Wood Supply

KLABIN'S FORESTRY UNITS ARE ALREADY AMONG THE MOST EFFICIENT IN THE WORLD IN TERMS OF THE PRODUCTION OF PULP PER HECTARE PLANTED.

—  Operational efficiency that begins in the forests

Klabin’s forests are already among the most efficient in the world in terms of the production of pulp per hectare planted. High productivity is a key factor for ensuring competitiveness and sustaining the company’s growth strategy. The company’s products are produced based on the pine and eucalyptus forests, through which Klabin has been advancing in new markets, such as pulp.

Most of the wood used comes from own plantations. Supply is supplemented by the purchase of material from producers that are members of Fomento Florestal or from independent producers with which the company maintains contracts that cover criteria such as quality, delivery times, compliance with relevant laws and the adoption of measures to protect the environment, among others. (G4-12)

>> IN 2017, KLABIN EXCEEDED ITS HISTORICAL PLANTING RECORDS, REACHING 34 THOUSAND HECTARES PLANTED IN SELF-OWNED AND THIRD-PARTY LAND, TWICE AS MUCH AS THE PREVIOUS YEAR <<

In 2017, Klabin expanded its forestry operations in order to handle the greater volumes of pulp production, after the ramp up of the Puma Unit, as well as paper and packaging production. Klabin handled approximately 16.1 million tons of logs and chips of pine and eucalyptus and waste for energy, a 12% increase compared to the volume transported the previous year.

  • Forestry operations in 138 municipalities, including self-owned and leased areas/partnerships.

  • Average distance of self-owned forests to the plants of 66 km in Paraná and 74 km in Santa Catarina, representing a great competitive advantage in terms of logistics.

  • Management of the forestry units (São Paulo, Paraná and Santa Catarina) is FSC®-certified, totaling 224 thousand hectares of planted forests.

  • In 2017, Klabin earned CERFLOR (Brazilian Forestry Certification Program), an internationally recognized forestry certification, ensuring sustainable management of forests at the Monte Alegre Unit in Paraná.

—  Forestry Goals

(GRI 103-2)

To ensure that forest assets are even more prosperous and present increasingly greater performance, Klabin’s objectives and vision for the forestry area, to be achieved in a few years, are summarized in six aspects of the Forestry Goals:

  • Greater productivity: we want to consolidate the forest productivity gains in the world pulp and paper market, in order to increasingly distance ourselves from the competitors. Klabin’s Forestry units are already among the most efficient in the world in terms of the production of pulp per hectare planted. Our goal is to consolidate our top position, increasing our differential compared to competitors.

Through its Research, Development and Innovation department, the company continuously seeks to improve its planting and management processes in order to increase the productivity of forests.

  • Lower operational costs: we want to be the lowest cost producer among global pulp and paper companies.

The short distance between forests and factories, coupled with the high productivity of the forests, allow Klabin to have the lowest cost/wood mill ratio in the world. With the increase in operational productivity, costs have been reduced in recent years.

  • Acceptance by the community: we work to be good neighbors and citizens. This effort permeates activities both large and small. Our water trucks, for example, dampen the dirt roads through which the wood haulers pass, preventing dust clouds. If possible, we change the trucks routes so that they do not cross school or large pedestrian areas, and we keep our planted forests separated from neighboring properties and roads to avoid shaded areas.

Since 2016, Klabin has been implementing a program to measure the acceptance of our activities in all the municipalities in which we operate, with the participation of various stakeholders. The company aims to regularly evaluate how it is viewed in order to build stronger relationships with communities. The results of the last survey, in 2017, showed significant advances in this indicator. See more at Two-way street (learn more in Relationship with Communities).

  • A reference in safety: our goal is to have world-class job safety, ensuring the physical integrity of our employees.

Klabin maintains programs that seek to develop a culture of safety that allows the company to achieve high levels of productivity while preserving the well-being of employees (learn more about it in People, health and safety).

  • Sustainable forestry management: we work to maintain our forest management practices as a benchmark among companies in the world pulp and paper market, achieving maximum productivity while protecting biodiversity and natural resources such as water and soil.

