Environment

5.1 Environmental management system

Essity maintains a continuous focus on the current environmental status and on the future improvements required to reduce the environmental impact of its products and activities. Supplier should be prepared to demonstrate their commitment and ability to support this initiative.

Supplier must adopt and implement a documented EMS (Environmental Management System), preferably at levels specific in the current ISO 14001 certification, including, at minimum:

• An environmental and/or sustainability policy
• A documented investigation of Supplier’s current environmental impact, including analyses and prioritizations which can be used as a basis for planning actions to reduce environmental impact, and an identification of all applicable legal requirements
• Defined and documented responsibilities, and available resources
• Setting of goals and actions for continuous improvement
• Regular management review of the EMS and its effectiveness

5.2 Climate and energy

Essity has joined the Business Ambition for 1.5°C campaign and our net zero commitment and Science Based Targets is part of our journey to reduce greenhouse gases. Essity also endeavors to reduce its greenhouse gas emissions from a life cycle perspective, i.e. from the extraction of resources, through production, transportation, use and waste after use. One of our key action areas is low carbon materials.

Essity expects all suppliers to actively contribute to our common journey and to work to reduce emissions, in terms of energy and electricity involved in the manufacture, transportation and sourcing of goods supplied. For energy- and energy efficiency management the use of ISO 50001 standard is recommended.

Supplier must have a climate strategy in place including an energy and electricity program with defined activities and goals for improving energy efficiency and reducing climate impact. Essity will give preference to those suppliers who increase their proportionate use of renewable energy and electricity and work with alternative materials/goods that are more environmentally sound. Essity promotes suppliers that also consider sub-suppliers’ climate impact as well as low emission transport modes (per tonkilometer) and freight and transport optimization to Essity.

5.3 Protect biodiversity

Essity recognizes the risks and challenges of biodiversity loss. We recognize that as a global user of both fresh and recycled fibers as well as other renewable resources and materials, our business is dependent on healthy and functioning ecosystems for our long-term survival and future success. With growing biodiversity risks and challenges, we want to do our part and contribute to the regeneration of ecosystems and prevent further biodiversity loss. Reduced climate impact, less pollution from air, land, water and waste from our value chain will contribute to reduced stress on our eco systems for forests and agriculture areas.

Nature consideration and protection of biodiversity by responsible management is a priority for Essity and we require our suppliers to maintain and safeguard responsible forest and agriculture management based on the principles of biodiversity and forest conservation⁵.

Supplier’s biodiversity impact will be assessed based on their climate impact, pollution to land, air, water and waste as well local initiatives to improve biodiversity, eco systems and land use affected by their operations. We require that renewable materials are sourced through a publicly recognized third-party certification of biomass sourcing and supply chain.

5.4 Circularity

Essity aims to design products and services for a circular society. We want to replace primary fossil-based materials and resources with low carbon footprint alternatives, renewable or secondary recycled materials and resources. This should be achieved via increased circular content and via the use of mass balance. Reusable design is another way to improve circularity. This means that for certain applications the use of textile materials will be considered and the requirements will follow the general requirements in GSS. How materials can create value after product use is also valuable such as, if they are suitable for recycling or composting depending on product category as well as the contribution to renewable or recovered energy in incineration.

We want to improve the technical recyclability for plastic and paper packaging globally. In Europe, guidance is provided by the recyclability requirements by the cross-industry European initiative RecyClass. Hence, final plastic packaging should fulfil the criteria from RecyClass A-C, preferably verified by certificates. In North America, final plastic packaging should fulfil the criteria from How2Recycle, preferably third-party reviewed.

Final paper packaging should be recyclable with low amounts of residues, verified by third party using established lab methods. Circularity implies that Supplier needs to consider the carbon footprint, the recyclability, compostability and the choices of chemicals for all materials in the value chain in order to optimize alternative waste management. More information on chemical substances is available in Annex 2 via the following link www.essity.com/gss

