Actions
[ESRS S2-4; GRI 3-3d]
A summary of the “Actions taken” can be found in the management approach at the beginning of this chapter. All actions mentioned below aim at fulfilling the “Supplier Engagement” target, by getting more insights into Lenzing’s suppliers, human rights violations can be prevented and/or mitigated.
In the reporting year, Lenzing has not identified any incidents and therefore, did not provide remedy in relation to an actual material impact. As there are no identified incidents, Lenzing cannot make a statement on the effectiveness of actions. The company is working to deepen its understanding of the value chain to ensure that own practices do not cause or contribute to material negative impacts on value chain workers. Therefore, Lenzing cannot state if or if it does not cause or contribute to material negative impacts.
Upstream and downstream value chain – hotspot analysis
In the reporting year, a hotspot analysis for forced and child labor was conducted across the entire value chain. This analysis served as a first step to gain deeper insight into the value chain, and the results will be used as a basis for deriving possible actions in the next steps.
Suppliers
Lenzing’s suppliers are required to declare that they have read and understood Lenzing’s Suppliers Code of Conduct and that they will comply with it. It is planned to be expanded.
Lenzing started including sustainability clauses in the contractual conditions for its key chemical suppliers in 2022, and since then has continued to implement such clauses in contractual conditions. These conditions include setting greenhouse gas (GHG) reduction targets approved by the Science Based Targets initiative, in order to provide information about the product carbon footprint and water scarcity at facilities where Lenzing sources products.
Wood and pulp suppliers
Lenzing uses FSC® or PEFC for wood and pulp supplies. For more information on Lenzing’s assessment of its wood and pulp suppliers, please see the “Sourcing” section and the “Supplier evaluation wood and pulp” section of the “G1 Business conduct” chapter.
In 2024, all wood suppliers providing FSC® Controlled Wood to the company were formally notified of the expectation that they acknowledge and implement the requirements outlined in the company’s Supplier Code of Conduct and Wood & Pulp Policy. This initiative reinforces the company’s commitment to responsible sourcing and highlights the importance of collaborative efforts in promoting sustainable forestry practices.
EcoVadis
EcoVadis is a provider of business sustainability ratings that has rated more than 100,000 companies in over 175 countries worldwide. Related topics cover the environment, human and labor rights, ethics and sustainable procurement, depending on the industry and the size of the rated company. Within the human and labor rights section of the questionnaire, companies are rated with regard to social aspects in the following areas: employee health and safety, working conditions, social dialog, career management, child labor incidents, among others. In the overall ranking, companies can achieve a rating between zero to 100.
Lenzing aims to encourage an ever-increasing number of its suppliers to be assessed by sustainability rating providers such as EcoVadis. This is in line with Lenzing`s “Supplier Engagement” target.
In 2024, the average score of Lenzing’s EcoVadis-rated suppliers was 55.6 (+8.6 points higher than the average global EcoVadis score of 47 points) and +8.6 points better as compared to benchmark. The overall performance also increased by 1.4 points compared to 2023 (54.2). This clearly shows that suppliers in Lenzing’s supply chain perform continuously and significantly above average of suppliers assessed by EcoVadis. Lenzing is working continuously with its suppliers to improve their sustainability practices.
Supplier performance is monitored in the EcoVadis dashboard, which uses various sources to monitor suppliers, such as in its “360° Watch”. AI (artificial intelligence) is used to search worldwide for news items about a company. Such findings are then evaluated as positive, neutral, or negative. Major negative findings can impact a company’s overall score. Discussions about the findings from supplier monitoring and corresponding corrective actions that are taken form part of regular reviews by Lenzing’s purchasers and management.
In 2023, a decision was taken to only engage with suppliers that have a minimum EcoVadis score of 45 points. The realization of this objective entails continuous effort. If a supplier falls below this minimum score, Lenzing will engage with this supplier to start a corrective action plan in order to be able to maintain the relationship. Lenzing automatically requests the submission of a corrective action plan within three months. The success of proposed corrective actions is reviewed after the elapse of an appropriate period of time. If no corrective action plan is launched, Lenzing terminates the relationship with the respective supplier. No such terminations arose in 2024.
Quarterly Supply Chain Sustainability Risk Management meetings
To support this measure, Lenzing purchasers and Lenzing’s Global Purchasing Sustainability manager engage in regular dialog. Furthermore, Lenzing has established a quarterly Supply Chain Sustainability Risk Management meeting. These meetings are attended by purchasing managers as well as supply chain and sustainability experts, who discuss and manage risks and opportunities, both internally and externally. The risk assessment of Lenzing’s lowest performing suppliers also forms part of these meetings, and includes considerations related to human rights. By regularly reviewing and acting upon suppliers’ performance, the target is to mitigate or minimize negative impacts on value chain workers. A further aim is to raise awareness of the need for sustainability risk management not only within Lenzing’s purchasing community, but also among its suppliers.
Together for Sustainability (TfS)
Audits conducted through the Together for Sustainability (TfS) network also assess the performance of some of Lenzing’s suppliers in terms of human rights, thereby ensuring compliance with all applicable legislation, such as the UN Convention on the Rights of the Child and the ILO conventions, among others. For additional information about the TfS, please see the “Stakeholder engagement” section of this chapter.
Lenzing conducted four audits through this network in 2024, and can also use the results of audits performed by other TfS members, as such audits of suppliers are shared among network members. The audits did not detect any severe human rights issues. Lenzing will continue to conduct audits through TfS.
Allocated resources
The allocated resources for managing the material impacts on workers in the value chain are as follows:
- In Global Purchasing: a Purchasing Sustainabiltiy expert
- In Corporate Sustainability: a Social Sustainability expert