2022
SUSTAINABILITY PERFORMANCE REPORT 2022
CONTENT
HOW WE ANCHOR SUSTAINABILITY Our commitment to foster new habits and drive change in our industry Our business model
3 5 6 7
Garment Division Furniture Division Supply Chain Continuous improvement & Sustainability Ladder Engaging our Stakeholders LTP GROUP'S FOUR SUSTAINABILITY COMMITMENTS The four Sustainability Commitments by end 2025
8 9 10
11
SUSTAINBILITY HIGHLIGHTS & TARGETS 2022
14 12
Sustainability Highlights 2022 Performance on Targets 2022
GOING FORWARD
18 19 22 25 28
2023-2025 Strategy Care for People Embrace Durability & Circularity Fight for Climate Unlock Transparency
RISK AND COMPLIANCE
31
32 34 35 36
APPENDIX 1: CERTIFICATIONS APPENDIX 2: GOVERNANCE & COMMITTEE APPENDIX 3: COMPLIANCE REPORTS APPENDIX 4: REPORTING PRACTICES
1
'Consciously crafted is our commitment to drive sustainable manufacturing, with environmental and ethical accountability determining our choices in producing durable, functional, premium products.' CONSCIOUSLY CRAFTED
WWW.LTPGROUP.COM
2
1
1
OUR COMMITMENT TO FOSTER NEW HABITS AND DRIVE CHANGE IN OUR INDUSTRY
CO-CEO'S Henrik Holmgaard Olsson Jeannett Hvidkjær
We continue to be committed to significantly improving LTP Group’s overall sustainability performance and drive positive change across our industries. In 2021 we established a governance structure, and we committed to ambitious targets for 2025 fostered by a materiality assessment. Through large parts of 2022 LTP Group were challenged by the lasting impact of the pandemic and ongoing disruptions of supply chains as well as the geopolitical uncertainty following the war in Ukraine. The war in Ukraine had a significant impact on the garment division and a re-organizing of the production capacity became a priority. Corporation with Russian and Belarusian production partners were discontinued in 2022. Despite these challenges LTP Group remained true to the four core commitments. The focus, following the anchoring of sustainability as a pillar in the corporate strategy, has been to strengthen each area in the “Sustainability ladder” . 1)
It includes the preparation of the up- coming product passport declaration which takes significant efforts to establish and in LTP Group the work started in 2022 being a priority to support the industry with the need for additional product data. This report will give insight into the achievements in 2022 and the areas of continuous focus and progression. LTP Group's sustainability report concerns the financial year 2022. It forms part of the management report of LTP Group's Annual Report for the year and covers statutory reporting on corporate sustainability as defined by the Danish Financial Statement Act. Tackling the environmental challenges cannot be done by LTP Group alone, collaboration and partnership are key to achieving sustainable solutions, involving employees, customers, and suppliers. Material sourcing is for the majority nominated by the customers and LTP Group does not have direct influence on the material choices.
Still, LTP Group take responsibility for the scope 3 emissions by ensuring data transparency for our customers, suppliers, and other partners to choose new and more sustainable solutions. It comes without saying that the textile industry needs to do more to protect the environment, and every small initiative and action counts. At LTP Group employees are encouraged to focus on a number of initiatives in the daily business as many small changes support the needed daily attention at the manufacturing sites fostering a new tomorrow. Among the small things is adding sensors to light sources, printed paper being reused on the blank side and changing from plastic cups/bottle, to tap water and paper cups. All initiatives change the lifestyle of the employees in LTP Group and bring awareness and inspiration to customers, suppliers and business partners.
Welcome to the Sustainability report for 2022 for LTP Group.
The reporting practice can be found in appendix 4 of this report.
3
1) See page 9
EUR +148 M. In revenue
12 Fully-owned factories across 6 countries
HQ, Copenhagen
>2,700 Employees worldwide
55/45 Diversity in management split. Percentage between female/male *
LTP Group is composed of a garment division and a furniture division. The group functions and strategic functions, including sustainability, are located in Denmark.
>5.100.000 Items in output
*) Group Executive Management, Chief Commercial Officers and the Managing Directors
4
OUR BUSINESS MODEL
bringing awareness and decrease of the environmental impact of the business through tracking emissions. LTP Group occupies a strategic position in the supply chain between material suppliers and the brands, serving a critical role from concept- stage to the delivery of the final product. Both in the garment and the furniture division the brands are designing the products and sending technical specifications to LTP for final development, construction, and manufacturing. "Being a link in the supply chain, between brands and suppliers, LTP works closely with customers, suppliers and production partners to create sustainable solutions"
LTP Group serves premium garment and furniture brands, offering manufacturing expertise, and being a specialist in handling textiles for many different products. LTP Group is comprised of a garment division and a furniture division. Through building a global manufacturing footprint LTP Group offers customers the possibility to have the manufacturing services including the materials sourcing near their customers - the end consumers. The business model accommodates the conscious choice of material and manufacturing partners and allows LTP Group to quickly adjust to match changes in the market conditions. A highly skilled workforce with deep industry knowledge serves the customers from 12 production sites located in 6 countries. Local factories are involved in achieving strategic targets and ensuring continuous improvements in all aspects of the business. LTP Group commits to high quality through manufacturing practices and keeps a strong focus on strengthening the sustainable offering of technically complex production capabilities and services to ensure longevity of products delivered. The processes and workflows are supported by continuous digitalization and integration with customers,
LTP GROUP MANUFACTURER
5
GARMENT DIVISION
LTP garment operates in six product categories: Active Sport, Cycling, Outdoor, Athleisure, Urban Performance and Sustainable Fashion & Lifestyle.
