Value Chain (suppliers and customers)

Understanding the needs and potentialities of our customers, with the purpose of offering sustainable products and solutions, through a relationship that favors long-term connections. Supplier management in accordance with the company’s social and environmental criteria, aiming at the development of local suppliers and the reduction of adverse impacts throughout the value chain.

  • Critical suppliers

    Change view:

    • wdt_ID Critical suppliers¹ 2019
      1 Total number of critical suppliers 389
      2 Percentage of critical suppliers (in relation to total number of suppliers) 4%
      3 Percentage of total purchases spent on critical suppliers 22%

    1. Suppliers of inputs and services that can generate significant impacts on quality, process performance, equipment safety and integrity, on the environment and on the health and safety of employees. The information was based on Fibria’s former database. Data from Suzano Papel e Celulose base are being mapped and will be evaluated in 2020.

    Additional information:

    In addition to the actions performed by Suzano for the proper management of all its suppliers (as described in the ““Supplier Management” indicator), specific measures are in place to ensure a good relationship between the company and critical suppliers and the reduction of the risks of these suppliers generating impact.

  • Markets served

    Context:

    Suzano maintains a long-term relationship with substantially all of its pulp customers, serving sectors such as printing and writing, packaging, specialty papers and hygiene, at different scales of supply. In line with our commercial policy, we seek a balance in pulp sales for the different paper segments, with emphasis on the paper for sanitary segment, which in 2019 retained a significant share in our sales mix. Today, it is the main segment served by Suzano with regard to pulp, accounting for 58% of this business unit’s of sales volume. Furthermore, the supply of pulp is both in the domestic and export markets, with customers located in Brazil, Asia, Europe and North America, among other regions. In this sense, of the 9.4 million tons sold in 2019, more than 90% were geared to the international market.

    Specifically in the fluff pulp segment, we serve the segments of incontinence absorbent products, children’s diapers, pet rugs and feminine pads, with customers located mainly in Brazil, China, United States, EMEA (Europe, Middle East and Africa) and Japan.

    In connection with the paper market, we have a very diverse customer base: from producers of notebooks and non-promotional material to more sophisticated customers, such as producers of promotional material, high-quality packaging and art books. Therefore, with these products, we cater to markets in Brazil, in South, Central and North America and in other regions on a smaller scale.

    In the Consumer Goods unit, operations are restricted to Brazil, with greater representation in the North and Northeast regions of the country. In addition, our customer base in this sector is broken down into sales to retailers, supermarket and hypermarket chains, distributors, wholesalers and cash & carry chains.

  • Negative environmental impacts in the supply chain and actions taken

    Change view:

    • wdt_ID Suppliers identified as having negative environmental impacts¹ 2019
      1 Number of suppliers assessed 168
      2 Number of suppliers identified as having significant actual and potential negative environmental impacts. 7
      3 Number of suppliers identified as having significant actual and potential negative environmental impacts with which improvements were agreed upon as a result of assessment 5
      4 Percentage of suppliers identified as having significant actual and potential negative environmental impacts with which improvements were agreed upon as a result of assessment 71%
      5 Number of suppliers identified as having significant actual and potential negative environmental impacts with which relationships were terminated as a result of assessment 2
      6 Percentage of suppliers identified as having significant actual and potential negative environmental impacts with which relationships were terminated as a result of assessment 29%

    1. To compose the indicator, only critical suppliers were considered, i.e., suppliers of inputs and services that can generate significant impacts on quality, process performance, equipment safety and integrity, on the environment and on the health and safety of employees. The information was based on Fibria’s former database. Data from Suzano Papel e Celulose base are being mapped and will be evaluated in 2020.

    Additional information:

    The negative, actual and potential environmental impacts in the table include oil spills not addressed, lack of timely information regarding control of water/waste treatment, inadequate allocation of tires and inadequate response time to environmental events with the proper positioning.

  • Negative social impacts in the supply chain and actions taken

    Change view:

    • wdt_ID Suppliers identified as having negative social impacts¹ 2019
      1 Number of suppliers assessed 168
      2 Number of suppliers identified as having significant actual and potential negative social impacts. 4
      3 Number of suppliers identified as having significant actual and potential negative social impacts with which improvements were agreed upon as a result of assessment 2
      4 Percentage of suppliers identified as having significant actual and potential negative social impacts with which improvements were agreed upon as a result of assessment 50%
      5 Number of suppliers identified as having significant actual and potential negative social impacts with which relationships were terminated as a result of assessment 1
      6 Percentage of suppliers identified as having significant actual and potential negative social impacts with which relationships were terminated as a result of assessment 25%

    1. For this indicator, only critical suppliers were considered, i.e., suppliers of inputs and services that can generate significant impacts on quality, process performance, equipment safety and integrity, on the environment and on the health and safety of employees. The information was based on Fibria’s former database. Data from Suzano Papel e Celulose base are being mapped and will be evaluated in 2020.

