Sustainability Report Crop Year 2019/2020 Visit our website by scanning the QR Code on the right or by clicking https://www.biosev.com/en INTRODUCTION GRI 102-50, 102-53, 102-54 and 102-56
We are pleased to present our Sustainability This edition of the Biosev Sustainability Report How to navigate this Report Report for crop year 2019/2020, in which we reflects the results of a new materiality exercise report to stakeholders, the market and wider conducted in the crop year as part of our ongoing To navigate this report and access society about our activities, initiatives and transformation journey. supplementary information, click the links in performance in the crop year. the Table of Contents below and/or in the GRI The Report is available in Portuguese and English. Content Index. The Report also supports us in achieving You can download a digital copy from our website continuous progress towards an overarching goal at https://www.biosev.com/en/sustainability/ At the bottom of each page, click the icons to of sustainable development. sustainability-report/. navigate through the document. We report both financial and non-financial For any comments, questions or suggestions information in accordance with the Core about our Report, please write to: option of the Global Reporting Initiative (GRI) [email protected]. Previous Next Back to Back to Standards. We also reference and report on our page page contents previously contributions to the Sustainable Development viewed Goals (SDGs). page CONTENTS
4 Message from the CEO 6 Our COVID-19 response 9 The crop year at a glance 11 Who we are 18 Our commitment to sustainability 21 Material topics 26 Corporate governance 33 A business model aligned with the circular economy 35 Integrated field and mill operations 53 Human capital management 69 Health & safety 80 Social platform - community relations 86 Relations with customers and consumers 88 Supplier management 95 Other stakeholders 97 Environmental management 113 Economic and financial performance 122 Going forward 124 Appendixes 147 Credits MESSAGE FROM THE CEO GRI 102-14, 102-15, 102-49
Having completed my second year as CEO at To translate our performance in the year into Biosev in July 2020, I am very proud to be a numbers, in crop year 2019/2020 we recorded part of the Company as it undergoes such an a consolidated cane yield (consolidated TCH) important operational turnaround. of 82.9 t/ha, an improvement of 3.5% on the previous crop year. Our mill efficiencies Our performance in crop year 2019/2020 was have also improved. The ratio of Product TRS driven not only by the projects and initiatives we to Cane TRS increased by 1.3% compared implemented and the milestones we reached, to the previous season. In terms of product but also by a major cultural and operational performance, revenues from ethanol sales transformation spanning the entire business. increased significantly by 9.5% in the year. We made important progress in the period across These results primarily reflect our continuing operational improvements, cost reductions, focus on cane field and crop management strengthened agricultural and mill operations, improvements, operational improvements, cash flows and improved economic and financial reducing process losses, and efficient performance. A focus on better managing our commercial management. field and mill operations in an integrated manner has increased efficiencies and incrementally They also confirm that our commercial and improved our results. At the same time, we operational strategy of focusing on our Center- have remained firm in our commitment to South operations—for strategic, economic and ethics, safety, valuing our direct and third-party logistics reasons—has proven successful. In employees, and taking care of the communities 2019 we completed the sale of two assets we where we operate and the environment. had in the Northeast.
Biosev Sustainability Report 4 Crop Year 2019/2020 “Our performance in the crop year reflects a major cultural and operational transformation that we have undertaken”
The weight of ethanol in our product mix have effectively implemented circular economy the integrity and health of our employees and was 65.3%, with more TRS being allocated to principles by recycling, reusing and selling waste, communities, and ensure continuity of our the production of ethanol due to its higher using byproducts and renewable energy, and in operations. profitability relative to sugar in the period. Since many other ways. the outbreak of the pandemic, in the current Going forward, we will continue to capture crop year (2020/2021) the market has shifted To ensure we understand and are able to meet opportunities and develop improvements and sugar is now more attractive. In response, stakeholders’ expectations, in the 2019/2020 while incrementally evolving our financial we have now rebalanced the product mix, with crop year we conducted a new materiality and operational performance. And we remain our mills quickly reconfiguring their processes to assessment, we set up a Sustainability Committee committed to creating added value for our produce more sugar. and subcommittees to manage identified material products and shared value for our stakeholders. topics, and we established a set of strategic We are continuously looking to new technologies sustainability drivers. The world has changed, especially now as a result and innovation, and had more than 35 initiatives of the pandemic. But we are on the right course in our R&D pipeline in 2019/2020. Through our All our operations are now certified within the and ready for what lies ahead. Ventures Program (Programa Empreender), we RenovaBio program. We are proud to be not elicit new ideas from across the Company that only aligned with, but actively supporting, global help drive the development of the business. efforts to tackle climate change by reducing Juan José Blanchard greenhouse gas emissions. CEO Sustainable development remains at the center of our operations, initiatives and actions, with full Following the COVID-19 outbreak in Brazil, we support from myself and senior management. responded rapidly and took several steps to I am very much a believer in, and we at Biosev mitigate the impacts from the pandemic, protect
Biosev Sustainability Report 5 Crop Year 2019/2020 OUR COVID-19 RESPONSE GRI 102-15
This year the world has been shaken with the outbreak of COVID- A structured response 19—a diseases caused by a novel coronavirus—which the World Health We launched a swift response to the We hired an infectious disease expert Organization (WHO) declared a pandemic, beginning in March 2020. to assist us in planning and decision- pandemic on March 11. making, and in developing a set of To ensure effective decision-making, internal protocols based on guidelines At Biosev, we took several steps we created a dedicated committee to issued by public health authorities. to mitigate the impacts from the monitor the situation on a daily basis and pandemic, protect the integrity coordinate preventive and risk mitigation We created a COVID-19 dashboard with and health of our employees and actions for both our employees and our a set of indicators that are tracked on communities, and ensure continuity communities and other stakeholders. a daily basis, and set up a dedicated of our operations. We have closely The committee meets on a regular basis. channel for employees to ask questions, followed the recommendations issued We also set up local subcommittees to submit medical leave documentation by Brazilian government agencies, the standardize and streamline prevention and perform other actions. We spared Ministry of Health and the WHO. and contingency measures. no effort in implementing and enforcing preventive measures.
Biosev Sustainability Report 6 Crop Year 2019/2020 Preventive and educational measures Social distancing and For our employees, we implemented educational sheltering in place initiatives and intensive campaigns via our internal communications channels (email, TV, intranet, bulletin boards, posters and informational videos). For example, we developed a Biosev Quick • All at-risk employees (people over 60 or • Travel and external visits were either canceled Reference Guide about the pandemic, and we who have diabetes, hypertension or other or postponed, and visits to and from suppliers broadcast “Health Moments” on the PA systems conditions) were given leave. and customers are now limited. at our facilities, with instructions on self-care and • Some office employees were assigned to work • Employee shuttle buses are now operating at personal hygiene at the workplace. from home. 50% capacity. The pandemic has put our mental health to • We are gradually reorganizing the workplace • We issued guidelines on using light vehicles, the test, disrupting our daily lives, keeping us layouts at our offices. including passenger limits. apart from our loved ones, not to mention the • We closed all meeting rooms and discontinued • Cafeterias are now operating at 50% capacity fear of contracting the disease. To help them all in-person meetings, events and training and all meals are now served without cope with these challenges, we have provided sessions to avoid large gatherings indoors. employees being allowed to touch the serving our employees with psychological support Meetings are held either via videoconferencing utensils. in partnership with Alelo and Auster, and a or in open, well ventilated facilities with dedicated channel for health counseling. participants wearing masks. • Social distancing signage and floor markings In addition, our prevention and education were placed in common areas, such as initiatives included the following: cafeterias and change rooms.
Biosev Sustainability Report 7 Crop Year 2019/2020 Personal Screening, Community protective testing and equipment quarantining initiatives We reconfigured our production operations to process ethanol into a 70% alcohol solution. • We provided alcohol-based hand sanitizers • Employees were vaccinated against influenza Products have been donated to the National at workplaces and to our employees, as well on an earlier date. Healthcare System (SUS) in a joint initiative led as different colored masks, with employees • COVID-19 test kits were purchased and by the Brazilian Sugarcane Industry Association receiving instructions on how to wear them suspected cases have been tested. (UNICA). As of August 2020, the initiative effectively and safely and to replace them • We implemented temperature screening for had donated one million liters of 70% alcohol every three hours. direct and third-party employees. solution. • Employees with symptoms of the disease, Between July and August 2020, we also donated who have tested positive for COVID-19 or approximately 3,000 liters of 70% alcohol whose household members have symptoms solution bottled at CicloFarma, as well as 900 Preventive or have tested positive are instructed to self- kilograms (kg) of food, cleaning and personal disinfection quarantine for 14 days. hygiene products to communities surrounding • We monitored and provided health advice to our operations in the southeastern cities of employees, especially suspected or confirmed Barretos, Barrinha, Pitangueiras, Morro Agudo, cases of COVID-19. Guariba, Pontal and Lagoa da Prata. • Common areas are now continuously cleaned and disinfected. • In work areas, at each change of shift equipment and vehicles are disinfected with a 70% alcohol solution. • Shuttle buses are disinfected after each trip.
Biosev Sustainability Report 8 Crop Year 2019/2020 THE CROP
No fatalities involving direct employees for the second YEAR AT A consecutive crop year
GLANCE Injuries down by 46% and Injury Frequency Rate down 31%(2)
All operations certified within the Brazil’s decarbonization program (RenovaBio) 5.8% 1.010 reduction Mill Efficiency (Product in plant water intensity TRS to Cane TRS), an (m³ per metric ton of improvement of 1.3% on Conducted a new sugarcane processed) the previous crop year materiality exercise, 82.9 t/ha involving 300 internal and Consolidated cane yield external stakeholders (consolidated TCH), up 3.5% on the previous crop year Implemented a Sustainability Committee and 12 subcommittees— one for each material NOTES: topic—and established (1) ex-resale/HACC/IFRS16 a set of Strategic (2) For direct employees. Including fatalities, lost-time injuries (LTIs) and non- R$ 1.8 billion Sustainability Drivers lost-time injuries (NLTIs). Not including Adjusted EBITDA(1), up first-aid cases. 12.9%
Biosev Sustainability Report 9 Crop Year 2019/2020 Significant awards and recognition in the crop year Top Companies (Empresas Mais) Visão Agro Brasil Visão Agro Center-South Ranking – Estadão
In 2019 the 17th edition of the Visão Agro Brasil In 2019 AR Empreendimentos – Comunicação e The 5th edition of the ranking in 2019 recognized awards was held to recognize professionals, Eventos organized the 10th edition of the Visão corporations with the best financial results in organizations and companies for excellence Agro Center-South awards. The awards recognize each segment between 2015 and 2018. The and outstanding efforts in support of the sugar professionals, organizations and companies that ranking is developed by the São Paulo newspaper and ethanol industry, to celebrate production make a difference and demonstrate excellence in O Estado de S. Paulo in partnership with performance in the year, and to promote their activities and businesses in support of the Fundação Instituto de Administração (FIA) and sustainable practices. Center-South sugar and ethanol industry. Austin Rating, a risk rating agency. The award ceremony took place on December The award ceremony was held on July 23, 2019 in The survey for the ranking reviewed the financial 5 in Ribeirão Preto (SP). The award program Piracicaba (SP). statements of 2,800 companies and selected is organized by AR Empreendimentos – those with the highest Estadão/FIA Impact Comunicação e Eventos under the oversight of We received recognition in the following Coefficient, a metric that intersects information the Research Group for Industrial Management categories: on the size and financial performance of each in the Ethanol Industry (GEGIS) and the trade • Best Mills: Santa Elisa (Sertãozinho - SP). company within its industry. We ranked second in journal Revista Visão Agro. • Special Mention: Biosev – mechanized the “Sugar & Ethanol” segment. harvesting. We received recognition in the following categories: Best Managers: Carlos Daniel Berro and Ricardo Lopes; Sudamérica Best Mills: Santa Elisa (Sertãozinho - SP); and Special Mention: Biosev – Mechanized Harvesting.
Biosev Sustainability Report 10 Crop Year 2019/2020 WHO WE ARE
Biosev Sustainability Report 11 Crop Year 2019/2020 About Biosev GRI 102-1, 102-2, 102-4, 102-5, 102-6, 102-7
We are one of the largest sugar cane processors in the world and a leading player in Brazil’s sugar and ethanol industry, primarily producing sugar, ethanol and cogenerated electricity. Ownership information Our operations span the entire value chain, from sugarcane cultivation through We are a Brazilian company majority-owned harvesting and processing to storage, by French group Louis Dreyfus Company. logistics and marketing in Brazil and Biosev has been listed in the Novo Mercado globally. segment of B3 S.A. - Brasil, Bolsa, Balcão We have eight mills in Brazil and since 2013. approximately 315,000 hectares of Our ownership structure at 3/31/2020 was cropland. Our field and mill operations are as follows: integrated together and our cutting and harvesting operations are virtually 100% Number of mechanized. Shareholder Shares % Shares With robust export capabilities, our Hédera Investimentos e 810,576,708 79.43% products are sold in Brazil and in more Participações Ltda. than 30 other countries around the world. Sugar Holding B.V. 130,850,715 12.82% Biosev’s strategic positioning is focused on NL Participações Holdings 4 B.V. 8,919,302 0.88% delivering sustainable results. NL Participações Holdings 2 B.V. 8,919,302 0.88% In crop year 2019/2020 we had a Free Float 61,163,399 5.99% workforce of 9,778 employees. Total 1,020,429,426 100.00%
Biosev Sustainability Report 12 Crop Year 2019/2020 Our operations GRI 102-4 Products Biosev’s assets are located in the states of São Paulo, Mato Grosso do Sul and Minas Gerais, and GRI 102-2 include a sugar export terminal at the Port of Santos on São Paulo's coast. We also have Head Offices Our operations produce sugar and ethanol in São Paulo (SP) and an Administrative, Technology and Innovation Center in Sertãozinho (SP). and are energy self-sufficient.
Sugar • Coarse Minas • VHP (very high polarity) Gerais • Liquid Mato Grosso (MG) • Invert 2 do Sul (MS) 1 5 6 8 3 A Ethanol 7 São Paulo 4 • Anhydrous (SP) • Hydrous B • Neutral T
OFFICES RIBEIRÃO PRETO SOUTH MATO GROSSO DO SUL A. Administrative, Technology and CLUSTER CLUSTER Electricity Innovation Center 3. Santa Elisa Mill 7. Rio Brilhante Mill All our operations (Sertãozinho - SP) (Sertãozinho - SP) (Rio Brilhante - MS) cogenerate their own B. Head Offices 4. Leme Mill 8. Passa Tempo Mill electricity by burning (São Paulo - SP) (Leme - SP) (Rio Brilhante - MS) sugarcane bagasse; seven mills export surplus 5. MB Mill TEAG RIBEIRÃO PRETO NORTH CLUSTER (Morro Agudo - SP) electricity to the grid for 1. Continental Mill 6. Vale do Rosário Mill Guarujá Sugar Export Terminal sale. (Colômbia - SP) (Morro Agudo - SP) (TEAG) 2. Lagoa da Prata Mill (Santos - SP) (Lagoa da Prata - MG)
Biosev Sustainability Report 13 Crop Year 2019/2020 Strategy GRI 102-16 We are currently undergoing a major transformation in which we are reorganizing ourselves to achieve new levels of strategic, financial, operational and organizational performance. Guiding principles We recently redesigned:
Our VISION: A safe, efficient and profitable enterprise that values people and simplicity and contributes to the development of communities where we operate.
Our VALUES: The Biosev Way means having ethical conduct, being mindful of safety, building trust, having a sense of ownership and demonstrating adaptability. Biosev’s values express who we are.
