Risk and Opportunity Management

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  • 3. Suzano’s Climate Risks

    Context:

    It is important to remain attentive to the identification and management of risks posed by climate change. These risks have different levels of materiality for Suzano’s business, based on their likelihood of occurrence and potential impact. Those of greater materiality require greater attention in the development of mitigating measures. The risk of energy shortages, for example, is being mitigated by the increase in the company’s energy self-sufficiency.

    Such risks can be physical or transitional. The physical risks stem from the effects that the increase in the concentration of greenhouse gases in the atmosphere has on natural ecosystems and the conditions for human life on Earth, which can be:

     

    • Acute Risks: arising from extreme weather events (cyclones, hurricanes, flooding), with increased intensity and frequency; or
    • Chronic Risks: arising from long-term changes in weather patterns, which can lead to rising sea level or constant heat waves.

     

    These risks can affect different dimensions of the pulp and paper value chain. The table below summarizes how these physical risks could materialize for Suzano:

    There are also risks arising from the need for society to transition to a low carbon economy. These are the transition risks, such as:

     

    • Regulatory and legal risks: arising from regulatory changes to encourage the transition to a low carbon economy or arising from the risk of litigation related to the supposed contribution, even if indirect, to intensifying climate change;
    • Technological: resulting from the development of improvements and innovations toward an economy with greater energy efficiency and low carbon;
    • Market: arising from changes in the supply/demand of certain commodities, products and services once issues related to climate come to be considered in decision-making; or
    • Reputational: related to changing perceptions by customers and society at large in relation to an organization’s positive or negative contribution to a low carbon economy.