With the production and processing of cartonboard, MM focuses on a packaging material that particularly satisfies the increasingly important requirement of recyclability in the packaging world and combines clear advantages when compared to other packaging materials with regard to the following parameters for sustainability.
Because cartonboard is
RENEWABLE due to the use of the raw material wood from sustainably managed forests. Certifications for fibers and sourcing from responsibly managed forests are considered standard in the European cartonboard industry.
RECYCLABLE and can thus be reused several times. Used cartonboard packages have the highest recycling rate of all packaging materials in the EU (85 %) and form the basis of the production of an environmentally friendly packaging material – recycled fiber-based cartonboard.
BIODEGRADABLE/COMPOSTABLE. Once released into the environment, paper-based packaging disintegrates
within a few weeks.
The following information corresponds to the consolidated non-financial report 2020, from which further details can be obtained.
Sustainability has always been a decisive success factor in the orientation and management of the Mayr-Melnhof Group. Since the start of non-financial reporting in 2017, we have been reporting in ever greater depth and more comprehensively on key environmental, employee and social issues. The legal requirements pursuant to section 267 a of the Austrian Commercial Code as well as the usual international standards serve as a basis. The aim is to document key sustainability topics at the MM Group by systematically presenting the relevant management concepts, objectives, measures as well as risks and opportunities. This consolidated non-financial report describes non-financial topics on which the business of the MM Group has a major impact or which are of particular interest for our stakeholders. It also describes the way in which we deal with them. Our aspiration is to continuously optimize and complement our annual reporting, especially by taking into account the findings and requirements identified in our continuous stakeholder dialog.
As a member of the United Nations Global Compact, we are committed to the Sustainable Development Goals (SDGs) of the United Nations. The report on the year 2020 is for the first time based on the GRI (Global Reporting Initiative) standards. By taking this step toward greater transparency and international comparability, we respond to the growing need of our stakeholders (especially investors, employees and the public) for more in-depth information on the Company based on ESG (Environment, Social, Governance) criteria.
Responsible circular economy has long been an intrinsic part of our business activities due to the concentration of our business on cartonboard and paper products, which are mainly produced using renewable raw materials and are fully recycled after use. Therefore, we strive to offer new possibilities for the substitution of plastics and to create attractive future potential in the current packaging discussion through innovative and competitive solutions using cartonboard and paper.
The basis for the sustainable orientation of the MM Group is our strategic positioning as market leader on the basis of cost and innovation leadership as well as the rules laid down in our Code of Conduct, which also include the universal principles of the UN Global Compact in the areas of labor standards, human rights, environmental protection, and anti-corruption. We set our targets and allocate resources based on the Group’s sustainable orientation.
In this context, the management of sustainability and occupational safety, which had previously been largely decentralized, was established as a Group function in 2020, with the aim of further improving Group-wide performance by harmonizing systems, tools, and standards and creating new competitive advantages for the Group. In addition, the high importance of these areas is also increasingly taken into account by supplementing the basis for the variable remuneration of managers by criteria relating to occupational safety and climate protection (Management Board only).
The fact that the MM Group succeeds in making continuous progress in economic as well as ecological, social and societal terms is due to the high sense of responsibility and performance of the entire MM team, for which we would like to express our special thanks to our employees.
The production of cartonboard and folding cartons for consumer goods is the core business of the Mayr-Melnhof Group, which covers almost the entire fiber cycle with the exception of the purely recycled fiber business. The integrated setup of the Group is covered by the divisions MM Board & Paper and MM Packaging, which are managed as profit centers and trade among each other at market conditions. Cartonboard is the most important raw material for folding cartons which are mainly used for the packaging of consumer staples. About 10,000 employees in the Group produce approximately 1.7 million tons of cartonboard per year and process approximately 847,000 tons of cartonboard and paper. The MM Group generated sales of around EUR 2.5 billion in 2020. Mayr-Melnhof is present in 20 countries with 6 cartonboard mills1) and 44 packaging sites and sells its products to around 100 countries worldwide, with Europe as main market.