Biosev Sustainability Report 14 Crop Year 2019/2020 Operational PRISMA program Competitiveness Program GRI 403-1, 403-8 GRI 102-15 Integral to our strategy is Biosev’s Integrated PRISMA Program – crop year 2019/2020 Quality, Health, Safety & Environment Program Total Throughout the crop year we continued our (PRISMA, in the Portuguese acronym), a Disclosure Percent number Operational Competitiveness Program,a management system spanning all our operations Company-wide initiative that guides our strategic that sets out guidelines and requirements on Employees who direction to drive efficiency and profitability in our behaviors and actions, at Biosev and at our are covered by the 9,778 100% the context of a major transformation. suppliers. program(1) Employees who are To date more than 500 opportunities have been The aim of the Program is to achieve high identified within the program. A total of 150 covered by such a standards of excellence in quality, health, safety program that has 9,778 100% initiatives were submitted in phase one, involving and the environment in all our activities. The process optimizations and improvements and been internally system is consistent with industry best practice audited(2) performance enhancements. and international standards, including ISO Employees who are We recognize that a transformation such as the 45001:2018 PT (Occupational health and safety management systems) and ISO 14001:2015 covered by such one ongoing at Biosev requires wide senior a program that leadership engagement. (Environmental management systems), going 1,778 18% beyond minimum legal requirements. has been audited or certified by an The PRISMA Program covers 100% of direct and external party (3) third-party employees, as shown in the table NOTES: opposite. (1) Third-party employees are covered by our management system but were not included in the data compiled for this For further information, visit: https://www. disclosure. (2) Historically, the PRISMA program has been audited biosev.com/en/sustainability/hse-management- by the corporate team on a sampling basis across all our system/ field and mill operations, since crop year 2015/2016. On an exceptional basis, due to the COVID-19 pandemic, in 2019/2020 the audits that were scheduled to occur in March 2020 in our Lagoa da Prata, Rio Brilhante and Passa Tempo operations had to be postponed. However, these operations had conducted pre-audits internally at a local level. (3) In terms of external audits, our HSE management system has been assessed as part of the BONSUCRO certification process at Santa Elisa. Other operations have not undergone BONSUCRO certification.
Biosev Sustainability Report 15 Crop Year 2019/2020 A new HSE culture HSE Roadmap GRI 102-15 As a way to build and strengthen a culture of More than simply setting goals and targets, the In crop year 2019/2020 we implemented a range active and mutual stewardship among our goal of the project is to enhance our approach to of initiatives to bolster our health, safety and employees, we launched an HSE Roadmap to HSE in our day-to-day activities, and to strengthen environment (HSE) culture at Biosev, including educate, support and inspire people to engage our HSE culture so that our workplaces become the following: around health, safety and the environment. increasingly safe, healthy and environmentally As part of the project, the corporate HSE team balanced. toured our operations to introduce local teams to our new approach to HSE, as an initial step. Five pillars guide our HSE activities and behaviors Structuring and increasing as part of the project: CAPEX spending on HSE
In March 2019 we carried out a general Our o l ta ar o o l assessment of risks and opportunities to identify Purpose CAPEX spending priorities for Health, Safety and the Environment. Our du at su ort a d s r o l The assessment used the Hazard Rating Number Mission (HRN) method, which is widely used around Our the world to quantify and rate the level of risk. Vision A cultural transformation requires l ad a l tra a d The assessment has enabled us to consistently communications. prioritize HSE projects, which will now be approved on an annual basis by the Executive H S E Health, Safety and n ironment a do t s r t Board and Strategy Committee as part of a multi- Our annual plan. Belief Our In crop year 2019/2020 we earmarked R$ 13.3 Principles Focus, discipline, continuous learning, self-motivation and million in CAPEX for HSE. r s l
Our Driver
Biosev Sustainability Report 16 Crop Year 2019/2020 The importance of an HSE culture – variable compensation linked to HSE performance
As another important initiative, we introduced variable compensation linked to HSE performance for both our leadership team and operational employees. For the leadership team we structured and implemented an HSE scorecard linked to our Profit-Sharing Program. We use the scorecard tool to set targets for different preventive and reactive HSE KPIs. We then assess each site’s and each department’s (cane field operations, mill operations and support) performance against each of the targets; the more targets each site and department meets, the higher its score. Depending on their final performance score, our corporate and site leadership teams receive different tiers of variable compensation. For operations teams, we have introduced variable compensation bonuses for zero injuries.
Biosev Sustainability Report 17 Crop Year 2019/2020 OUR COMMITMENT TO SUSTAINABILITY
Biosev Sustainability Report 18 Crop Year 2019/2020 Commitment to sustainability GRI 102-12, 102-15, 102-16, 102-18
Sustainability is ingrained in our business, During these meetings, the Committee In addition to these internal efforts, Biosev projects, initiatives, practices and mindsets. collaboratively discusses and approves Company- has also participated in external sustainability Our commitment to sustainable development is wide strategies and projects to strengthen events and initiatives to identify and predict central to everything we do. sustainability at Biosev. trends, including the SDG Talks at the Brazilian Association of Sustainability Professionals As part of our transformation journey, we We have also set up 12 subcommittees for each (ABRAPS), the ABRASCA (Brazilian Association have redesigned our business strategy on of our 12 material topics (as described in the of Listed Companies) sustainability reporting sustainability. chapter “Material topics” of this Report), for awards, and events organized by the Global more targeted action. During crop year 2019/2020 we conducted a new Compact. As well, we support the global agenda materiality assessment in which we identified These subcommittees’ duties are to conduct on climate action through our participation in 12 priority topics needing to be addressed and benchmarking analyses and assessments of the Brazilian government’s RenovaBio Program monitored across all levels of the Company (see opportunities and challenges. Subcommittee and by annually inventorying our greenhouse the chapter “Material topics” in this Report). As activities are translated into proposed goals gas (GHG) emissions. part of the assessment, we mapped the identified and projects which are then submitted to and material topics to the United Nations (UN) approved by the Sustainability Committee. Sustainable Development Goals (SDGs). Subcommittee members form a group of The outcomes from the assessment inform our “sustainability ambassadors” that is diverse both short-, medium- and long-term strategies. A in its profile and in the key departments of the Sustainability Committee has been set up as part Company it represents. of this broad-reaching process. Each subcommittee has a “sponsor” at the The Sustainability Committee meets on a senior leadership level who coordinates the monthly basis with the involvement of our subcommittee’s activities and ensures alignment As entire leadership team and key departments, across the operational, tactical and strategic including: Communications & Corporate Social levels. part of our Responsibility; Health, Safety & Environment; transformation journey, Sustainability; Financial; Planning; and Investor Relations. we have redesigned our business strategy on sustainability.
Biosev Sustainability Report 19 Crop Year 2019/2020 Strategic drivers for a sustainable future In 2020 we established a set of Strategic The six drivers are illustrated below. Each driver Sustainability Drivers consistent with Biosev’s goal is further ramified into sub-drivers that guide our of steering our initiatives, projects and practices sustainable development strategy. toward a sustainable future. Biosev’s Sustainability Drivers are aligned with This was informed by discussions and our most our Vision and Values. recent materiality assessment (see the chapter “Material topics” of this report) to further strengthen our sustainability governance at Biosev.
Sustainability Drivers
Social Responsibility Human Capital VALUES SOCIAL B L A R S P A A E H
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Biosev Sustainability Report 20 Crop Year 2019/2020 MATERIAL TOPICS
Biosev Sustainability Report 21 Crop Year 2019/2020 Materiality Assessment structure assessment The assessment was structured into six steps: GRI 102-40, 102-41, 102-42, 102-43, 102-44 and 102-46 1 Mapping material topics
At Biosev we periodically conduct materiality assessments to identify our material topics and ensure we create shared value for and increasingly positive 2 Prioritization of stakeholders impacts on our stakeholders. The aim of the assessment is to identify material topics to inform our institutional, economic, social and environmental 3 Interviews strategies and business plans. Our most recent materiality assessment was conducted from August 2019 to March 2020 with support from Combustech—a firm specializing in 4 Supplementary research sustainability—and included a survey involving more than 300 internal and external respondents. 5 Prioritization
The complete assessment is available at: https://www.biosev.com/en/ sustainability/materiality-review/ 6 Validation
Biosev Sustainability Report 22 Crop Year 2019/2020 Stakeholder engagement GRI 102-40, 102-42, 102-43, 102-44 We recognize the importance of engaging and maintaining positive relations with stakeholders based on mutual participation and on building trust. In our most recent materiality exercise, we identified 14 stakeholder groups based on the guidelines outlined in AA1000SES:
The survey also identified key concerns raised by stakeholder groups. For further information, read Employees Communities the complete materiality report at: https://www. biosev.com/en/sustainability/materiality-review/ As part of the stakeholder engagement process, in addition to the recent materiality exercise, we Regulatory Shareholders Media/press also developed: agencies • A Participatory Social Assessment in crop year 2015/2016, which revealed no existing negative impacts and showed that surrounding Trade union communities are keen to engage with the Suppliers entities Think tanks Company, obtain social investment for neighboring cities and learn more about our operations. • A Strategic Engagement Plan in crop year 2016/2017, outlining initiatives that also Lenders Governments Non-government organizations inform our related strategies and direction. Further information on these initiatives can be found at: https://www.biosev.com/en/ Trade Universities and sustainability/social-responsibility/relationship/ Customers associations research institutions
Biosev Sustainability Report 23 Crop Year 2019/2020 S 8 8 The SDGs creating opportunities S 9 12 Material topics related to our products and S 8 markets are: 1 and linkage to S Risk nnovation mana R gement the SDGs Economic Financial Ethics anagement ntegrity GRI 102-47 S 0 1 5 1 The primary outcome from our materiality iversity itigation and S Opportunities assessment was a set of “material topics” and inclusion adaptation to The SDGs which we can positively climatic changes that are strategic for sustainability at influence through our business,
Local development ater S Biosev.
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creating value for society, are:
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A short list of 24 material topics was 1
2
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assessed, and 12 were prioritized (these S topics are illustrated in the wheel diagram Human capital Fertigation management opposite). Social envi Health and ronmental S safety risks of 2 As part of the materiality assessment, suppliers 1 5 8 we mapped the identified material topics 10 S to the United Nations (UN) Sustainable 5 Development Goals (SDGs). S 1 12 1 8 S 8
Environmental Economic Social
Biosev Sustainability Report 24 Crop Year 2019/2020
Perceived importance of environmental, economic and social impacts on Biosev Reporting scope and boundaries of material topics GRI 102-46 and 103-1 The reporting scope and boundaries of each topic in our value chain are described in the table below: Boundary Boundary outside Biosev Material Topics Details GRI Disclosures within Biosev Suppliers Customers Society 1- Employee training, health and Safeguarding the health and safety of direct and third- 403-1; 403-2; 403-3; 403-4; 403-5; X X X safety party employees. 403-6; 403-7; 403-8; 403-9; 403-10 2- Economic and financial management for sustainable Managing economic performance. X X X X 201-1 business Adequately managing the use of vinasse for irrigation and 3- Fertigation X X X fertilization applications. Preventing social and environmental risks in the supply 204-1; 308-1; 308-2; 406-1; 407-1; 4- Supply chain social and chain, including: illegal deforestation, arson, slave labor X X X X 408-1; 409-1; 410-1; 411-1; 412-1; environmental risk management and child labor. 412-2; 412-3; 414-1; 414-2 Managing environmental, economic, social and 5- Risk management X X X X 307-1; 419-1 compliance risks. Employee training, capacity building, recognition and 202-1; 202-2; 401-1; 401-2; 401-3; 6- Human capital management X X X retention. 404-1; 404-2; 404-3; 406-1; 412-2 102-16; 102-17; 205-1; 205-2; Doing business and interacting with stakeholders with 7- Business ethics and integrity X X X X 205-3; 206-1; 307-1; 406-1; 412-2; ethics and integrity. 415-1; 419-1 8- Social and economic Cultivating healthy stakeholder relationships, striving impacts: local development and to meet their expectations and supporting local X X X X 203-2; 204-1; 413-1; 413-2 stakeholder engagement development. Adequately managing water use and quality and effluent 9- Water stewardship X X X X 303-1; 303-2; 303-3; 303-4; 303-5 discharges. Investing in new technologies and practices that support 10- Innovation, research and the sustainability of the business in a constantly changing X X X X development environment. Diversity (gender, ethnicity, LGBTQI+, etc.) and inclusion of 11- Diversity and inclusion X X 405-1; 405-2 people with disabilities (PwDs). Adapting the business to climate change and supporting 12- Mitigating and adapting to 201-2; 305-1; 305-2; 305-3; 305-4; reductions in greenhouse gas emissions by producing X X X X climate change clean fuels and electricity. 305-5
Biosev Sustainability Report 25 Crop Year 2019/2020 CORPORATE GOVERNANCE
Biosev Sustainability Report 26 Crop Year 2019/2020 Governance Governance Board of Executive practices structure Officers The Board of Executive Officers is responsible GRI 102-16 GRI 102-18 for the overall management of the business. Our statutory Executive Board currently consists We seek to implement best governance practice Our governance structure comprises the of three members, who were appointed on in the day-to-day management of the business. following: 9/17/2020: Our conduct is guided by ethics and integrity and we maintain a continuing focus on risk Board of Directors Juan José Blanchard CEO management, compliance, internal controls, The Board of Directors is a joint decision- information security and anti-corruption. making body responsible for establishing Leonardo Oliveira D’Elia We observe the standards issued by the Brazilian general business policies and guidelines. It is CFO and Investor Relations Officer Securities Commission (CVM) and guidelines laid also responsible for setting long-term strategy, overseeing our performance, and supervising our Ricardo Lopes down by the Brazilian Institute for Corporate Chief Operations Officer Governance (IBGC). Biosev is listed on “Novo executives. Mercado”, an enhanced corporate governance For the detailed composition of the Board listing segment on the São Paulo stock exchange, of Directors, visit: https://ri.biosev.com/en/ Fiscal Council B3 (Brasil, Bolsa, Balcão). We are therefore also corporate-governance/management/ The Fiscal Council is an independent, non- subject to the “Novo Mercado” listing rules permanent management and external audit applicable to listed companies, including more Committees body which may be instituted by shareholders in stringent corporate governance requirements. any given fiscal year. The Audit Board’s primary Biosev has three dedicated, non-statutory duties include overseeing our management’s Committees that advise the Board of Directors: performance of its duties, reviewing our financial • Strategy Committee statements, and reporting its findings to our • Audit Committee shareholders. Biosev currently has no standing Audit Board. • Human Resources Committee Supplementary information and updates to this report are available at: https://ri.biosev.com/en/.
Biosev Sustainability Report 27 Crop Year 2019/2020 Ethics and integrity GRI 102-15, 102-16, 102-17, 103-2, 406-1, 412-1
We work to strengthen integrity and promote procedures, implementing and enforcing anti- Resources functions, is responsible for transparency in our day-to-day interactions and bribery practices, ensuring compliance with investigating, discussing, monitoring and business dealings, in order to ensure that our legal requirements and internal procedures, resolving all reported concerns involving ethics business activities and relationships are ethical, investigating any reported misconduct matters. Members of the Ethics Committee meet respectful, productive and enduring. or noncompliance, and supporting the on a monthly basis to review cases submitted by implementation of best practices. the Internal Audit function. The Biosev Code of Conduct, which was further revised in crop year 2019/2020, serves as a Biosev also has an Internal Audit, Security Periodic work meetings are held with individual practical guide on the personal and professional and Internal Controls function responsible for functions and departments to review, establish conduct required at Biosev. It outlines principles observing, inquiring about and ensuring that and adjust processes and rules, in order to ensure of conduct in the work environment and in procedures are being properly implemented. It we uphold the highest standards of governance business dealings, and expresses and emphasizes creates and monitors implementation of audit and ethical conduct. our commitment to good business practices, to plans and programs and internal controls, and high standards of ethics, and against corruption provides independent support to management in any form. The Biosev Code of Conduct applies in mitigating risks and ensuring our processes are to all employees in their day-to-day decisions effective and compliant with applicable policies, and actions, as well as to customers, suppliers, procedures, laws and regulations. contractors, business partners and other stakeholders in their interactions with Biosev. Biosev’s Ethics Committee, with representatives from the Internal Audit, Legal and Human We have a Compliance Department which is responsible for ensuring conformity to our Code of Conduct, developing anti-money laundering
Biosev Sustainability Report 28 Crop Year 2019/2020 Conflicts of interest Security Internal controls Where potential conflicts of interest arise, our Biosev is committed to providing a secure Our Internal Controls function is tasked with Related Party Transactions Policy and Procedure environment for direct and third-party employees improving the flow of operational information, establish rules and guidance applicable to all at our operations and in the regions where we developing and continually monitoring our risk members of the Board of Directors, executive operate. This is supported by a security team of matrix, and supporting the development and officers and other employees. These include approximately 180 people. revision of internal procedures. rules and guidelines on transactions involving the Company, our subsidiaries and related parties, As part of this commitment, we: We regularly review our internal controls and and procedures on enforcing the policy. • implement peaceful solutions to protect the procedures to map out our processes and identify physical integrity of our direct employees, key risks. third-party employees and communities, We have also dedicated greater effort to Information security to safeguard our property, information monitoring and evaluating the effectiveness of and resources, and to keep our production internal controls addressing identified key risks. In 2011 we introduced an Information Security processes running. Policy, developed jointly by the Information • take preventive and life-protecting measures Technology and Internal Controls departments, using lawful security methods and tools. with guidelines on handling information created, • maintain access control for people and stored, processed and transmitted in our IT vehicles; monitor inbound and outbound flows environment or on our premises. The policy of goods and products in our operations; and was updated and relaunched in 2018 to reflect restrict access to previously identified strategic the requirements of the Brazilian General Data areas. Protection Act (LGPD). Our security rules are outlined in internal The Policy establishes a continuous process procedures and are in line with internal policies for safeguarding the availability, integrity and and the Biosev Code of Conduct. confidentiality of internal information.
