Integration in functions and projects

Research and Development: A project is being planned with academic partners to decarbonize heating demand by developing high-temperature heat pumps with renewable electricity to replace the use of fossil fuel for heating. This project has been dealing with delayed requisite financial support and resources in 2022. Therefore the operation will start in 2024 in Lenzing (Austria).

Operations: All production sites have been engaged to develop their targets and roadmaps. For more information, please see the “strategy, targets, and roadmaps” section. Some emission reduction projects implemented globally during the reporting period include:

  • Since July 2022, the Purwakarta site (Indonesia) has purchased 100 percent renewable grid electricity. Some of the grid electricity purchased by Nanjing (China) in 2022 was renewable.
  • Four photovoltaic (PV) systems were started up in Lenzing (Austria) in 2022. One ground-mounted and three roof top PV systems with a total capacity of 7 MWpeak.

Business management and sales: A process has been launched to identify and support the development of new product offerings with climate change benefits, for example carbon-neutral product portfolio. For more information, please see the “Business value creation with climate action” section in this chapter.

Procurement and supplier engagement: Supplier engagement has been carried out with key chemical and pulp suppliers to reduce Lenzing’s Scope 3 emissions. These engagements and partnerships are intended to develop raw materials with lower GHG and other impacts. Lenzing focuses on maintaining long-term relationships, helping suppliers achieve improvements, and being part of their transitional journey by buying their green products.

Strategy, mergers and acquisitions: Every capital project, whether brownfield or greenfield, has to align with the climate change strategy and targets. In this regard, some projects have been assessed for their benefits and contribution to climate change impact as part of the Managing Board’s decision-making process. Internal carbon pricing for key projects is used to support this process.

Finance and controlling: In 2020, climate change metrics were integrated into the capital allocation and periodic management reporting process of the Group’s operations. In 2022, there were no capital allocation.

Internal carbon price: In 2021, an internal carbon price (ICP) of EUR 75 per ton of CO2 was implemented. The ICP comes on top of regulatory carbon pricing at different Lenzing locations (e.g. EU ETS). It was applied in the 2022 strategic investment planning process for capex projects of over EUR 2 million. The purpose of the ICP is to mitigate future carbon risks, trigger renewable fuels over fossils and support energy efficiency projects.

Board remuneration linked to sustainability performance: The remuneration policy of Lenzing AG for the performance-based remuneration of the Managing Board is linked not only to financial performance criteria but also to non-financial sustainability criteria (ESG). For more details, please see “Managing Sustainability” chapter.

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