Sustainable sourcing of wood and dissolving wood pulp

Wood and dissolving wood pulp are Lenzing’s most important raw materials. The Lenzing Group assumes responsibility by focusing on sustainable sourcing covered by certifications, responsible consumption, and the highly efficient use of these valuable resources. Lenzing sources wood and dissolving wood pulp from semi-natural forests and plantations (as defined by the Food and Agriculture Organization of the United Nations¹⁴), not from natural or ancient and endangered forests.

Precise figures for the absolute volumes of wood purchased and dissolving wood pulp sourced are not provided for confidentiality reasons. As an indicative estimate, total fiber sales of nearly 1 million tons require a pulp input of around the same amount. The amount of wood required for the production of this dissolving wood pulp cannot be stated exactly, especially given all the different processes and species that Lenzing’s suppliers use. Assuming a dissolving wood pulp yield from wood of 40 percent, a rough estimate for the total wood input would be 2.5 million tons (dry matter), spread between Lenzing’s own production and the dissolving wood pulp purchased.

Wood as a natural and renewable raw material plays an important role in replacing fossil-based products and helps mitigate climate change through carbon sinks in forests and wood products. For more information on climate effects of and on wood and pulp sourcing, see the “Climate & energy” chapter – especially “Avoided emissions”, and the “Wood and Pulp” focus paper.

Lenzing Group’s Wood and Pulp Policy

In its Wood and Pulp Policy, Lenzing is committed to procuring wood and dissolving wood pulp exclusively from non-controversial sources.

Controversial sources include wood derived from:

• illegal logging or the trade in illegal wood or forest products
• the destruction of high conservation values in forestry operations, including ancient and endangered forests, and endangered species habitats
• plantations established after 1994 through significant conversion of natural forests or conversions to non-forest use
• the introduction of genetically modified organisms in forestry operations
• the violation of traditional, community and/or human rights
• any violation of the ILO¹⁵ Core Conventions as defined in the ILO Declaration on Fundamental Principles and Rights at Work.

Regular risk assessments, audits, on-site visits, and independent third-party certification of sustainable forest management programs ensure compliance with the policy and Lenzing’s commitment to no-deforestation.

If Lenzing discovers that it has sourced wood or dissolving wood pulp from controversial sources, it will first engage with the supplier to encourage practices consistent with Lenzing’s Wood and Pulp Policy. If the response is unsatisfactory, the supplier will be delisted with a reasonable lead time. Very few such cases have occurred in recent years. There were none in 2019, three in 2020, and one in 2021. For more information, please see “Wood and dissolving wood pulp certifications”.

Societal aspects, especially human rights

Lenzing’s Wood and Pulp Policy also refers to societal aspects, especially human rights, in wood sourcing covered by the wood certification systems used by Lenzing, FSC^® and PEFC. Together with national laws and the Lenzing Code of Conduct they ensure that traditional, community, and civil rights are observed, and that labor conditions meet ILO Core Conventions¹⁶.

Wood and dissolving wood pulp certifications

Lenzing’s wood procurement management system ensures that all wood is sourced from legal and sustainably managed sources. Lenzing demonstrates that the wood sourcing complies with its high standards through verification based on FSC^® and PEFC certification systems (figure “Certification status of Lenzing operations – Chain of custody”). More than 99 percent¹⁷ of wood and dissolving wood pulp used by the Lenzing Group is either certified by FSC^® and PEFC or inspected in line with these standards (figure “Certification status in the Lenzing Group 2021”). Also, the last CanopyStyle verification audit report, which was published in the second half of 2020, confirmed low risk of sourcing from ancient and endangered forests, which is the best possible category.

The following figures show the certification status of all wood or pulp input into Lenzing’s fiber production, whether obtained directly through own procurement for in-house dissolving wood pulp mills or indirectly through dissolving wood pulp suppliers. All Lenzing Group production sites are FSC^® CoC (Chain of Custody) certified. The group certification for PEFC CoC currently covers five sites. Purwakarta, Nanjing and Mobile have successfully been added due to growing market interest in certified fibers and customers expectations (see table “Certification status of Lenzing operations – Chain of custody”).

PEFC is mainly used for wood sourced from Central Europe, based on strict, rigorously enforced national forestry laws. FSC^® certification of forests is not widespread in this region. Therefore, most wood sourced is procured with a PEFC certificate and receives FSC^® Controlled Wood status at Lenzing sites after a due diligence process. The Lenzing site has held the PEFC Chain of Custody certification as its main certificate for more than a decade. Since 2016, this has been complemented by an FSC^® CoC (Chain of Custody) certificate that covers all Lenzing production sites. All wood input to the Lenzing Group is either certified or controlled by the FSC^® certification system (figure “Certification status in the Lenzing Group 2021”).

