KODS 2030

100% of critical suppliers included in the Sustainable Supply Chain Management Program

The 2020 baseline (KODS release date) considers around 13.5% of critical suppliers covered per year, since the first phase of the Supply Chain Social and Environmental Responsibility Program began in 2019. The criteria that define a supplier as critical are: value of Klabin's revenue (spend), representativeness in the business areas (Forestry, Pulp and Paper and Packaging), recurrence greater than six times (in different months of the year).

For more information on the program, method and results, please refer to Supplier social and environmental performance management. 

Klabin’s supply chain profile

The suppliers are classified as providers of forestry inputs, commodities and specialty chemicals for pulp and paper production; fuel, power and packaging for finished products; provision of logistics services, material management, equipment storage and rental; supply of auxiliary production material, uniforms and Personal Protective Equipment (PPE), bearings, pumps; provision of cleaning, security and maintenance services, among other positions. This sample does not consider international purchases (Imports and Klabin Argentina).

The raw materials that make up Klabin's products are 98% sourced from renewable sources (wood for processing, purchased wood chips, and purchased pulp), and 2% from non-renewable sources (sulfuric acid, sodium sulfate, aluminum sulfate, lime, and kaolin).

 Supplier screening program

Supplier assessment program 

Suppliers are evaluated based on four strategic pillars: Environment, Labor and Human Rights, Ethics, and Sustainable Procurement. Suppliers with negative impacts are those who scored between 0 and 34 points in the assessment, indicating a risk. All suppliers scored unsatisfactorily in two or more pillars, with 96% performing poorly in Ethics, 94% in Environment, 67% in Sustainable Procurement, and 53% in Labor Practices and Human Rights.

Suppliers demonstrating significant impacts undergo an action plan, accounting for 33% of those evaluated. Among them, 3% have active action plans, while the remaining 30% have been reassessed and do not pose a high risk.

Suppliers with corrective action plans  

Suppliers in capacity building programs 

Number of active suppliers by region and total expenditures made

GRI-204-1

Percentage of purchases from local suppliers

1. Local suppliers are those based in the same state as Klabin's operations (headquarters and subsidiary). 
2. The percentage of purchases from local suppliers considers the total spend of monitored suppliers (excluding imports, Klabin Argentina, and Klabin's itself). 
3. The variations are due to commercial negotiations and differentials in price and volume conditions. 

GRI-308-1GRI-414-1

Percentage of new suppliers selected based on social and environmental* criteria​

*The number of suppliers reported represents critical suppliers that participate in our Supply Chain Corporate Social Responsibility program. The 4 topics covered in our program are: Environment, Ethics, Labor Relations and Human Rights, and Corporate Purchasing.

The suppliers, within the total reported here, participated in the Corporate Social Responsibility in the Supply Chain program for the first time in 2023. This program assesses the following topics: the environment, ethics, human rights, and sustainable purchasing. 

GRI-308-2GRI-414-2

Evaluation of social and environmental impacts on the supply chain​

In the 5th year of the Corporate Social Responsibility program in the Supply Chain, three evaluation actions were conducted (two reevaluations and one evaluation of newly selected suppliers) using the EcoVadis methodology. A total of 95 suppliers were invited and 91 were evaluated, with a participation rate of 96% at the end of the cycle.

Klabin's supplier management is segmented between industrial and forestry activities. Considering the specificities of both activities, the Company has defined separate material topics (KODS) to address the respective supply chains. 

In the case of timber supply, management and performance on the topic can be observed in the KODS for Forest Certification, with a focus on the FSC® certification process, support for the development of producers to meet ESG aspects (Matas Legais Program), monitoring and traceability activities, as well as fostering initiatives (Plante com a Klabin). 

Klabin's performance, associated with supplier management as a whole, KPIs, and commitments made with the respective KODS, are continuously monitored by the Executive Board and the Sustainability Committee, composed of the Company's board of directors. 

Anchored in the KODS for Suppliers' Socio-Environmental Performance, Klabin's Sustainable Supply Chain Management Program aims to ensure that suppliers implement and follow good social and environmental practices and ensure the proper management of potential risks present in their activities, as established in Klabin's General Supply Conditions and Socio-Environmental Guidelines for Suppliers.

In 2023, the Supplier Code of Conduct and the Engagement Policy were developed under the Corporate Social Responsibility Program. Both are subject to approval for publication in 2024. 

ESG criteria in supplier selection and screening 

During the procurement process, suppliers are instructed to confirm compliance with the general supply conditions, which include ESG aspects that must be fulfilled during the execution of contracted services. Non-compliance with these requirements is prohibitive for the continuation of service provision until the supplier regularizes its situation. 

Contracts with suppliers are established through a screening and approval process, which involves evaluating aspects such as occupational health and safety, legal, commercial, technical, environmental responsibility, and financial factors. These contracts also include specific clauses for protecting labor rights, such as the prohibition of child and forced labor, child sexual exploitation on the roads, and environmental protection, among others. 