5.5 Wood and wood derived fibers and products

Wood and wood derived fibers and products⁶

It is Essity’s ambition to promote forest certification and to only purchase wood fibre from certified and chain of custody sources, this includes fibre containing raw materials such as timber, pulp, packaging, mother reels and any other wood derived articles and materials supplied by third parties. Essity accepts both Forest Stewardship Council® (FSC®) and Programme for the Endorsement of Forest Certification™ (PEFC™) international forestry certification schemes, with a preference for FSC. Essity requires that all suppliers of wood fiber materials hold a FSC Chain-of-Custody (CoC) certification, regardless of adherence to other forest certification. The portion originating from certified forests shall be continually reviewed and suppliers are requested to define plans for increasing their use of certified wood and fibers throughout their supply chain. Essity recognizes that some suppliers, especially new suppliers and converters, may not have FSC CoC in place to meet the minimum FSC Controlled Wood requirement. In these cases, if Supplier is prepared to implement FSC or PEFC CoC certification within 12 months, Essity may continue to support Supplier as they work towards implementation. However, the wood/fibre sourced by Supplier will be assessed to ensure compliance with the FSC Controlled Wood defined below:

Wood from the following types of sources is not accepted:

• Illegally harvested wood
• Wood harvested in violation of traditional or human rights
• Wood harvested in forest in which high conservation values (HCVs) are threatened by forest management activities
• Wood harvested in forests being converted to plantations and non-forest use
• Wood from forests in which genetically modified trees are planted

Pulp suppliers will receive a copy of the Essity Global Fiber Sourcing Policy together with a detailed pulp supplier questionnaire every two years. Compliance to the policy is mandatory, and any issue which may result in Supplier being non-compliant must be reported to Essity as early as possible. Please note the requirements for reporting on the amount of certified wood purchased by the supplying pulp mills and the supplier action plans to increase the certified amount in the supply chain. In addition we require information about how any degradation of the supplying forests is identified and measured.

To assist Essity in meeting the increasing regulatory demands (e.g. Timber Regulation and the proposed EU regulation on deforestation-free products) to confirm the wood pulp origins and legal harvesting, Supplier is required to provide documents and other evidences (such as felling permits etc.) when requested by Essity within 48 hours. To support this, a delivery of pulp to an Essity mill or factory will be chosen and a full traceability package shall be provided by Supplier. This package needs to include documentation (permits etc.) confirming the legal sourcing of wood and the geographical location of the forests in the specific pulp supplied, as well as shipping documentation from forest to pulp mill, and pulp mill to Essity, including any relevant customs paperwork.

5.6 Pulp production

The environmental impact of production, i.e. emissions to air⁷ and emissions to water⁸, contribute to the assessment of Supplier’s environmental performance. Levels and technology comparable with the European Industrial Emissions Directive and its associated BAT levels (Best Available Techniques) are preferred.

5.7 Cotton

Cotton is considered as a high-risk material by Essity in terms of its social and environmental impact. The crop is often grown in areas where basic human rights are not respected. Furthermore, cotton farming, if not well managed, can lead to irresponsible application of insecticides & pesticides with adverse impact on water quality and human and animal health.

Essity encourages the production of sustainable cotton, e.g., cotton produced pursuant to a recognized certification scheme such as BCI (Better Cotton Initiative), Fair Trade and GOTS of which BCI is the preferred option. Supplier shall be transparent and comply with Essity’s requirements for information regarding traceability and origin of cotton.

5.8 Other renewable fibers

Other renewable fibers can be derived from primary sources such as bamboo, corn, sugar cane or cotton or from by-products or secondary sources such as wheat straw. Supplier to Essity of any other renewable fibers intended for any part of the goods will be asked to fulfill requirements similar to those applicable for fresh wood fibers, e.g. origin, traceability and environmental and social performance and use of relevant recognized certification systems.

5.9 Recovered wood fibers

Recovered fibers shall regarding environmental and social performance fulfill the same requirements as applicable to virgin wood fibers, including FSC Chain-of-custody certification.

5.10 Renewable plastics

Renewable plastics can be used in packaging, nonwovens, plastic films or renewable super absorbents in any hygiene or health product or packaging. Renewable plastics, i.e., biobased plastics can be derived from primary sources such as vegetable fats and oils, starch and cellulose or from by-products or secondary sources such as tall oil and are alternatives to finite fossil plastics. Suppliers to Essity of renewable plastics, must provide information about the minimum bio-based content as well as on the minimum bio-based carbon content, determined and reported according to a recognized, widely accepted international, regional or national standard.