Biosev Sustainability Report 29 Crop Year 2019/2020 Whistleblowing hotline
We have a dedicated, independent and We ensure the identity of the whistleblower None of the reports received in crop year impartial whistleblowing hotline, called “Fale is kept anonymous if they so request, and we 2019/2020 involved discrimination. Even so, we com a Biosev”, operating 24 hours a day, seven will not tolerate any form of retaliation against have intensified our internal communications and days a week. Employees as well as external any person reporting a violation of our Code of awareness initiatives addressing discrimination. stakeholders—including customers, community Conduct in good faith. representatives, partners, suppliers and any other stakeholders—can use the hotline to submit Reports to the whistleblowing channel are 0800-940-9199 suggestions, complaints, questions or reports. reviewed and directed to the appropriate The whistleblowing number is widely advertised, department. All reported information is kept both internally and externally. absolutely confidential. [email protected]
Number of complaints and grievances Crop Year Crop Year Crop Year Environmental Human Rights 2017/2018 2018/2019 2019/2020 Labor Practices Society
Total number of complaints and grievances by type 9 182 96 26 10 268 13 20 8 290 15 15 Total number of complaints and grievances 313 311 328 Processed during the reporting period 8 165 90 24 10 268 13 20 8 290 15 15 Addressed during the reporting period 8 165 90 24 10 233 11 20 1 244 13 15 % of complaints and grievances received during the crop year that were resolved during the reporting period 92% 88% 83% Total number of grievances filed prior to the reporting period that 5 9 12 6 1 17 6 2 0 35 2 0 were resolved during the reporting period (1) Total number of complaints and grievances filed before the reporting period and not yet resolved 0 0 0 0 0 0 0 0 0 0 0 0 Total number of complaints and grievances filed in the reporting period and not yet resolved 1 17 6 2 0 35 2 0 7 46 2 0
(1) All outstanding cases from crop year 2018/2019 were processed and addressed in crop year 2019/2020.
Biosev Sustainability Report 30 Crop Year 2019/2020 Risk management GRI 102-11, 102-15, 102-17, 205-1, 205-2, 205-3 Approach to risk management
Risk management is crucial for our business and futures contracts and other derivatives to hedge for its sustainability. We are exposed to a number against fluctuation in foreign exchange and of risks that are inherent to our operations. Those interest rates and sugar and ethanol prices, we consider to be most critical aremarket, credit, including derivatives transactions in Brazilian and liquidity, capital and operation risks. international markets. monitor and ensure compliance with our loan covenants so as not to jeopardize the future Our primary aim in managing market risks is Over-the-counter instruments are traded via availability of credit on favorable terms. to hedge the Company against fluctuation in local and international banks that are deemed sugar, ethanol and electricity prices and foreign to pose a low level of risk. Stock market trades Our capital structure is managed in such a exchange and interest rates. These risks are are primarily made on derivatives, options and way as to safeguard our ability to ensure the managed using instruments available in the futures exchanges in New York (NYSE: ICE), sustainability of the business and provide financial market, including: interest rate swaps Chicago (NYSE: CME) and Brazil (B3 – Brasil, shareholder returns. and futures; currency options; and commodity Bolsa, Balcão). For operating risks—including the risk of options. Instruments are traded under a Financial Policy operations or process disruptions and accidents Another way we manage market risks is by and a Risk Management Policy approved by the affecting people’s health, safety and the enhancing the operational flexibility needed Board of Directors in respectively September environment—we have a risk map in place and to target our production to the most profitable 2013 and February 2020. Biosev engages in no implement continual improvements in mitigating markets (sugar/ethanol mix strategy), helping to form of leveraged transactions or trading in exotic those risks. Finally, our activities at Biosev are mitigate these risks. derivatives. guided by the Precautionary Principle. As part of our operational and financial We maintain levels of liquidity considered procedures for managing market and liquidity adequate for our operations and use multiple risks, we use hedging mechanisms including sources of funding for our activities. We also
Biosev Sustainability Report 31 Crop Year 2019/2020 Risk factors Risk governance In our day-to-day operations, different risk factors can potentially have At Biosev, risks are identified and managed via an financial impacts on the Company. These factors are continuously monitored integrated organizational structure spanning the by our Risk Management department, and are described in our Reference different management bodies and departments Form (https://ri.biosev.com/en/). within the Company, with support from the Internal Audit and Risk Management functions. Assessing corruption risk Biosev’s risk management policies, practices and instruments are supervised by the Executive Board Assessments of corruption risk are conducted on request from the and Strategy Committee (a body advising the Board relevant department or when purchasing and/or selling products and/or of Directors). materials to or from foreign markets and/or politically exposed persons (PEPs). All our contracts contain anti-corruption clauses and where those Our Risk Management function reports to the Chief clauses are breached by the counterparty, the contract is immediately Financial Officer and is responsible for calculating, terminated and any contractual penalties are applied. measuring, analyzing and monitoring our exposure to risks. It issues daily reports that inform any Our Code of Conduct, which is widely disseminated, contains anti- required corrective action. It is also responsible for corruption requirements that are mandatory for all employees. We also monitoring compliance with our Financial & Risk have internal policies on donations and sponsorship, which prohibit any Management Policies. giving or offering of anything of value to a counterparty for the purpose of obtaining an undue advantage. In terms of legal risks, our Legal department assesses potential impacts to ensure we remain at We plan in the future to develop anti-corruption training programs, all times compliant with applicable regulations in primarily for individuals identified as having increased exposure in the short, medium and long term. connection with their activities and duties. In crop year 2019/2020 there were no confirmed cases of corruption directly involving Biosev employees, suppliers and/or contractors.
Biosev Sustainability Report 32 Crop Year 2019/2020 A BUSINESS MODEL ALIGNED WITH THE CIRCULAR ECONOMY
Biosev Sustainability Report 33 Crop Year 2019/2020 Our business model enhances value creation and integration across our field and mill operations, supporting our overarching goal of sustainable development. 1. Recycling by-products back into the production process, using biological pest control and implementing fertigation have helped to reduce water and chemical usage in sugarcane cultivation. Sugarcane trash is left on cane fields to protect and improve the soil.
2. Our waste recycling rate is notably high (84.4% in crop year 2019/2020).
3. We have increased the rate of water reuse in our mill operations by using closed circuits and through conscientious consumption awareness campaigns.
4. Filter cake, a byproduct from treating sugarcane juice, is mixed with ash and soot from the co-generation process for use in cane-field fertilization.
5. We have maximized the reuse of plant water in sugarcane fields, such as using vinasse (either pure or mixed with treated wastewater) for fertigation.
6. Bagasse from sugarcane milling is used in cogeneration boilers to produce renewable electricity (bioelectricity).
7. Generated bioelectricity is fed back to the production process, and the surplus is sold. As a renewable energy source, bioelectricity supports the commitments Brazil undertook under the Paris Agreement in the 2015.
8. The use of ethanol as an automotive fuel helps to mitigate climate change and air pollution in major urban centers.
9. We create shared value. Our business supports the social and economic development of the communities where we operate by generating employment and income opportunities and tax revenues. In addition, the surplus electricity we produce is sold to the National Grid and ultimately supplied to our communities.
Key Products and raw materials By-products and waste
Biosev Sustainability Report 34 Crop Year 2019/2020 INTEGRATED FIELD AND MILL OPERATIONS
Biosev Sustainability Report 35 Crop Year 2019/2020 Field-mill integration In our operations, Biosev’s management approach—which is continuously improved—is centralized yet responsive Agricultural Intelligence Center to local needs. This ensures that each site implements Agricultural Intelligence Centers (CIAs) remotely monitor our operations. standardized best practices, but can also leverage regional strengths. The control room uses different communication and operational technologies, including Business Intelligence (BI) tools, to track and Our field and mill operations are closely integrated evaluate productivity rates in real time. These centers provide a high-level in terms of their operating dynamics, practices and view of our operations, supporting leadership teams in making strategic technologies. They are mutually complementary. Biosev decisions quickly, preventing potential process errors and correcting has a vertically integrated value chain that spans from identified faults on a timely basis. plantation to marketing. This integration is all the more essential in the operational turnaround we are currently The center operates 24 hours a day during the harvest season, and pursuing as part of a strategic transformation. enables real-time monitoring of strategic items such as: • Cane field productivity (harvest potential, weather window utilization, Supporting this integration are our Agricultural Intelligence impurities, production potential). Center (CIA) and Industrial Operations Centers (COI), which centrally receive and aggregate information in an efficient • Inclement weather conditions which could affect the harvest and manner, supporting real-time management and sound feedstock supply to the mills. operational decision-making. More information about these • Satellite-monitored fire outbreaks. centers is provided further below. Regular analytics reports inform better decision-making by corporate and In terms of governance, our Operations heads (officers) site managers. in each cluster play an essential role in integration. This The end result from this is safer, more efficient, more profitable and includes assessing needs and issues arising in field and mill better-managed field and mill operations. operations and coordinating and prioritizing action plans and decision-making without casuing disruptions among different areas.
Biosev Sustainability Report 36 Crop Year 2019/2020 Innovation We continuously explore opportunities for innovation in our day-to-day operations. Our Administrative, Technology and Innovation Center (CTI) implements initiatives and practices focused on innovation and technological development. The Center also hosts workshops and activities to develop our employees and drive innovation. The CTI is located at the Santa Elisa projects to deliver process improvements. site (Sertãozinho - SP). Ideas developed by our operations teams are In addition to the CTI, we have partnership and entered in a proprietary system and presented collaboration agreements in place with research to internal working groups, who review the institutes and universities that give us access to proposed projects for technical and financial emerging technologies and research, such as new feasibility. Initiatives deemed to be feasible sugarcane varieties, innovative cropping systems, are then assessed at the corporate level and submitted to the Executive Board for approval. In new process automation solutions, and other Another remote monitoring technology we crop year 2019/2020 we conducted a total of 35 developments. use is Digital Sugarcane Certificates (CDC), an innovation, research and development projects, app that uses data from onboard computers— To equip our employees to generate new ideas, in an aggregate investment of R$ 17.7 million. we encourage them to develop their knowledge such as onboard geographic intelligence data, and provide them with technical training— One example of our innovation initiatives is harvest times and individual machine codes—to including refresher training courses, workshops Biosev Forms, an app and online platform integrate communications between trucks, infield with consultants, and sharing experience across hosting electronic forms and checklists. The transporters and harvesters. This enhances business units. We also give employees full scope app allows users to submit photos and texts transparency, traceability, reliability, security and to suggest new ideas. when completing forms, in addition to providing efficiency in our harvesting and field-to-mill haul other functionality. The platform allows for operations, eliminating manual data entry. Innovative initiatives are also supported as part of fast information sharing across our agricultural In this chapter, we describe a number of other our Ventures Program (Programa Empreender), operations, eight mills and head office, and is innovation and modernization initiatives and which fosters new ideas across all levels of also environmentally friendly as a fully paperless projects. the organization, that are then translated into process.
Biosev Sustainability Report 37 Crop Year 2019/2020 Field and mill performance indicators GRI 102-7, 201-2, 202-1
Biosev’s field and mill performance indicators improved in crop year 2019/2020, reflecting our continuing focus on efficiency, excellence and enhancing operational productivity and profitability. Some of the key figures in the crop year include the following: • Crush volumes were approximately 27 million metric tons, on a level with the previous crop year. • Cane field yield, as measured by consolidated TCH, was 82.9 t/ha, up 3.5% on the previous crop year. This performance was despite the negative impact from heavy frost damage that occurred in the Mato Grosso do Sul cluster in July 2019. • Mill yields (Product TRS to Cane TRS) improved by 1.3% to 1.010 in crop year 2019/2020. This denotes increased efficiency in processing sugarcane into sugar and ethanol, and reduced process losses.
Biosev Sustainability Report 38 Crop Year 2019/2020 Efficiency and productivity Electricity Crop Year Crop Year Our mills cogenerate their own electricity and all are energy self- Efficiency and Productivity(1) Change 2018/2019 2019/2020 sufficient. Seven of our eight mills produce surplus electricity that is exported to the grid and available for sale. Crush (‘000 t) 27,068 27,044 -0.1% Own 17,656 16,781 -5.0% Electricity exports were 3.7% lower in crop year 2019/2020 than in Third party-sourced 9,412 10,264 9.0% the previous crop year, at 811.7 GWh. TCH (t/ha) 80.2 82.9 3.5% Cogeneration efficiency, as measured in power output per metric ton TRS - Sugarcane (kg/t) 130.7 128.0 -2.1% of processed sugar cane, was 33.0 kW per metric ton in the crop year, TSH (t/ha)(2) 10.5 10.6 1.3% down 3.3% on the previous crop year. Mill Yield 0.996 1.010 1.3% Crop Year Crop Year (Product TRS to Cane TRS) Production(1) Change 2018/2019 2019/2020 Total Cogeneration (GWh) 842.9 811.7 -3.7% Sugar and ethanol production Cogeneration for Sale (GWh) 835.3 811.7 -2.8% Crop Year Crop Year Production(1) Change 2018/2019 2019/2020 NOTES: (1) 2018/2019: ex-Northeast Cluster, for the purpose of comparison. Percent Sugar (%) 34.7% 34.7% 0 p.p. (2) TSH: Calculated by multiplying TCH by Cane TRS Percent Ethanol (%) 65.3% 65.3% 0 p.p. TCH = Metric Tons of Cane per Hectare TRS – Total Recoverable Sugar Percent Anhydrous (%) 21.4% 28.9% 7.5 p.p. TSH – Metric Tons of Sugar per Hectare 3 (3) Uses conversion factors for sugar and ethanol as used in São Paulo State and Production (‘000 t Product TRS) 3,522 3,500 -0.6% published in the São Paulo State Association of Sugarcane, Sugar and Ethanol Sugar (‘000 t) 1,170 1,163 -0.6% Producers (CONSECANA) Manual. Ethanol (‘000 m3) 1,359 1,346 -0.9%
The share of ethanol in the product mix was 65.3%, on a level with the previous crop year despite the negative impact from heavy frost damage that occurred in the Mato Grosso do Sul cluster, reflecting a higher allocation of TRS to ethanol production due to higher profitability for ethanol versus sugar. The share of anhydrous ethanol (anhydrous ethanol out of total ethanol produced) was 28.9%, increasing 7.5 p.p. from the previous crop year as part of our strategy of focusing on higher value-added products.
