WEPA ESG REVIEW 2024

INTRODUCTION

WEPA is a family owned business since 1948 specialising in paper based hygiene products that originated from Germany and has expanded into six different countries. They are among the top 3 paper hygiene manufacturers in Europe with 14 production locations in Europe; Germany, Italy, France, Poland, Netherlands, and UK.They recently added an office in India to handle their IT and Digital infrastructure. In 2024, WEPA raked in consolidated revenues of €1.8 Billion. In 2020 WEPA founded its own Foundation as part of its CSR initiative which focuses on unique projects to support communities and environmental champions in the country. They have 10,000 employees under their care along with the communities, environment, consumers and other stakeholders affected by their business operations along their supply chain. Sustainability is a strong foundation of their business operations. They have been voluntarily issuing sustainability reports since 2020 and has recently established a Sustainability Stakeholder Advisory Council consisting of independent advisors with rich backgrounds in corporate sustainability and ESG. Some of their notable accomplishments at a glance are their partnerships and awards - in 2024 they were awarded with the German Sustainability Award in the Paper, Cardboard, and Paperboard Category. WEPA's emissions ambitions are set for reductions by 52.5% till 20230 and carbon neutrality by 2040. Overall WEPA has an impressive track record, a deep dive into their Sustainability Report for 2024 which was prepared in accordance with ESRS will give us more insights into their achievements, goals and future strategy - keeping in mind 1) their big dilemma of an energy and water intensive process that involves significant natural resources and 2)  their ever growing portfolio of business operations through WEPA ventures.

Image Source: https://www.wepa.eu/en/blog/detail/why-wepa-reports-annually-on-sustainability

Images Source: WEPA Professional Business Products and WEPA Consumer Products

ENVIRONMENTAL

Material Sourcing: WEPA prioritizes sourcing materials through scientific evidence that align with its commitment to sustainability. The company is a leader in using recycled fibers, specifically from recovered paper and cardboard, which follows the principle of cascade utilization to prevent fresh fibers from being used only once. They also innovate with non-wood alternatives like Miscanthus and paludiculture fibers, which are part of their targeted R&D and sustainability strategy given its longevity. For the wood-based fresh fibers they still use, WEPA ensures they are sourced responsibly, with 100% of these fibers being FSC® or PEFC-certified.

Material collection from customers: One of WEPAs circularity measures is collecting used cardboards after delivery with certain customers (like stores or supermarkets) and using them to process their hygiene paper products. Along side an initiative to collected used hand paper towels from customers washrooms. Their goal is to have 60% of their sales to be made from 60% from recycled fibres and non-wood fibres by 2030. As of 2024 they are at 33%.

Emissions intensity (Scopes 1,2 and 3): As the company aims to reach net zero by 2040 and reduce emissions of Scope 1,2 and 3 by 52.5% compared to base year 2019, their efforts to reduce emissions in an energy intensive production process is one to look forward to - They use renewable energy which contributes to 72% of their energy mix (aim of 100% renewable energy by 2030), they engage with external green power sources including becoming a part of a green hydrogen project backed by the German Ministry for Economic Affairs and Climate Action, and they use innovative different energy sources for example their heat pump electrifying heat generation and the expected implementation in 2025 of their biomass steam from waste wood. As of 2024, compared to base year, they have reduced 28.64% of Scope 1 & 2 emissions, and 12.41% of Scope 3 emissions. As of 2024, Scope 1 & 2 contributed to 39% of their operations and Scope 3 contributes to 61%.

Water Management: WEPA acknowledges their intensive water use and has therefore made efforts to optimise water efficiency through partnerships like with regional universities which also highlights their proactive nature in collaboration. Their other efforts include partnering with WWF for the Water Stewardship Program, and rewetting peatlands through the Alliance of the pioneers.

Waste Management: They implemented a Zero Waste and Secondary Raw Materials Strategy for all their sites to promote circularity which is a goal they seem to have in the works to have more defined measures and targets. Their current waste risk score of over medium risk is one they have planned to reduce to low risk by 2030. For example they turn waste into resources through separating metals and plastics and collecting for further use, as well as separating inks and fillers from paper to get dewatered paper sludge. Sludge is used in brickworks and ash in the cement industry.

SOCIAL

Collaboration: WEPA's strategy towards many of their goals is through collaboration with different technologically enhanced groups as well as aiming for cross-sector collaboration to enable circularity in their business practices. One example is through their Venture Capital program that invests in start-ups that are driving towards, green tech and green business development, example platform for digital waste management platform (Resourcify).

Consumer Awareness: through their 'Beige is better' campaign creates awareness of the recycled and unbleached hygiene paper product being of same quality as fresh fibre quality and has an overall lower environmental impact.

Employee Surveys: annual employee survey.

Image Source: WEPA Sustainability Report 2024 page 35

GOVERNANCE

Board and Management: The company has a clear structure of the Supervisory Board and the Management Board. They address the age range of their board, frequency of meetings, and gender diversity of the boards of which there are no female members. Their CEO and their director of sustainability have extensive experience and skills in sustainability and ESG, aside from whom they also have an external Sustainability Stakeholder Advisory Council to assist the company with their sustainability and ESG goals.

Reporting: Their reporting is done in accordance with EU CSRD and ESRS. As reporting obligations have been postponed, WEPA continues to publish a Sustainability Report in preparation with existing standards whilst they prepare for mandatory reporting in the future.

Supply Chain Due Diligence: They carefully consider their suppliers management process and conduct risk assessments and surveillance of their partners. They evaluate suppliers annually and conduct on-site audits of their pulp suppliers (primarily from Scandinavia, South and Middle Europe, and South America. They also have an established Code of Conduct for their business partners.

Packaging: The use of 50% wild plastic for their toilet paper packaging - wild plastic involves sourcing plastic from outside the recycling plants - those that are illegally dumped in landfill sites or nature. They seem to collect some of these from countries outside their operational vicinity like from Ghana, India, and Thailand. They also use 60% of post-consumer recycled content in their plastic packaging.

Image Source: WEPA Sustainability Report 2024 page 54

Image Source: WEPA Sustainability Statement Report 2024 page 11