Interview with Suzano’s GC Pablo Machado on Legal Challenges in Providing Oxygen Concentrators
Pablo Machado, the general counsel of Suzano spoke to Chambers Brazil researcher Ana Brandt about an initiative that brought together 12 different companies to provide more than 5,000 oxygen concentrators to help with the treatment of Covid patients in Brazil.
Stepping up in a moment of crisis
At the worst moment of the Covid pandemic in Brazil, when oxygen supplies were getting scarce and the number of infections and hospitalisations was surging, a group of companies joined hands and decided to help. One of the driving forces behind the initiative was Pablo Machado, the general counsel of Suzano, the Brazilian paper company.
How did the idea of combining efforts between the companies to donate oxygen concentrators in such a critical moment of the pandemic come about?
Since the start of the pandemic, Suzano was prepared to help. Because we have operations in China, we were able to plan our actions before the pandemic arrived in Brazil. We adopted a three-pillar approach: protection for our partners, employees and their family members; protection for our business operations; and protection for society. The donation of oxygen concentrators falls within the third one. We were in constant contact with health authorities and we saw the increasing deficit in the availability of medical oxygen. Therefore, we started by donating oxygen used in our industrial plants to health secretaries, but we did not think that was enough.
During the oxygen cylinders shortage crisis, we had the opportunity (due to Suzano’s worldwide connections) to import oxygen concentrators. These concentrators have the advantage of using the air around them, so they do not require a cylinder. Since importing these devices required a very large investment, we tried to get support from other companies. I take pride in saying that within four hours we got 11 other companies to join us in this effort. Together we were able to acquire 5,130 devices, which were donated to Brazil’s public healthcare system, SUS. All concentrators have already been imported and distributed and are operating.
The pandemic has posed unprecedented challenges spanning health, the economy and society. Do you think the responses have been innovative, at least when it comes to the participation of companies in such initiatives?
During the pandemic, we have seen companies importing intubation kits, ventilators, masks and hand sanitisers, helping the Brazilian government to have access to such necessary supplies. The pandemic has intensified the mobilisation of companies around the world to fight the health crisis. In Brazil, it was no different, and I am very optimistic that this will become a trend in the future. A great example is the “Unidos pela Vacina” group (United for the Vaccine), of which Suzano has been a part of since its foundation. It has multiple initiatives which aim to accelerate the vaccination of the Brazilian people, acting on many fronts, such as logistics, communication, awareness, supplies and support to local authorities to speed up its rollout. We notice how such a severe crisis has created a positive effect of mobilising the corporate world to support society in this moment.
ESG is such an important topic nowadays. Do you think it has helped increase involvement in social initiatives?
I am very happy to say that ESG is at the core of Suzano’s business strategy. With ESG at the core of our strategy, growth of the business continues to promote ESG. Our support to society did not just start with the pandemic. It comes from decades of developing initiatives and partnerships with communities and the government to promote education and equality, among other objectives. We have long-term ESG goals of removing 40 million tons of carbon from the atmosphere by 2030, replacing 10 million tons of fossil-originated products with renewable ones and removing 200,000 people from below the poverty line in our influence areas. Everyone in the company knows our objective very clearly, which is renewing life from trees. This is our purpose.
Did you face any legal challenges to implementing the donation initiatives? How did you overcome them?
There are always legal obstacles. Fortunately, our in-house legal team has been able to overcome all of them so far. It is interesting that in Brazil, even donations face bureaucracy. For example, the government could not legally take the oxygen donations without a previous public call involving a series of prerequisites. At the beginning of the pandemic, foreseeing that donations would be necessary, we worked together with the government on ways to speed up this process.
In the case of the oxygen concentrators, while we were contacting partners to join us in the initiative, we already had a team working with the government to assist with the public call. This way, we would be able to quickly implement the initiative as soon as the public call was published, together with the other companies that decided to be a part of it. All of that demanded specific expertise from our legal and tax teams which was not part of our business. Therefore, we needed to focus on public law, as well as on the tax aspects of importing equipment with incentives deriving from the pandemic and on how to implement their donation. These were skills and expertise that we had to develop throughout the pandemic.
There are concerns about levels of donations, which can change abruptly. Is there a project aiming at more permanent or frequent initiatives like these in the future?
I can only speak for Suzano, but our strategy has been to take action. In a moment of crisis, when there are so many uncertainties, the common reaction is to be paralysed. Here at Suzano, even with all the uncertainties, we decided to have an active role. Of course, we don’t have infinite resources, nor do we have the intention to take on the obligations of the government. We think about the impact of our initiatives and how much we can contribute. Therefore, we allocate our financial capacity according to the greatest positive impact that our initiatives can have. Once this has been assessed, we implement them as soon as possible. In the pandemic, we saw a rapid increase in the first wave and more stable numbers towards the end of last year. At the end of January 2021, we saw the numbers rising again. Foreseeing a second wave, as had happened in other countries where we operate, we brought once more onto the agenda what our initiatives to fight the second wave would be.