expects the same standards for its business partners.

Sustainable chemicals sourcing

The most important chemicals used in the Lenzing Group – amounting to approximately 85 percent of the overall purchase volume – are caustic soda (NaOH), carbon disulfide (CS₂), sulfuric acid (H₂SO₄), sulfur (S), sulfur dioxide (SO₂), softening agents, flame retardants, modifiers, N‑methylmorpholine N‑oxide (NMMO), titanium dioxide (TiO₂), and zinc sulfate (ZnSO₄). Figures for chemical sourcing are not provided for confidentiality reasons.

The target of assessing 80 percent of the most important suppliers (by purchasing value) was reached in 2019. Additional suppliers continue to be assessed (table “Number of suppliers responding to EcoVadis questionnaire since the introduction of the assessment in 2017”). Due to changing market environment, the supplier base can change. Hence, the new goal set in 2022 was to continuously engage suppliers, which cover more than 80 percent of budget spend on procurement, to improve their sustainability performance (“Supplier engagement” target). This target has also expanded to include assessment possibilities other than EcoVadis. As a measure for this target, Lenzing has begun to include sustainability clauses in the contractual conditions for its key chemical suppliers from 2022. Some of these conditions include setting GHG reduction targets approved by the Science Based Target initiative, to provide information about the product carbon footprint and water scarcity at facilities where Lenzing sources products.

EcoVadis Score of Lenzing’s suppliers

The overall EcoVadis Score achieved by the Lenzing Group’s suppliers in 2023 (54.2) is 8.2 points higher in comparison to the average EcoVadis Score (46). The overall performance of Lenzing`s suppliers is also 1.9 points better compared to year 2022 with the overall score (52.3). This clearly indicates that suppliers belonging to Lenzing’s supply chain continuously perform an above the average score of suppliers assessed by EcoVadis. The improvement of the overall score from last year until now shows how important sustainability is becoming in organizations as well as the effort of the purchasing community to strive for sustainable supply partners.

Supplier management

Active negotiations with suppliers regarding their engagement for sustainability assessment are in progress. Currently more than 600 suppliers were assessed on the basis of social and environmental criteria through the EcoVadis tool.

80 percent of all purchased liquid metric tons of chemicals were delivered by 30 suppliers in 2023. Relationships with these suppliers are highly stable. In 2022 due to non-availability of caustic soda in European market a higher volume of such was imported from other regions. During 2023 availability of caustic soda continuously stabilized, which led to a higher proportion of regionally purchased chemicals compared to 2022 (table “Regionality of purchased chemicals”). Regional in this case refers to all deliveries from the same country or a neighboring country as the destination site.

Regional wood supply in Europe

Regional wood supply is important to Lenzing, as this is one measure to reduce GHG emissions stemming from transport. Lenzing operates three pulp mills in which wood is turned into dissolving wood pulp. The Lenzing site (Austria) mainly uses beech wood plus small amounts of other hardwoods and spruce, whereas the Paskov plant (Czech Republic) mainly uses spruce. The plant in Indianópolis (Brazil) exclusively uses eucalyptus from a plantation under own operation. Lenzing is committed to source the wood for its pulp mills in Europe as locally as possible.

Wood sourcing for the Lenzing Group’s own pulp mills in Lenzing (Austria) and Paskov (Czech Republic)

Beech and spruce by country, 2021–2023. 
“Other countries” for Lenzing sites are France, Switzerland, and Poland.

In order to ensure short transportation distances and short delivery times, almost all the wood required originates regionally. For the Lenzing site (Austria) regional¹ wood accounted for 95.2 percent in 2021, 93.8 percent in 2022 and 96.5 percent in 2023. For the Paskov site (Czech Republic), the regional supply rate has been constant at 100 percent since 2019. For the underlying figures, please see the Annex.

Local wood supply in Brazil

Lenzing constructed a new pulp mill in Brazil in a joined venture called LD Celulose together with Decxo. It started operation in 2022. Currently around 90,200 hectares of plantation are managed, including around 19,884 hectares (table “Quantitative description of areas managed and influenced by LD Celulose” in the “Biodiversity and ecosystems” chapter) of protected area which are not used for wood sourcing but ensure the protection of flora and fauna. These plantations operate completely in accordance with the guidelines and high standards of the Lenzing Group for sourcing wood and pulp as well as the requirements of the leading certification schemes.

The forest unit responsible for supplying LD Celulose’s wood is in Triângulo Mineiro in the State of Minas Gerais. The area that was transformed into the LD Celulose plantation unit has been used for cattle raising, intensive agricultural activities and eucalyptus forestry since the 1970s. No native (primary) forest was converted for establishing the LD Celulose plantation. The plantations are more than 800 kilometers from the region that comprises the Amazon rainforest.