Suppliers of products and services undergo procedures for submitting documents attesting to their compliance with labor legislation and payment of social contributions and labor obligations, which may include inspections (second-party audits). These inspections include an inspection of labor documentation and workplaces in order to audit possible non-conformities. The procedure seeks the effectiveness of the conditions established for those hired directly by the Company, with employees physically present at Klabin's units or at another location determined by the company. 

The documentation related to the labor area can be monitored at the supplier's own facilities to enable more detailed analysis. In the event of any irregularities, the contracting area and the Supply department are responsible for taking action, which includes written notification to the supplier regarding rectification, suspension of payment until rectification of the detected issue, and affirmation that recurrence will lead to disqualification as a Klabin supplier. The disqualified company can only be rehired after a period of two years has elapsed since the contract was terminated. In the event of further irregularities during the term of the new agreement, the supplier is definitively disqualified.

In strategic procurement processes, such as those involving the criticality of supply, financial volume and production impacts, Klabin adopts methodologies to gather information for the technical and commercial qualification of suppliers. One of these methods is the RFI (Request for Information) process, in which a variety of information is requested, including socio-environmental criteria (such as environmental management programs, supplier evaluation criteria, training in environmental issues, etc.), operational information and registration data (such as billing, customers, units, etc.). This information is analyzed, and suppliers that demonstrate superior socio-environmental performance can become more prominent during the final selection process for supply, in addition to the evaluation of technical and commercial aspects.

Risks considered in the supplier screening process 

The company purchases approximately 40% of the wood used in its production process. To mitigate risks, the Company seeks suppliers with whom it enters into contracts for the purchase and sale of standing timber or wood to be delivered to its industrial units, as well as spot purchases.

The price conditions of wood are subject to market fluctuations and competition with other crops (such as soybeans, sugarcane, and others) in the different regions where Klabin operates. This can lead to price increases and impact the availability of wood, adversely affecting the supply to its factories, production costs, and financial results. The Company relies on the supply of inputs, raw materials, and services for its operations. Increases in input prices can raise production costs and reduce profitability

Definition of Critical supplier 

The criteria defining a supplier as critical are: the value of sales to Klabin (spend), representation in business units (Forestry, Pulp and Paper, and Packaging), recurrence more than six times (in different months of the year). 

Assessment and development of significant suppliers 

The supply chain management is carried out using the EcoVadis methodology, which evaluates Environmental, Labor and Human Rights, Ethics, and Sustainable Purchasing criteria for critical suppliers.  

Within the methodology, which scores suppliers from 0 to 100, the following criteria are considered: company size, country context, type of the product and potential for positive or negative visibility through external assessments. Assessment levels demonstrate suppliers’ maturity, as follows: 

• 0 to 20 points: high risk. 
• 20 to 35 points: medium risk. 
• 36 to 55 points: engaged companies. 
• 56 to 75 points: advanced companies. 
• Over 75 points: reference companies. 

The effort in relationship-building with each level of suppliers is greater for those scoring below 35 points, through support and development of this group, based on follow-ups of their action plans by Klabin's Supply area, across the four pillars covered by the platform, thereby increasing their level of engagement. That way, it is possible to increase the evaluation criteria based on the performance of this supplier over a medium to long-term period. The selected suppliers participating in the evaluation are those considered critical. 

Critical suppliers that do not adhere to the evaluation process are analyzed by a committee that includes the areas of Technical Management, Purchasing Management directly related to the supplier, Sustainability Management, Excellence and Innovation Management in Supply Chain, Risk Management, and Integrity Management. The analysis considers aspects associated with non-substitution and productive impact (critical materials and services).  

Since 2019, critical suppliers have been evaluated using this methodology, beginning with the first wave, when 110 suppliers were invited and resulted in 86 being evaluated, with a participation rate of 78% at the end of the process. Klabin's goal is to cover 100% of them by 2030. 

In 2023, the 5th wave of evaluation was conducted with 64 invited suppliers, 61 evaluated (a participation rate of 95%), and 30 suppliers re-evaluated – from previous years – with 15 at medium risk level (between 20 and 35 points) and 15 at the "engaged" level (between 36 and 55 points). Evaluation topics included: Environment, Labor and Human Rights, Ethics and Sustainable Procurement. 

On average, 13.5% of significant suppliers are evaluated each year, totaling 83.1% in 2023. Among them, all those who scored below the expected average have action plans monitored annually and receive program support for implementing the indicated improvements. 

Internal training on ESG practices for suppliers 

To promote the improvement of critical suppliers' performance in socio-environmental assessment, the EcoVadis platform provides an online training environment (EcoVadis Academy) that guides the creation and development of management practices aligned with the assessed criteria.

Furthermore, as part of Klabin's Climate Transition Plan, the Company has begun to raise awareness in the supply chain by providing training and capacity-building for suppliers with lower maturity levels in carbon emissions management.