    Additional information:

    With regard to social assessment, the criterion taken into account was the non-use of local/regional labor by suppliers

  • New suppliers that were screened using environmental criteria

    Context:

    At Suzano, the process of registering and certifying new suppliers considers their scope of operation to define the criteria by which they will be analyzed. In this sense, suppliers selected based on environmental criteria are those whose activities have a direct relationship with this topic.

    In 2019, 100% of the new suppliers hired by Suzano whose scope of operation involves environmental aspects – i.e., 514 suppliers – were selected based on these criteria. This represents 26% of the total number of new suppliers hired by the company in the reporting period.

    Change view:

    • wdt_ID New suppliers that were screened using environmental criteria 2019
      1 Total number of new suppliers that were considered for hiring 1,953
      2 Total number of new suppliers that were hired using environmental criteria 514
      3 Percentage of new suppliers that were hired using environmental criteria (%) 26.32%
  • New suppliers that were screened using social criteria

    Context:

    At Suzano, the process of registering and certifying new suppliers considers their scope of operation to define the criteria by which they will be analyzed. With regard to social criteria, all suppliers are invariably analyzed and are only registered if they are in accordance with the established criteria. Thus, in 2019, 100% of the new suppliers hired by the company – i.e., 1,953 suppliers – were selected based on these criteria.

    Change view:

    • wdt_ID New suppliers that were screened using social criteria 2019
      1 Total number of new suppliers that were considered for hiring 1,953
      2 Total number of new suppliers that were hired using social criteria 1,953
      3 Percentage of new suppliers that were hired using social criteria (%) 100.00%
  • Operations and suppliers at significant risk for incidents of child labor and forced and/or compulsory labor

    Context:

    Suzano has a social and environmental responsibility term that addresses exploitation of child labor and forced or compulsory labor, with the objective of guiding all employees and partners on compliance with the guidelines in our Code of Conduct, which repudiates situations of this nature. Therefore, 100% of the suppliers hired by Suzano must agree to the Terms of Commitment and Legal and Social and Environmental Responsibility Standards adopted by the company and, consequently, to what is stated in the document in this regard.

    In addition, our forest management and its operations follow standards established by the FSC® (Forest Stewardship Council®)¹ and PEFC/CERFLOR (Brazilian Forest Certification Program) certifications, which assess the social conditions of workers in our operations, as well as compliance with legislation related to this topic. Concerning the purchase of wood, suppliers are assessed and monitored in order to identify significant risks regarding the use of slave or child labor, which, if confirmed, makes negotiation impossible.

    In addition, a due diligence system is applied to carry out risk assessments of wood suppliers on the subject, so that the company meets the requirements established by the certifications. Thus, for these assessments, we rely on an internal methodology that includes, among other factors, conducting interviews and providing documentary evidence regarding the legality of the hiring and of the working conditions of the professionals involved in the activities.

    In 2019, we did not identify situations of significant risk of child, forced and/or compulsory labor in Suzano’s or in our suppliers’ operations.

    1. Forest management certificates FSC-C110130, FSC-C118283, FSC-C100704, FSC-C009927, and FSC-C155943; and chain of custody certificate FSC-C010014.
  • Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

    Context:

    Suzano’s Code of Conduct, in the Transparency ethical pillar, addresses how our relationships are conducted in a clear, objective and legitimate way. We are confident about the company’s conduct in promoting an open, loyal and meaningful dialogue with entities representing the employers and workers, based on the principles of freedom of association and respect for the plurality of ideas.

    Also, 100% of the suppliers hired by the Procurement area agree with the Terms of Commitment and Legal and Social and Environmental Responsibility Standards adopted by Suzano, which does not condone situations of this nature.

    In 2019, we did not identify in the operations of the company or of our suppliers any situation in which the right to exercise freedom of association and collective bargaining could have been violated or at risk.

