Procurement management

Wood purchasing, pulp purchasing, and chemicals purchasing are handled by three different teams within the Lenzing Group (Wood Procurement, Pulp Trading GmbH, and Global Purchasing). Lenzing aims to minimize purchasing risks such as major price fluctuations and supply bottlenecks through reliable, long-term supply relationships and active supplier management.

Supplier selection and evaluation is based on environmental, social, and governance standards (ESG) as well as economic criteria.

The most important materials procured are (in order of annual procurement volume): wood, dissolving wood pulp, caustic soda, sulfuric acid, sulfur, carbon disulfide, sulfur dioxide, and magnesium oxide.

All of the Lenzing Group’s suppliers must comply with the Lenzing Global Supplier Code of Conduct. Wood and pulp suppliers additionally comply with Wood and Pulp Policy. In the policy Lenzing gives preference to suppliers compliant with FSC® or PEFC standards.

Supplier assessment

All suppliers are evaluated for sustainability in the production chain. Lenzing conducts regular audits as well as specific evaluations of both new and established suppliers for sustainability including compliance with environmental and safety standards. Suppliers are interviewed regularly and evaluated under environmental and safety aspects with the support of external experts. A final assessment is then conducted. It affects the overall supplier assessment and constitutes a major criterion for long-term cooperation with suppliers. Past supplier assessments have found no violations of environmental, social, or ethical standards that could have led to the cancellation of existing supplier contracts.

Lenzing’s most relevant suppliers are those that have an increased risk due to their size and volume. They represent 80 percent of global purchasing volume including dissolving wood pulp but excluding wood. The EcoVadis online tool is used to evaluate these non-wood suppliers. Evaluations of the non-wood suppliers found no violations of environmental, social or ethical standards that could have led to the termination of existing supply contracts in the reporting year.

Wood suppliers are evaluated using a due diligence system based on FSC® Controlled Wood criteria.

All wood suppliers – in 2021, more than 500, many of them private owners – in all sourcing countries are assessed once a year against FSC® Controlled Wood and PEFC Controlled Sources criteria. All of the pulp suppliers are certified by the leading forest certification schemes and supply Lenzing with certified or controlled pulp.

After reduced production in 2020 pulp production was back on normal level although COVID-19 pandemic continues to have a substantial impact on the market.

Strategic dissolving wood pulp suppliers are evaluated periodically. In 2021, no on-site audits were conducted due to the COVID-19 pandemic. The sustainability performance of pulp suppliers was investigated using a comprehensive questionnaire covering aspects such as procurement standards, supply chain and supply areas, engagement and GHG emissions, amongst others. The results of the survey will be used to identify the key sustainability issues and guide Lenzing’s future supplier engagement activities.

In addition, Lenzing assessed the maturity of its own procurement management system and processes to gain a shared understanding of what is needed to further integrate sustainability criteria into its procurement and supplier management processes. Workshops took place with several departments to reach a common ground on upcoming legal requirements (e.g. German Supply Chain Act) and stakeholder expectations related to supply chain sustainability and due diligence. Based on the results of the maturity review and the internal discussions about future requirements, Lenzing is now developing the next steps to further improve supplier sustainability performance.

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