Biosev Sustainability Report 39 Crop Year 2019/2020 Cane field management GRI 102-15 Soil stewardship
At Biosev we are continuously focused on In all our cane fields, vinasse application is improving land preparation methods. We governed by a Vinasse Application Plan based take a conservationist approach that includes on state environmental regulations. reduced tillage to minimize soil disturbance. TCH 100 Program A second byproduct we use is filter cake, We also recognize the importance of soil which is primarily applied as a fertilizer in In crop year 2019/2020 we health and work to prevent contamination planting furrows. The surplus is used to implemented a program, and erosion, and to preserve soil fertility and replenish nutrients around sugarcane stools called TCH 100, that aims tilth. (sugarcane stools are the clusters of roots and to increase crop yields and Conventional fertilization is supplemented stumps that remain in and about a palm's incrementally improve by organic-rich crop management methods height above the ground after harvesting). consolidated TCH levels. The using byproducts from sugarcane processing program comprises guidance We are continuously exploring new (organic fertilization). and measures designed technologies and innovations, and are to achieve a cane yield One of the byproducts we use is vinasse, currently assessing the feasibility of using milestone of 100 metric tons which is rich in potassium. Vinasse was poultry litter and pig slurry as fertilizers. per hectare. used for fertigation in approximately 87% of Biosev has also begun using biological fertilized cane fields in crop year 2019/2020. fertilizers (fertilizers produced from natural The use of localized vinasse application compounds containing water, manure, plant expanded from 40% to 64% of fertigated area litter, fermenting bacteria and fungi), which compared to the previous crop year. Localized we believe to be very promising. Biological vinasse application provides a range of fertilizers are likely to be applied at increasing benefits for plant health and the environment, scale in our cane field operations as a as application is more targeted. standard part of our fertilization program.
Biosev Sustainability Report 40 Crop Year 2019/2020 Adequate planting methods
Foliar feeding–or application of essential plant Crop management practices are important for nutrients to above-ground plant parts—is an crop performance, and may be adjusted during additional fertilization method we use. Foliar feeding the course of the crop cycle to optimize results. is currently used in 70% of our cane field area. Crop establishment must be carried out properly Crop rotationhas been effectively implemented as from the beginning. After a highly successful a crop management practice since the previous crop pilot, we set up four facilities to produce Pre- year. As part of a program called “Crop Rotation with Germinated Seedlings (PGS) at our Santa Elisa Grains”, after the final ratoon has been harvested (Sertãozinho-SP), MB (Morro Agudo-SP), Passa the sugarcane stools are plowed out and other crops Tempo (Rio Brilhante - MS) and Lagoa da Prata such as soy beans, peanuts and rattlepods are planted (Lagoa da Prata - MG) operations. This technology before cane is replanted for a new cycle. supports the production of better-quality, disease- free sugarcane, as well as reducing planting costs. Another conservation method we have used is The use of PGS also minimizes gaps in crop rows minimum tillage. This method reduces the number of and yields higher multiplication rates compared cultivation passes compared to conventional tillage, to conventional seed cane, due to the material’s helping to preserve the soil. greater vigor. The combined use of agricultural practices such as Successful implementation of Pre-Germinated organic fertilization, biological fertilization, foliar Seedlings (PGS) has also supported the use of feeding, crop rotation and reduced tillage have helped another planting method—the Simultaneously to improve soil health. For example, soil microbiome Occurring Intercropping and Rotation (MEIOSI) formation, reactivation and diversity have been system. In this system, sugarcane rows are greatly improved thanks to the nutrients supplied by intercropped with soybeans, peanuts or biological fertilizers. rattlepods, and then transplanted manually. Since implementing this system, we have achieved multiplication rates greater than 1x10, with excellent technical and economic benefits.
Biosev Sustainability Report 41 Crop Year 2019/2020 Farming technologies We are constantly exploring new farming Expanded use of “ready mixing" technologies that can help to improve crop yields and profitability, and minimize environmental Seven of our eight operations have damage. implemented ready mixing, in which pesticide tank mix preparation (dilution in water) An extensive range of innovation initiatives is done at a central location rather than have recently been implemented, including: transporting pesticides to be formulated in the georeferencing and the use of drones and field. unmanned aerial vehicles (UAVs) for cane field assessments, control and monitoring; onboard The benefits from the project include: technology (onboard computers) to continuously increased employee safety, as contact with optimize the deployment and running times of pesticides during preparation is minimized; our agricultural fleets; and Solinfitec, a remote, lower risk of environmental contamination, online control system used on 100% of our since pesticide packaging consumption is harvesters and infield transportation equipment, reduced and better managed, and the tank supporting real-time monitoring of harvesting mix is prepared at a single location; higher operations, timely and efficient communications cane field productivity as a result of using and the ability to take corrective actions as more accurately formulated pesticide tank necessary. mixes in a structured environment; and a lower risk of pesticide theft. Drones and UAVs fly missions over our cane fields on a daily basis to map out crop gaps and crop rows and to perform emergency-basis biological control of sugarcane borers (Diatraea saccharalis) in infested areas. Harvest planning for each farm is managed by a software system called iCOL based on variables including logistics and cane field maturity.
Biosev Sustainability Report 42 Crop Year 2019/2020 Cane field quality We are constantly developing initiatives to increase the Geography-appropriate varieties longevity of our cane fields in a sustainable manner, as an imperative to improve operational performance. Climate, terrain and soil conditions vary significantly between our eight sites in the states of São At our Administrative, Technology & Innovation Center Paulo, Minas Gerais and Mato Grosso do Sul. To (CTI) and experimental fields, we explore, test and accommodate these differences, we conduct implement new and innovative technologies emerging competition experiments and cultivate different in our industry. varieties in nurseries that are suited for both As a measure of progress, we have succeeded in favorable and less favorable soils. We currently maintaining excellent levels of TRS, TCH and crop use 12 different varieties of sugarcane across longevity—an average of 7.5 ratoons, compared to an our cane fields, and another 30 new varieties industry average of 5 ratoons for ethanol and sugar are being cultivated experimentally. producers. Some of our key initiatives to increase crop longevity include:
Continuous training for employees
We regularly invest in technical training for our employees. Our Alvodrop Program provides technical training to crop management teams on pesticide application technologies and safe and proper handling and use. The expected benefits from this program include: reduced pesticide wastage, a decreased risk of environmental and human contamination, increased efficiency and quality in pesticide application, lower operating costs, and standardized and data-driven crop management operations.
Biosev Sustainability Report 43 Crop Year 2019/2020 Mill operations GRI 102-15 Our mill operations have also undergone positive transformations. We have improved our facilities and invested in equipment such as boilers, sugar centrifuges, and new distillation columns and equipment. We have also invested extensively in continuous process and systems improvements.
New equipment expands ethanol production capacity at Rio Brilhante
In May 2019 we started up a new distillation unit at our Rio Brilhante (Rio Brilhante - MS) operation to expand its ethanol production capacity. The new equipment is part of a series of off-season investments that will enable us to better harness market opportunities. The new distillation equipment has increased ethanol production capacity by an additional 250 cubic meters per day. As a result, our mills in Mato Grosso do Sul now have a production capacity in excess of 2,000 cubic meters per day. In addition, our two mills in Rio Brilhante have expanded their crush capacity by 3,000 metric tons per day, as well as their molasses storage capacity.
Biosev Sustainability Report 44 Crop Year 2019/2020 Biosev’s operations are supported by important capabilities and technology, including the following:
Integrated operations and SAP PLC industrial intelligence centers Biosev has a license for SAP Plant Maintenance Our plants use PLC-based automation systems The entire mill operation can be monitored in (SAP PM), which we use to manage projects, track that allow the entire process to be operated and real time from our Industrial Operations Centers schedules and measure maintenance costs. monitored remotely and are interconnected (COI). by a digital network that feeds information to a control center, improving process safety, management and efficiency.
Process simulation and MAP Softexpert automation A High-Performance Maintenance (MAP) program Softexpert supports the planning, execution and We use a range of process simulation and helps to enhance plant reliability and efficiency. management of new industrial projects, such as automation software programs and systems such The MAP program comprises five components: plant expansions. It also manages the storage and as Pentagro, a platform that virtualizes industrial planning, standards, prediction, execution, control of documents and certifications, including plants using process modeling. This enables plant and audit. In annual audit cycles, items such quality management system documents, and managers to systematically and continuously as lubrication plans, maintenance checklists, assists in plant-related management tasks. improve operational performance by using predictive inspections, off-season planning, fault simulations to inform strategic decisions for handling and data management and reliability are increasing profitability. evaluated.
Biosev Sustainability Report 45 Crop Year 2019/2020 Commercial management GRI 102-15, 206-1
Our commercial strategy in crop year to prioritize products for which 2019/2020 included an increasing focus market conditions are most on higher value-added products and favorable. In addition to VHP and strengthening customer relationships. fuel-grade ethanol, we also produce other sugarcane products that require We have also made progress on product a special production process, have high pricing. added value, and have enabled us to In the 2019/2020 crop year, export expand our customer base. opportunities grew significantly on the back New commercial opportunities are being of higher foreign-market demand. As a result, created to monetize byproducts from our our ethanol exports increased by more than operations, recyclable solid waste materials 230%, especially in July/August 2019 and in and decarbonization credits within the the last quarter of the crop year. Brazilian government’s RenovaBio Program Biosev’s commercial strategy rests on three (for further information, see the section pillars: “Biosev’s engagement on climate change” in • A flexible sugar/ethanol production mix. the chapter “Environmental management” of this Report). • Targeting the most profitable markets. • Optimal timing of sales. We have also progressed in securing contracts to sell surplus electricity produced Diversification of our portfolio is central from sugarcane bagasse, improving our to our continuous efforts to improve financial performance. commercial performance, and enables us
Biosev Sustainability Report 46 Crop Year 2019/2020 Our surplus electricity can be sold either: This is especially important as Biosev’s • in the Free Contracting Environment (ACL), in commercial strategy affects production (sugar/ which electricity is sold under power purchase ethanol) mix decisions and logistics and storage and sale agreements between generators/ planning, which in turn affect the profitability traders and “free consumers” (consumers of our operations. permitted by law to source electricity from Lastly, Biosev continuously monitors the suppliers other than local utilities, as opposed competition landscape and movements, to “captive consumers”). including expansions, new operations and new • in the Regulated Contracting Environment product launches—all within the bounds of (ACR), in which electricity is sold under respectful competition. There were no actions regulated contracts with distribution utilities pending with respect to anticompetitive or, in certain cases, with the Electric Power behavior and/or antitrust or monopoly Trading Chamber (CCEE). All ACR contracts violations involving the Company in the contain standard terms and conditions 2019/2020 crop year. established by the Brazilian electric power sector regulator, ANEEL. Our Commercial department has begun to work more closely with operations functions, supporting common and integrated planning and helping to achieve greater synergies. The Sugarcane Sourcing function within the Commercial department has also developed greater integration with field operations.
Biosev Sustainability Report 47 Crop Year 2019/2020 Logistics management In our logistics operations, we manage our storage, transportation and distribution processes in a way that maximizes operational and financial performance. Storage Biosev’s sugar storage capacity at March 31, 2019 was approximately 470,000 metric tons (or 19% of our annual production capacity)— across Company- and third-party-owned, public and private warehouses. Ethanol storage capacity at March 31, 2019 was approximately 650,000 cubic meters (equivalent to 41% of our annual production capacity)—across Company- and third-party-owned, public and private tank farms. In crop year 2019/2020 our product stocks peaked on 9/30/2019 at respectively 13% and 26% of maximum annual production capacity for sugar and ethanol. Sugar Ethanol Inventories by quarter (‘000 metric tons) (‘000 m3) 3/31/2020 9 33 12/31/2019 120 343 9/30/2019 332 420 6/30/2019 214 186 3/31/2019 18 37
Large storage capacity allows us to buffer our inventories in order to optimize the timing of product sales. This also mitigates seasonality effects on our results by enabling us to buffer stocks during the harvest season for subsequent sale during the off season.
Biosev Sustainability Report 48 Crop Year 2019/2020 Product transportation and distribution Biosev’s diversified geographies—São Paulo, Mato In sugar logistics, road and rail are the primary Grosso do Sul and Minas Gerais—give us a logistics modes of transportation. In crop year 2019/2020, edge by both providing access to fast-growing we used road transportation 20% of the time and domestic markets, as well as offering easy access to rail transportation 80% of the time. Brazil’s primary commodities export corridors. Crop year(1) Rail Road 2017/2018 60% 40% For sugar distribution: 2018/2019 70% 30% • Our well-located plants in São Paulo State are served by excellent highway infrastructure as well 2019/2020 80% 20% as nearby rail links, allowing us to ship most of our sugar output by truck or by rail, or both, to the port. In ethanol logistics we primarily use road transportation. • Our sites in Mato Grosso do Sul are also served by multi-modal—road and rail—export infrastructure. Our well-located plants in São Paulo State have Products are shipped from our plants on trucks to a good road links to major ethanol distribution rail terminal in Maringá (PR) and from there by rail centers in the cities of Ribeirão Preto, Paulínia, to the Port of Paranaguá (PR). Guarulhos, Santos and São Paulo. • Biosev’s Lagoa da Prata site in Minas Gerais is well- Biosev’s mills in Mato Grosso do Sul and Minas positioned to serve the food industry in the state Gerais are also well served by road infrastructure, of Minas Gerais, as well as having access to foreign with multiple road links available for each markets via the Port of Santos (SP). shipment and destination.
NOTE: (1) Percentages calculated based on outbound shipments from our mill, in metric tons.
Biosev Sustainability Report 49 Crop Year 2019/2020 Export terminal
The Guarujá Sugar Export Terminal (TEAG) at the Port of Santos, a joint venture with Cargill, is an important logistics asset used primarily for exports. With a daily ship loading capacity of 27,000 metric tons, TEAG currently exports mainly sugar, soya and maize. An annual sugar handling capacity of approximately 3.2 million metric tons provides greater flexibility for storage and exports of VHP sugar, and greater control of logistics flows. The terminal is equipped with modern operation and environmental control systems and infrastructure for ship loading from both rail cars and trucks, depending on which mode of transport is most competitive for each producing region. The terminal’s static storage capacity is 110,000 metric tons across two warehouses, one with a capacity of 60,000 metric tons and the other 50,000 metric tons. This capacity is fully adequate for accommodating and optimizing receipt and ship loading operations.
Biosev Sustainability Report 50 Crop Year 2019/2020 Quality
In our field and mill operations, we strive to requirements outlined in local regulations. We ensure that stakeholders’ expectations and all also conduct assessments of consumer health legal requirements applicable to the sugar and and safety impacts. ethanol industry are met, and that the products Information on industrial-grade products we supply are safe and high-quality, to the is provided in product specifications, and is satisfaction of our customers and end consumers. submitted to customers for approval during Our Quality department is responsible for commercial negotiations. managing certifications, standardizing and Our mill and field operations are covered by managing policy documents (standards, manufacturing risk management programs procedures, etc.), and developing, updating and based on applicable regulations on food safety. monitoring conformity to technical specifications Among these is Biosev’s Good Manufacturing for all products we market. Practices (GMP) program. Biosev has an established protocol on gauging Periodic internal audits are conducted on our the perceptions and satisfaction of customers and operations to ensure compliance with product consumers. safety requirements and good manufacturing Our website has a dedicated section featuring practices. our product portfolio (https://www.biosev.com/ Active product quality and safety management en/products/) and providing detailed information is included as a profit-sharing metric for senior and applicable safety procedures. These include management and other employees, further Material Safety Data Sheets and Emergency Data underlining our commitment to food safety Sheets. and quality. Information for end consumers(composition, shelf life, technical specifications and other mandatory information) is printed on product packaging in accordance with the labeling
Biosev Sustainability Report 51 Crop Year 2019/2020 Certifications GRI 102-12 Biosev has the following certifications:
CERTIFICATION CERTIFIED UNITS / SCOPE Santa Elisa (Sertãozinho - SP): ethanol (anhydrous, hydrous, neutral) and sugar (liquid, inverted sugar syrup and VHP) certification Bonsucro EU covers the entire chain of custody, including mills, company-owned and leased farms, and the port terminal. Bonsucro Production certification aims to reduce the environmental and social impacts of sugarcane production under a standard with established Standard principles, criteria and indicators. Santa Elisa (Sertãozinho - SP): “Food Safety Management System” certification. FSSC 22000 certification attests that this business FSSC 22000:2005 unit applies best-practice food safety management in the production of liquid sugar and inverted sugar syrup. Santa Elisa (Sertãozinho - SP) and Vale do Rosário (Morro Agudo - SP): this certification attests that the sugar, anhydrous and Kosher hydrous ethanol produced at these business units conform to Jewish dietary laws. Leme (Leme - SP), Santa Elisa (Sertãozinho - SP), UMB (Morro Agudo - SP) and Vale do Rosário (Morro Agudo - SP): for exports to LCFS-CARB the state of California, Biosev is registered as part of the Low Carbon Fuel Standard (LCFS) Program created by the California Air Resources Board (CARB). All our operations have been certified within this program. RenovaBio is a Brazilian government program that aims to expand RenovaBio production and the share of biofuels in Brazil’s transportation fuel mix, supporting decarbonization and efforts against climate change. Leme (Leme - SP), Santa Elisa (Sertãozinho - SP), UMB (Morro Agudo - SP) and Vale do Rosário (Morro Agudo - SP) produce fuel RFS2-EPA ethanol registered under the Renewable Fuel Standard 2 (RFS2) Program created by the US Environmental Protection Agency (EPA) for ethanol marketed in the US. Lagoa da Prata (Lagoa da Prata - MG), Passa Tempo (Rio Brilhante - MS), Rio Brilhante (Rio Brilhante - MS) and Santa Elisa Green Energy Mark (Sertãozinho - SP) are among a select group of facilities in Brazil that have been certified within the Sugarcane Industry (UNICA) Union (UNICA) Bioelectricity Certification Program, following an audit against stringent sustainability and energy efficiency requirements.
