Metrics and targets

[ESRS E1-4; GRI 3-3e, 302-4]

For more information, see “Sustainability targets” in the management approach at the beginning of this chapter. All of Lenzing’s sustainability targets and the process of setting and monitoring (ESRS 2 MDR-T 80g, 80j) can be found in the “Sustainability targets, measures and progress” section in the "ESRS 2 General disclosures” chapter. Depending on technology and market developments, further measures for the period of 2030-2040 will be disclosed in the coming years.

The previous near-term SBT is still relevant for remuneration and corporate targets with same baseline for 2017. Thus, realization and achievement of measures of the updated near-term and long-term SBTs will result in reaching those linked targets.

Lenzing’s responsibility and science-based targets (SBTs)

Lenzing first set SBTs in 2019. In 2023, Lenzing’s SBTs were updated to align with the most recent climate science, and in 2024 they were verified and approved by Science Based Targets initiative (SBTi). The previous targets were 2 ^°C aligned and expressed as GHG intensity reductions (GHG emissions reductions per ton of pulp and fiber sold). The previous target uses 2017 as the baseline year with specific GHG emissions from that year serving as the baseline value (for the values please see table “Specific greenhouse gas emissions”), which still serves as reference for remuneration and corporate strategy targets. After the update in 2023, the SBTs are now expressed as absolute GHG reductions aligned with the 1.5 ^°C scenario of the Paris Agreement and the UN SDG 13 on climate action, making them even more ambitious. Both the previous and the updated SBTs are in line with Lenzing’s Bioenergy Policy and Sustainability Policy.

Lenzing’s updated SBTs use 2021 as the baseline year, with total absolute GHG emissions (scope 1, 2 and 3) from that year serving as the baseline value and reference point for tracking progress (for the baseline values, please see table “Absolute emissions of target scope”). The baseline year and value were set to 2021 in accordance with SBTi rules, as 2020 was significantly impacted by COVID-19 and was not representative of typical operational conditions. The 2021 baseline accurately reflects Lenzing’s typical operational activities and emissions, excluding any one-time events or anomalies, ensuring that the baseline is representative of normal operations. In the reporting year, the baseline value was subject to a recalculation (increase of 0.158 million tons GHG emissions), therefore an additional reduction to the tune of 0.066 million tons GHG emissions is necessary to achieve the scope 1 and 2 targets. For further information on the reason for the recalculation, please see the “Accounting principles” section. The target scope for reducing scope 1 and 2 absolute GHG emissions is fully aligned with the boundaries of the GHG inventory, which includes emissions from direct operations and energy use. A market-based method was used to calculate scope 2 GHG emissions included in the target. The boundary of the scope 3 target includes categories 1, 3, 4 and 9, but excludes the category 15 (investments) and covers approximately 97 percent of the reported scope 3 GHG emissions inventory. Furthermore, the targets cover emissions of all greenhouse gases (CO₂, CH₄, N₂O, HFCs, PFCs, SF₆, NF₃) as defined under international protocols such as the Greenhouse Gas Protocol (GHG Protocol) and are expressed as CO₂ equivalents. The targets follow a cross-sector absolute contraction approach (ACA), setting absolute emissions reductions in line with global decarbonization pathways. These pathways are based on climate science and aim to keep the global temperature rise within the limits set by international agreements such as the Paris Agreement, which aims to limit warming to 1.5 °C or well below 2 °C above pre-industrial levels. They have been independently verified and approved by the SBTi to ensure that they align with climate science and SBTi criteria. SBTi uses climate scenarios compatible with limiting global warming to 1.5 °C.

Internal stakeholders, including the commercial, investor relations, strategy, and corporate sustainability teams as well as the Managing Board were involved in the target setting process. In addition, external stakeholders were engaged, including key pulp and chemical suppliers, customers requesting SBTs, as well as multi-stakeholder initiatives such as the UN Fashion Charter, which advocate for commitment to the Paris Agreement. Selected stakeholders were involved through meetings and conferences. The SBTi was involved in verifying the targets and subsequently, in approving the SBTs aligned with the 1.5 °C ambition. The Lenzing team is further engaging with SBTi regarding FLAG targets.