MM Board & Paper is the largest producer of cartonboard in Europe with a leading position in the field of recycled fiber-based cartonboard and a growing position in the field of virgin fiber-based cartonboard. The broad product and service portfolio of the cartonboard division comprises cartonboard grades for a great variety of consumer goods industries, especially in the sectors of fast-moving consumer goods (FMCG) and e-commerce. In line with the product portfolio, around 75 % recycled fibers and 25 % virgin fibers are used as raw materials. The significantly lower virgin fiber share consists mainly of groundwood pulp and a smaller proportion of cellulose. Besides fibers, the most important input factors are coating chemicals for the cartonboard surface and energy which mainly comes from natural gas. As already described in the introduction, unprocessed cartonboard is mainly used in packaging production. All cartonboard products of MM Board & Paper are produced using renewable fibers and are both recyclable and biodegradable. Customers of the cartonboard division are mainly folding carton producers, but consumer goods manufacturers also have an influence on the choice of cartonboard.
MM Packaging is the largest producer of folding cartons in Europe and in several countries outside Europe. Production focuses primarily on manufacturing packaging for everyday consumer goods in the sectors of fast-moving consumer goods (FMCG) and e-commerce as well as in the premium sector. While the first sector serves a wide range of food and non-food applications, the premium business comprises highly specialized packaging markets such as health, beauty & personal care, cigarette, and luxury. Recycled and virgin fiber-based cartonboard are used as raw materials in roughly equal proportions, with the majority of cartonboard being purchased from outside the MM Group. In addition to the raw material cartonboard, inks, varnishes and die-cutting tools are important input factors in the production of packaging which is more labor-intensive but more energy-extensive than cartonboard production. MM Packaging's customers include both multinational and local consumer goods producers.
The recycling rate for cartonboard and paper currently totals around 85 % in Europe. Circular economy is an inherent part of the MM Group's business model through the use of paper for recycling in cartonboard production and the manufacture of recyclable cartonboard packaging.
1) In addition, MM Board & Paper produces virgin fibers at the FollaCell site.
Value added and growth in the core business
The focus of our strategy is the sustainable generation of value added and growth along the supply chain according to the business model described above, focusing on the two core business areas: MM Board & Paper and MM Packaging.
Striving for best practice
To this end, we focus on excellent industrial performance, striving to achieve cost, innovation and technology leadership and to use best practice opportunities in the areas of resource consumption, circular economy, safety and the development of our human resources, diversity, respect for human rights as well as an ongoing fight against corruption and bribery. By implementing a Group-wide sustainability management, we aim at further emphasizing MM's attractiveness as a sustainable company and at responding even better to our customers' expectations in this connection.
Growth based on sustainable solutions
We focus on the development and optimization of recyclable packaging solutions made of cartonboard and paper as we are convinced that we will meet the expectations of the market in the long term and achieve success with sustainably produced products that create added value. We strive for growth both organically and through acquisitions. We support our customers in their expansion aspirations, open up new sales areas and penetrate existing markets with highly competitive and innovative products and processes.
Our goal is to grow faster than the market through innovative, sustainable packaging solutions and to reduce the number of occupational accidents and CO2 emissions.
The ultimate responsibility for non-financial matters lies with the Management Board.
In the Group, the central function "Sustainability Management" has been set up, reporting directly to the Management Board and ensuring that sustainability management is implemented and operated on behalf of and in the interests of the Management Board. This central function was set up to conduct a materiality analysis, data collection, and reporting. The respective local management exercises its managerial duties, with each employee making her or his own contribution. Sustainability management therefore does not take place in an isolated way, but as an integral element of the organization and its processes.
Impact of Covid-19 on business activities
With the Covid-19 pandemic, a new material issue has arisen in 2020, which, due to its far-reaching effects, also requires reporting with regard to the impact on the non-financial concerns of the Company and its business model. It should be noted that the overall economic impact of Covid-19 on the Company has so far been largely neutral and the supply chain has been kept intact despite temporary challenges.
Due to the fact that the mills are still in operation, there were no significant direct changes in environmental aspects. Investment subsidies were used to invest in more climate-friendly expansions, however, e. g. at the cartonboard site in Frohnleiten. In addition, the limited travel activities within the Group have caused fewer emissions.