Biosev Sustainability Report 52 Crop Year 2019/2020 HUMAN CAPITAL MANAGEMENT
Biosev Sustainability Report 53 Crop Year 2019/2020 Management approach GRI 102-7, 102-8, 102-16, 102-49, 413-2
Human capital management (or people In short, the Biosev Way is about acting ethically, management) is a cornerstone for our success as a being mindful of safety, building trust, having a sense business. Our strength lies in people and leaders of ownership and demonstrating adaptability. who set a positive example, who celebrate our achievements at Biosev, and who work together each In our day-to-day activities, we seek to maintain a crop year to achieve our business goals. harmonious, productive and participatory work environment that encourages open communication. In our people management practices, our primary emphasis is on recognizing and developing our In crop year 2019/2020, Biosev had 9,778 direct employees. employees and 7,817 contractor/third-party employees. We operate in a fast-changing environment that is faced with disruptions, such as the current Total workforce pandemic. But adaptability is in our employees’ Crop Year Crop Year Crop Year Disclosures DNA. 2017/2018 2018/2019 2019/2020 We encourage employees to have a sense of Direct(1) 14,581 12,643 9,778 ownership—to act as owners of each part of the Third-party 2,761 6,862 7,817 business. We believe that an entrepreneurial mindset is essential for critical, analytical an independent There were no collective terminations as a result thinking in our day-to-day activities. of the disposal of our Estivas (RN) operation in We get things done the right way—ethically and crop year 2019/2020. All employees working at the safely—and we look after other. plant were transferred to the buyers, along with the obligations and responsibilities arising under their Lastly, we believe that trust, and having the courage employment contracts. to express ourselves, tackle challenges and deliver results, is also a vital element of our way of doing NOTE: (1) Employees hired full time, including shift workers. Includes things. apprentices but excludes interns and periods of leave exceeding 180 days. The average of month-end figures for the crop year.
Biosev Sustainability Report 54 Crop Year 2019/2020 People management practices in our day-to-day activities Our people management practices are supported by the following programs: EntreNós Program “HR in the Field” Program GRI 404-2, GRI 413-1
EntreNós is a program designed to support In crop year 2019/2020, we directed Biosev’s “HR in the Field” Program aims to the retention of key employees. efforts to: foster engagement and interaction with our • aligning the program with our Vision field and mill operations teams. It provides The program comprises a set of wide- a channel for our Human Resources ranging initiatives aimed at improving and new Values; • disseminating the Company’s new department to communicate more closely and evaluating employee performance, with operations personnel. recognizing and rewarding people, strategic direction; attracting, retaining and developing • ensuring human capital is closely As part of the Program, representatives talent and leaders, and building a healthy managed in our operations; and from Human Resources visit our organizational climate with a sense of • ensuring communications flow operations and hold private discussions belonging and engagement. seamlessly across the strategic, tactical with employees—without their managers and operational levels. present—to collect suggestions for The program includes initiatives improvement. addressing: performance; best practices EntreNós is also an inclusion program in human resources, compensation and through which we provide people with This is supplemented by our “Open Talk” benefits; careers; attracting, developing disabilities with opportunities to join and “Breakfast with Management” and retaining talent; supporting our leaders our workforce and support them in initiatives (for further information, (ensuring they are better prepared to developing their skills, adaptability and see the section below on “Internal address day-to-day issues and develop careers. Communications”). their teams so they feel professionally fulfilled and deliver sustainable results for the business and communities); and sustainability—a good organizational climate, community relations, diversity, good practices and inclusion of people with disabilities (PwDs).
Biosev Sustainability Report 55 Crop Year 2019/2020 Internal communications
In addition to our regular communications initiatives, campaigns and channels, we have focused on ensuring information is effectively cascaded from management and other leadership to our teams on the ground. We encourage our leadership to build closer communications with their teams. This is supported by initiatives such as our “Open Talk” program, in which each unit’s leadership meets with employees to collect suggestions and discuss operational results, and our “Breakfast with Management” program. “Breakfast with Management” sessions led by the CEO and other executives at Biosev are held on a rotating schedule covering all business units. Approximately 30-40 employees at each unit, including managers and other employees, are invited to attend. After senior executives present the Company’s most recent guidelines, projects, initiatives and business results, the session is opened for questions, requests for clarification and suggestions from attendees, which helps to encourage engagement and shortens the distance between senior leadership and our operations through open and direct communication.
Biosev Sustainability Report 56 Crop Year 2019/2020 Compensation, careers and performance assessment GRI 401-2, 404-3
Our compensation policies are consistent with Employees receiving regular industry and market best practices. In addition to performance and career development fixed compensation, employees in some positions reviews in crop year 2019/2020 receive variable compensation linked to the Disclosures(1) Men Women extent to which targets and results are achieved, Officers/Directors/ as part of our Profit Sharing Program. 100% 100% CEO We offer opportunities for career progression Managers 100% 100% and professional growth, and have processes for Supervisors 100% 100% managing internal career pathways, including career plans. Specialists 100% 100% Coordinators 100% 100% Performance assessments are conducted on Other positions(2) 4% 2% an annual basis. Participating employees(2) are Total 9% 3% assessed on their performance against targets and on soft skills. The performance assessment process comprises the following steps: • Self-assessment by the employee • An assessment by the employee’s manager NOTE: • Feedback to the employee (1) Based on our workforce as at March 31, 2020. (2) Performance assessments are not required • Data entry in the system for assistants, interns, young apprentices and • The employee then plans development actions operational positions such as operators and mechanics. for the following crop year, with their manager either validating those actions or suggesting new ones.
Biosev Sustainability Report 57 Crop Year 2019/2020 Benefits GRI 401-2, 403-6
We offer employees a wide range of benefits, including, depending on the position, the following: • Life insurance fully sponsored by the Company. • Health insurance. • Dental insurance at more competitive rates than the market average. • Vaccines and drugstore discounts. • Medical checkups. Total direct employees versus total compensation and benefits paid and • Private pension plans. average compensation • Profit sharing. Crop Year Crop Year Crop Year • Cafeteria. Disclosures 2017/2018 2018/2019 2019/2020 • Restaurant and supermarket vouchers Total direct employees(1) 14,581 12,643 9,778 depending on each employee category’s union agreement. Total compensation and 689.2 655.3 587.3 • Shuttle buses, bus tickets and parking. benefits paid (R$ million) • Education and language training grants. Average compensation/ Total compensation and benefits declined in benefits per employee (R$) 47,267 51,833 60,066 the crop year, reflecting a reduction of our total in the crop year workforce. Average compensation and benefits per employee have consistently improved, however, NOTE: (1) Employees hired full time, including shift workers. Includes apprentices but excludes as shown in the table opposite, demonstrating interns and periods of leave exceeding 180 days. The average of month-end figures for our commitment to rewarding and valuing our the crop year. employees.
Biosev Sustainability Report 58 Crop Year 2019/2020 Parental leave Union relations GRI 401-3 GRI 102-41, 407-1
All employees are covered by collective In crop year 2019/2020 we began reporting this disclosure bargaining agreements. in accordance with the Global Reporting Initiative (GRI) Standards. Our operations are compliant with local labor laws and regulations, and managers are regularly reminded of the important role Parental leave – crop year 2019/2020 that unions play in the relationship between employers and workers, and of the need to Disclosures Men Women balance the interests of the parties involved. Employees entitled to parental 9,060 718 leave(1) Biosev has fostered constructive relations with trade unions based on mutual trust and Employees who took parental 359 26 seeking common ground, and recognizes leave (2) them as employees’ legal representatives in Employees that returned to work labor relations. 359 26 after parental leave ended(2) We ensure all employees are free to Employees that returned to work effectively exercise their right to freedom and were still employed three 329 16 of association, in accordance with all months after applicable regulations. Return to work rate 100% 100% In the six previous crop years there have Retention rate of employees that been no strikes or other work stoppages 92% 62% took parental leave involving Biosev employees.
NOTES: (1) Includes all employees covered by the policy, and not only employees who had children. (2) Includes only those employees who took and returned from leave during the crop year (2019/2020).
Biosev Sustainability Report 59 Crop Year 2019/2020 Workforce numbers(1) GRI 102-8, 202-2, 401-1, 405-1
Workforce by gender Workforce by region Crop Year Crop Year Crop Year Crop Year Crop Year Crop Year Gender Region 2017/2018 2018/2019 2019/2020 2017/2018 2018/2019 2019/2020 Women 932 956 718 Midwest 3,183 2,803 2,135 Men 13,649 11,687 9,060 Northeast 2,463 1,612 447 Total 14,581 12,643 9,778 Southeast 8,935 8,227 7,196 Total 14,581 12,643 9,778
Workforce by position Workforce by age Crop Year Crop Year Crop Year Crop Year Crop Year Crop Year Position Age 2017/2018 2018/2019 2019/2020 2017/2018 2018/2019 2019/2020 Officers/Directors/ 18-25 1,823 1,087 1,118 19 16 13 CEO 26-30 2,301 1,615 1,307 Managers 66 57 43 31-40 5,272 4,397 3,554 Supervisors 165 152 131 41-50 3,230 3,007 2,332 Specialists 57 63 51 51-60 1,667 1,874 1,212 Coordinators 377 420 394 Over 60 288 663 255 Other positions 13,897 11,935 9,146 Total 14,581 12,643 9,778 Total 14,581 12,643 9,778
NOTE: (1) Employees hired full time, including shift workers. Includes apprentices but excludes interns and periods of leave exceeding 180 days. The average of month-end figures for the crop year.
Biosev Sustainability Report 60 Crop Year 2019/2020 Workforce by gender and title Workforce by employment contract and region
Crop Year Crop Year Crop Year Time Midwest Northeast Southeast Total Employees 2018/2019 2019/2020 Definite term 54 745 721 1,520 Men Women Men Women 2017/2018 Indefinite term 3,129 1,718 8,214 13,061 Officers/Directors/CEO 12 4 10 3 Total 3,183 2,463 8,935 14,581 Managers 51 6 37 6 Definite term 38 56 147 241 Supervisors 131 22 113 17 2018/2019 Indefinite term 2,765 1,557 8,080 12,402 Specialists 44 19 39 12 Total 2,803 1,612 8,227 12,643 Coordinators 387 34 369 25 Definite term 92 19 1,145 1,256 Other positions 11,063 871 8,492 655 2019/2020 Indefinite term 2,043 428 6,051 8,522 Total 11,688 956 9,060 718 Total 2,135 447 7,196 9,778
Workforce by employment contract and gender Workforce by employment type and gender Crop Year Gender Definite term Indefinite term Total Crop Year Gender Full time Part time Total Women 124 808 932 Women 834 98 932 2017/2018 Men 1,396 12,253 13,649 2017/2018 Men 13,343 306 13,649 Total 1,520 13,061 14,581 Total 14,177 404 14,581 Women 101 855 956 Women 857 99 956 2018/2019 Men 140 11,547 11,687 2018/2019 Men 11,539 148 11,687 Total 241 12,402 12,643 Total 12,396 247 12,643 Women 121 597 718 Women 615 103 718 2019/2020 Men 1,134 7,926 9,060 2019/2020 Men 8,771 289 9,060 Total 1,255 8,523 9,778 Total 9,386 392 9,778
Biosev Sustainability Report 61 Crop Year 2019/2020 Technical and leadership positions, by age group (%) Crop Year Crop Year Crop Year Position 2017/2018 2018/2019 2019/2020 <30 30-50 > 50 <30 30-50 > 50 <30 30-50 > 50 Officers/Directors/ 0.0% 61.5% 38.5% 0.0% 68.8% 31.3% 0.0% 85.7% 14.3% CEO(1) Managers 2.9% 83.7% 13.4% 0.0% 84.2% 15.8% 2.3% 81.4% 16.3% Supervisors 10.4% 78.4% 11.3% 2.0% 82.2% 15.8% 4.6% 86.3% 9.2% Specialists 29.8% 68.1% 2.1% 7.9% 85.7% 6.3% 17.3% 80.8% 1.9% Coordinators 17.5% 72.7% 9.8% 8.8% 80.0% 11.4% 13.7% 75.9% 10.4% Other positions 28.9% 57.5% 13.6% 18.8% 60.7% 20.5% 25.8% 58.9% 15.4% Total 28.3% 58.3% 13.4% 18.1% 61.9% 20.1% 24.8% 60.2% 15.0%
Members of senior management hired from the local community(2)
Crop Year Disclosure 2019/2020 Total members of senior management 8 Members of senior management hired from 4 the local community Proportion of senior management hired from 50% the local community (%)
NOTES: (1) The group most directly responsible for governance (2) We define senior management as the CEO and all executive officers reporting directly to the CEO. We define local communities as cities in which our operations are located or any cities which are subject to the economic, social or environmental impacts from our operations.
Biosev Sustainability Report 62 Crop Year 2019/2020 Employee turnover GRI 401-1
Employee hires by gender(1) Employee turnover by gender(1) Crop Year Crop Year Crop Year Crop Year Crop Year Crop Year Gender Gender 2017/2018 2018/2019 2019/2020 2017/2018 2018/2019 2019/2020 Women 18 - 26 Women 2.47% 1.46% 3.27% Men 291 652 274 Men 2.73% 4.88% 3.03%
Employee hires by age group(1) Employee turnover by age group(1) Crop Year Crop Year Crop Year Crop Year Crop Year Crop Year Age Age 2017/2018 2018/2019 2019/2020 2017/2018 2018/2019 2019/2020 18-25 71 180 79 18-25 4.51% 10.90% 6.13% 26-30 55 119 45 26-30 3.08% 5.41% 3.44% 31-40 106 211 97 31-40 2.69% 4.31% 2.70% 41-50 54 105 54 41-50 2.28% 3.51% 2.47% 51-60 21 35 23 51-60 1.90% 2.54% 2.23% Over 60 2 3 2 Over 60 1.46% 5.41% 1.57%
NOTE: (1) Figures computed on a monthly basis: Hiring Rate = (average hires / average number of employees working with the Company during the period). Termination Rate = (average terminations / average number of employees working with the Company during the period). Turnover Rate = ((average hires + average terminations) /2) / average number of employees working with the Company during the period).
Biosev Sustainability Report 63 Crop Year 2019/2020 Turnover – crop year 2019/2020 – breakdown Average workforce in Average Rate of New hires Termination Turnover rate Disclosure Average hires(1) the year terminations (1) (%)(1) rate (%)(1) (%)(1) BY GENDER 9,778 300 296 3.07 3.03 3.05 Women 718 26 21 3.62 2.92 3.27 Men 9,060 274 275 3.02 3.04 3.03 BY AGE 9,778 300 296 3.07 3.03 3.05 18-25 1,118 79 58 7.07 5.19 6.13 26-30 1,307 45 45 3.44 3.44 3.44 31-40 3,554 97 95 2.73 2.67 2.70 41-50 2,332 54 61 2.32 2.62 2.47 51-60 1,212 23 31 1.90 2.56 2.23 Over 60 255 2 6 0.78 2.35 1.57 BY REGION 9,778 300 296 3.07 3.03 3.05 Midwest 2,135 57 67 2.67 3.14 2.90 Northeast 447 11 2 2.46 0.45 1.45 Southeast 7,196 232 227 3.22 3.15 3.19
NOTE: (1) Figures computed on a monthly basis: Hiring Rate = (average hires / average number of employees working with the Company during the period). Termination Rate = (average terminations / average number of employees working with the Company during the period). Turnover Rate = ((average hires + average terminations) /2) / average number of employees working with the Company during the period).