Supplier evaluation

All suppliers are evaluated for sustainability in the production chain. Lenzing conducts regular audits, as well as specific evaluations of both new and established suppliers for sustainability, including compliance with environmental and safety standards. Suppliers are interviewed regularly and evaluated under environmental and safety aspects with the support of external experts. A final assessment is then conducted. It affects the overall supplier assessment and constitutes a major criterion for long-term cooperation with suppliers. In 2023, when screening for risk suppliers, no Lenzing suppliers were identified as having significant actual and potential negative environmental impacts.

Lenzing’s most relevant suppliers are those that have an increased risk due to their size and volume. The EcoVadis online tool is used to evaluate these non-wood suppliers. Evaluations of the non-wood suppliers found no violations of environmental, social or ethical standards that could have led to the termination of existing supply contracts in the reporting year. Pulpwood suppliers are evaluated using a due diligence system based on FSC^® Controlled Wood criteria.

The sustainability performance of pulp suppliers is annually investigated using a comprehensive questionnaire covering aspects such as procurement standards, supply areas, supply chain traceability, and GHG emissions. The results of the survey are used to identify the key sustainability issues and guide Lenzing’s future supplier engagement activities.

All wood suppliers – totaling more than 600 in 2023, half of which are private owners – in all sourcing countries are assessed once a year against FSC^® Controlled Wood and PEFC Controlled Sources criteria. All of the pulp suppliers are certified by the leading forest certification schemes and supply Lenzing with certified or controlled pulp.

Pulpwood and dissolving wood pulp certifications

Lenzing’s wood procurement management system ensures that all wood destined for the production of pulp is sourced from legal and sustainably managed sources. Lenzing demonstrates that the wood sourcing complies with its high standards through verification based on FSC^® and PEFC certification systems (figure “Certification status”). 100 percent of wood and dissolving wood pulp used by the Lenzing Group is either certified by FSC^® and PEFC or controlled and inspected in line with these standards (figure “Certification status – overall certified and controlled wood”). Wood and pulp procurement faces annual surveillance/recertification audits of the FSC^® and PEFC systems.

The following figures show the certification status of all wood or pulp input into Lenzing’s fiber production, whether obtained directly through its own procurement for in-house dissolving wood pulp mills or indirectly through dissolving wood pulp suppliers. All Lenzing Group production sites are FSC^® CoC (Chain of Custody) certified. The group certification for PEFC CoC currently covers five sites (table “Certification status of Lenzing operations – Chain of custody”).

PEFC is mainly used for wood sourced from Central Europe. FSC^® certification of forests is not widespread in this region. Therefore, most wood sourced is procured with a PEFC certificate and receives FSC^® Controlled Wood status at Lenzing sites after a due diligence process. The Lenzing site has held the PEFC Chain of Custody certification as its main certificate for more than two decades. Since 2016, this has been complemented by a FSC^® CoC (Chain of Custody) certificate that covers all Lenzing production sites. All wood input to the Lenzing Group is either certified or controlled by the FSC^® certification system (figure “Certification status – FSC® Mix and FSC® controlled wood”).

Certification status

Certification status – overall certified and controlled wood

Certification status – FSC^® Mix and FSC^® controlled wood

Pulp suppliers can hold more than one forest-related certificate. Most of the pulp suppliers located in North America also carry certification from the Sustainable Forest Initiative (SFI), which is also a national member of and fully endorsed by the global PEFC certification scheme.

For detailed explanations of the certificates, controlled wood, and the internal due diligence system, please see the “Wood and pulp” focus paper.

Since forestry operations in Central Europe are generally small-scale, many small forest owners harvest wood for additional income and do not participate in a certification process. Therefore, Lenzing needs to procure reliable but limited quantities of such wood other than that is FSC^® or PEFC certified from time to time. This category of wood is inspected in line with these standards. Strict forestry laws and enforcement in Central Europe also require all forest owners to pursue sustainable management. The Lenzing Wood and Pulp Policy and Supplier Code of Conduct are part of all wood purchasing activities and are presented to potential suppliers before the start of a business relationship. Deliveries can only be made to Lenzing if these conditions are accepted.

The Lenzing due diligence system for wood and pulp procurement includes regular formal audits. However, ongoing, day-to-day, informal, personal contact between Lenzing’s procurement team and suppliers is even more important. Supplier contracts can be terminated in response to severe sustainability findings. This has happened occasionally in the past when suppliers failed to remedy certain issues. In 2023, no such cases occurred.

¹ Regional wood supply originates from the country where the pulp mill is situated and from neighboring countries from which wood can be transported directly without crossing a third country.