LTP garment serves customers from two innovation centres, one in Europe and one in Asia. The European innovation and cutting centre are situated in Lithuania with a local management team overseeing 5 manufacturing service sites. The Romania set up was established in June 2022 following acquisition of business activities from an existing textile manufacturer. In total the European manufacturing set up counts +800 employees and 118 3rd party production partners. The two fully owned manufacturing locations in Belarus have been operational during 2022. The re-structure of capacity continues, and further reduction is planned in 2023.
The innovation centre in Asia is situated in Ho Chi Minh City and counts +1.100 employees and 24 3rd party production partners.
6
FURNITURE DIVISION
LTP furniture offers a total supply chain solution including full assembly, packaging, and logistics of upholstery chairs and sofas for high-end design driven retail or contract brands operating with a global distribution setup. Near shoring for North America was prepared in 2022 with a full-scale local operation in Mexico. A supply chain was established to source local components, which overall will support a better carbon footprint of the products delivered compared to loading containers in Europe. European market is supported by four factories in Lithuania and as part of the vertical integration strategy a new in-house wood frame facility was established in the last quarter of 2022 delivering FSC certified products. During 2023 additional vertical integration activities are expected to take place, which will ensure competitiveness and a continued focus on an even stronger sustainable production platform.
7
SUPPLY CHAIN
Supply chain transparency is a pre-requisite for managing ethical and environmental risks. Being a link in the supply chain, between brands and suppliers, LTP Group works closely with our customers and suppliers to create sustainable solutions. As a global company, LTP Group is aware that its worldwide sourcing and procurement activities have a considerable influence on the environment, and on the social conditions for people in the countries we operate, source materials and services in. It is essential to have an efficient supply chain that enables LTP Group to adjust volumes based on changes in customers’ demands. A significant part of the environmental footprint occurs in the supply chain, especially in fabric manufacturing. LTP Group sources from more than 1.000 suppliers globally, where the vast majority are suppliers nominated by our customers. Our supply chain is built on long-term strategic partnerships where possible, and these are supported by our production and sourcing functions in Lithuania, Vietnam and Mexico.
As a baseline, all suppliers are required to follow our Code of Conduct and we ensure that delivered items fulfill requirements from the REACH directive set by the European Commission. In 2022, 47% of the required production capacity in garment division, were handled by third party sewing partners and it is essential for a more sustainable supply chain to ensure the compliance documentation meets the LTP Group standards of social conditions and ethical behavior.
Additional steps were taken by building a structure to audit sewing partners by questionnaires, where 66% of Europeans partners were assessed, and new sourcing contracts were established including a sustainability clause. In 2023 the same structure will be implemented with Asia partners. Both in the garment and the furniture division the brands are designing the products and sending technical specifications to LTP Group for final development, construction, and manufacturing.
Supply Chain
Raw Material Producers
Material Suppliers
Manufacturer
Brand/ Retailer
User/ Consumer
Disposal
8
CONTINUOUS IMPROVEMENT
SUSTAINABILITY LADDER
To and improvement of the sustainability agenda, LTP Group work with 4 areas of equal importance. ensure continuous development The foundation is anchored in core values – Care, Trust and Challenge. The values drive open- mindedness, entrepreneurship, initiatives, and change; the heart of LTP Group culture. A culture which underlines an environment of teamwork, trust, and respect. The values lead to a detailed level of compliance, which is essential to successfully build sustainability initiatives and monitor risk. Certification at product and factory level is the tool to monitor processes, progress, and challenges within the organization. Certifications include social, quality and sustainability areas, providing continuous third-party monitoring and specialist expertise with best practice from other industries. For a full overview of certifications see appendix 1. The journey in defining the sustainability agenda has brought LTP Group from merely focussing on certifications to a diverse path, also including strategic priorities and metric performance drivers.