  • Proportion of spending on local suppliers

    Change view:

    • wdt_ID Percentage of the purchasing budget spent on suppliers local to the states of our significant operations¹ 2019 (%)
      1 Maranhão 52
      2 São Paulo 78
      3 Bahia 43
      4 Espírito Santo 58
      5 Mato Grosso do Sul 45
      6 Piauí 56
      7 Tocantins 63
      8 Pará 31
      9 Minas Gerais 87

    1. Local suppliers are those whose headquarters or branch is located in the same state where Suzano operates. This indicator considered production and forestry units, ports, and distribution centers.

    For more details on supplier development programs, see the indicator “Supplier management”.

  • Supplier management approach

    Context:

    Suzano has a structured process for managing and training its suppliers that is also based on its Culture Drivers. This management includes a series of activities to guarantee not only the supply of products and services, but also a relationship based on ethics and integrity with these fundamental links of our value chain. In this sense, in order to hire, register and certify suppliers, we proceed as follows:

     

    1. economic and financial qualification of suppliers;
    2. background check;
    3. performance evaluation of suppliers of raw materials, inputs and services;
    4. receipt and acceptance of the Code of Conduct;
    5. signature, by the supplier, of the commitments to the Legal and Social and Environmental Responsibility Standards established by Suzano;
    6. management of access and labor obligations of service providers.

     

    In the supplier performance evaluation process, audited internally and externally (according to ISO 9000, 14000, 18000, INTI, SMETA, Clients), Safety, Environment and Sustainability requirements are applied to 100% of the regular service providers (those performing services for more than 90 days at Suzano’s premises), and suppliers may be classified under degree of excellence, approved, approved with restrictions, and not approved.

    Furthermore, in order to be duly hired, 100% of the suppliers must agree to the Terms of Commitment and Legal and Social and Environmental Responsibility Standards established by the company.

    Additionally, Suzano considers part of its suppliers to be critical. That is, suppliers of inputs and services that can generate significant impacts on quality, process performance, equipment safety and integrity, on the environment and on the health and safety of employees. This group accounts for 5% of the company’s total number of suppliers and corresponds to 36% of the purchasing budget. Thus, different measures are in place to ensure a good relationship with these suppliers and reduce the risk of generating impacts on their end.

    With regard to the development of local suppliers, Suzano has some programs in place in specific units:

     

    • Supplier Development and Qualification Program (Mato Grosso do Sul state): also known as PQF, this program aims to adapt micro, small and medium-sized enterprises to both basic management requirements and international standards for negotiating with large industries. Suzano is one of the sponsors of the Program, which is intended for any supplier, not only those that work for the company.
    • Integrated Supplier Development and Qualification Program (Espírito Santo state): a joint action by the main companies operating in Espírito Santo to promote, in an integrated manner, the development and qualification of their suppliers of goods and services. This program, also known as Prodfor, has the participation of important sponsor companies installed in the state, which rely on the support of the Federation of Industries of the State of Espírito Santo (FINDES), and coordination of the Euvaldo Lodi Institute (IEL-ES). Suzano is one of the sponsors of Prodfor, which is intended for any supplier, not only those that work for the company.
    • Development of local partners (Bahia state): the purpose of the program, in partnership with SEBRAE, is to promote the sustainability of the supply chain in the regions where we operate, focusing on micro and small enterprises, expanding the qualification of our local partners, encouraging the adoption of best management practices and principles of legal and social and environmental responsibility adopted by Suzano. The supplier development program covers topics such as Entrepreneurship, Financial and Business Management and Taxation, Legal Responsibility and Social and Environmental Principles, and our Culture Drivers. This is a pilot project that started at the Bahia unit, but it is under approval in order to be extended, already in 2020, to other states where the company operates.

     

    In 2019, the company had 10,255 suppliers, while in its database, there were 35,964 registered suppliers. Both data consider headquarters and branch. These numbers include international suppliers, individuals, legal entities, landowners, public agencies, carriers, among others. Domestic suppliers come from all states in Brazil, while international suppliers include suppliers from all continents. In 2019, spending on suppliers was approximately R$ 17 billion.

  • Total spending on suppliers by region

    Change view:

    • wdt_ID Total spending on suppliers per regions of significant operations, in R$ millions 2019
      1 Maranhão 1,600
      2 São Paulo 5,000
      3 Bahia 2,700
      4 Espírito Santo 1,800
      5 Mato Grosso do Sul 3,300
      6 Piauí 7
      7 Tocantins 186
      8 Pará 102
      9 Minas Gerais 208
      10 Others 2,000

    Total number of suppliers handled: 10,255 (head office and branch).