The decrease in certified wood input and increase of controlled wood in 2021 was due to necessary supply adjustments.

Certification status in the Lenzing Group 2021

Certification status in the Lenzing Group 2021

FSC^® certification status in the Lenzing Group 2021

Pulp suppliers can hold more than one forest related certificate. Most of the pulp suppliers located in North America also carry certification from the Sustainable Forest Initiative (SFI), which is also a national member of and fully endorsed by the global PEFC certification scheme.

For detailed explanations of the certificates and controlled wood, see the “Wood and Pulp” focus paper in its most recent version.

Since forestry operations in Central Europe are generally small-scale, many small forest owners harvest wood for additional income and do not participate in a certification process. Therefore, Lenzing needs to procure reliable but limited quantities of such wood other than that certified to FSC^® or PEFC. This category of wood is inspected in line with these standards. Strict forestry laws and enforcement in Central Europe also require all forest owners to pursue sustainable management. The Lenzing Wood and Pulp Policy and Supplier Code of Conduct are part of all wood purchasing activities and are presented to potential suppliers before the start of a business relationship. Only if these conditions are accepted, deliveries can be made to Lenzing.

Wood procurement faces annual surveillance/recertification audits of the FSC^® and PEFC systems. In 2021, the certification body was changed to ensure continuous impartiality to the third-party-verifications. SCS Global Services (with Headquarters in California, USA) was the appointed company.

The Lenzing due diligence system for wood and pulp procurement includes regular formal audits. However, ongoing, day-to-day, informal, personal contact between Lenzing’s procurement team and suppliers is even more important. Supplier contracts can be terminated in response to severe sustainability findings. This has happened occasionally in the past when suppliers failed to remedy certain issues. No such cases occurred in 2019. In 2020, three contracts were suspended due to findings. Two were later re-activated after the issues were resolved. One supplier was delisted. In 2021, one supplier was suspended and later reactivated after checking and confirmation of compliance.

Regional wood supply in Europe

The Lenzing site (Austria) mainly uses beech wood plus small amounts of other hardwoods and spruce, whereas the Paskov plant (Czech Republic) mainly uses spruce. Lenzing is committed to the cascading use of wood, and primarily makes use of timber generated from small trees through thinning and sections of large trees that are unsuitable for high-grade products, such as furniture or construction.

The percentage of broadleaf forest, especially beech, is increasing¹⁸ in wood-sourcing countries as forests are being returned to a more natural mix of tree species, contributing to climate change resilience. The area devoted to spruce cultivation is decreasing, although stocks are still increasing in most sourcing countries due to low felling rates. Exceptions in recent years were caused by natural disturbances such as storm events and subsequent bark beetle outbreaks. Utilization of beech wood to manufacture fibers provides relatively high value creation versus wood use for energy generation, making it an important economic factor for the regeneration of forests with more deciduous species. This transition is also crucial for adapting forest ecosystems in Central Europe to climate change through greater species diversity^19,20.

Sustainability criteria have long been an important factor in supplier selection. As Austria, Germany, the Czech Republic and Slovakia have strong political commitments to sustainable forestry, their state-owned forests are an important source of wood for Lenzing sites and cover more than 20 percent of wood purchases.

In order to ensure short transportation distances and short delivery times, almost all the wood required originates regionally, meaning, either from the country where the pulp is produced or from directly neighboring countries. Regional²¹ wood accounted for 98 percent of the supply for the Lenzing site from 2015 to 2017. Due to sourcing issues caused by updated FSC^® risk assessments in some Central European countries, the regional supply rate temporarily decreased to 91.5 percent in 2019. In 2020, it was 94.4 percent, and in 2021 95.3 percent. For the Paskov site, the regional supply rate increased to 100 percent since 2019.

Wood sourcing for Lenzing Group’s own pulp mills in Lenzing (Austria) and Paskov (Czech Republic)

Beech and spruce by country, 2019–2021. “Other countries” for Lenzing sites are France, Switzerland, and Poland.

Wood from Poland was exclusively sourced with FSC^® certificates. For underlying figures, please see the Annex.

Dissolving wood pulp in the Lenzing Group

Processing wood into fibers requires a special quality of pulp called dissolving wood pulp. The Lenzing Group’s current dissolving wood pulp capacities are 320,000 tons at the Lenzing site and 285,000 tons at the Paskov site. In 2021, the Lenzing Group’s own dissolving wood pulp accounted for 65.2 percent (2020: 62.4 %, 2019: 61.8 %) of the planned dissolving wood pulp volume required for the planned fiber production. Sufficient quantities of wood are purchased for this purpose. In addition to its own dissolving wood pulp production, Lenzing procures dissolving wood pulp in the global market, mostly under long-term supply contracts. The Lenzing Group’s long-term strategy is to increase its own dissolving wood pulp capacities to 75 percent of its planned fiber production requirements.