The metrics aim to validate the investments delivering real changes on operational, tactical, and strategic level for LTP Group and our partners. The strategic priorities set out in this report are the outcome from the materiality assessment conducted in 2021. To embrace all our certifications and all steps in our sustainability ladder LTP Group will aim for B-Corp certification by 2025. B-Corp certification is an independent standard that mandates businesses to fulfill social, environmental and sustainability standards, meet accountability criteria, and maintain transparency to the public based on their assessment score. This certification is applicable to the entire company, covering all product lines and potential challenges. The four key areas are illustrated in the diagram. To successfully operate on all four steps of the ladder, teams of sustainability professionals, each with dedicated competencies and responsibilities were established, all of whom collaborate and work in parallel to achieve LTP Groups strategic goals.
Continuously improving
Key performance indicators and measurable targets to track progress on strategic priorities
Performance based metrics
4
Strategic priorities
Focus areas to strategically drive high ambition level and an ability to drive change
3
Certifications
Third party certificates at product and factory level, to attest the sustainability level and efforts
2
Compliance & Corporate Values
Code of Conduct & Ethics, core values, internal compliance policies and processes
1
Care
Trust
Challenge
9
ENGAGING OUR STAKEHOLDERS
FOCUS
Injuries & accidents
14
Occupational health
15
2
16 17
18
Fair working conditions
3
16
20
8
13
1
14
11 12
Fair wages & benefits
17
4
19
15
5
9
Recycled, recyclable & durable material sourcing
7
1
6
10G
Sustainable product development & innovation for Design for Circularity* Production waste management & disposal Renewable energy sourcing (electricity & heating) Energy efficiency (electricity & heating)
2
11F
For each of the four commitments the underlying sustainability priorities were identified together with their related 2022 actions. In 2022 LTP Group moved from mapping to execution on the four sustainable commitments. The sustainability agenda is constantly changing, and it is essential to keep the priorities up to date. In 2023 a new double materiality assessment will be conducted, which will prioritise sustainability activities based on impact on the environment and at the same time the financial impact of the environment and society have on the LTP Group business.
In 2021, LTP Group conducted a materiality assessment to identify the most important sustainability topics for the business and to address the relevant actions and targets for the stakeholders. 80 stakeholders and formed the foundation for our 2025 sustainability strategy. LTP Group stakeholders are employees, management team, members of the board of directors, suppliers, customers, industry experts and representatives of the civil society. The assessment engaged with The outcome of the collective input gave nine sustainability priorities which were grouped into four distinct areas. These four areas became the four sustainability commitments. The four commitments describe the sustainability priorities towards 2025 and the specific initiatives committed to.
3
Immaterial aspects
4
5
Low (1-4)
Moderate (4-7)
High (7-10)
Business interest
LTP Group 9 material topics
Relevant UN SDGs*
Sustainability commitments
Injuries & accidents
14
Occupational health
15
Fair working conditions
16
Fair wages & benefits
17
CARE FOR PEOPLE
Recycled, recyclable & durable material sourcing
1
Sustainable product development & innovation for Design for Circularity* Production waste management & disposal
2
EMBRACE DURABILITY & CIRCULARITY
3
Renewable energy sourcing (electricity & heating) Energy efficiency (electricity & heating)
4
5
FIGHT FOR CLIMATE
10
*) Identified by looking at overlaps at the target level based on the GRI UN SDGs linkage resource
OUR FOUR SUSTAINABILITY COMMITMENTSBY END 2025
CARE FOR PEOPLE It is essential for LTP Group to provide opportunities for our employees to develop their skills and continuously improve working, social and living conditions. We are committed to assuring we have high work safety in all factories. No one must get hurt on our shift. We also commit to involving business partners to meet high social industry standards for their own employees. FIGHT FOR CLIMATE Given the urgency of the climate change situation we will invest in renewable energy and tree planting locally and we will aim to reach emission reduction targets in alignment with the Science Based Targets initiative (SBTi). We also commit to share the carbon footprint of our products' full lifecycle. EMBRACE DURABILITY & CIRCULARITY As a manufacturer for multiple garment and furniture brands, LTP takes the responsibility to collaborate with brands and suppliers on materials substitution, product- development and innovation for design for durability and design for disassembly. We will promote knowledge sharing and sustainability standards to drive industry transformation. We also commit to minimise production waste and optimise recycling of waste. UNLOCK TRANSPARENCY We commit to open communication and demonstrate results to all stakeholders.
(Refers to the section 'Risk & Compliance, on page 31)
EMBRACE DURABILITY & CIRCULARITY
CARE FOR PEOPLE
We commit to provide equal means for all employees to meet the basic needs of their families wherever they live.
We commit to rethink material sourcing, production processes and technologies to enable
UNLOCK TRANSPARENCY
industry wide and scalable circularity solutions.
We commit to open communication with end- consumers, customers & suppliers and demonstrate results to all stakeholders
FIGHT FOR CLIMATE We commit to reach carbon equivalent neutrality within our organisational boundaries and with offsetting by end 2022 and to significantly lower the CO2 footprint per production unit by end of 2025.
