Impacts, risks and opportunities
[MDR-P 65a]
This section outlines impacts, risks and opportunities (IROs) where applicable. The table illustrates how IROs relate to specific policies, targets, actions, and metrics. However, this does not imply that all listed elements are interconnected.
Sub-topic |
IRO |
IRO description |
Policies |
Targets |
Actions |
Metrics |
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Climate change adaptation |
Risk
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Climate models indicate that rising global mean temperatures will lead to an increase in chronic physical climate hazards. Lenzing’s operations and supply chain could be increasingly affected by extreme weather events, water scarcity and other physical hazards of varying severity. All identified risks arising are managed by Lenzing through comprehensive supplier diversification and holistic inventory and resource management. |
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Risk
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As wood is one of Lenzing’s most important raw materials, risks of wood unavailability rise due to forest degradation (diseases, pests, etc.) as a direct consequence of higher average temperatures can affect its core business. |
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Risk
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Wood is the most important natural resource for the Lenzing Group as it is needed for manufacturing regenerated cellulose fibers. Despite Lenzing’s sustainable sourcing policy and backward-integrated production, wood prices are at risk of increasing due to climate change and growing competition for biomass and land use. |
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Climate change mitigation |
Risk
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Increasing regulation, especially on green taxation and carbon pricing, constitutes a relevant risk for Lenzing. In the countries where Lenzing has carbon-intensive processes, regulations on greenhouse gas (GHG) emissions have already been implemented (such as energy efficiency improvements and regulated emission allowances) and stricter regulations that could increase the costs of GHG emissions are under development. Lenzing is implementing stringent energy efficiency measures in order to reduce its potential exposure to green taxation. |
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Opportunity
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The Lenzing Group considers rapid decarbonization to be a major business opportunity to de-risk its operations, build resilience, launch products with lower climate impact and realize energy efficiency gains. Lenzing will substantially reduce its GHG emissions in the coming years through a number of corresponding measures (decarbonization strategy) and science-based targets. Furthermore, Lenzing aims to reach net-zero greenhouse gas emissions by 2050. |
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Energy |
Negative impact
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By using non-renewable energy sources or inefficient energy conversion technologies, Lenzing generates GHG emissions which contribute to global climate change. |
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Risk
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Risk of not achieving energy transformation in line with the Lenzing Group’s science-based targets. |
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Risk
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Lenzing’s reputation could be damaged if the sustainability requirements with regard to energy sources are not met. Lenzing has energy-intensive processes that result in GHG emissions and is facing increasing pressure from customers and EU directives to address its carbon footprint, which poses a risk for Lenzing if expectations are not met. |
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Risk
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Commodity prices (e.g. wood, pulp and chemicals) could increase due to the availability of energy and price volatility as a result of climate change. For example, an increase in the price of wood due to increasing demand for renewable energy sources, zero deforestation trends and/or more frequent pests and diseases (e.g. pest infestations) due to changing weather patterns as a result of climate change. |
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Risk
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With the Renewable Energy Directive (RED II/III) biomass could be reclassified and no longer count as renewable. |
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Risk
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Unforeseen energy shortages could compromise Lenzing’s operations, which can pose a financial risk. |
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Opportunity
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Lenzing identifies an opportunity to position itself favorably by proactively addressing environmental challenges. In addition, energy costs can potentially decrease in the long term by using renewable energy sources and new technologies. This can lead to a market advantage if the transition is done quickly. |
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