Over the past decades, the corporates in the Alpine country have relied on high quality. This differentiation strategy was necessary due to the high labor costs and a big supply of a well-educated local workforce. While in many other countries, public policy is driving the transformation to a sustainable economic system, in Austria, the country's large industrials are moving ahead. Austrian companies are betting on circular business models to defend their market position as high-end suppliers. As you can see from the Austrian export map below, the country’s economy is very diverse. This diversity is also reflected in the various sustainability initiatives portrayed in this article.
Heavy Industry
Austria’s largest company by revenue, the OMV group is also the company that is probably planning the largest strategic turnaround among the mentioned corporations. The oil& gas group with combined revenues of 16.5 bn. EUR wants to transform into a chemical company. A major step in this transformation was the 3.8 bn. EUR deal to increase the ownership of Borealis from 36% to 75% in 2020. OMV wants to become a leader in the circular plastics economy and plans to invest 1 bn. EUR in sustainable projects by 2025. Those actions should increase the ratio of low- and zero-carbon products in the portfolio to 60%. Among the sustainability initiatives of OMV is ReOil, a plastic recycling project, which will transform plastic waste into synthetic crude through a pyrolysis process. Furthermore, OMV will develop its hydrogen and e-mobility offerings, and deliver advanced biofuels.
RHI Magnesita, a multinational supplier of refractories with a strong historic presence in Austria, is massively investing to make its business more sustainable. The company increases the investments in sustainability from 25 MEUR to 75 MEUR. A major target is the reduction of CO2 emissions, therefore RHI is implementing CCS (carbon capture and storage) and Carbon utilization concepts. Another strategic initiative is the realization of a recycling project in Styria, which is the first recycling facility of RHI in Europe. The facility focuses on the recycling of ceramic and mineral waste. RHI is already conducting recycling activities in America, India & China.
The largest Austrian steel producer VOEST aims to become the global leader in sustainable steel production. 2.3 bn. EUR has been invested in sustainability over the past 10 years. VOEST’s decarbonization strategy relies on hybrid technology for the transition phase. For that process, electricity and hydrogen/natural gas are utilized in an HBI direct reduction process. In autumn 2019, the company launched the (back then) world's largest plant for green hydrogen production. Potentially, the steel company, which is traditionally accounting for over 10% of Austria’s total CO2 emissions, could reduce its emissions by 80% by 2050.
Wienerberger is the largest global producer of bricks and has been awarded multiple times for its sustainability initiatives by the “Austrian Sustainability Reporting Awards”. In 2020, they launched the first climate-positive brick in Austria. The company has committed to the target of decarbonizing the entire product portfolio. In the period 2010–2020, Wienerberger could already reduce the energy consumption in brick production by 22%
Power Due to extremely favorable geographic conditions, Austria generates around 75% of its electricity from renewables sources. Hydropower is traditionally responsible for the majority of green power production. Interesting fact: 78% of the Austrian electricity demand was covered by Hydropower back in 1950, higher than the total share of renewables today. The share of hydropower in the total electricity mix has decreased ever since. Since 2000, alternative green energy sources (wind, solar, biomass) are gaining importance. The potential for wind energy is exceptionally strong in Lower Austria & Burgenland. Energie Burgenland is the largest producer of wind energy in Austria, with an installed capacity of 522 MW. The Austrian utility with the highest GHG emissions is Wien Energie (2.5 million tons in 2019), mainly due to the thermal cogeneration plant Simmering. To reduce its carbon footprint, the company wants to invest heavily in solar PV, wind & hydro.
The hydropower sector is dominated by Verbund. Austria’s largest power utility and one of the biggest producers of renewable energy worldwide is planning investments of 2,3 bn. over the next 3 years to grow its business. Approximately 1 bn. EUR will be invested to refurbish and extend the 2 large pumped storage facilities Malta & Kaprun. Furthermore, Verbund plans to increase the share of its wind & solar operations to ~30% of the total energy production. The natural gas power plant in Mellach, Styria will be developed into the company’s innovation hub for hydrogen technologies.
Pulp, Paper, & Packaging
According to CEPI, Austria is the 7th largest producer of pulp- and paper products in the European Union. The Austrian pulp & paper industry is well-positioned to benefit from surging demand for renewable materials. Brigl & Bergmeister and Delfort are tackling plastic pollution by offering paper alternatives to plastic straws.
Mayr-Melnhof, Europe’s largest cardboard producer is focusing on sustainable packaging solutions. In December 2020, the company announced to invest 100 MEUR in its plant in Frohnleiten, Styria. The investment will increase the efficiency of the recycling operations while simultaneously reducing the water & energy consumption of the plant.
Mondi is also developing sustainable packaging solutions. For a cheese packaging developed together with REWE group, for instance, the company received two green star packaging awards from OFI, the Austrian research institute for chemistry & technology.
Automotive & Technology Austria’s technology sector is dominated by highly specialized SMEs. Many of those companies provide important niche technologies. Environmental and automotive technologies play an important role, also for the large corporations: ANDRITZ, which is Austria’s largest technology company by market cap, invests heavily in industrial IoT and recently developed new machines for recycling & air pollution control. The ANDRITZ SeaSox technology, which reduces harmful air pollutants in shipping, will contribute significantly to reduce the environmental impact of maritime trade. AVL is a major global technology provider for the automotive industry and is heavily investing in zero-impact emission mobility solutions. In the hydrogen segment, the company recently signed a strategic partnership with CERES to jointly develop SOFC technology.
FACC is a publicly listed supplier to the aerospace industry and presented its strategy FACC 2030 in March 2020. Apart from reducing the environmental impact of flying by utilizing recycled and lightweight materials, the company aims to become a major player in the emerging market for Urban air mobility & space travel.
Conclusion Sustainability seems to become a key requirement in the global markets and is also strongly affecting the strategy of Austria’s leading companies. On the one hand, 4 of the companies mentioned in this article (OMV + Borealis, VOEST, Wien Energie, Verbund & EVN) collectively accounted for more than 1/4 of the countries total GHG emissions in 2019 (20.8/79.8 million tons of CO2e). Therefore, the behavior of Austria’s industrial behemoths will strongly affect the environmental performance of the whole country. On the other hand, Austrian innovations in segments such as packaging or industrial machinery will help to reduce the global carbon footprint.
Only time will tell if those sustainability initiatives are merely marketing instruments or sincere commitments to fight global warming.
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