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SUSTAINBILITY HIGHLIGHTS 2022
CARE FOR PEOPLE
55%
66% of employees are at or above living wage
of employees are covered by collective bargaining agreements 100%
of managers are women
Through large part of 2022 LTP Group was challenged by the economical and geopolitical turbulence. The war in Ukraine had a significant impact on our business operations in Europe, resulting in major disruptions in especially in the garment supply chain channel. A strong wish to help the refugees in Ukraine resulted in a collaboration with Kvadrat & Hess Natur manufacturing blankets in our factories in Lithuania. In LTP Ukraine, the employees were paid salaries in advance to help them secure their livelihoods, and donations were made to Red Cross, UNICEF and UNHCR as well as donation to local humanitarian support, all to ensure continuous support for the Ukrainian colleagues. The strategy to diversify the garment production locations and exit strategy in Belarus prompted us to accelerate our expansion plans in Romania. As a result, LTP Group acquired a new in-house sewing location for the garment production, which will increase the production capacity and ensure the future supply chain.
EMBRACE DURABILITY & CIRCULARITY
80% of all gluing is sprayed by robots and is of 100% water based glue
54% of plastic bags with min. 50% recyled content
60% of cardboard sourced is FSC certified
FIGHT FOR CLIMATE
>80%
8% of fleet went from hybrid to electric
22% of electricity fromrenewable
% of light sources LED
sources with PPA*: 1 GWh purchased
The challenges throughout 2022 could have easily distracted from sustainability priorities. Regardless, LTP Group showed progress on the four commitment areas:
UNLOCK TRANSPARENCY
Care for People, Embrace Durability & Circularity, Fight for Climate & Unlock Transparency.
66%
100%
3
of Group Executive Management, Managing Directors and Managers onboarded to new governance model
of 3rd party production partners assessed on sustainability
events to share knowledge across the industry
12
*) PPA: Power Purchase Agreement
SUSTAINBILITY HIGHLIGHTS 2022
In Vietnam, a post-pandemic wave of orders and a shift away from China, resulted in a growth rate of more than 100%. This tremendous growth brought challenges in production functions and led to instances of excessive overtime. To prevent this situation from happening again, expansion plans were made and will be approved to ensure sufficient future capacity in Vietnam. Mexico's furniture division successfully delivered its first orders to the North American market in 2022, marking a major achievement for the company. Moreover, the local near-shoring strategy will result in reduced emissions from local production.
This move is in line with LTP's commitment to sustainability and responsible business practices.
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PERFORMANCE ON 2025 TARGETS
CARE FOR PEOPLE
Priority topic
2021 Result
2022 result
2025 Target
Status
Injuries & accidents
Number of near-misses
-
-
0
Initiated
Number of accidents
2
10
0
Not achieved
Business partners portfolio management
% sewing production partners signing LTP Code of Conduct and Ethics
90
100
100
Achieved
% sewing production partners assessed on sustainability
88
66
100
Initiated
% sewing production partners reaching “Green” performance level
-
37
50
Initiated
% material in value from suppliers signed LTP Code of Conduct and ethics
70
75
90
Initated
Fair wages/benefitsand diversity/equality
% factories involved in living wage assessment
-
100
100
Achieved
% blue collar workers receiving living wage or higher
-
66
70
Initiated
% gap between males and females for equal salary and job function
-
-
Max. 10
New 2023
% male/female in managerial positions
45/55
45/55
50/50
New 2023
Fair working conditions & occupational health
% workers covered by an occupational health and safety management system
-
100
100
Achieved
% total employees covered by collective bargaining agreements (part of the work council within the factory or union)
-
99
100
Initiated
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PERFORMANCE ON 2025 TARGETS
EMBRACE DURABILITY & CIRCULARITY
Priority topic
2021 Result
2022 result
2025 Target
Status
Production waste management & disposal
% of plastic bags with min 50% recycled content
42
54
70
Initiated
% of leftover textiles technically recyclable
-
0
60
Initiated
Ratio of 3D furniture samples versus physical samples
-
20
35
Initiated
Ratio of 3D garment samples versus physical samples
-
9
25
Initiated
Product manufacturing for circularity
Number of annual projects which are designed for disassembly
-
5
10
Achieved
Sustainable material substitution
% of water based liqued glue (fully exclude solvent based glue)
100
100
100
Achieved
% of cardboard in kg sourced which are FSC certified
63
60
90
Initiated
% of wood in kg. sourced which are FSC certified (pallets excluded)
11
19
50