From a social point of view, the system relevance of cartonboard and cartonboard packaging for the supply of people with goods for their daily needs manifested itself as an opportunity. In contrast, lockdowns result in particular in higher volatilities in the volume and prices of paper for recycling.
Changes in working conditions resulted in particular from higher hygiene standards to reduce the risk of infection, the need for greater flexibility, and new requirements and opportunities arising from the fact that employees were working at home. No impact on fundamental rights or changes in susceptibility to corruption and bribery were identified in connection with business activities during the corona pandemic.
Management concepts and due diligence processes
The objective of the pandemic management concepts is to ensure the safety of employees in the best possible way at all times and to maintain operations. With a view to maintaining the supply chain, broadbased monitoring of goods and logistics and flexible planning within and among the plants are used in close coordination with business partners. Control measures are cascaded at both plant and divisional levels. A steering committee set up at Group level also monitors ongoing developments and makes decisions on overarching guidelines and measures within the Group and regulations at Group headquarters. Hygiene management is assigned to the individual subsidiaries, with minimum standards in place.
Impact of business activities on climate change
Cartonboard and cartonboard packaging have two specific advantages:
- They are based on wood, a renewable resource. Wood absorbs CO2 during its growth phase.
- They store carbon and, through recycling, CO2 remains bound. It’s not returned to the atmosphere.
When forests are sustainably managed, as in Europe, carbon sequestration in wood increases steadily or at least remains stable.
The latest CO2 footprint for cartonboard was calculated in 2019 by the RISE Research Institutes on behalf of Pro Carton. In addition to the fossil emissions previously considered exclusively, resulting mainly from energy production, the new method now also covers biogenic emissions and their decomposition as well as direct land use changes. With a CO2 eq/t value of 326 kg, cartonboard has extremely low CO2
ratings compared to other packaging materials, such as plastic, glass, or aluminum. This value is the result of a methodologically new study initiated by Pro Carton and available at www.procarton.com/wpcontent/uploads/2019/10/Carbon-Footprint-Report-2019-Exec-Summary-English-1.pdf. The CO2 footprint of cartonboard for 2019 has improved by 9 % compared to 2015 when applying the old method.
For years, both divisions have moreover been participating in the world's largest collection of primary emission data of companies, the CDP (Carbon Disclosure Project), with the aim of evaluating the climate footprint in the value chain on the basis of this database. In this context, the MM Group, for its part, strives for refining its monitoring to achieve even higher transparency. On this basis, climate change is also to be increasingly taken into account by the Group's risk management.
Risks from the Company's activities in connection with climate change are mainly concentrated on the use of fossil energy sources in the energy production of our cartonboard mills and on logistics along the value chain. This is, however, offset by opportunities arising in connection with the increased use of renewable energy and the progressive substitution of plastic packaging with sustainable cartonboard and paper solutions.
Relevance of climate change for the business model
We currently consider the direct and short-term effects of climate change on the business model of the MM Group to be insignificant regarding the supply chain as well as to the general conditions. From today's perspective, we also do not expect any significant changes in the medium term due to the geographical positioning of the MM Group and the availability of raw materials and sustainable sales markets. The effects of possible future regulatory measures on our business environment are subject to risk but cannot be assessed.
Opportunities derive in particular from the positive positioning of renewable packaging products made of cartonboard and paper with low CO2 values and high recycling rates. Risks can arise above all from regulatory changes with regard to the raw materials and energy used and transportation. MM pursues consistent minimization of specific consumption as well as an optimization in the planning, use and choice of means of transport.
MM Group part of the 4evergreen Alliance
Since 2019, the MM Group is part of the 4evergreen Alliance, which was initiated by CEPI, the European paper industry association (http://www.cepi.org/4evergreen). 4evergreen brings together companies from all sections of value added chain to promote the recycling of fiber-based packaging and cooperation in the development of recyclable materials. The aim is to increase the contribution of fiber-based packaging to a sustainable circular economy in order to minimize impacts on climate and environment.