The Supply department is strategic for the governance of our business and works in direct collaboration with the Controllership and Compliance sector. This closeness is essential in order to ensure high standards of integrity, and it directly contributes to the credibility of our restoration and carbon credit projects built off these projects, while also sustaining the continuity of the operations.
The Supply team is responsible for planning, negotiating, and managing suppliers, ensuring efficient supply aligned with the company’s objectives, both in forestry operations and corporate demands. This area defines or participates in an extensive network of decisions and procedures that precede the beginning of planting of each project and extends itself throughout the whole operation.
Among the everyday responsibilities, key activities include market analyses, supplier development and approval processes, and commercial negotiations. These responsibilities mean that the supply areas perform a structural role, both in specific projects and at the company as a whole.
Now, the Controllership and Compliance area operates across departments, coordinating and prompting the actions of other areas involved in the contracting process, with the goal of ensuring regulatory, legal, financial, and reputational compliance of suppliers and partners. In this context, this area is responsible for conducting and consolidating the risk analyses, in tandem with the relevant technical areas, monitoring identified issues, and supporting the approval, or rejection, decision of each contract.
In this article, we detail how the articulation between the two areas results in a structural dimension of the operation. This information is based on conversations with Bruna Alencar, our Supply Consultant, e Graciete Pettinari, our Controllership and Compliance Manager.
The complexity of our projects demands a broad and diverse supply chain that’s integrated to the territory, and this depends on specific, strategic planning from the onset of the project
Biomas’ projects mobilize an extensive network of suppliers that goes well beyond plant nurseries and planting companies. Bruna Alencar shares that contracting involves everything from suppliers of boxes for transporting seedlings to companies highly specialized in drone operations and mechanized soil preparation, for example.
There are also input suppliers, seed collector associations, forest inventory companies, capacity-building and training services, law firms, IT support, companies responsible for taking project photos, among many others. “It truly is a very ample universe,” she affirms.
Supply chain planning begins with schedules, RFIs, and market studies
The composition of the supplier network varies based on the territory of each project. Bruna explains that Biomas seeks to contribute to regional development and income generation in the areas where it operates and, therefore, prioritizes local suppliers whenever possible.
When starting a new project, the Supply area identifies, in dialogue with the other areas, which processes are crucial for starting operations. Based on this information, it creates specific timelines and verifies the critical paths that impact or determine the start of planting. These processes are prioritized in planning and interaction with the market.
We regularly use the Request for Information (RFI) tool to map the market and collect detailed information about production capacity, location, leveraged technology, internal policies, and certifications of potential suppliers. In one of our projects, for example, almost 150 companies were solicited to respond to the RFI.
However, it’s not uncommon to hire specialized consultants to support decision making and strategic planning. For example, contracted services may include analyzing the socioeconomic conditions and local economic dynamics of the region where the project is implemented.
In this case, the goal is a better understanding of the regional workforce profile. Availability, education levels, sectors that employ the most workers, and production capacity are all preliminary information that come prior to planting. “From this set of information, we build a puzzle,” Bruna explains.
Integrity in practice: the importance of approval and monitoring
Supplier selection involves a structured approval process, which includes the verification of their regulatory, legal, financial, and reputational standing to guarantee their alignment with Biomas’ principles and codes of ethics. The process is carried out alongside the Supply and Controllership and Compliance areas, and no contract is formalized without this prior integrity analysis.
According to Graciete Pettinari, “reputation and integrity are seen as essential indicators for the hiring decision.” She goes on to share that, “what we look for, in terms of integrity in the relationship, is that these people and businesses are aligned with Biomas’ purpose”.
The commitment to integrity doesn’t end with the hiring process. Biomas continuously monitors its most critical suppliers, accompanying their financial capacity, debts, and other governance risks. They maintain a system for labor documentation management and periodically review these parameters.
This governance risk management is essential for Biomas. Graciet explains that, for critical areas, the goal is to avoid depending on a sole supplier. This practice is often challenging, since necessary inputs and services often come from a small ecosystem of companies. These, though, do not always have the capacity to supply the required volumes.
Still, tracking goes beyond certificates and receipts. “It isn’t just about technical, legal, or financial capacity. Obviously this is essential, but integrity is too. For us, it’s fundamental to monitor the reputational situations of our main suppliers,” says Graciete.
Local development and social responsibility: lessons from Project Muçununga
To Biomas, supply chain is also an instrument of social responsibility. Our planning includes capacity-building and training of workers in regions where these opportunities are scarce, and we always prioritize local suppliers.
At Project Muçununga, which is restoring 1,200 hectares of Atlantic Forest in Southern Bahia (the initiative is developed in partnership with Carbon2Nature Brasil, in Veracel’s property areas), the support of a culture of respect and equity in the field was among the developed actions.
Including women workers in rural operations, for example, also involved steps taken to ensure their respectful integration to the field teams, as well as the creation of a reporting channel for men and women third party workers.
“We want engagement from the people involved in the operations, and we seek to understand them. We know that planting native species is delicate work. If handled appropriately, there is a higher chance that the seedling will survive,” says Graciete.
The connection between supply chain management and governance contributes to the integrity of our carbon credits
Though supply management is often seen as a support activity, at Biomas it is treated as a strategic pillar. As Graciete explains, “the collaboration between Supply Chain and Controllership and Compliance maintains operational integrity and contributes to the credibility of the projects and the carbon credits generated.”
By structuring the supply chain with technical rigor, integrity criteria, and social commitment, the company guarantees the quality of the carbon credits offered to the market and contributes to the maturation of the ecological restoration sector of Brazil.