Initiated
Number of projects with sustainable material as an alternative
-
0
5
Initiated
15
PERFORMANCE ON 2025 TARGETS
FIGHT FOR CLIMATE
Priority topic
2021 Result
2022 result
2025 Target
Status
Carbon equivalent emissions scope 1 & scope 2
T/FTE Carbon eq. emissions for scope 1 and 2
0.90
0.99
-
T/FTE Carbon eq. emissions from company vehicles
0.08
0.08
-
Set with SBTi in 2023
T/FTE Carbon eq. emissions from electricity consumption
0.54
0.68
-
T/FTE Carbon eq. emissions from heating
0.28
0.23
-
Renewable energy sourcing
% of electricy from own solar panels
2
2
-
% of electricity from renewable sources with Renewable Electricity Certificate (REC)
50
48
-
Set with SBTi in 2023
1 GWh purchased in 2022 effective Q4-2023 - app. 22% of total electricity
% of electricity fromrenewable sources with Power Purchase Agreement (PPA)
-
-
Inhouse transportation & logistic of goods
% of new company vehicles being hybrid, or vehicles being electric, or lower than defined CO2 missions
-
83
100
Initiated
Energy efficiency
% of light sources LED
>80
>90
New 2023
16
PERFORMANCE ON 2025 TARGETS
UNLOCK TRANSPARENCY
Priority topic
2021 Result
2022 result
2025 Target
Status
Employees
% employees provided training on sustainability
-
-
100
Initiated
% directors onboarded on new sustainability governance model
-
100
100
Achieved
Customers
Annual events organized to foster knowledge sharing across players in the industry
3
3
5
Achieved
Product users /consumers
% of customers using tracability on their products
4.6
5.1
8
Initiated
% of items delivered with tracability
-
0.2
10
New
% of items deliverd with CO2e information
-
-
50
Initiated
Business partners
% of sourced materials in value providing sustainability information
-
-
50%
Initiated
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GOING FORWARD 2023-2025 STRATEGY
We established our sustainability reporting baseline in 2021 and published the first external report on our performance.
As new reporting regulations are being implemented in the EU, such as the Corporate Sustainability Reporting Directive (CSRD), LTP Group is required to comply with these regulations starting from 2025. Consequently, a commitment to track and report on ESG activities from 2024 based on the metrics defined by EFRAG (European Financial Reporting Advisory Group) is made. With new CSRD regulations the work towards conformity against new regulations will already start in 2023 revisiting the Materiality Assessment and target setting.
On the following pages we present our 2022 performance and set new targets for 2025. The targets are defined for each of the four sustainability commitment areas. All targets for 2025 are set on a group level.
Certifications: LTP Group factories are audited by third party companies in the context of the social and environmental certifications. Noteworthy is the newly obtained STeP certification, and the ISO-14001 certification for all European furniture sites. An overview of all certificates can be found in appendix 1. Compliance: LTP Group has implemented and regularly reviews internal policies such as our Code of Conduct and Ethics. A detailed list of the internal policies and other compliance documents is available in appendix 3 of this report.
The industry can not be revolutionised over night, but LTP Group have started taking the first steps towards a new industry.
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CARE FOR PEOPLE
LTP Group operates in a labour-intensive industry that is under constant pressure due to operating in low-cost countries. As a responsible company, LTP Group prioritises the well-being of the workers. Labour rights All full-time production workers at LTP Group are represented by a work council or union. LTP Group strongly believe in the freedom of association for all employees, and support collective bargaining. While all other sites have established work councils or unions, the Mexico site is still in the process of setting one up due to the size of the team. Responsible business At times, there will be incidents in the operations or supply chain that might not comply with the LTP Group standards of integrity. Through the whistleblower system LTP Group ensure the employees can securely and confidentially report potential misconduct. In 2022, there was one case reported through the whistleblowing system. The case related to business integrity, including conflict of interests, anti-bribery, and corruption. It is essential for LTP Group that anyone who reports misconduct feels completely safe raising any concerns, thus the whistleblower system is hosted by an external provider. We provided training to workers at all our sites to encourage them to report any issues through the form. To increase awareness, trust and understanding of the whistleblower system a campaign will be conducted in 2023. The garment division has achieved its target of having 100% of sewing partners sign the Code of Conduct and Ethics.
