Strategy

[ESRS S2 ESRS 2 SBM-2]

The Lenzing Group strongly supports globally recognized human rights, and vehemently opposes any form of violations of such rights. This commitment extends to safeguarding the rights of all workers within its sphere of influence, aligning with the Universal Declaration of Human Rights, the UN Global Compact (UNGC), the OECD Guidelines for Multinational Enterprises and the Declaration on Fundamental Principles and Rights at Work of the International Labour Organisation (ILO). These principles, which as far as possible protect employees and workers throughout the value chain, are fully respected and followed by the Lenzing Group. For more information, please see the “Stakeholder workers in the value chain and strategy” section in the “ESRS 2 General disclosures” chapter.

[ESRS S2 ESRS 2 SBM-3]

Lenzing`s value chain encompasses a diverse range of workers who could be materially impacted.

In the upstream value chain, foresters and loggers are crucial in sourcing raw materials from forests, and in ensuring that sustainable practices are followed. Wood and pulp suppliers provide essential materials for the company`s production processes, while chemical suppliers deliver the necessary chemicals for its manufacturing needs. Additionally, workers involved in transportation and logistics, such as truck drivers, dock workers, and warehouse staff, play a key role in ensuring the safe and efficient movement and storage of raw materials along the supply chain.

In the downstream value chain, waste management companies handle the disposal and recycling of the company’s waste, thus ensuring environmental compliance. Transportation and logistics providers are responsible for the efficient movement of the company’s products to various markets. Production workers are involved in the manufacturing and assembly of its products, and in ensuring that quality and safety standards are met. Furthermore, garment workers and textile manufacturers are key in transforming raw materials into finished textile products, while retail workers and distributors ensure that these products reach consumers. Workers in the nonwovens industry, including those in product development and manufacturing, play a significant role in creating nonwoven materials used in various applications.

Moreover, workers involved in the operations of joint ventures or special purpose vehicles (SPVs) that include Lenzing as a participant are also impacted. These workers, although not directly employed by Lenzing, contribute significantly to the joint projects or specific tasks for which these legal entities were established.

Lenzing has begun a detailed assessment of its impacts on its upstream and downstream value chains. In this initial phase, the collection of data on vulnerable groups (such as migrant workers, women, and young workers) or workers with specific characteristics is ongoing, and reliable findings are not yet available. Consequently, it is not yet possible to specify in detail which workers in the value chain are (likely to be) materially impacted by the company’s business practices or, in the case of material negative impacts, whether they are either (i) widespread or systemic in contexts where the company operates or has sourcing or other business relationships (for instance, child labor or forced labor in particular commodity supply chains in specific countries or regions), or (ii) related to individual incidents (for instance, in case of an industrial accident or an oil spill) or to specific business relationships.

According to the ILO, migrant workers, women, children, indigenous peoples, ethnic minorities, prisoners, and workers in global supply chains are particularly vulnerable to forced labor due to discrimination, exploitation, and lack of legal protections. Child labor, as the name indicates, affects children. ILO further states that in child labor, boys are slightly more affected than girls and it is more likely to occur in rural areas than in urban areas.

As a company involved in the chemical and forestry industries, Lenzing sources products from several countries that can exhibit heightened risks of child labor and forced labor. Additionally, garment production may occur in regions where systemic risks related to forced labor and modern slavery are prevalent. Certain regions in the value chain, including Asia, South America, Central America and the Caribbean, as well as Eastern Europe and Eurasia, have been identified as having an elevated potential for such risks due to socioeconomic vulnerabilities, inadequate labor law enforcement, and complex supply chain dynamics.

Lenzing also sources regionally at its locations, some of which are situated within these identified regions, further highlighting the importance of addressing potential risks and ensuring responsible practices across the value chain.