Biosev Sustainability Report 64 Crop Year 2019/2020 Training and development(1)(3) GRI 404-1, 404-2, 413-1
We continually invest in the training and Training expenditure (R$) development of our employees including both Crop Year Crop Year Crop Year Item technical courses and lectures for employees 2017/2018 2018/2019 2019/2020 at all levels of the organization. We aim Education grants 124,879 105,306 21,732 to maintain a highly trained and engaged Language course grants 9,373 3,590 1,904 workforce. Technical training 1,569,838 1,265,038 906,216 In addition to in-house training, we have a Behavioral training 52,637 19,658 45,831 Grant Policy under which employees are Total 1,756,727 1,393,592 975,683 awarded grants for associate, undergraduate, graduate and language training programs. Average hours of training per employee(2) Applications are considered on a case-by- University Management Non-university Hours/ case basis in relation to training needs, and Crop Year Gender level positions level positions employee therefore grant percentages may vary. positions Women 9.5 13.5 16.1 We have also made a strong effort to ensure 2017/2018 30.5 our managers and other leaders are aligned Men 18.9 30.4 31.6 with Biosev’s strategic direction and are able Women 12.0 18.5 26.9 2018/2019 37.2 to convey this alignment to their teams. Men 11.7 29.1 38.1 For our leadership team, in crop year Women 0.0 11.2 20.2 2019/2020 33.5 2019/2020 we developed a special behavioral Men 4.5 23.3 41.1 training program on workplace harassment. Total number of course attendances Our training figures in the year are shown in Crop Year Crop Year Crop Year the table opposite: Disclosure 2017/2018 2018/2019 2019/2020 Total number of course attendances 14,330 14,621 9,884
NOTES: (1) Includes all training, including English class hours. Intern training hours not included. (2) Average hours = total training hours in the crop year / average headcount during the crop year. (3) Includes seasonal workers who terminated their employment during the crop year, with some employees participating in more than one activity.
Biosev Sustainability Report 65 Crop Year 2019/2020 Diversity GRI 102-12, 202-1, 401-1, 405-1, 405-2, 413-1 Biosev has embraced diversity as an institutional To further enhance internal discussions on diversity, and social cause. in mid-2020 we launched a Diversity Committee, which we will continue to develop as we explore issues The term diversity encompasses the broad surrounding diversity. spectrum of differences that exist between people, including gender, ethnicity, age, In addition: sexual orientation, belief systems, social class, • We advanced initiatives for the inclusion of PwDs, worldviews, and other differences. including our People with Disabilities Inclusion Program and Recruiting Events for PwDs in São We are all different from others’ perspective. We Paulo. believe that, in our day-to-day activities,we all have a role in valuing and promoting diversity. • Changes have been made to our recruiting process to address the gender gap. But valuing diversity isn’t enough. In our day- • In October 2019 we and 18 other companies in the to-day activities, this needs to be effectively sugar and ethanol industry signed a commitment translated into inclusion. to the Women’s Empowerment Principles, created Inclusion makes people feel welcome despite by UN Women and the Global Compact. We believe their differences and that they are able to work this represents an important step in supporting together on equal footing, supporting the whole and promoting equality between women and men in achieving set goals. Inclusion recognizes and at the workplace and amplifying opportunities for values each person’s differences and similarities. women’s training and professional development. • We participated in the Women in Sugar initiative, In 2019 and 2020 we undertook an exercise to a group that brings together women from different benchmark our practices against those in our countries to discuss the role of women in the sugar industry. We compiled, discussed and reviewed industry. related materials and publications (including reports submitted to our whistleblowing On the following page we present our key indicators on channel). gender diversity and PwDs.
Biosev Sustainability Report 66 Crop Year 2019/2020 Gender Ratios of standard entry level wage by gender compared to local minimum wage(2) Crop Year We recognize we still have a long way to go to close Disclosure the gender gap and increase women’s participation 2019/2020 in our workforce (7.3%). However, it is important to Minimum wage R$ 998.00 note that in crop year 2019/2020, women’s average Ratio of standard entry level wage (men) 101% salaries in a given position category were never less Ratio of standard entry level wage (women) 101% than those for men and, overall, women’s average basic salaries were 30% higher than for men. We have Ratio of basic salary of women to men by employee category(3)(4) maintained efforts to encourage and foster greater Crop Year Crop Year Crop Year Position gender diversity. 2017/2018 2018/2019 2019/2020 Officers/Directors/CEO(5) -18% -3% 33% (1) Percentage of women in the workforce Managers -6% -3% 4% Supervisors -4% 1% 0% 6.4% Specialists -6% 2% 14%
7.6% Coordinators 27% 22% 24% Other positions 14% 8% 13% 7.3% Total 36% 25% 30%
Crop Year Technical and leadership positions, by gender (%) 2017/18 2018/19 2019/20 Crop Year Crop Year Crop Year Position 2017/2028 2018/2019 2019/2020 Women Men Women Men Women Men NOTES: (1) Employees hired full time, including shift workers. Includes Officers/Directors/CEO(5) 21.2% 78.8% 25.0% 75.0% 23.1% 76.9% apprentices but excludes interns and periods of leave exceeding Managers 17.1% 82.9% 10.5% 89.5% 14.0% 86.0% 180 days. The average of month-end figures for the crop year. (2) Excluding interns, apprentices and employees on leave for Supervisors 14.2% 85.8% 14.5% 85.8% 13.0% 86.3% longer than 60 days. (3) Ratio = (average salary of women – average salary of men) / Specialists 34.5% 65.5% 30.2% 69.8% 23.5% 76.5% (average salary of men). (4) Based on nominal average salaries. Coordinators 7.8% 92.2% 8.1% 92.0% 6.3% 93.7% (5) The group most directly responsible for governance. Other positions 6.1% 93.9% 7.3% 92.7% 7.1% 92.9% Total 6.4% 93.6% 7.6% 92.4% 7.3% 92.7%
Biosev Sustainability Report 67 Crop Year 2019/2020 Recruiting events
As part of our EntreNós program initiatives to promote diversity and inclusion in our workforce, in crop year 2019/2020 we organized our first Recruiting Events for People with Disabilities (PwDs) in São Paulo. Four editions were organized between January and February 2020 in partnership with local governments PwDs in the towns of Sertãozinho, Barretos, Orlândia and Morro Agudo. Over the past few years, the EntreNós program has helped to Despite our many efforts to date, the percentage provide people with disabilities with opportunities to join our of PwDs in our workforce is still less than we workforce and has supported them in developing their skills, aspire for. We will continue to implement adapting and building their careers. initiatives to improve our performance on this indicator over the coming years. At the Recruiting Events, a specialized team conducted interviews, while other supporting staff helped candidates prepare and Number and percentage of people with submit their resumes. Candidates were asked to bring their disabilities (PwDs) resumes, a medical certificate of disability and, for field positions, their driver’s license. Crop Year Crop Year Crop Year Disclosure 2017/2018 2018/2029 2019/2020 The National Industrial Training Service (SENAI) provided No. of PwDs(1) 243 357 172 assistance in evaluating job positions and providing awareness training to our leadership teams. We also ran internal campaigns Total workforce 14,581 12,643 9,778 to advertise available positions and encourage employees to % PwDs 1.7% 2.8% 1.8% recommend candidates with disabilities (PwDs). A total of 116 resumes were submitted. After filtering out candidates who failed to qualify as PwDs, we were able to hire four new employees.
NOTES: (1) The PwDs figures in the table were compiled at the end of the crop year (cutoff date: March 31).
Biosev Sustainability Report 68 Crop Year 2019/2020 HEALTH & SAFETY
Biosev Sustainability Report 69 Crop Year 2019/2020 Guidelines and initiatives consistent with Company strategy GRI 403-1, 403-2, 403-4, 403-5
Our updated Vision and Values now place a • Internal Accident Prevention Committee • PTW Coach Program – in which the HSE greater emphasis on safety, in another important (CIPA) and Internal Rural Accident Prevention department coaches employees responsible step in our continuous efforts over the past years Committee (CIPA-TR) for issuing Permits to Work to achieve progress in this area. • Environmental Risk Prevention Program (PPRA) • Regular field inspections by our leadership and Biosev’s QHSE management system (see the • “Pyramids Program” – a channel for reporting HSE teams section on the “PRISMA Program” under unsafe conditions to the HSE Department and • Safety violation notices and the “Golden “Strategy” in the chapter “Who we are”) provides to the leadership team Rules” Program – which outlines procedures a structured governance system and a suite of • Behavioral Observation Program – an and rules on preventing accidents, and the tools for identifying hazards and assessing and educational program in which managers penalties for violations of those rules monitoring risks, including the following: observe operations tasks and provide feedback • Emergency Response Plans – at all units • Specialized Occupational Health and Safety to improve employees’ safety awareness and • Centralized management of action plans for Engineering Services (SESMT): a team of more foster an HSE culture identified nonconformities than 130 employees • Safe Work Instructions – standard operating • Regular training – conforming to applicable • Occupational Health Surveillance Program procedures for each task, including pre-task regulations (PCMSO) risk assessments and appropriate protection • Health, Safety & Environment Toolbox Talks measures • Preventive communications • Permit-to-work (PTW) – for tasks involving high levels of health and safety risks. The Permit-to- work (PTW) system also involves pre-task risk assessments and implementing appropriate protection measures
Biosev Sustainability Report 70 Crop Year 2019/2020 We strive to implement preventive measures sufficient to eliminate, minimize or control risks, using the hierarchy of risks outlined in Brazilian Regulatory Standard NR-9; preference is given to collective prevention measures to the extent possible. We also rely on administrative measures (such as procedures and signage) and work organization measures, requiring the use of personal protective equipment (PPE) in risk areas, provided to employees at no cost. The corrective measures may: not involve investment; involve OPEX investment; and involve CAPEX investment. In our operations we recommend the immediate adoption of measures not involving investments. Measures involving OPEX and CAPEX investments are approved in the annual budget preparation process, and we have a mechanism in place for immediately approving emergency situations. To inform the performance of CAPEX investment, we conducted an evaluation according to the HRN methodology (Hazard Rating Number), detailed in the section “A new HSE culture”, in “Working strategy”, in the chapter “About us”. All employees are encouraged to report risk conditions, and are protected from retaliation by the “Right of Refusal” to carry out activities for which they do not feel qualified and safe, including receiving recognition for taking such a stance. We also have processes in place for worker participation, consultation, and communication on occupational health and safety, which we describe in the following page.
Biosev Sustainability Report 71 Crop Year 2019/2020 Worker participation, consultation, and communication on occupational health and safety
All our operating plants have an Internal procedure, which provides instructions on Accident Prevention Committee (CIPA), the process to be conducted. All HSE events regulated by Brazilian Regulatory Standard NR- are immediately reported to the leadership 05, and an Internal Rural Accident Prevention of all plants, where the leaders and to the Committee (CIPA-TR), regulated by NR-31, extent possible employees from the sectors which aim to prevent occupational accidents involved in each incident participate in the and illnesses and to make the workplace investigation committee. We also study the compatible with protecting the life and health applicability of serious incidents inside and of workers. outside the Company, in order to map out accident prevention actions, with all relevant At each plant, the CIPA and CIPA-TR consist of information provided to employees. Company representatives and employees, in the proportions established in the regulatory Collective agreements with local unions standards, who are democratically elected. cover all employees. These agreements are The meeting frequency is established in the renegotiated annually, containing specific regulations. health and safety clauses, such as the provision of free personal protective equipment (PPE). In addition to these two committees, we have numerous channels of communications Lastly, any other formal agreements with with employees and third parties, including trade unions involving occupational health and Health, Safety & Environment Toolbox safety items will always bolster compliance Talks, informative emails, HSE notice boards with the existing labor legislation (such as allocated in work areas, HSE initiatives on the free supply and use of PPE in all activities social media and regular health and safety requiring these items), in order to guarantee campaigns. These channels are being widely the hygiene, health and well-being of used, for example, in COVID-19 prevention. employees. In the event of an incident we follow our Incident Reporting, Analysis and Treatment
Biosev Sustainability Report 72 Crop Year 2019/2020 Participatory leadership and focus Occupational health and safety on continuous improvement training and coaching In order to assure the quality of these As regards continuous training and coaching processes and ongoing improvement, every of the teams involved: year we organize audits of our management • We provide first aid training to members system (Prisma Program) whilst using of the Internal Accident Prevention daily and weekly monitoring of guidelines Committee (CIPA) and the emergency established in HSE procedures and the main response team, in addition to training in health and safety KPIs, in accordance with the basic life support (BLS) for nurses. GEROT methodology (Routine Management). • We provide training for vehicle safety, Every week the main deviations found are hearing protection, respiratory protection, addressed at meetings involving senior use of PPE in addition to other training leadership of the Company (managers, established in the Regulatory Standards: officers and the Chief Operations Officer). work at height; confined spaces; electricity; These issues are presented to the Strategy LOTO (lock-out tag-out); chemical products; Committee every month (or as needed). machinery operation; firefighting; and others. • In addition to applying Safe work instructions (ITS) and the Health, Safety & Environment Toolbox Talks (DDSMA), we have a schedule of weekly HSE awareness raising and prevention campaigns. • Lastly, we have a “PTW Coach” Program and Behavioral Observation Program, as already mentioned in this section.
Biosev Sustainability Report 73 Crop Year 2019/2020 Highlights in the crop year “Safe Choice” Campaign Safety Day Health and safety precautions related to communities and the In June and July 2019 we ran a “Safe Choice” “Safety Day” events were held at all operating environment campaign to reinforce the daily transformation plants between February 14 and March 10, and progress of our safety culture. 2020 (except for the Lagoa da Prata Mill, Items such as vehicle safety, dust and noise which had to be postponed because of emissions, and the risk of contamination, leaks The campaign is conducive with our policy of the COVID-19 pandemic). All areas of the or spills are continuously addressed by careful ensuring an increasingly safe and productive operation were embraced (agricultural and route planning, fleet and equipment inspections workplace with quality-of-life for all employees industrial), involving the participation of and maintenance and, where necessary, road and partners. We believe that every day “each thousands of our employees. spraying. little action counts”. This is an annual initiative. This is a day when We have a contract with a specialized company our employees meet to learn more about that has emergency responders on call to safety through initiatives such as testimonials, respond to any environmental emergencies music, competitions and art. in our operations (including emergencies involving the transportation of The events in 2020 had the main slogan: products and materials). “Close the 5 doors of risk: rushing, improvising, presuming, exceptions and SAFE excess confidence”. Our senior leadership CHOICE participated too, including the operations officer and company CEO.
The campaign consisted of initiatives across all plants, such as training in occupational accident and illness prevention, recognition of good HSE practices and conduct, vehicle safety blitzes and other initiatives.
Biosev Sustainability Report 74 Crop Year 2019/2020 Vehicle safety Our operations employ a large fleet of machinery, On an annual basis, as part of Brazil’s national As a result of our efforts, traffic accidents vehicles and equipment that plant, harvest Yellow May campaign, we implement initiatives involving injuries decreased significantly by 72% and haul sugarcane to our mills for processing to raise awareness about safe driving practices. from the previous crop year and by 80% from and then transport processed products to our crop year 2017/2018 (including Company and customers. third-party fleets), as shown below: On a daily basis, thousands of drivers operate yellowmay vehicles and machinery on our properties 24 when driving, let safety lead the way hours a day, and need to do so safely as any Number of vehicle careless driving can have serious consequences. accidents involving injury During Yellow May week in crop year 2019/2020, These risks make vehicle safety a crucial aspect of we addressed traffic safety at all our operations 45 32 9 our operations. through Toolbox Talks and traffic blitzes at our Biosev has a Vehicle Safety Program comprising mills and in our cane fields. We also provided rules, guidelines and procedures on vehicle safety tips via radio broadcasts and instant safety. messaging, and implemented other initiatives to raise awareness and engagement around vehicle As part of the program, we regularly renew safety. our fleets, manage driver’s licenses and their expiration, conduct regular vehicle inspections, One of the most significant factors in traffic and perform other preventive activities. accidents, and one of our chief concerns in relation to vehicle safety, is fatigue. We We also have contracts with vehicle tracking recommend that before sitting in the driver’s firms, with both our light and heavy vehicles seat, drivers should check that they are feeling Crop Year fitted with telemetry systems. Driver, driving and well and alert. If they feel they are unfit to drive, 2017/2018 geographic location data can be compiled into they must notify their leader and either rest a 2018/2019 reports or reviewed in real time. The system also while or not operate the vehicle or machinery at 2019/2020 generates sound alarms if the driver commits all that day. specified traffic violations or engages in unsafe driving (e.g. speeding, sudden braking, etc.).