By far the biggest step in Lenzing’s strategic approach to strengthen its dissolving wood pulp position was taken in December 2019, when the company announced plans to build a 500,000 ton dissolving wood pulp mill in the state of Minas Gerais (Brazil). It started to implement this investment in a joint venture with the Brazilian Dexco (formerly, Duratex) group. Lenzing holds a 51 percent stake, while Dexco has a 49 percent stake. The expected industrial capital expenditure (CAPEX) in the joint venture will be approximately USD 1.38 bn.

The new production facility was designed with sustainability in mind. It will be among the most productive and energy-efficient facilities in the world, meet the European Union’s Best Available Technology (BAT) standard²², and export more than 50 percent excess bioelectricity generated on-site as renewable energy into the public grid. The produced pulp can be 100 percent FSC^® certified and will be totally chlorine-free (TCF). This site is scheduled to start up in the first half of 2022.

In 2021, the Lenzing Group procured pulp from the following suppliers (in alphabetical order):

For the locations of the pulp supplying factories, see the map on the website. Eucalyptus, pine and spruce represent the predominant wood species used by Lenzing’s partners. However, beech, birch, ash, maple as well as other hardwoods and softwoods are also processed. The actual tree species vary depending on the region and quality conditions. Regardless of the species, all of the wood originates from sustainable forest operations that are certified or controlled according to the leading forest certification schemes. An extended list of tree species in 2021 can be found in the Annex. Lenzing ensures that the bleaching process of all purchased pulp is totally chlorine-free (TCF) or elemental chlorine-free (ECF).

Local wood supply in Brazil

In preparation for the pulp factory construction, the LD Celulose joint venture secured FSC^®-certified plantations²³ covering over 44,000 hectares to provide the necessary biomass. Around 70,000 hectares of plantation will be managed once full production capacity is reached. These plantations operate completely in accordance with the guidelines and high standards of the Lenzing Group for sourcing wood and pulp as well as the requirements of the leading certification schemes.

The forest unit responsible for supplying LD Celulose’s wood is in Triângulo Mineiro in the State of Minas Gerais. The area that is being transformed into the LD Celulose forest unit has been used for cattle raising, intensive agricultural activities, and eucalyptus forestry since the 1970s. No native (primary) forest will be converted. The plantations are more than 800 km from the region that comprises the Amazon rainforest.

Key aspects that compelled Lenzing to enter into a joint venture with Dexco in Brazil were its track record and reputation for environmentally responsible forest management, its tradition of respect for the environment, its experience in responsible and productive forest management, and its extensive knowledge of the Brazilian Forestry Code, which is one of the most stringent in the world. Lenzing makes a point of only working with certified and controlled wood sources to ensure supply chain sustainability. This commitment is being maintained at LD Celulose with Dexco’s forest management expertise.

The Dexco Forest Management Plan was adopted, which is responsible for ensuring compliance with Forest Stewardship Council (FSC^®) certification criteria. The FSC^® certificate provides the assurance that LD Celulose’s forest management work takes account of 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 impact, and the promotion of native forest conservation and restoration efforts. Lenzing cooperates with NGOs, such as Canopy, to assess the sustainability of its wood supply chain. All these measures ensure that wood sourcing is in line with Lenzing’s Wood and Pulp Policy and grounded in sustainable practices.

Currently, and until the pulp mill is in operation, timber harvested from the plantation is sold to the market as logs for saw mills, chips for particle board, and biomass fuel for drying processes.

Stakeholder activities in wood and pulp procurement

CDP Forests

In 2021, the Lenzing Group contributed to all three areas (climate change, forests and water security) of the Carbon Disclosure Project (CDP). It received a triple “A” score for tackling climate change as well as acting to protect forests and water security. Only 14 companies worldwide were recognized with a triple “A” for environmental leadership in all three categories. Through its significant demonstrable actions in these areas, Lenzing has taken a leading position on corporate environmental ambition, action, and transparency. For the first time, Lenzing reported on its activities in Brazil. The efforts to ensure legal compliance and to ensure that activities (e.g. leasing of new areas for plantations) do not contribute to deforestation in Brazil were examined. Transition risks were included and published in the risk reporting. Data were collected and extensively reported on the activities in Brazil, ensuring a share of certified or controlled wood input greater than 99 percent.

The CDP Forests Rating confirms that the production of Lenzing’s wood-based cellulose fibers does not contribute to deforestation – through a combination of a strict wood sourcing policy, forest certification and a dedicated collaboration with the CanopyStyle initiative.