Klabin develops its forest management using the mosaic concept: pine and eucalyptus plantations are interspersed with areas of native forests – preserved areas of the Brazilian Atlantic Forest – to create ecological corridors that preserve the local fauna and flora. Learn more about the forestry management certifications on Klabin’s website.

  • Quality raw material: we wish to satisfy our internal and external customers with quality raw material compatible with their needs.

Monitored logistics

In search of a more productive cycle for forestry and wood logistics operations, Klabin invested over BRL 7.5 million in infrastructure and technology in 2017 at the Forestry Unit Logistics Center in Paraná. A new truck tracking software allows the company to track the entire route of wood-hauling vehicles. If the truck makes an unscheduled stop for more than 20 minutes, the Center’s team is warned by the system and contacts the driver and the customer to report possible delays. The Forestry Unit Logistics Center is responsible for monitoring and tracking 320 trucks, totaling 770 daily trips.

—  Responsible management recognition

For the fourth consecutive time, Klabin was recognized for its Forestry Management Practices by the Carbon Disclosure Program (CDP), an international institution that examines companies’ initiatives to minimize and manage the environmental impacts of their activities. In 2017, the company was included once again in the “Leadership” category in its annual results for “Forest” by earning an “A-” rating, which ratifies the best practices in the sustainable development and responsible management of its forests. CDP emphasized management actions in the fight against deforestation and forest certification, including the supply chain.

In the “Water” category, Klabin has remained at the “Management” level, receiving a “B-” rating, a result that also recognizes the actions to measure impacts and try to reduce them. In the “Climate change” category, the company is also rated under “Management”, which confirms the best practices to manage risks related to climate change in internal and third-party operations.

Learn more at Recognition of best practices.

—  Value partnerships

(GRI 102-9, 103-1, 103-2, 103-3)

Klabin has been maintaining the Programa de Fomento Florestal since 1984, seeking to expand and diversify the income of communities close to its units by planting forests on rural properties. At the same time, these producers represent an important link in the company’s wood supply chain.

The Programa Matas Legais is another initiative that contributes to improve landscape planning, taking into account environmental and social factors. Carried out in partnership with the Associação de Preservação do Meio Ambiente e da Vida [Environment and Life Preservation Association] (Apremavi) since 2005, the program guides independent producers from Santa Catarina and Paraná to cultivate their lands in a sustainable manner, encouraging the recovery of native forests, responsible forestry, organic agriculture, ecotourism and conservation of natural heritage.

Klabin offers rural producers a family farming incentive program called Matas Sociais [Social Forests], in partnership with Apremavi, Sebrae, and the international organization The Nature Conservancy (TNC). Learn more in Local Development.

Governance of forestry operations with regard to the interaction with the areas, dialogue, mapping operational impacts, and regional actions is carried out by the Paraná Community Relationship department (learn more about it at Engagement begins in the company).

>> THE MATAS LEGAIS PROGRAM IS ANOTHER INITIATIVE THAT CONTRIBUTES TO IMPROVE LANDSCAPE PLANNING, TAKING INTO ACCOUNT ENVIRONMENTAL AND SOCIAL FACTORS <<

—  Management of suppliers

(GRI 102-9, 103-1, 103-2, 103-3)

A non-negotiable term when hiring suppliers at Klabin, legal compliance with labor practices, and environmental and human rights aspects – such as condemning forced labor or discrimination of any kind – is set out in clauses of supply agreements and in documents such as Klabin’s Code of Conduct and the Social and Environmental Responsibility Policy.