Biosev Sustainability Report 75 Crop Year 2019/2020 Health GRI 102-41, 403-3, 403-6
We have the Occupational Health Surveillance Everyday health care management is discussed We have an outpatient clinic at each mill to Program (PCMSO), which addresses primary by our Internal Accident Prevention Committees handle emergencies and a fleet of ambulances on health issues, always based on a preventive (CIPA) and Internal Rural Accident Prevention standby. approach. All our plants participate in the Committees (CIPA-TR). Our employees and program. service providers can always rely on the support All employees are offered a health care plan of our Specialized Occupational Health and regulated by the National Health Agency (ANS), The PCMSO follows our Environmental Risk Safety Service (SESMT), which includes our which provides access to consultations, exams, Prevention Program (PPRA). The PCMSO health team responsible for running the above therapy, clinical hospitalization and surgery as includes the Hearing Protection Program (PCA), health programs. part of the list of procedures covered. We also the Respiratory Protection Program (PPR), the offer optional dental plans to eligible employees, Ergonomics Program, the Drowsiness Prevention Our employee services include health care offering prices cheaper than can be found on Program, and flu vaccination campaignsand professionals working from our plants, including main street. monthly health campaigns, primarily addressing physicians (one per plant), nurses (one per plant) topics related to anti-smoking, the flu, dengue and nursing technicians (three to five per plant, Employee patient health information is stored in fever and STDs, amongst other illnesses. depending on the number of employees). We records by us, in the strictest of confidence. Every year our plants celebrate Pink October also have outsourced consultants: an ergonomics We lastly point out the crucial role played by our (breast-cancer prevention) and Blue November expert (one per plant) and hearing care specialists health care team in fighting the pandemic. For (prostrate cancer prevention). (one per plant). In addition, we have a health further information please see the section Our care professional in charge of standardizing and COVID-19 response. Both the PCMSO and other health care programs enhancing processes, under the oversight of an undergo internal audits as part of the PRISMA HSE manager. Program) and independent audits.
Biosev Sustainability Report 76 Crop Year 2019/2020 Health performance GRI 403-10 The sugar and ethanol industry comprises a series of agroindustrial activities which, because of the tasks involved, could be associated with certain agents of risk to employee health, consisting of physical, chemical, biological or ergonomic risks (the main health problem observed in the sector is musculoskeletal disorders). Although risk exposure is inherent in the sector, no Occupational Injury Notices (CAT) for occupational illnesses were made in the 2019/2020 crop year. This is thanks to our awareness raising campaign and properly implemented control measures, such as the use of Personal Protective Equipment (earmuffs and protectors, goggles, gloves, respirators, overalls) and Collective Protective Equipment, as well as the adoption of good ergonomics practices including the use of dollies, overhead cranes and winches.
Crop Year Disclosure 2019/2020 Number of fatalities as a result of zero work-related health issues Number of reportable occupational zero illnesses
Biosev Sustainability Report 77 Crop Year 2019/2020 Injury severity Injury rate(2) rate Safety performance(1) GRI 403-9 7.83 6.58 4.54 310.10 127.00 133.84
Because of our daily efforts, instructions and awareness raising, for the second consecutive crop year we did not experience any fatalities due to occupational accidents at the Company. The number of injuries(2) plummeted by 46%: from 155 in the 2018/2019 crop year to 84 in the 2019/2020 crop year. The Injury Frequency Rate also plummeted compared with the previous crop year, by 31%, from 6.58 to 4.54. Only the Injury Severity Rate rose, just slightly, by around Number of Number of injuries (2) fatalities 5%: from 127.00 to 133.84. 222 155 84 1 0 0 We are still far from our ideal target, as we are aiming for “zero injuries”. However, we are making gradual and consistent progress on our track record in previous crop years (which can be seen in our previous annual Sustainability Reports). The 2019/2020 results are amongst some of the lowest figures achieved in recent years.
NOTE: (1) For direct employees. (2) Includes fatalities, lost-time injuries (LTIs) and non-lost- time injuries (NLTIs). Not including first-aid cases. Crop Year 2017/18 2018/19 2019/20
Biosev Sustainability Report 78 Crop Year 2019/2020 Consolidated table: occupational injuries – direct employees
Crop Year Crop Year Crop Year Disclosure Reporting criteria 2017/2018 2018/2019 2019/2020 Number of fatalities as a result of work-related injuries 1 0 0 Includes fatalities Rate of of fatalities as a result of work-related injuries 0.04 0.00 0.00
Number of high-consequence work-related injuries 63 51 32 (excluding fatalities) Includes lost time injuries (LTIs) Rate of high-consequence work-related injuries 2.22 2.16 1.73 (excluding fatalities)
Number of reportable occupational injuries 222 155 84 Includes fatalities, lost-time injuries (LTIs) and non-lost- Injury Rate 7.83 6.58 4.54 time injuries (NLTIs). Not including first-aid cases.
Injury Severity Rate 310.10 127.00 133.84 An indicator we monitor due to its relevance.
Total hours worked 28,361,439 23,558,610 18,515,014
Biosev Sustainability Report 79 Crop Year 2019/2020 SOCIAL PLATFORM - COMMUNITY RELATIONS
Biosev Sustainability Report 80 Crop Year 2019/2020 Community relations guidelines GRI 102-15, 201-1, 203-2, 411-1
Civic engagement We are aware of our economic, social and Recognizing the rights of CIVIC This consists of social environmental impacts on local communities. ENGAGEMENT indigenous communities PROGRAM campaigns, sponsorship for We are responsible for some 10,000 direct and SOCIAL RESPONSABILITY local development projects, GRI 411-1 30,000 indirect jobs in Southeast and Midwest donations and incentives for Brazil. With a footprint in eight different sports and culture. Biosev has operations in Mato Grosso do Sul municipalities, we are one of the main job that are near indigenous reservations. creators in our geographies, propelling local development and even that of cities in the Community togetherness Our relations with these communities are governed by our Policy on Indigenous vicinity of our operations. COMMUNITY Actions to increase proximity and TOGETHERNESS interact with local populations Lands, which is available for reference at We accordingly continued our social initiatives PROGRAM SOCIAL RESPONSABILITY (valuing diversity, VEM program). https://www.biosev.com/en/sustainability/ and projects in order to bolster and expand our indigenous-land-policy/. participation in community life. This policy recognizes indigenous We have a Social Responsibility Policy and our communities, their social organization and projects and initiatives are grouped into four Health education program their rights to their lands under law. major “social causes”. HEALTH Initiatives emphasizing health Under the policy, we commit to respect EDUCATION We want to be close to communities at all times PROGRAM and quality-of-life. the boundaries of, not to take or maintain and cement initiatives that create positive value SOCIAL RESPONSABILITY possession of, and not to source sugarcane for people and deepen their trust. that has been harvested on, indigenous lands. The purpose of the policy is to In the 2019/2020 crop year our social initiatives preserve the environment and the cultures prioritized our social causes and received of indigenous peoples. investment of more than R$ 1.3 million, in Environmental education either direct investment or using tax incentives. ENVIRONMENTAL Environmental education No violations of the rights of indigenous and EDUCATION PROGRAM and awareness in traditional peoples were identified during SOCIAL RESPONSABILITY communities and schools. the 2019/2020 crop year.
Biosev Sustainability Report 81 Crop Year 2019/2020 Core social initiatives and programs GRI 201-1, 203-2, 413-1
Local development and engagement initiatives were carried out for all our plants in the 2019/2020 crop year. Our social programs, initiatives and projects included: Amor de Mãe Homeless Shelter
Around 30 staff members from our eight plants Civic engagement and corporate offices comprising our Health, Safety & Environment (HSE) team volunteered in a social and environmental initiative that took place in February 2020, at the Amor de Mãe Homeless Shelter, which looks after the homeless in Morro Agudo (SP). The volunteers worked on two revitalization fronts: the vegetable garden and communal social area. At the vegetable garden, activities Initiatives organized by our included planting new types of vegetables, adding plants manure and identifying available varieties. The vegetable garden's produce is consumed by the Over the course of the 2019/2020 crop year organization itself. The shelter’s employees were our plants directly organized a number of also given important tips on how to keep the initiatives, such as winter clothing campaigns, vegetable garden productive at all times. The distribution of Christmas hampers and other communal social area received a fresh lick of paint Christmas initiatives, donations to organizations and wooden chairs and tire stools, all made from and collection of toys. recycled material. Specialist professionals also instructed the groups in their activities, which made the area even more comfortable.
Biosev Sustainability Report 82 Crop Year 2019/2020 Environmental education All of our plants carried out environmental education initiatives over the 2019/2020 crop season, such as:
“Green June” Campaign Fire prevention campaigning in Environmental Education schools Program of the Environmental To mark World Environment Day (June 5), in June Military Police (Progea) of 2019 we launched a “Green June” Campaign at All of our plants took part in a community all our plants, which aims to raise awareness and campaign from July to September 2019 focusing Minas Gerais engage both employees and local communities on schools in our geographies, addressing From April to November 2019, in Lagoa da Prata about the importance of properly disposing of solid the importance of fire prevention and the (MG), we sponsored the edition of Progea, waste and fire prevention. precautions necessary. The aim was to nurture a consisting of various activities in municipal greater level of awareness amongst this younger The company's materials, talks and stands addressed schools fostering environmental awareness generation and to disseminate good practices. information about the unnecessary production of for children aged 8 and 9. Three schools waste (such as: printing and food waste), reusing In the campaign approximately two thousand participated in the program in this 2019 edition, materials (e.g.: using fewer disposable cups), types students watched talks (special classes) in which presented talks and initiatives to the of waste, means of segregation, using different the cities of: Colômbia, Leme, Morro Agudo, students inside and outside the classroom, such color trash cans and recycling and other means of Orlândia, Pitangueiras, Pontal, São Joaquim as drama plays and the Semeando o Futuro disposing of this waste. da Barra and Sertãozinho, in São Paulo state; project, which teaches how to plant and look after native saplings. This campaign also emphasized the seriousness Capoeirão, Japaraíba, Lagoa da Prata and Luz, in Minas Gerais; and Maracaju and Rio Brilhante, in of fires, both for the environment and for people, The highlight and climax of the project is in Mato Grosso do Sul. placing lives at risk. Prevention precautions and November, when the children plant saplings measures were addressed, and the campaign Leaflets were also handed out for young people on the banks along the buffer area of the São included the donation of native saplings to local to take home and share their new knowledge Francisco River. Approximately 3 thousand residents. with their families. seedlings have been planted to date.
Biosev Sustainability Report 83 Crop Year 2019/2020 Health education program
Health guidelines “Educa Judô” Program
In November 2019 at the Leme plant (Leme - SP) This program harnesses judo as an educational, we organized health guidance initiatives in local health, development and transformation tool in the communities, measuring blood pressure and lives of children. It takes place at eight plants in the body mass indexes, carrying out blood glucose cities of Ribeirão Preto, Sertãozinho, Cajuru, Morro tests, conducting walks along the banks of the Agudo, Franca, Serrana, Orlândia and Campinas, in Mogi Guaçu river, donating 100 saplings and São Paulo state, benefiting children aged 6 to 14, with giving sandwiches to all of those in attendance. approximately 100 students in each center.
Quality of life campaign Athletics and Parkour School
We carried out a quality of life campaign in This school promotes sporting initiation and stimulates September 2019 in Rio Brilhante (MS). The the practice of sports in the city of Leme (SP). The campaign consisted of: medical consultations, project involves 150 children and adolescents from examinations, blood donations, mini bakery the town and keeps them busy by providing training courses, mapping candidates for vacant activities supervised by specialist psychologists, social positions, hairdressing, manicures and pedicures, and educational initiatives and sporting festivals. Family storytelling for children and adopting animals. members or guardians also participate, to create a sense of togetherness and encourage participation in these initiatives, thus helping strengthen family bonds.
Biosev Sustainability Report 84 Crop Year 2019/2020 Community togetherness
Colhendo Memórias (“Capturing “Livro de Ouro” VEM (Vivenciar, Entender e Memories”) Multiplicar - Experience, Learn This children’s play tells the story of a magical and Multiply) This is a tax-deducted project in partnership city called Livrópolis, where inhabitants spend most of their time reading, writing, drawing, with the municipal government, the Sugarcane In place since 2015, VEM is an open-door playing musical instruments and painting. “Livro Museum and municipal schools in Pontal (SP). program that hosts visits by local community de Ouro” encourages reading and addresses The program uses art as a way to teach about members to raise their awareness about the the issue of technology and smart phones, and and preserve regional culture and the history Company and the sugar and energy sector. how their excessive use can impair interpersonal of sugarcane in the region and Brazil. It also This enables us to maintain more transparent, relationships, autonomy and creativity of helps to attract visitors to the museum and organized and effective two-way communications. individuals. The play toured the cities of Barrinha, works to empower youth and strengthen civic The program is open to all comers and the visits São Joaquim da Barra, Guará, Leme, Sertãozinho, engagement. The education program, which take place periodically. Visitors learn about Colômbia, Ribeirão Preto, Pontal, Orlândia and comprises three stages, begins with training for our agroindustrial practices, our production Pitangueiras, in São Paulo state, with an average the education team (monitors and teachers), who processes and the products and initiatives in aid audience of 259 children in each presentation, then apply the program content in a classroom of sustainability in our businesses and activities. amounting to a total audience of 2,569 people. setting, including activities in preparation for an During crop year 2019/2020, approximately excursion to the Sugarcane Museum in the third 2,000 people visited our facilities as part of the and last stage of the program. In the 2019/2020 program. crop season around 650 grade 4 students in Pontal's municipal schools participated in the initiative.
Biosev Sustainability Report 85 Crop Year 2019/2020 RELATIONS WITH CUSTOMERS AND CONSUMERS GRI 102-6
Biosev Sustainability Report 86 Crop Year 2019/2020 We have a broad and diversified customer base. Part of our produce goes to final consumption necessary around product quality and Biosev’s customers include wholesale chains, and part for consumables in industry (and other responsibility—for further information see the retail chains, food and beverage companies, fuel segments). section “Quality” in the chapter “Integrated field distribution and marketing companies, electric and mill operations”. utilities, and pharmaceutical companies. We export to various regions in the world, but mainly China, Southeast Asia, the USA, European Within Biosev’s product portfolio, only coarse Our products are sold to customers in Brazil and Union, North and West Africa, and the Middle sugar products for retail are subject to local overseas. East, with most transactions taking place through product labeling regulations. Biosev sells sugar international trading companies. to retail markets in Mato Grosso do Sul under its proprietary brand, Açúcar Estrela. Net revenue ex-HACC/export performance The fact we are a part of Louis Dreyfus Company by market (%) (R$ ‘000) Group opens doors to virtually all international We use pesticides in a proper and highly controlled and national markets. This partnership expands manner, utilizing state-of-the-art methods to 31.7% 68.3% access to information about the sugar and mitigate operating, environmental and food-safety Crop Year ethanol sectors, providing historic data, studies, risks. For example, we have pesticide management 2018/2019 analyses and risk and credit consultancy, along procedures to prevent the use of highly toxic with surveys, opinions and estimates on a range pesticides (pesticides classified as 1A and 1B by the 37.3% 62.7% of topics related to the sugar and ethanol sectors World Health Organization), and procedures on Crop Year both nationally and internationally. crop dusting. 2019/2020 We also seek the highest standards of food quality and safety. We take all the precautions Foreign Markets Domestic Market
Biosev Sustainability Report 87 Crop Year 2019/2020 SUPPLIER MANAGEMENT GRI 102-9, 102-10, 102-15, 204-1, 205-1, 308-1, 308-2, 407-1, 408-1, 409-1, 412-1, 412-3
Biosev Sustainability Report 88 Crop Year 2019/2020 Biosev’s supply chain comprises suppliers of This two-pronged approach allows us to satisfy As shown in the table below, the share of sugarcane, other raw materials and inputs the needs of both classes of suppliers while contract growers has increased as a result of our (fertilizers, pesticides, fuels, chemicals, packaging, securing a reliable supply of raw materials to our strategy of optimizing cash-flow management etc.) and services (health insurance, dental mills. by reducing the need for cane-field investments insurance, life insurance, food service, security, while securing a reliable supply of cane to meet rental equipment and vehicles, maintenance, In crop year 2019/2020 we sourced sugarcane mill demand. consulting, etc.). from 71 municipalities, managing approximately 315,000 hectares of contract cropland and paying Percentage of third approximately R$ 1.15 billion to contract growers Crop Year party-sourced and partners. Sugarcane suppliers sugarcane(3) 2017/2018 35.6% GRI 102-9, 102-10 Monetary value of payments made to 2018/2019 36.2% sugarcane suppliers and partners (R$) in We use two different approaches to sugarcane crop year 2019/2020(1)(2) 2019/2020 38.1% sourcing: Type Amount R$ Partnership agreements: under which Biosev is responsible for the land and all agricultural Own (partnerships) 357,344,451 Third-party sourced operations. This approach includes partnership 792,650,524 and lease agreements. (contract growers) Total 1,149,994,975 Contract farming: under which contract growers either plant, manage, harvest and deliver sugarcane crops directly to the mill, or Biosev harvests the sugarcane from the supplier’s sugarcane fields. NOTES: (1) “Own” refers to payments for the use of land The partnership approach is advantageous for (partnership), with Biosev defraying the costs of landowners, who benefit from our agricultural planting, crop management and harvesting. (2) “Third-party sourced” refers to sugarcane know-how and experience, while the contract purchased from contract growers for processing at farming approach is beneficial for outgrowers, our mills. who benefit from greater independence in (3) Percentage calculated in terms of crushed volumes. managing their cane fields.