New technologies will play an important role in mitigating CO₂ emissions and achieving the GHG emission reduction targets.

For more information about for the decarbonization levers and their overall quantitative contributions to meet the SBTs, see the “Climate Action Plan” (figure “Climate Action Plan”) at the beginning of this chapter. For more information about the actions described by decarbonization levers, please see the “Action” section. Not every action described by the levers is explicitly mentioned as a measure under the targets but still contributes to their achievement.

Lenzing has not yet set a target for its own operations concerning the “Risk for Lenzing’s operations and supply chain due to the increasing chronic physical climate hazards as indicated by climate risk assessment”. However, Lenzing has been prioritizing and addressing key topics in a step-by-step manner while managing resources. The upstream value chain aspects of this risk are addressed through the “Supplier engagement” target, as climate change is part of the environmental pillar of the assessment. This target will further intensify efforts related to climate change adaptation. For more information on the “Supplier engagement” target, please see the “Metrics and targets” section of the “S2 Workers in the value chain” chapter.

The ”Risk of wood scarcity from non-resilient forests and effects of increasing global average temperature” is addressed by the “Conservation projects” target which focuses on engaging in further conservation, biodiversity protection, and restoration activities in regions where forests are at risk, aiming to improve the resilience of forests so they can better adapt to climate change. For more information on the “Conservation project” target, please see the “Metrics and targets” section of the “E4 Biodiversity and ecosystems” chapter. The ‘FEM’ target addresses the following impact, risk and opportunity: Opportunity to de-risk Lenzing’s operations and gain market share by reducing GHG emissions; Negative impact on global climate change by generating GHG emissions with the use of non-renewable energy sources; Risk of reputational damage if sustainability requirements in regard to energy sources are not met and carbon footprint is not reduced. The Higg Facility Environmental Module (Higg FEM) standardizes how facilities can measure and evaluate their annual environmental performance. Energy and GHG emissions are one of the seven categories covered by the assessment. For more information on the “FEM” target, please see the “Metrics and targets” section of the “E3 Water and marine resources” chapter.

Energy and fuels

[ESRS E1-5; GRI 302-1, 302-3]

Lenzing’s absolute fossil and renewable energy consumption increased year on year. This is due to an increased production volume of pulp and fiber.

Energy sources

For a description of the ESRS 2 MDR-M of the metrics energy consumption and energy intensity, the high climate impact sectors and the line item in the financial statement used to calculate the energy intensity, please see the “Accounting principles” section in this chapter. Figures for energy production are currently not available.

Lenzing’s greenhouse gas emissions

[ESRS E1-6; GRI 305-1, 305-2, 305-3, 305-4]

Lenzing’s carbon footprint

Lenzing’s absolute scope 1 and 2 GHG emissions increased by 0.17 million tons (11 percent) year on year. The main reason is the increased production volume of pulp and fiber.

Scope 1 biogenic GHG emissions slightly increased due to the biomass power station at the Heiligenkreuz (Austria) site now integrated into Lenzing’s operations for the first full year in 2024 as well as due to higher consumption of biomass fuel at the Indianópolis (Brazil) site.

Lenzing’s absolute scope 3 GHG emissions increased by 0.16 million tons (11 percent) year on year. The main reasons for the increase are higher amounts of purchased goods and services as well as higher values in upstream and downstream logistics. This was triggered by higher production volumes of pulp and fiber as well as longer distance transportation routes (red sea crises).

Despite an 11 percent year-on-year increase in absolute scope 1, 2, and 3 GHG emissions within the target scope (0.33 million tons), the specific scope 1, 2, and 3 GHG emissions per ton of fiber and pulp produced remained at the same level.

Specific scope 1, 2, and 3 GHG emissions per ton of fiber and pulp sold increased slightly to 2.14 tons CO₂ eq./tons in 2024. Despite this increase, the remuneration target for 2024 was achieved.

In accordance with the European Sustainability Reporting Standards (ESRS), Lenzing has updated its GHG intensity metrics to ensure compliance. A new metric, “million tons CO₂ eq. per EUR revenue” has been calculated in line with ESRS, see table “Greenhouse gas emissions intensity”. The previous specific GHG metrics of “tons CO₂ eq. per ton fiber & pulp sold” and “tons CO₂ eq. per ton fiber & pulp produced”, both in absolute terms and as a percentage relative to the base year 2017, have been retained due to the near-term SBT target.

