Can a company that cuts down millions of trees a year ever truly be sustainable?
At first glance, perhaps not. But context matters.
What if the company had planted those trees years earlier, on degraded land that’s now been revitalized? And if it then planted millions more trees where the cut ones used to be — all to be harvested years later and replaced by yet more trees? And it did this for multiple generations in partnership with local and Indigenous communities?
Can that company be deemed sustainable?
These are among the questions I pondered last week during my visit to São Paulo, Brazil.
I was there as the guest of Suzano — a 98-year-old pulp and paper company, the largest in Latin America and one of the 10 largest in the world — to help host its annual ESG Call, an online event during which the company showcased its achievements and challenges to a global audience of investors, customers, activists and others. (I was paid for this work, but not for this article.)
Can a company that cuts down millions of trees a year ever truly be sustainable? Context matters.
While I’m not sure I’m able to answer the “is it sustainable?” question above, I came away with a newfound appreciation of what it takes to be seen as a leader in the forestry and pulp-and-paper industries — and, by extension, any company whose business model is dependent on natural capital and local communities.
Suzano, founded in 1924 by Ukrainian immigrant Leon Feffer, pioneered the production of pulp and paper from eucalyptus as an alternative to pine. It invested in research and development — in the 1980s, for example, it began to apply biotechnology, adopting micropropagation practices in its plantations — and in sustainability measures, including the creation in 1999 of the nonprofit Ecofuturo Institute (Portuguese), with a focus on “socio-environmental responsibility.”
Today, the company, whose board chair is David Feffer, Leon’s grandson, manages about 7,700 square miles of land, a large portion of which is in the Atlantic Forest, which extends along much of Brazil’s coast, the planet’s second-largest rainforest, behind only the Amazon.
Being a company that relies on natural capital in the world’s most biodiverse country brings challenges.
“We are undergoing a climate crisis, a biodiversity crisis and a poverty crisis,” Suzano CEO Walter Schalka told me when I interviewed him during the ESG Call. “And each day, each of these takes their toll. We want to have a leading company, and to bring all the other parts of the society together in this journey. We believe it is critical for the work that we do it right now.”
A key part of that work involves planting 650,000 eucalyptus trees a day. The goal: regenerate degraded pastureland, which provides few ecosystem services, back into native Brazilian vegetation. Those trees produce pulp, about 90 percent of which is exported to Asia, Europe and North America, and is used in products and packaging by companies such as Procter & Gamble and Kimberly-Clark. Suzano also makes its own line of consumer products, including tissues and toilet paper.
I was impressed by the environmental aspects of Suzano’s operations, which have been informed by such global sustainability thinkers as John Elkington, Pavan Sukhdev and the late Tom Lovejoy. But what fascinated me more were the social components of its work, which take place in a nation rife with need.
“We live in a continent-sized country where around 13 percent of the population lives below the poverty line,” explained Marcela Porto, the company’s communications director. “In 2022, the country registered over 120 million Brazilians living with some degree of food insecurity. The pandemic took more than 5 million young people and children out of school, compromising futures that were already exposed to a situation of vulnerability. So, any effective action by a company like Suzano needs to be systemic and to promote scalable actions for real change.”
Suzano is a large landowner in five Brazilian states that are home to more than 200 communities, including many Indigenous communities. The company has aimed to align its business goals with those communities and set a goal to lift 200,000 people out of poverty in its areas of operation by 2030.
“The nature of our business requires continuous social engagement and in full empathy for the communities that surround Suzano,” Cristina Gil White, Suzano’s chief sustainability officer, told me when I interviewed her for our 350 podcast. “If we have shared values, we will have a great business. So, it’s very important that we continuously understand the needs of our neighboring communities and work with them, providing tools to help them come out of poverty — not just in terms of income, but multidimensional poverty when you think about education, health and other needs that vulnerable communities have.”
The company has a longstanding rural development program in which it teaches communities how to make the best use of their land by producing high-value crops and helping them transform those crops into finished goods that go into local and global markets. For example, it supports honey producers and beekeepers in placing their hives inside Suzano’s eucalyptus plantations, which has the added benefit of reducing poaching by people afraid of bee stings.
“It’s really important that we have trusting relationships that allow those communities to see the benefit of our plantations, of our work, of our production, and that there’s always a shared value,” White explained. “Of course, it’s not always peaceful, and we’re always striking that balance. But how can you have a thriving business if you don’t have thriving neighbors?”
It can be a heavy lift.
“The beginning of the journey has been difficult, given the scale and the challenges — full of learning opportunities but with countless rewarding results,” said Giordano Automare, Suzano’s territorial social development manager.
Among other things, there is a history of distrust to overcome. A few years ago, for example, activists in the northern state of Maranhao claimed Suzano had behaved badly, stealing land from traditional communities, displacing families and making livelihoods untenable. Suzano disputes these claims.
And reaching that self-imposed 2030 goal — moving 200,000 people out of poverty — has proved to be slow going. In 2021, for example, only about 9,000 people were lifted from below the poverty line — just under 5 percent of Suzano’s goal, with nine years to go.
Still, there are successes. For example, those 9,000 Brazilians saw their income increase on average by 57 percent. Suzano says its programs generated around $18 million in revenue for these communities and has produced 35,000 tons of food and other products. “The enhancement of an inclusive bioeconomy has a positive impact on families’ food security, quality of life and conservation of essential social environmental attributes for the sustainability of distributors,” Automare said.
And some of those individuals might end up working at Suzano. “Many of our employees in our social responsibility area come from the very same communities we’re talking to,” Gil White explained. “We make sure we always have a positive impact with communities. But of course, we’re learning; we don’t always do it perfectly.”
Schalka, the CEO, struck me as earnest as any business leader about the company’s social — and environmental — commitments.
“Not everything that we are doing is perfect,” he said. “But we are humble enough to bring the problems to the table and try to address how we are going to build the action plan to the future.”
He is the first to say that much of what is behind the company’s ESG work is about hedging risk, pure and simple.
“We have a lot of uncertainties,” Schalka explained to me during the Q&A portion of the ESG Call. “We need to hedge ourselves in different aspects and not only on the financial side. We need to be hedged on the forest side, as well. We need to hedge on the biodiversity issue for the future.”
He added: “Our company has a purpose to renew life through planted trees. We believe that we are in a regenerative world, and we need to be part of the solution.”
Thanks for reading. You can find my past articles here. Also, I invite you to follow me on Twitter and LinkedIn, subscribe to my Monday morning newsletter, GreenBuzz, from which this was reprinted, and listen to GreenBiz 350, my weekly podcast, co-hosted with Heather Clancy.
June 27, 2022 at 03:19PM