These commitments are reinforced by the company’s voluntary adoption of the Brazilian National Pact to Eradicate Slave Labor. Klabin also respects the freedom of association of hired professionals and suppliers. (G4-DMA)

In 2007, no actual or potential risks related to freedom of association and collective bargaining, child labor and forced or slave labor were identified in Klabin’s or its suppliers’ operations. (HR4, HR5, HR6)

Assessment and monitoring

(GRI 308-1, 414-1)

Suppliers of the industrial area considered critical for Klabin from a financial and sustainability point of view are monitored through a criticality matrix, which evaluates impacts related to environmental licensing, eco-efficiency initiatives, greenhouse gas inventories (GHG), operation sites, water consumption and effluent generation, labor relations, compliance with legislation, training on environmental standards and Occupational Health and Safety (OHS), control of injury rates, diseases, absenteeism, deaths, anti-discrimination practices and prevention of corruption, legal and labor compliance, incidence of slave labor in the supply region, environmental licensing, type and danger of material supplied, type of supplier and participation in discussions with communities for local development.

All new suppliers at Klabin hired in 2017, considered significant from an economic and financial point of view, were assessed taking into consideration their legal compliance with environmental aspects, labor practices and human rights.

Wood suppliers

(GRI 102-9)

The forest units follow the Controlled Wood Program, in which suppliers are assessed by the Forestry area based on specific methodology related to the FSC® chain of custody certification. In 2017, 574 visits were made to certified and uncertified wood suppliers in Paraná, and 188 visits were made in Santa Catarina.

All forestry units’ suppliers are audited by Klabin on a quarterly basis, in general. The audit considers human rights elements, environmental aspects, social aspects (surrounding community), compliance with labor laws, working conditions analogous to slavery and child labor, as well as other aspects that can affect human dignity. In case of non-conformity, Klabin interrupts the supply immediately and forwards a recommendation of compliance. After implementing the recommendations, the supplier is again audited and, if there are no outstanding issues, the supply agreement is resumed. (GRI 308-2, 414-2)

Percentage of suppliers identified as causing significant actual and potential negative impacts, with which improvement agreements were signed as a result of the assessment: 2017
Environmental impacts 0.60%
Impacts on labor practices 0.00%
Impacts on society (at surrounding communities) 0.37%
Impacts on Human Rights 0.00%

—  Suppliers of products and services

(GRI 102-9, 204-1)

Klabin has about five thousand active suppliers throughout Brazil, for the supply of raw materials such as forestry inputs, commodities and specialty chemicals for pulp and paper production, fuel, power and packaging for finished products; provision of logistics services, material management, storage and rental of forklifts; supply of auxiliary production material, uniforms and personal protective equipment (PPE), bearings, pumps and provision of cleaning, security and maintenance services, among other functions, in addition to wood suppliers. Of this total, 925 suppliers are monitored by the Criticality and Sustainability Matrix. Of these, 60.89% were hired in states in which Klabin operates.

Percentage of procurement budgets and contracts of major operating units spent on local suppliers1, in 2017 (GRI 204-1)

2017 2016 2015
Paraná 62.2% 79.5% 62.9%
São Paulo 85.0% 68.1% 52.7%
Santa Catarina 49.8% 50.5% 50.8%
Amazonas 77.8% 14.4%
Minas Gerais 39.2% 14.3% 28.4%
Pernambuco 48.7% 52.9% 44.1%
Rio Grande do Sul 14.5% 2.2% 18.8%
Bahia 28.3% 20.5% 54.4%
AVERAGE2 60.9% 63.9% 67.3%

1 The term “local” refers to the state of establishment of the unit to which the service is provided or to where the material/product is supplied.
2 The average was calculated based on the number of local suppliers divided by the total number of suppliers assessed.

 

Dialog and integration

Klabin has been improving its management of suppliers by strengthening dialog, aiming to integrate new and current suppliers and promote the sharing of best practices. At Porto de Paranaguá (PR), for example, the 2nd Logistics Operation meeting held by Klabin in 2017 gathered over 200 people, including employees, drivers and dockworkers, who participated in lectures and activities focused on health, safety, quality and well-being.

One of the innovations presented, whose idea was introduced in the first edition of the meeting, was the Boarding Platform. The tool, unprecedented in the shipment of pulp in Brazil, prioritizes worker safety and does not interfere in the loading time. With that, ships remain moored for shorter periods, allowing the company to achieve the planned export volume, while always prioritizing security.