Accounting principles

ESRS 2 MDR-M, E1-5, E1-6]

GHG emission calculation for scope 1, 2 and 3 follows the corresponding standards and guidances of the GHG protocol.

Local sites report energy and fuel input data, as well as emissions factors and calorific values to the Group database on a monthly basis. On both the site- and the group-level, energy and GHG accounting follows the GHG protocol and ESRS E1 requirements. The accounting principles are disclosed based on the ESRS terminology.

Calorific values und emissions factors used by EU sites are the same as those used for disclosures under the EU Emission Trading Scheme. Non-EU sites may use measured emission factors or literature values according to local legal requirements. Otherwise, references to IPCC are used.

Energy consumption for Lenzing’s own operations is measured as the input of purchased electric power, heat (steam), and fuel, monitored by meter readings or invoices based on the direct quantification of fuels. Fuel quantities are multiplied with calorific values to calculate energy consumption (in MWh).

Energy intensity is based on Lenzing’s total energy consumption per revenue from activities in high climate-impact sectors. The high climate-impact sectors relevant to Lenzing are manufacturing of man-made cellulose fibers and dissolving wood pulp. For the revenue used in this calculation, please refer to the table “Revenue from external customers by products and services” in the “notes”, where the sum of the line items “Division Fiber” and “Division Pulp” is used. The energy consumption of the revenue category “Others” was not excluded from the total energy consumption, as their impact on the indicator is not significant. “Others” mainly includes central headquarters functions, overarching activities, and BZL’s business activities (training and personnel development). Energy intensity is reported as MWh/EUR.

Scope 1 GHG emissions include direct GHG emissions at Lenzing’s production sites. For their calculation, the quantity of the fuel consumed is multiplied by suitable emission factors (see section “calorific values and emissions factors”).

Scope 2 GHG emissions include all indirect emissions related to the generation of acquired and consumed electricity and heat. All consumed energy is monitored by meter readings or invoices.

Location-based accounting involves multiplying the energy consumed from the public grid by relevant location-based emission factors, which typically reflect residual mixes. These factors are obtained from the IPCC 2021 GWP100 V1.02 (country and regional data). Market-based accounting considers the energy source of purchased electricity/heat and corresponding emission factors, which are provided by public traders and substantiated by Energy Attribute Certificates, such as Guarantees of Origin or Renewable Energy Certificates (REC). As in the market-based approach, steam and electricity at the Prachinburi (Thailand) and Grimsby (UK) sites as well as steam at the Nanjing (China) site is multiplied with supplier-specific information. Supplier data and information is based on regulations and the IPCC. For the calculation of the scope 2 GHG emissions, which are included in the target scope, a market-based method was used.

Scope 3 GHG emissions refer to all other indirect emissions within the accounting scope. Lenzing identified five significant/material categories out of 15 defined by the GHG Protocol: category 1 “Purchased Goods and Services”, category 3 “Fuel- and energy-related activities (not included in scope 1 or scope 2)”, categories 4 and 9 “Upstream and Downstream Transportation and Distribution” and category 15 “Investments”. The SBT target scope includes categories 1, 3, 4 and 9 but excludes category 15 (97 percent scope 3 covered by target). The scope 3 categories contain estimates of the value chain. The relevant categories have an estimation accuracy of 2 (1 – exact figure, 2 – calculation / exact estimate, 3 – rough estimate).

Scope 3 category 1: Lenzing’s purchased goods and services are calculated using the supplier-specific method as well as the average data method. Lenzing’s purchased goods and services are calculated using three subcategories:

1. Wood harvesting: The calculations are based on supplied round wood multiplied with Ecoinvent emission factors
2. Purchased external pulp: The calculations based on purchased volumes and Supplier LCA data.
3. Purchased chemicals: The calculations are based on volumes of purchased chemicals multiplied in part with generic emission factors from Ecoinvent and in part with data provided by suppliers. Supplier specific data share is 42 percent of scope 3 category 1 emissions.

