Many green investments today focus on companies and sectors that are carbon efficient in terms of their Scope 1 and Scope 2 emissions. This means that their direct and indirect emissions generated during the production of their products and/or services are taken into account. The data required for this is relatively easy to measure and widely available today. However, Scope 3 emissions are also crucial to a company's carbon footprint. However, like Scope 2, these are indirectly related to the company's activities. One example is the employees' commute to work. Scope 3 emissions have so far been difficult to measure and record. However, for textile companies, about 90% of emissions would fall under Scope 3, and again 25-30% of these emissions are due to raw materials. How can progress be made here? The practical example of Lenzing shows which strategies and processes are possible in procurement:
Lenzing produces textile fibers and pulp raw materials. The fibers are mainly used in the textile industry and for the production of non-woven fabrics, technical textiles, home textiles, curtains and towels. The company's sustainable fiber products enable customers to reduce emissions and save water along the entire value chain.
Target for reduction of carbon dioxide emissions
The company set a science-based carbon emissions reduction target in 2019. Achieving this goal will require collaboration across the company and integration of climate-related considerations into all functions. This includes conversations with procurement and working with investor relations to understand how investors think. The company is also looking for ways to support its customers and help them achieve their own knowledge-based goals. For climate-neutral products, there are internal criteria that must be met (e.g. emissions below a certain threshold, 100% renewable electricity at the site, etc.). Lenzing's intention is to create internal competition and an impetus for improvement for those products that qualify for this product portfolio.
Currently, Lenzing is experiencing growing interest and a positive trend for its climate-neutral fibers. Companies with which Lenzing cooperates can apply for a license to use trademarks (such as the Tencel logo). The companies consider this to be an advantage as the brand becomes better known to the end consumer and the end consumer knows what Tencel stands for. In the area of emissions avoided (Scope 4), corresponding claims are used to position and sell branded products. Ecovero, for example, claims 20% lower CO₂ emissions compared to conventional viscose on the market. Lenzing calculates this for all branded products for which a baseline is available, but has not quantified the prevented emissions at the Group level. Lenzing sells its product to a spinning mill that produces yarn from it. However, sales meetings take place with the brand companies, i.e. Lenzing approaches the companies and communicates the benefits they would achieve by using Lenzing fibers. The LCA is used as a decision-making tool. It can be applied, for example, in the selection of suppliers, as they influence the final footprint of the product. An LCA can also influence long-term supplier relationships.
Another example is research and development, where LCA is used to compare the impact of different decisions and support the final decision. A specific example is the Lenzing plant in Thailand (the largest lyocell plant in the world) - here a decision was made on which energy source to use (coal, natural gas or biomass) - biomass had a lower carbon intensity but was more expensive. This was weighed against the cost of a potential carbon tax if natural gas or coal was used. In this case, the company included outside effects in its decision making. Ultimately, the decision was in favor of energy generated from biomass.
Traceability using blockchain technology
Lenzing has accomplished the goal of physical traceability from fiber to garment using blockchain technology (the goal is for 100% of specialized products to be traceable). Traceability enables transparency throughout the value chain so that the end customer is able to scan the labels and see where the fiber came from (used by H&M, etc.). This has been implemented for more than 600 members of the value chain. Lenzing's policy is to source only certified wood and certified pulp - 100% of its products originate from certified and controlled sources. Lenzing's plantation in Brazil is located in the south of the country, far from the Amazon region. It is one of the first plantations in Brazil certified by the Forest Stewardship Council (FSC). Vertical integration ensures that the company is only supplied by certified plantations. Lenzing does not see any significant sustainability risks at the Brazil site, as financing is provided by the IFC, which requires detailed environmental and social impact assessments. For FSC certification, there are also (country-specific) requirements on how much of the plantation must remain unchanged for biodiversity reasons or how biodiversity corridors must be preserved. Although some Lenzing fibers are 100% biodegradable, the biodegradability of the final product may vary as it depends on which other fibers are added. While Lenzing tries to influence how brands use its fibers, it stands at the beginning of the value chain and thus has limited influence. Lenzing is aware that biodiversity is an area where the company strives for improvement.
Corporate culture/equality and diversity
Employees are qualified and well trained and all of them are compensated with a sufficient salary to live on. Working conditions are also better than in other industries. The company is working to improve equality and diversity as well as inclusion. There are difficulties in increasing the proportion of women - there are many qualified workers, but the problem is attracting them to work in the plants. Lenzing's sustainability mission has proven to be a driving force in attracting talent, as some employees have moved to Lenzing from other companies because of its sustainability profile. However, there is still room for improvement for younger people, as Lenzing operates in a historically conservative sector. The fact that Lenzing is also located in rural areas can often limit the search for new talent. However, the company also offers its employees the opportunity to adopt hybrid working relationships.
Getting through to the end customer
Sustainability is Lenzing's main selling point, but there is still a need for education, both among customers and vendors. In terms of pricing, there is a premium for sustainable clothing, but the proportion of sustainable fibers in the end market price is small.