Management approach

Material topic: Business conduct

[GRI 3-3]

Lenzing and its people are expected to act with honesty and transparency in line with the Group’s Global Code of Business Conduct and corporate governance policies. These expectations of compliance reach beyond legal requirements and regulatory standards, as the company strives for exemplary quality in all products, processes and dealings with customers, partners and shareholders. It is the responsibility of all employees and contractors to uphold these standards and to help create a culture of tolerance and integrity. Lenzing continues to develop its Compliance Management System to ensure the company acts to prevent misconduct, mitigate compliance risks and effectively safeguard its people. Training in business conduct ensures that all employees understand the behavior expected of them and contributes to an environment where the people feel comfortable raising concerns or reporting misconduct. Suppliers are also expected to adhere to the highest professional and ethical standards in the industry, as business conduct does not only apply to Lenzing’s own operations but also to responsible sourcing and supplier relationships.

Actual and potential negative and positive impacts, risks and opportunities

Positive

• Compliance through a shared culture of values
• Preventive measures via whistleblowing
• Prevent retaliation against those who raise a concern
• Promote trust and confidence in business dealings
• Maintain corporate reputation
• Avoid conflicts of interest, misrepresentation, bias and negligence
• Prevent and report bribery and other forms of corruption

Negative

Own activities:

• Violation of fair and compliant business practices leading to reputational damage and resultant loss of public trust
• Loss of clients and business partners
• Value depreciation in the capital market

Business relationships:

Non-compliance with laws, regulations and obligations due to constantly changing internal and external business environment

Policies and commitments

• Lenzing Global Code of Business Conduct
• Lenzing Global Supplier Code of Conduct
• Policy on Human Rights and Labor Standards
• Modern Slavery Act Transparency Statement
• Sustainability Policy
• Quality Policy
• Product Safety Policy
• Policy for Wood and Pulp
• Policy for Safety, Health and Environment (SHE)
• Bioenergy policy
• Equity, Diversity and Inclusion (EDI) Policy
• Anti-Bribery and Corruption Directive (ABC Directive)
• Austrian Local Guidance Document for the ABC Directive (e.g. registration system for gifts/hospitality, local limits for gifts and hospitalities)
• Antitrust Directive
• Whistleblower Directive
• Investigation Directive
• Issuer Compliance Directive
• Anti Money Laundering Directive (AML Directive)
• Know-How Protection Directive

Actions taken

• Update of Global Code of Business Conduct and roll out of corresponding training
• Update of the Anti Money Laundering Directive
• Nomination of two Co-Heads of Compliance – one for Asia and one for Europe and Americas
• Implementation of local standards/limits for gifts and hospitality in addition to global ABC directive
• Anonymous management survey on compliance risks at Lenzing
• Groupwide anonymous survey to all employees (Integrity Scan)
• Awareness campaign on whistleblowing
• Implementation of a Group-wide compliance eLearning for Code of Conduct
• Working on concept of ongoing Compliance Risk Assessment
• Reporting incidents via BKMS^® (Business Keeper Monitoring System) whistleblower system (“Tell us”)
• Following up procedure for reported incidents
• Transparent reporting within Lenzing’s Corporate Governance Report
• Compliance training for employees
• Compliance Register Tool (e.g. gifts and hospitality)
• Development of Conflicts of Interest Directive and self-registration tool

Sustainability targets, measures and progress

• “Supplier engagement” target
• No corruption incidents

Stakeholders

• Employees
• Suppliers
• Governments
• Customers
• Membership associations
• Austrian Code of Corporate Governance
• Together for Sustainability (TfS)
• EcoVadis

Responsible

• Managing Board
• SVP Global Legal, IP & Compliance
• Local Compliance Manager
• SVP Global Supply Chain/Purchasing
• VP Wood & Pulp Procurement
• SVP Corporate HR
• VP Global QESH
• VP Corporate Sustainability

Supporting

• Corporate Communications & Public Affairs
• Corporate HR
• Corporate Audit & Risk
• Corporate Sustainability
• Global Process Information Technology
• Site managers