Scope 3 category 3: Fuel- and energy-related activities (not included in scope 1 or scope 2) are calculated using average data. GHG emissions generated during extraction and processing of fuels (coal, natural gas, biomass etc.) are derived from fuel consumption and Ecoinvent emission factors.

Scope 3 category 4: Lenzing’s upstream transport includes purchased external pulp, round wood and purchased chemicals. The distance-based method was applied – transport volumes, transport routes and transportations modes are obtained from the ERP logistics system. Emission factors are derived from EcoTransIT.

Scope 3 category 9: Lenzing’s downstream transport includes fiber and pulp sold as well as by-products (sodium sulfate, acidic acid, furfural, soda, etc.). The distance-based method was applied – transport volumes, transport routes and transportations modes are obtained from the ERP logistics system. Emission factors are derived from EcoTransIT.

Scope 3 category 15: Lenzing’s equity investments are calculated using the investment-specific method – publicly available data, such as sustainability reports or the EU ETS register, are used.

The following scope 3 categories are relevant but not material: category 2 (capital goods), category 5 (waste generated in operations), category 6 (business travel), category 7 (employee commuting) and category 8 (upstream leased assets) – therefore these categories are excluded from the inventory.

Scope 3 category 10 (processing of sold products): In line with the GHG protocol scope 3 guidance, Lenzing excluded this category from the inventory. Lenzing is a producer of intermediate products and has no visibility and no control/influence over processing of Lenzing’s products after sale. For example, Lenzing products end up in many potential downstream applications, each with potentially different GHG emission profiles. The GHG emissions associated with further processing depend not only on the technical method used but also on the location and setup of the processor. For example, a spinning mill with a 100 percent renewable energy supply has minimal Scope 1 and 2 emissions, while a spinning mill using 100 percent coal-fired electricity has high scope 1 and 2 emissions. It is therefore not reasonably possible to estimate GHG emissions associated within category 10. Moreover, as an intermediate supplier, Lenzing does not have control or influence over operational and financial decisions in this category to reduce GHG emissions.

The following scope 3 categories are not relevant: category 11 (use of sold products), category 12 (end-of-life treatment of sold products), category 13 (downstream leased assets) and category 14 (franchises).

GHG emissions intensity is based on total location-based and market-based GHG emissions as well as the revenue from the financial statement, and refers to the line item “Revenue as per consolidated income statement”. For the revenue used in this calculation, please refer to the table “Revenue from external customers by products and services” in the “notes”.

External assurance provider

The metrics reported in the sections “Energy and fuels” and “Lenzing’s greenhouse gas emissions” are not subject to additional external verification other than the Sustainability Report assurance process.

Recalculation of 2017, 2021, 2022, and 2023 scope 1 GHG emissions

The recalculation of scope 1 GHG emissions for 2017, 2021, 2022, and 2023 in the reporting year is due to a regulatory change at the Lenzing site in Austria. Previously, the fossil share of external waste burned at the site was estimated, but it is now based on direct measurements. Since the measured fossil share is higher than the estimate, this increases the fossil scope 1 GHG emissions and proportionally reduces the biogenic scope 1 GHG emissions by about 160 to 170 kilotons of CO₂.

Internal carbon price

[ESRS E1-8]

Since 2021, an internal carbon price (ICP) of EUR 75 per ton of CO₂ has been applied in the strategic investment planning process. This ICP is added on top of regulatory carbon pricing and is uniformly applied across all Lenzing locations for scope 1 and 2 CO₂ emissions. It is used as a shadow price (virtual cash outflow) for future CapEx projects exceeding EUR 2 million, with two business cases calculated: one including the ICP and one excluding it. The adjusted Internal Rate of Return (IRR) including the ICP is used for project prioritization. The purpose of the ICP is to mitigate future carbon risks, to encourage the preference of renewable fuels over fossils and to induce energy efficiency projects. The carbon price is derived from benchmarks against peers and a theoretical carbon price of USD 50-100 per ton of CO₂ (from the The High-Level Commission on Carbon Pricing and Competitiveness) aligned with the 1.5 °C target. The use of the ICP in the strategic investment planning process affects the Internal Rate of Return (IRR), a key ranking criterion among projects, and is not used for margins and yields.