Forest Europe, European and national forest strategies

The Forest Europe political process was initiated in 1990 by the Ministerial Conference on the Protection of Forests in Europe, which comprises 46 states, to promote sustainable forest management in Europe. A set of indicators grouped into six different criteria was developed to measure the sustainability performance of European forests and set targets for improvement²⁴. Current efforts focus on climate change adaption²⁵, water protection, and biodiversity²⁶. As a major buyer of wood in Europe, the Lenzing Group supports these targets, which aim to ensure the continued and improved function of forests in their ecosystems while maintaining the long-term availability of wood as a raw material.

The European Forest Strategy is currently in development. Lenzing contributed to an open consultation in 2021, calling for a consistent approach to regulation in the forest sector, and highlighting the forest-based bioeconomy as an important source for renewable carbon for materials within the European Green Deal.

The Austrian Bioeconomy Strategy

The Austrian Bioeconomy Strategy was published in 2019²⁷. The current phase calls for the development of an action plan. Lenzing is represented in the bioeconomy platform and provided input on the strategy and the development of the action plan from 2019 to 2021 through workshops and an online consultation. The action plan aims to balance the need for mobilizing timber as a raw material for the bioeconomy with assuring and improving the vitality and resilience of forests through adequate forest management. The strategy is prominently placed in the government working program and its implementation is assured.

The underlying studies have already shown a gap between increasing demand for renewable resources for materials and energy on the one hand, and the possible supply on the other hand, which is mainly limited by the available land area. One area of the action plan of particular relevance to Lenzing is therefore the continued development of the biobased circular economy involving the recycling of biobased materials, to which Lenzing will contribute accordingly.

In 2021, the development process of the Bioeconomy Strategy was linked to the Circular Economy Strategy. A catalog of actions is expected in early 2022.

Canopy

Lenzing cooperates with the NGO Canopy and maintains a continuous dialog with members of the CanopyStyle initiative to ensure responsible wood sourcing and protect the world’s ancient and endangered forests from ending up in textiles and fibers.

Canopy publishes the Hot Button Report, an annual ranking of all wood-based cellulosic fiber manufacturers based on their wood and pulp sourcing performance, transparency and innovation. Today, more than 455 global brands with combined annual revenues of over USD 791 billion guide their sourcing towards “green shirt” producers²⁸. Thus, this demand is a driver of change. In recent years, Lenzing has shown continuous improvement in all of these criteria: Lenzing’s Wood and Pulp Policy has been aligned with the CanopyStyle initiative for years, and since 2020, geographical locations of pulp suppliers have been publicly disclosed in more detail (see website and table 17). Regarding alternative (“next generation”) cellulose sources, Lenzing is the first company to produce and market lyocell fibers on a commercial scale using pre-consumer cotton scraps and post-consumer garments with Lenzing’s patented REFIBRA™ technology. For more information, please see the “Developing commercial-scale recycling technologies” chapter. Furthermore, Lenzing takes an active part in the Zero Discharge of Hazardous Chemicals (ZDHC) initiative and proactively advances the track- and traceability of its fibers within the value chain. In 2021, Lenzing established a guiding document for the implementation of its internal process of continuous improvement in minimizing its wood sourcing risks.

In Canopy’s latest Hot Button Report, published in October 2021, Lenzing received a dark green shirt for the second time and improved its score from 30.5 buttons in 2020 to 31 in 2021, continuing its long record of top rankings.

In addition to activities related to its own supply chain, Lenzing supports conservation solutions in other regions, such as afforestation in Albania and the USA. Also Lenzing has a record to express political support for the protection of ancient and endangered forests in Canada (Broadback Forest Quebec, Vancouver Island) and this year also Indonesia (Leuser Ecosystem). Moreover, Lenzing has contributed to a recent feasibility study for a project on specific protection activities for endangered species in Austria.

Greenhouse Gas Protocol: Update on carbon removals and land sector initiative

The Greenhouse Gas Protocol has launched a process to develop new standards or guidance on how companies should account for the following activities in their greenhouse gas inventories: carbon removal and sequestration, land use, land use change and bioenergy. One starting point for the initiative is the criticism of carbon neutrality for bioenergy and emissions from biogenic sources. In Lenzing’s view, sustainably managed forests and plantations are key elements for climate change mitigation through carbon sequestration in the forest, harvested wood products, and replacement of fossil-based materials that have high carbon footprints. Moreover, sustainably managed semi-natural forests are the most successful way to protect biodiversity and enable people to enjoy the benefits of forests in the form of recreation or micro-climate benefits (“ecosystem services”), for example.

The outcome of these ongoing considerations will have a decisive impact not only on the wood-based fiber industry, but on the entire wood-based bioeconomy. Lenzing has signed up for the review group to comment on the draft guidance, and for the pilot trial of the draft guidance, both of which are planned in the first half of 2022.