Paper manufacturer Suzano SA is launching a new bond offering that will include a penalty clause in the event the Brazilian firm does not meet its greenhouse gas emission targets, the Financial Times reports. 

Aside from reducing the greenhouse gas emissions from paper production, the move also shines a light on the emissions from supply chain operations and logistics. As outlined in Panjiva's research of July 23, the shipping industry is slowly moving toward addressing greenhouse gas emissions after the completion of desulfurization rules in January.

Panjiva's data shows Brazilian exports linked to Suzano have proven resilient during COVID-19, which is perhaps unsurprising given the demand for paper products in the home and in medical or industrial cleaning settings. Exports climbed 7.0% year over year in the second quarter on the back of a 12.7% rise in pulp and a 46.3% surge in coated paper products. Growth accelerated in July with an 11.5% increase in total shipments led by a 33.1% jump in pulp exports.

Suzano's move may put pressure on its competitors to incorporate similar terms into future capital instrument issuance. After Suzano, the second-biggest pulp exporter from Brazil is Klabin SA, with shipments that increased by 10.3% in July after surging 53.9% in the second quarter. Third was Japan-Brazil Paper Development, part-owned by Itochu Corp., with exports that climbed 56.0% year over year in second quarter and jumped 118.8% in July.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.