In addition, Supplier must comply to Essity’s requirements for use of relevant recognized certification schemes as well as for information regarding traceability and origin. Important common factors to review for the supply chain of renewable plastics are:

1. The source of the renewable feedstock
2. Secured regrowth by responsible management of forestry or agriculture
3. Nature consideration and protection of biodiversity by responsible management of forestry or agriculture
4. Responsible production with socially acceptable conditions which positively impact local communities e.g., secure no forced and child labor, hazardous labor conditions or conflict over land rights, no ethical issues in the supply chain, e.g., corruption
5. Food security⁹ , i.e., food availability, is not comprised
6. GMO free materials is the first option (5.14).

1-4 above should be included in certifications schemes and 5 must be assessed by Essity

5.11 Recycled plastics

Recycled plastics can be used in packaging, nonwovens, plastic films or renewable super absorbents in any hygiene or health products. We accept recycled plastics from mechanically or chemically recycled sources and aim for low carbon alternatives. Recycled plastics shall fulfill the same requirements as applicable to primary plastics, with regards to environmental and social performance.

5.12 Mass balanced sources for plastics and chemicals

An alternative way of replacing fossil-based materials is to introduce the mass balance approach for products or packaging from renewable or recycled sources.

The mass balanced approach supports the increase of the renewable or recycled material input in the material production where fossil-based sources are replaced with renewable or recycled sources and then allocated through mass balancing to the material used. Feedstock for mass balanced materials will be assessed case by case and follow criteria for renewable or recycled materials. Supplier shall comply with Essity’s requirements for use of relevant recognized certification schemes for the supply chain as well as for the resources used.

5.13 Renewable ingredients

Cosmetics products or chemicals can contain renewable ingredients such as palm oil or similar. Supplier of cosmetics or chemicals will be requested to show documentation that their supply chain is certified according to a recognized system such as RSPO (Roundtable of Sustainable Palm Oil). Low carbon renewable ingredients are preferred.

5.14 Genetically Modified Organisms (GMO)

Renewable fibers and ingredients include fibers or ingredients from managed forests or other agricultural crops. The vast majority of Essity´s product assortment does not include raw materials with a GM (Gene Modified) origin. Forest fibers shall always be free of GMOs (Genetically Modified Organisms). In those few cases where a raw material could be of GM origin, the GMO-free alternative shall be the preferred choice. If a GMO-free alternative is not available, Essity’s approval is required and an assessment from a safety and environmental perspective will be performed by Essity before such approval is given.

5.15 Electronics

Components included in electronics supplied to Essity shall be the subject of a documented responsible supply chain. Relevant information shall be provided to Essity in the form of a completed CMRT document to make sure absence of conflict minerals. We also expect additional information about the technical recyclability of electronic components.

5.16 Environmental questionnaires

Essity continually assesses the environmental performance of its suppliers. As part of this effort, and as input for life cycle assessments and/or environmental labeling, updates and surveys are necessary.

Supplier will be required to answer questions put forward by Essity from time-to-time on various topics at the individual site level, including:

• Use of energy (electricity and fuels)
• Water use
• Source and traceability of feedstock and raw materials
• Emissions to land, air, water
• Waste
• Transports
• Local initiatives to improve biodiversity

Essity may also require that Supplier provide such environmental information about their sub-suppliers and the materials/ components they add to the supply chain.

On Supplier’s request, a confidentiality agreement can be signed to restrict the use of the information where only Supplier’s environmental status is assessed by the Sustainability Products & Services, Regulatory Affairs and Product Safety departments.

⁵Principles of biodiversity and forest conservation are described in UNEP environmental, social and sustainability framework Safeguard standard 1: Biodiversity, Eco systems and Sustainable Natural Resource Management

6Wood derived fibers include, but are not limited to, pulps, mother reels, packaging, semi-finished and finished goods containing fibers originating from forest operations.

⁷ GHGs (Greenhouse Gases, e.g. sulfur and nitrogen oxides)

⁸COD (Chemical Oxygen Demand), and/or BOD (Biological Oxygen Demand), TOC (Total Organic Carbon), AOX (Adsorbable Organic Halides) and phosphorus

⁹Food security, as defined by the United Nations’ Committee on World Food Security, means that all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food that meets their food preferences and dietary needs for an active and healthy life. This is also related to the UN sustainable development goals, i.e. the SDGs, where the 2nd goal is “zero hunger”. The phrase “food security is not comprised” refers to the intention that Essity’s use of resources and materials must not lead to negative impact on food security. However, this does not mean that any feedstocks that are also used for food or related to food production are not accepted. Negative impact on food security and hunger is caused by many factors such as political instability, low incomes and indirect effects of the climate effect.