To ensure future compliance, the CoC is incorporated as a standard in the revised standard contract. Additionally, an assessment and score of a total of 66% of our sewing partners were conducted, and this process will continue in 2023 to ensure that all partners meet the standards. Health & Safety All workers have received training according to local health and safety regulations. In 2022, LTP Group made an investment in a new online Environmental Management System. The system is designed to improve the ability to collect data on near misses and other incidents across all 12 factories. Although the system was not fully implemented in 2022, the work is diligently continued and expected concluded in the second half of 2023. No fatal accidents were reported in any of our factories in 2022. Some accidents were reported, the majority of which were related to sewing operations. Every accident is taken seriously and LTP Group are committed to continuously improving health and safety procedures to prevent future incidents. Fair wages and benefits LTP group pays 100% of workers at or above the minimum wage in their respective countries. In 2021, LTP Group initiated a living wage analysis as part of the 2025 strategy, reflecting the commitment to fair compensation for our workers. Living wage is defined as the compensation workers receive to support themselves and their families in the local area where they live. LTP Group recognises the importance of providing fair wages to its employees and has developed
a tool to accurately capture living wage data. To establish a baseline for living wages, a representative group of hourly paid workers from each factory was surveyed to obtain information on their household budgets. The survey results were then assessed and used as the basis for determining the living wage for each factory. As of 2022, 66% of all hourly paid workers are receiving a wage that meets or exceeds the living wage baseline established through our survey tool. It is anticipated the share may decrease in 2023 due to inflation rates outpacing salary increases. Diversity and equality LTP Group believes a diverse team will be an advantage, and the composition from managers to executive management and Board of Directors are measured. The Board of Directors comprises 17% female and 83% male, changed from 20% and 80% relatively in 2021. The target is to comply to a minimum of 33% females in 2025. The gender composition of the senior management, defined as Group Executive Management, Chief Commercial Officers and the Managing Director level, is unchanged from last year, characterized by overrepresentation of the female gender, 55%, i.e., male gender represent 45%. When measuring the proportion of women across the locations in management levels, the development compared to previous years varies. End of 2022 the diversity in next management were 55% female and 45% male. LTP Group will continue to work towards equal gender representation.
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CARE FOR PEOPLE
Diversity % of women in senior management
Fair wages & benefits % of full time employees, where wages meets or exceed living wage
100%
100%
For 2023 a pay gap analysis will be conducted with focus on gender-based discrepancies. In first stage the analysis will focus on the largest locations, covering more than 80% of the total employees. The analyse is expected to bring transparency around unexplained gaps enabling for identifying root causes. The next step will be to establish monitoring of pay data and take measured actions as needed, creating a base for management to take equitable and unbiased pay decisions.
55%
55%
50%
66%
70%
2021 Result
2022 Result
2025 target
2021 Result
2022 Result
2025 target
Health & safety Measure Number of accidents
Assessment % of sewing partners assessed on sustainability
100%
88%
66%
100%
2
10
0
2021 Result
2022 Result
2025 target
2021 Result
2022 Result
2025 target
20
All numbers are measured on Group Level
CASE
Living Wage
What did we do?
LTP Group is evaluating living wage in all LTP Group factories
Why did we do it?
When workers make a living salary, they can afford to pay for things like housing, food, healthcare, daycare, taxes, and transportation. A livable salary might also vary depending on workers situation, like living location.
Key learnings
Impact
Provide workers decent living Different methodology gives slightly different results
Possibility to collaborate with brands in searching ways to increase workers salaries Country
Division
Lithuania, Belarus, Ukraine, Mexico, Vietnam
Garment & Furniture
Related Commitment
Result & Target
In cooperation with
66% of workers receive wages that meet or exceed living wage
Care for People Unlock Transparency
21
EMBRACE DURABILITY & CIRCULARITY
Recycle plastic Reducing plastic in our packaging has been a focus for LTP Group for several years. In 2022, we made progress in both divisions but fell short of the targets to reach 90% recycled plastic bags, having 50% recyclable content. The garment Europe division managed to increase the percentage of recycled plastic bags to 69%, up from 41% in 2021. Sustainable material substitution In 2021, LTP Group made the switch to using only water- based glue for furniture production. In 2022, and despite its now all water-based glue, LTP Group continued to focus on improving the gluing process by creating a safer and healthier working environment for production workers. To achieve this, a second robot was added, and today more than 80% of gluing is done in cabins without human involvement. This has significantly reduced the exposure to glue and improved the overall working conditions for the employees. LTP furniture has made significant progress in sustainable sourcing of cardboard, with more than 60% of all cardboard sourced having a full chain of custody under the FSC certification in Europe. The plan is to extend this certification to Mexico in 2023. As for FSC sourced wood, LTP Group has set a target to reach 50%. In 2022, 19% were achieved, while 30% was the target.
Production waste management and disposal For 2022 an ambitious goal was set to recycle 100% of all textile leftovers. This target has not been achieved. It is extremely challenging to convert sustainability concepts into new production solutions, as it necessitates a significant quantity of leftovers with the same composition. Additionally, the textile suppliers do not yet offer take-back options for recycling, and many customers are not yet prepared to pay more for eco-friendly solutions. The most successful project exploring creative textile waste management in 2022 was carried out in collaboration with MAAP. This project created a limited-edition bikewear collection utilising the brand's production leftovers. Other customers could benefit from a similar initiative. More details on this project can be found on page 24. The efforts to repurpose textile leftovers from production will continue to be a top priority in the coming years. In 2022, several projects were initiated in collaboration with both customers and suppliers to explore potential solutions for recycling textile leftovers. It remains a commitment to find innovative ways to reduce waste and promote sustainable practices in the industry. To meet the set goals of reducing the number of physical samples through 3D sampling, significant investments were made in 2022. These included the adoption of new 3D software and the full implementation of elongation testing for textiles.
