lenzings moral

The CEO of Austria’s Lenzing talks to fDi about the company’s innovative approach to fibre production.

The UK’s House of Commons Environmental Audit Committee noted in its 2019 report, Fixing Fashion, that the absence of real infrastructure in recycling textiles hinders the industry’s ability to meet both its environmental and social responsibilities to achieve low-impact methods of production. The fashion industry is a bigger polluter than the shipping and aviation industries combined. Much has been written about the dangers of conventional cotton production (excessive water use and slave labour in the supply chain), as well as its competition with arable farming.

Lenzing is positioned and marketed as one of the leading solution providers for retailers and manufacturers looking to reduce their overall environmental impact in production. Lenzing CEO Stefan Doboczky puts his company's strategy into global context: “From a fibre perspective, two-thirds of textiles are crude oil derived – (polyester, polyimide, etc. A third of the market relies on conventional cotton, which is water-thirsty and uses up arable land, putting pressure on natural resources.”

Carbon neutral

By contrast, Lenzing’s innovative branded fibres Tencel Lyocell are cellulosic, biodegradable at the end of their lifecycle and have a relatively low impact on the environment during the manufacturing process. In June 2019, Lenzing announced its intention to became the world’s first carbon-neutral fibre producer by 2050.

“Contrary to the paper and metal industries, there is still no formal circular model of recycling for the global textiles industry,” says Mr Doboczky. “We follow a fully circular model. The wood we use is also Forest Stewardship Council certified.”

Lenzing has been at the forefront of innovation and investment in sustainable global textiles manufacturing for many years, opening its first fibre plant in 1938 by converting a pulp and paper mill into a viscose-producing plant. By the 1970s, the company had adopted a programme of environmental rehabilitation and in 1975 it established its own in-house environmental department to continue developing the concept of ‘closed production cycles’. By 2004 the group acquired sites in Alabama and Grimsby (UK) for the production of its flagship product Tencel, which is now used by clothing brands such as H&M and Levi’s. 

Beyond the buzzword

Speaking about Lenzing’s success in having Lyocell (made from sustainably sourced wood chips) integrated into the production lines of major players such as ASOS, US brand Reformation and Spain’s Zara, Mr Doboczky outlines three key pillars influencing its corporate strategy.

The first is ensuring sustainability is more than a buzzword, but at the very heart of Lenzing’s corporate values. “We designed a strategy that balances the interests of shareholders with conservation of the planet. Sustainability is a non-negotiable priority for us,” he says. In pursuit of full accountability, the company has set itself the target of cutting carbon dioxide emissions by 50% by 2030 and becoming 100% carbon neutral by 2050.

Unlike the rest of the fashion industry, which has only recently started adhering to the ethos behind the UN’s Sustainable Development Goals and the idea of the circular economy, Lenzing has been operating under this philosophy for well over a decade, according to Mr Doboczky. “Sustainability has been a major business driver for us, because it’s our USP. We have the unique position of being a business model to the industry in that you can have a corporation that creates value for the consumer while simultaneously creating profits for our shareholders,” he says.

Where to invest?

The second pillar is in Lenzing’s strategy for FDI. Recent reports of its decision to put a new development in Alabama on ice raised eyebrows and there was speculation into the reasons behind the sudden decision to relocate the next big project to Thailand.

Mr Doboczky says: “Initially the Alabama market was looking for our Tencel products. We already have a very successful installation in Alabama, but as things developed in the planning stages, the investment climate [there] changed towards projects [involving] oil and aircraft. Local labour was sucked up and the costs became very different to what we had previously projected. We’re not saying ‘never’ to Alabama – but at this moment in time, we are focused on Thailand.”

Asked whether geopolitics had any influence on this decision, Mr Doboczky acknowledges the challenges that tariffs posed on the company’s ability to move goods around. “Tensions between the US and China influenced our decision to change the destination of Alabama for Asia. Thailand is closer to our Asian customers and the country has free-trade agreements with China and India, two of our customers.”

China and India still have a considerable stake in the global textiles production value chain; Mr Doboczky points out the strategic benefits of introducing more sustainable methods of textile production closer to the location of the factories as a means of reforming the supply chain and the overall process of manufacturing.

Considerate guests

The third pillar of the Lenzing strategy reflects how sustainability has permeated into all aspects of its corporate culture. When assessing potential FDI projects, Mr Doboczky clarifies that sustainability is not only an ecological indicator, it is also an imperative when evaluating human capital. Assessing the skill level of the local population – and thus identifying whether Lenzing’s intellectual property will be managed well – is a key priority in the planning process.

“We don’t set up operations in areas where water is scarce or where our presence would put pressure on local resources,” says Mr Doboczky. “Bio-energy is also a key element for us; building power stations powered with a source of energy with a low carbon footprint is another priority. We make sure that our suppliers of dissolving wood pulp implement efficient water management schemes for their natural resource wood.”

Water is pivotal to the natural cycle of wood growth and is also used in Lenzing’s cooling process of fibre production. “Sustainably managed forests, as part of the natural water cycle, do not need any additional water to grow; they play an important role in stabilising the water supply and providing protection against flooding as well as water shortages in case of little precipitation.”

As the global population grows and the global textiles industry faces challenges on multiple fronts, Lenzing’s influence as a paradigm of sustainability should continue to drive the demand for FDI projects that produce cellulosic or recycled textiles.

Editor's note: An earlier version of this feature, and the printed version in the magazine, stated: 'In 2019, Lenzing became the world’s first carbon-neutral fibre producer'. In fact, the company has declared an ambition to reach this goal by 2050. We apologise for the error.

This article is sourced from fDi Magazine
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