 

—  Logistics network study

In 2017, the Planning and Logistics Department carried out a logistics study covering all of the company’s manufacturing units to map the source and demand, seeking opportunities to reduce process-related costs. The study identified several opportunities, such as the use of ICMS credits, consolidation of cargoes in warehouses (centralization in a location able to serve nearby units, for example), inventory optimization, among other initiatives, generating an action plan that is already in progress.

—  Best practices

Good wood

With Klabin’s support, 33 small rural producers of Paraná obtained the FSC® certification in 2017; the seal contributes to the conservation of natural resources, provides fair working conditions, and encourages a good relationship with the community.

 

Responsible wood production, from a social and environmental point of view, produced based on management standards recognized around the world. This is already a reality for many small producers of Paraná, thanks to the support provided by Klabin to allow these properties to obtain the international Forest Stewardship Council ® (FSC®) certification.

The work started in 2013, when the Small Rural Producers Forest Certification Program was introduced by the company. Since then, the initiative has already allowed 286 local producers to become certified. Of this total, 33 obtained the certification in 2017, the year in which the area of pine and eucalyptus forests certified through the program reached 66 thousand hectares.

The initiative is aligned with the Klabin’s commitment to prioritize the use of certified wood deriving from sustainable production processes. In addition to the company’s own forests – 100% FSC®-certified, 20% of the total volume of wood used by Klabin is acquired from third-party forests. Thus, the company’s efforts to certify local properties offer bilateral benefits: producers receive an additional amount for certified wood and have greater chances to supply to other markets, as they hold an internationally-recognized certificate. Meanwhile, Klabin has greater availability of certified wood to supply its industrial units, in addition to supporting sustainable development and promoting agricultural and forestry activity as a source of economically-viable income.

Step by step

The work to obtain a certification begins with a diagnosis of the reality of the properties, prepared by a specialized consulting firm hired by Klabin. With the document in hand, producers have the opportunity to adjust their processes according to the FSC® recommendations. On average, it takes 120 days to implement the adjustments to the property and the activities, which can vary depending on the size and structure of the site.

Producers who participate in the process have their properties assessed based on various aspects, including economic management, environmental compliance (such as resource optimization and minimization of impacts), possible social impacts generated by the business (working arrangements and the impact of the activity on the surrounding communities, among other things).

At the end of the period granted for producers to implement the adjustment and gather all documentation, an external audit is responsible for carrying out an assessment to determine whether the certificate will be awarded to properties.

Once certified, small producers undergo annual maintenance audits carried out by the Institute of Forestry and Agricultural Management and Certification (Imaflora), which audits a few randomly-selected properties, assessing their compliance with the processes.

Waiting for the first harvest

Producers supported by Klabin that have obtained the FSC® in 2017 include David Manosso, producer of Palmital de Cima, district of Reserva, Paraná. Milk production is the property’s main source of income. Eucalyptus, planted in 2011, will be cut for the first time in 2018, supplementing the family’s income. “I have three children living away from home, two of whom are school-aged. Funds obtained from the sale of wood will be important to support them financially. Certified wood has a differentiated value”, says David.

In addition to the positive economic impact, David highlights the environmental benefits resulting from seeking to obtain the certification. “After the diagnostics performed by the consulting firm hired by Klabin, we have increased the protection of the property’s springs. This work is done by all producers seeking certification, and undoubtedly leads to an important positive result, expanding the availability of water in the region”, he says.

Forestry Certification Program figures*

Year 2017 2016 2015 2014
Number of certified producers 33 402 43 41

* The program reached its peak in 2016, due to the large number of properties established near the Forestry Unit of Paraná, whose crops were ready to be harvested and that expressed interest in obtaining the certification. Starting in 2017, the program expanded its area of operation, covering properties that were more geographically distant, located up to 150 km from the company’s headquarters. There was a reduction in the number of certifications obtained in the period, due to the smaller number of properties with forest plantations in these areas.

>> CERTIFIED WOOD HAS A DIFFERENTIATED VALUE”. DAVID MANOSSO, PRODUCER ASSISTED BY KLABIN, RESIDENT OF PALMITAL DE CIMA, RESERVA (PR) <<

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