Professional training was provided to the furniture division. As a result of the investments in 3D sampling, the furniture division now builds products in a 3D environment. This has led to a significant improvement in the correctness of the first samples. The ratio of 3D sampled products now stands at 20%. This improvement has resulted in a linear reduction in the consumption of raw materials making samples, helping implementation of more sustainable production practices. In the garment division, the first trial customers have used 100% e-samples without creating physical samples before mass production. As a result, the proportion of samples made in 3D increased from 0% to 9%. The new target for 2025 is 25%, and LTP Group is determined to promote more sustainable practices throughout the production process. Designing products for reuse, repair, and recycling is essential for achieving a circular economy. In the furniture division 5 projects were successfully made, designed for complete disassembly. This was achieved by avoiding the use of glue in all processes, making it easier to reuse or recycle the materials at the end of the product's life cycle. LTP Group remain committed to promoting circular design principles and incorporating them into the production process.
22
EMBRACE DURABILITY & CIRCULARITY
Production waste management & disposal % Plastic bags with min. 50% recycled content
Production waste management & disposal % leftovers textiles technically recycleable
100%
100%
42%
0%
60%
54%
70%
2021 Result
2022 Result
2025 target
2021 Result
2022 Result
2025 target
Sustainable material substitution % cardboard in kg sourced - FSC
Sustainable material substitution % wood sourced - FSC
100%
100%
60%
63%
90%
19%
50%
11%
2021 Result
2022 Result
2025 target
2021 Result
2022 Result
2025 target
23
All numbers are measured on Group Level
Manufacture of a bike jersey made from 100% leftover fabric
CASE
What did we do?
Support our customer MAAP, in manufacturing their bike OffCut collection, made fully from MAAP fabric leftover from our stock
Why did we do it?
To reduce the overall fabric waste from our production To showcase the value of the leftover fabric and invite more brands to follow MAAP's example
Key learnings
Impact
Need to have digital tool for stocks Challenging to scale the model to reach mass production
100% of leftover fabric in the garment ~900 pieces manufactured Country
Division
Lithuania
Garment
Related Commitment
Embrace Durability & Circularity
In cooperation with
In cooperation with
24
FIGHT FOR CLIMATE
Renewable energy sourcing Production sites in Lithuania were all supplied by 100% energy with green certificates and from own solar panels at one of our locations. Renewable energy sources certificates are provided by our electricity providers in Lithuania, stating that all electricity comes from renewable sources. The certificates do not disclose registered production site of the renewable energy, likewise it is not transparent if the amount of renewable electricity stated on the certificate is cancelled, so that the value of the certificate can be used for disclosure of renewable energy origin to LTP Group as the final customer. In 2023 we will dive into this dilemma, while we also proceed towards entering further Power Purchase Agreements (PPA’s) to cover our future electricity use. For 2023 the Kaunas site in Lithuania will not be provided with green certificate as a change of the power connection to another public grid is needed. In 2022 a PPA were signed for 1 GWh for a solar cell park in Lithuania, equivalent to 22% of LTP Groups global electricity consumption in 2022. The park is expected to be ready by the end of 2023. The Vietnamese factory accounts for 39% of the total electricity consumption, and although many efforts are made to find good solutions with PPA agreements, it has not been successful. LTP Group will continue the efforts to locate feasible renewable energy projects. Two production sites were upgraded in 2022 and installed
100% Track 2: Renewable sources: In Spring 2022 LTP Group signed up for a Power Purchase Agreement for 1 GWh renewable energy supply from solar- cells. The park is expected to be finished in autumn 2023. This will cover approximately 22% of LTP Groups electricity consumption. 100% A total of seven company vehicles were added fulfilling LTP Groups new established requirements of max 152 gram of C02/km. All production lines in Mexico and facilities in Kaunas, Lithuania, were installed with LED lightning. Existing lightning in one of the furniture facilities in Kedainiai was replaced with LED lighting, and sensors were added in all locations where possible. More than 80% of lightning across all facilities is LED based. Scope 1 & 2 Impact reduction from Scope 1 & 2 is divided into two tracks. Actions and impact from the two tracks are described below. Track 1: Reduce In Lithuania two production sites were remodeled as heat pumps were installed to replace natural gas sources.
