Impact, risk and opportunity management

Policies

[ESRS S2-1; GRI 2-23, 2-25, 3-3c, 414-2]

The five policies in this section address the two negative impacts of this chapter: negative impacts on children in Lenzing’s value chain, as child labor is common in textile manufacturing, and negative impacts on forced labor in Lenzing’s value chain, as forced labor is common in textile manufacturing. The scope of the Policy on Human Rights and Labor Standards relates solely to the sphere of influence, which encompasses both the upstream value chain as well as direct customers. The scope of the Lenzing Global Supplier Code of Conduct and the Wood and Pulp Policy relates solely to the upstream value chain.

Sustainability Policy

In its Sustainability Policy, Lenzing is committed to protecting human rights and labor standards for all team members within its sphere of influence. The company empowers its employees and motivates partners along the value chain to become drivers of change and sustainability efforts. Lenzing fosters awareness, knowledge, and skills among its workforce, contractors, and supply chain partners, enabling them to implement sound environmental and social practices in order to achieve strong and positive performance levels. For more information about the ESRS 2 MDR-P of Lenzing’s Sustainability Policy, see the “Sustainability Strategy” section in the “ESRS 2 General disclosures” chapter.

Lenzing Global Code of Business Conduct

Lenzing’s Global Code of Business Conduct serves as a guideline for its own business activities. Furthermore, Lenzing is committed to very closely monitoring the risk of violations of human rights and environmental obligations, both in its own operations and throughout its entire supply chain. The Global Code of Business Conduct was created according to the recommendations of the UN Global Compact, of which Lenzing is a member. FSC^® certification provides assurance that forest management work takes into consideration aspects such as respect for the rights of indigenous people, the wellbeing of the professionals who work in the forest and local communities, the reduction of environmental impacts, and the promotion of native forest conservation and restoration efforts. For further information on the ESRS 2 MDR-P of Lenzing’s Global Code of Business Conduct, please see the “Policies” section in the “G1 Business conduct” chapter.

Lenzing Global Supplier Code of Conduct

Lenzing requires its suppliers to operate in accordance with the principles outlined in its Lenzing Global Supplier Code of Conduct and to fully comply with all applicable laws and regulations. The use of child labor is strictly prohibited under any circumstances. Suppliers are required to maintain official documentation verifying each worker’s date of birth, and to ensure adherence to all relevant child labor laws, including those related to hiring, wages, hours worked, overtime, and working conditions. Furthermore, forced, bonded, or involuntary labor is strictly prohibited, and all work must be voluntary. Slavery and human trafficking are not tolerated, and suppliers must uphold these principles in all aspects for their operations. For further information about the ESRS 2 MDR-P of Lenzing’s Global Supplier Code of Conduct, please see the “Policies” section in the “G1 Business conduct” chapter.

Wood and Pulp Policy

Moreover, Lenzing enforces a stringent Wood and Pulp Policy, thereby committing not to source materials from controversial origins. If it is found that a supplier has sourced wood or pulp from such sources, or has violated human or labor rights, Lenzing will initially work with the respective supplier to encourage compliance with its Wood and Pulp Policy. Should the supplier’s response remain unsatisfactory, and if violations are not corrected promptly, Lenzing will cease its business relationship with this supplier. For further information on the ESRS 2 MDR-P of the Wood and Pulp policy, see the “Policies” section in the “E4 Biodiversity and ecosystems” chapter. For information on terminated supplier relationships, please refer to the “Wood and dissolving wood pulp certifications” in the “G1 Business conduct” chapter.

Policy on Human Rights and Labor Standards

Lenzing is dedicated to meeting – and wherever possible, exceeding – all applicable social and ethical standards across its global network, while protecting human rights within its sphere of influence. This commitment extends to its suppliers, which are expected to uphold the same high standards. Lenzing fosters compliance with its high internal standards and all applicable external requirements on a continuing basis through training programs and risk-based auditing for suppliers. For more information about the ESRS 2 MDR-P of the Policy on Human Rights and Labor Standards, which is aligned with international instruments such as the United Nations (UN) Guiding Principles on Business and Human Rights, see the “Policies” section in the “S1 Own workforce” chapter.

In the 2024 reporting year, no cases of non-compliance with the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, or the OECD Guidelines for Multinational Enterprises were reported in the upstream value chain.

In its Policy on Human Rights and Labor Standards, Lenzing is committed to identifying, preventing, mitigating, and remediating any actual or potential adverse human rights impacts associated with its operations and business relationships. This commitment includes ensuring that appropriate remedies are provided to affected individuals, workers, and local communities, including indigenous peoples, through both judicial and non-judicial mechanisms. At present, the only written procedure in place is Lenzing’s child remediation procedure, the scope of which includes Lenzing sites and third parties on the sites. Currently, Lenzing policy commitments do not include a general approach for its engagement with value chain workers.

Channels and remediation

[ESRS S2-2]

At present, Lenzing does not yet have established a standardized process for engaging with workers in its value chain.

[ESRS S2-3; GRI 2-25]

Grievance mechanisms

In 2017, Lenzing introduced an online-based whistleblower system designed to empower not only its employees but also customers, suppliers, and other third parties around the world to voice their concerns. This platform enables individuals to report issues such as corruption, bribery, conflicts of interests, antitrust violations, and breaches of capital market law. The BKMS^® whistleblower system, or “Tell us”, is accessible on the Lenzing’s website, ensuring that anyone can express their concerns anonymously. The anonymous reporting feature ensures that individuals worldwide can share their concerns without the fear of retaliation, this is also stated in Lenzing`s Global Code of Business Conduct. For more information on the Whistleblower System, it’s anonymous reporting feature, report processing and its effectiveness, as well as for further information on the system and process, please refer to the “Whistleblower system” and “Handling of reported concerns” sections in the “G1 Business conduct” chapter.

As far as such channels at Lenzing’s suppliers are concerned, Lenzing’s Global Supplier Code of Conduct states: “Suppliers are required to provide means for their employees to report concerns or potentially unlawful activities in the workplace. Any report should be treated in a confidential manner, wherever possible. Suppliers are required to investigate such reports and take corrective action if needed. It is expected that suppliers shall not retaliate against or harass any employee submitting a report in good faith.”

Processes of remediation

Lenzing’s Policy on Human Rights and Labor Standard addresses the topic of remediation (see “Policies” section in this chapter). At present, however, Lenzing’s child remediation procedure is the only written procedure in place. It has not yet been possible to measure the effectiveness of this procedure as no cases were reported during the year under review.