100% CO2 reporting by GHG Mapping and scoping the CO2 emissions using the Greenhouse Gas Emission Protocol Accounting Standards (GHG), has been the main focus during 2022. The mapping will result in a new reporting structure and baseline for the 2023 sustainability report. The GHG protocol consists of three scopes of which the efforts were focused on Scope 1 & 2 emissions. Scope 1 & 2 are the direct greenhouse gas emissions from sources that are owned or controlled by LTP. A methodology to measure and collect data for Scope 3 emissions was also initiated, which is related to non-controlled processes from materials used in production and their inbound transportation. 87% ILED lights as well as light sensors to reduce emissions. In Lithuania, all newly installed heating systems are heat pumps that run on green-sourced electricity in order to reduce the consumption of natural gas. Cars In line with LTP Group's car emission policy, the first hybrid car was added to the fleet. Further increase in the use of electric cars in Lithuania is anticipated in the coming years, and as a result, the plan is to install electric charging stations at the factories in 2023. This initiative is a part of the commitment to reducing our carbon footprint and promoting sustainable transportation.
25
FIGHT FOR CLIMATE
Renewable energy sourcing % of electricity from renewable sources with Renewable Electricity Certificates *
Carbon equivalent emission to scope 1 & 2 Carbon equivalent emission to scope 1 & 2 - T/FTE
100%
Scope 3: LTP Group has invested in IT systems, to support the detailed track of scope 3, where materials and in-bound transport are taken into account. For Furniture customers this data will be available online to access during 2023 and it’s expected to be ready in 2024 for garment division. With the new furniture setup in Mexico it will support the customers in a reduced scope 3 as they are able to nearshore furniture for United States and Canada.
0,90
0,99
50%
48%
2021 Result
2022 Result
2025 target
2021 Result
2022 Result
2025 target
*Power Purchasing Agreement to buy renewable energy
Inhouse transportation & logistic of goods new company vehicles being hybrid or vehicles being electric or lower than defined CO2 emission
100%
100%
100%
83%
2021 Result
2022 Result
2025 target
26
All numbers are measured on Group Level
CASE
Planting Trees
What did we do?
Organise a tree planting day in a Lithuanian national forest Being part of the government forests, these trees will be protected
Why did we do it?
To do something positive for our forest: essential for biodiversity, soil erosion prevention, air purification and carbon capture To do something positive for ourselves: soil microbes "prozac like" effect
Key learnings
Impact
Forests cover 33% of Lithuania For Lithuanians forests are sacred, it lies in their pagan roots
~ 3 000 pine and spruce trees planted 40 employees involved
Division
Country
Garment & Furniture
Lithuania
Related Commitment
In cooperation with
Care for People Fight for Climate
27
UNLOCK TRANSPARENCY
As a global manufacturer, LTP holds a responsibility to promote transparency in the supply chain and encourage the sharing of sustainable initiatives, to inspire new ideas among business partners. To unlock transparency, it’s important to share knowledge about how to jointly support the industry with more knowledge about operations to generate best practice. LTP Group joined 3 events in 2022 where speakers shared topics about recycle & waste management, and innovation. For 2023 LTP Group has outlined a new in-house program to accelerate green solution for our garment customers, called Design for Sustainability DfS. STeP In 2022, LTP furniture in Lithuania achieved STeP certification for two of the production sites, earning the highest possible ranking. This certification allows customers to label the final products with a QR code indicating that they were MADE IN GREEN, enabling end-consumers to track each item in their product back to its place of origin. The certification process ensures that the products are tested against harmful substances and produced in socially responsible production facilities.
N/A The European Union is planning to introduce the Digital Product Passport by 2024 to promote transparency across the entire value chain and foster a circular economy. 4 LTP Group commit to continuing the journey of transparency and aim to have more than 10% of the delivered items traceable by 2025. N/A Consumer web-based App In the garment division, QR codes were introduced on garments to track the supply chain. Currently, five of the customers are using this service. BtB Sustainability platform The furniture division has made significant progress in enhancing customer experience and accessibility to relevant information. Currently, 61% of our customers are actively using our online partner portal to access important orders and customer information. We are continuously working towards improving the portal's functionality and accessibility and aim to provide access to sustainability data by the end of 2023. LTP furniture successfully delivered the first orders under this certification in 2022 and remains committed to promoting sustainable and socially responsible production practices.
This will enable consumers to access information about a product's environmental impact. At LTP Group the work laying the foundation to ensure preparedness for the anticipated requirement of the Digital Product Passport has started. At LTP we welcome customers to conduct audits and jointly improve and develop the Value Chain. In 2022 our internal Auditing system on an online platform was established to support transparency during customer audits. Aim for 2023 is to have our first audits conducted through the new platform.
5
N/A
4
5
28
UNLOCK TRANSPARENCY
Customers % customers using traceability
Products % items delivered with CO2e information
100 %
100%
50%
5,1%
4,6%
8%
2021 Result
2022 Result
2025 target
2021 Result
2022 Result
2025 target
Products % items delivered with traceability
Customers Annual events fostering knowledge sharing across the industry
10 events
100%
3
3
5
10%
0,2%
2021 Result
2022 Result
2025 target
2021 Result
2022 Result
2025 target
29
All numbers are measured on Group Level
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