Biosev Sustainability Report 89 Crop Year 2019/2020 The number of both contract farming and to generate profitable financial returns on our partnership agreements increased in the crop operations, given that sugarcane transportation Meetings with sugarcane year compared to the previous year. represents a major cost item. For this reason, we suppliers have no contracts in regions other than those in Number of agreements which our mills are located. On an annual basis, we organize meetings Total agreements with contract growers and partners to discuss regulatory developments, Crop Year Contract Partnership Geographic distribution of contracts in crop government inspections and environmental farming year 2019/2020 aspects related to sugarcane growing, fire 2017/2018 1,250 921 prevention and response measures, market 2018/2019 1,020 1,271 Contract opportunities (including RenovaBio), value State Partnership 2019/2020 1,595 1,699 farming creation, and sustainability. Change 56.40% 33.70% São Paulo 1,514 1,246 During these meetings, we also strengthen 19/20 x 18/19 Minas Gerais 32 316 engagement around Rural Environmental This reflects the larger share of contract growers Mato Grosso do Sul 49 137 Registry (CAR) requirements under under our sourcing strategy, as well as contract Other locations in the Brazilian Forest Code, as a way to 0 0 changes as part of the contract management Brazil mitigate environmental risks and enforce compliance. process, as a result of: Total 1,595 1,699 • the expiration of existing agreements, which Among the supplier events in crop year may or may not be renewed; There were no significant changes in the crop 2019/2020, a highlight was the supplier • partners and contract growers being newly year in our approach to managing the sugarcane meeting on November 7, 2019 in Ribeirão onboarded; and supply chain. We continued to implement Preto (SP), which provided a unique • amendments following family succession or continuous improvements that have increased opportunity to further strengthen our company reorganizations. process efficiencies, and we have actively partnership with suppliers, gain insight into managed our portfolio of cane field assets to different issues, and share best practices to In sourcing sugarcane, it is essential for the improve crop performance and, ultimately, our improve crop yields. business that we develop local partners if we are results of operations.
Biosev Sustainability Report 90 Crop Year 2019/2020 Other supply chains We regularly conduct factory inspection testing (e.g. at suppliers of agricultural machinery GRI 102-9, 102-10 parts or new industrial inputs) to support onboarding new suppliers. Having a large In the 2019/2020 crop year we completed R$ vendor base gives us greater bargaining 1.07 billion in transactions with 4,691 suppliers power while also allowing us to maintain high outside the sugarcane supply chain (described in standards of quality. the previous section). In crop year 2019/2020 we joined the SCA Number of suppliers procurement group alongside other sugar and Crop Year and orders issued ethanol mills. The alliance allows members to 2018/2019 4,008 obtain volume discounts for certain categories of collectively procured items,lowering 2019/2020 4,691 procurement costs. Change 17% We also implemented changes in supplier management, including implementation of a Amounts involved Procurement Planning function tasked with Crop Year (R$ billion) improving procurement performance. 2018/2019 3.37 In addition, we created new indicators, 2019/2020 1.07 onboarded new suppliers and explored new procurement opportunities, sourcing fromlocal Change -68% suppliers to the extent possible.
Biosev Sustainability Report 91 Crop Year 2019/2020 Local sourcing(1) GRI 102-9, 204-1
Biosev aims to expand local sourcing as a way to Supplier geographies Proportion of spending on support local development while also obtaining locally-based suppliers(2) logistics, operational, environmental and financial Crop Year Crop Year Change Crop Year benefits. 2018/2019 2019/2020 State Operation São Paulo 67% 48% -19 p.p. 2019/2020 This is a long-term, continuous process that Minas Gerais 10% 20% 10 p.p. Mato Grosso Passa Tempo 40% considers the total cost of procurement (product Mato Grosso do Sul Rio Brilhante 35% + shipping + taxes), with preference given to local 9% 23% 14 p.p. do Sul Lagoa da suppliers. Minas Gerais 63% Other Prata Some services and items may be sourced locally locations in 7% 9% 2 p.p. Continental 88% or otherwise depending on geographical distance Brazil Leme 91% and technical and administrative requirements. International 7% 0% -7 p.p. Santa Elisa 91% São Paulo Whenever possible, we source locally. Total 100% 100% UMB 91% In crop year 2019/2020, 91% of contracts were Vale do Our operations in the state of São Paulo account for 91% with suppliers located within the states where Rosário the highest proportion of spending on locally-based we operate (São Paulo, Minas Gerais and Mato Mato Grosso do Sul 38% suppliers. Grosso do Sul). As shown in the following table, Minas Gerais 63% the share of suppliers in Minas Gerais and Mato This reflects the state’s highly developed São Paulo 91% Grosso do Sul increased significantly in the manufacturing and services industries. But we Total 76% crop year as a result of efforts to develop local have also increased the procurement volumes suppliers. sourced from local suppliers in Mato Grosso do Sul NOTES: (1) Not including sugarcane sourcing. and Minas Gerais, although these states continue (2) We define local suppliers as those located within to underperform São Paulo in the proportion of the same states as our mills. This indicator includes the supply of equipment, materials and services used spending on locally-based suppliers. in our production and non-production processes.
Biosev Sustainability Report 92 Crop Year 2019/2020 Procurement, screening and assessment processes GRI 102-9, 205-1, 308-1, 308-2, 403-7, 407-1, 408-1, 409-1, 412-1, 412-3
Over the years we have enhanced our procedures applicable laws and regulations, as well as for screening sugarcane and other suppliers specific clauses on preventing corruption and against legal compliance and, where applicable, forced, slave and child labor. union relations requirements. All contracts also incorporate by reference our Suppliers are screened against economic, quality Code of Conduct, which counterparties are and legal compliance requirements (including contractually required to comply with. The Code labor, social and environmental aspects). of Conduct formalizes guiding principles of Supplier onboarding and retention observes pre- business conduct, including in our supply chain. established requirements. We also have procedures in place for assessing In supplier selection and onboarding, our Quality, environmental, social and human rights risks, Health, Safety and Environment (QHSE) Policy which are detailed in the following section. establishes that Biosev will only select and onboard suppliers that are aligned with our These efforts to identify and address impacts Code of Conduct, procedures and standards of related to labor, social, human rights, excellence, and are environmentally compliant. environment, health and safety practices in our sugarcane supply chain are an integral part of All sugarcane sourcing, agricultural partnership commitments concluded with the International and procurement contracts contain standard Finance Corporation (IFC), one of our clauses requiring that the relevant services and/ shareholders, and with Proparco, a creditor. or activities be conducted in accordance with
Biosev Sustainability Report 93 Crop Year 2019/2020 Assessing environmental, social and human-rights risks
In the sugarcane supply chain, each year we basis, we also check that suppliers are compliant collection and disposal services) are required check our contract growers against the Brazilian with payment and other legal requirements. to provide certain mandatory documents such Ministry of Employment’s slave and child labor In addition, we inspect their equipment, as Environmental Operation Permits (or proof blacklist (a list of employers that have been facilities and camps, and working conditions for of exemption from permit requirements) and found to use child or forced labor). No violations employees or contractors. Federal Technical Certificates issued by the were identified during the reporting period. environmental authority, IBAMA. In environmental assessments, we review a For services suppliers specifically, a third-party Fale checklist of documentation demonstrating firm conducts an independent, desktop- We also operate a whistleblowing channel (“ com a Biosev compliance with legal requirements before based social and environmental assessment ”) to receive and address any reports approving new contracts with growers, to identify requirements needing to be met on human rights violations. partners or properties. A total of 396 contracts before approving work orders and payments. In concluded in the year underwent environmental crop year 2019/2020, a total of 2,843 contracts All of our operations have assessments. underwent this assessment, with 7,817 third- party employees being cleared for induction. conducted environmental, For materials and services suppliers, we also use the “Serasa Fornecedor” portal for assessments In assessments against social and labor social and human rights on financial health and cash flow capacity. When requirements, we review the documentation of risk assessments on a onboarding a new supplier, our teams assess both the company and its employees. For manual whether that supplier will be able to perform the planting workers, we engage third-party firms sampling basis, with a contract and check the status of its obligations to conduct sampling-based inspections of living to employees, suppliers, tax authorities, etc. quarters (where applicable) and to implement focus on supply chains Contracts are only concluded with suppliers action plans where necessary for compliance. with higher risks for passing this assessment, mitigating the risk of In environmental assessments, suppliers contract breaches and losses. On a monthly posing a higher risk (such as hazardous waste violations.
Biosev Sustainability Report 94 Crop Year 2019/2020 OTHER STAKEHOLDERS
Biosev Sustainability Report 95 Crop Year 2019/2020 Government Trade associations agencies and GRI 102-12, 102-13 As part of our commitment to operating sustainably political parties in and supporting the development of the sugar and GRI 102-13, 415-1 ethanol industry, we actively participate as members of trade and institutional associations. Biosev’s relations with government agencies We are members of important committees within and government bodies primarily involve legal several of these associations, including the Brazilian or other matters affecting our business, such as Sugarcane Industry Association (UNICA), the largest securing licenses and government approvals. trade association in the sugar and ethanol industry— Whenever necessary, we attend meetings with in which we are members of the Sustainability, municipal governments and environmental and Communications and Labor Relations Committee, supervisory agencies at the federal, state and where participants share best practices in our municipal levels, in all regions where we operate. industry—and the Brazilian Association of Listed Companies (ABRASCA). We seek to provide channels for open and transparent communication with government Biosev also actively engages with other important stakeholders, and work to consistently develop associations, including: a positive agenda to drive improvements and • the Mato Grosso do Sul Bioelectricity Producers’ reduce negative environmental and social Association (BIOSUL) impacts. • the Minas Gerais Sugar and Ethanol Industry Association (SIAMIG), an umbrella organization In relation to political parties, in crop year bringing together the Minas Gerais State Sugar- 2019/2020 we made no campaign contributions Ethanol Industry Association and alcohol and sugar to political candidates and/or parties, in manufacturing labor unions compliance with Brazilian laws and regulations. • The São Paulo state environmental agency, Companhia Ambiental do Estado de São Paulo (CETESB), where we are members of the environmental chamber for the sugar and ethanol industry • River Basin Committees (CBH)
Biosev Sustainability Report 96 Crop Year 2019/2020 ENVIRONMENTAL MANAGEMENT
Biosev Sustainability Report 97 Crop Year 2019/2020 Management Technical Meeting on the Environment approach In February 2020 we held our 2nd Technical Meeting on the Environment, attended by environmental teams from all plants as GRI 102-12, 102-15, 307-1 well as HSE supervisors and the health, safety, environment and sustainability corporate team. At the company we have experienced a veritable and robust transformation. As a part of this In addition to discussing and critically analyzing indicators and we are reshaping our operating strategy in the reviewing the area’s strategic plans, the meeting carried out other direction of sustainability. activities such as: training in time management, technical visits and social and environmental initiatives (revitalization of the communal Our daily environmental management is social area and vegetable garden at the “Amor de Mãe Homeless primarily underpinned by impact mitigation Shelter” - more details on page 82). and monitoring policies, programs, actions and strategies along with environmental education initiatives involving employees, suppliers, partners, communities, customers and other stakeholders. But it goes beyond this. We have a formidable team of environmental engineers and analysts Environmental Protocol who manage the topic through a strong presence in the field. All operations in the state of São Paulo have subscribed to the São We want to continually and proactively Paulo Environmental Protocol for the Sugar and Ethanol Industry, evolve through prevention, conservation and a state government initiative to implement environmental preservation initiatives (where necessary). We best practice in the industry in order to achieve environmental have accordingly made important progress in our progress and mitigate impacts. environmental management.
Biosev Sustainability Report 98 Crop Year 2019/2020 Impact mitigation GRI 413-1
We recognize that our production operations and activities generate impacts that vary depending on their geographies, footprint and the type of activity. This is a continuing area of focus for our Company, and one which we address through mitigation and environmental awareness initiatives. Some of our key related initiatives, which we describe throughout this Sustainability Report, are summarized in the following infographic.
Biosev Sustainability Report 99 Crop Year 2019/2020 Mitigation initiatives Vinasse and wastewater
Continual investment Water savings programs: Planning and control of vinasse A Fertigation Master Plan establishing in treated wastewater reducing water and treated wastewater guidelines on medium and long-term and vinasse application withdrawals also reduces application in our cane fields to investment to better manage the volumes infrastructure and generated wastewater maximize operating efficiency of vinasse and treated wastewater used in processes in cane volumes, mitigating as part of our annual Vinasse cane fields, and identifying potential areas for fields. social and environmental Application Plan (PAV). expansion of vinasse usage. risks.
Chemicals
HSE management Installation of chemical Periodic inspections and system procedures for storage bunding systems. maintenance for tank chemicals. integrity.
Biosev Sustainability Report 100 Crop Year 2019/2020 Environmental incidents Protection of native forest land
Incident reporting, Specialized emergency Emergency Training for sugar cane suppliers on the investigation and response firm Response Plans at Forest Code, with a focus on compliance response procedures. engaged. all units. and preserving protected areas and legal reserves.
Air emissions Pesticides Waste management management
Boiler scrubbers and Pesticide management procedures to prevent the use of Management procedures and emissions monitoring. highly toxic pesticides (pesticides classified as 1A and 1B by training on waste segregation the World Health Organization). and disposal. Cropdusting procedures.
Biosev Sustainability Report 101 Crop Year 2019/2020 Rural fire protection and control GRI 413-1
We conduct no controlled burning in our farm As another fire protection initiative in the operations. Any fires that occur are typically 2019/2020 cop year, the satellite-based fire Discussing fire prevention and accidental or arson. Fires can also be started outbreak detection and monitoring system response naturally, such as by thunderbolts. we had piloted in the previous crop year was rolled out to our other operations. On April 25, 2019 we attended the 5th Fire outbreaks are a particular concern in Technical Meeting with the Sugar and that they expose people to risks and cause The system identifies fire outbreaks and Ethanol Industry, organized by the São environmental damage. For this reason, we automatically triggers fire responder alarms. Paulo State Environmental Police, in São dedicate great effort to fire prevention and This ensures a more timely and effective José do Rio Preto (SP). response. fire response and consequently reduces environmental impacts and occupational We were represented at the event by At an institutional level, we have a Fire health and safety risks. employees from our corporate function Prevention Program that encompasses a wide and our operations in São Paulo State. range of initiatives and activities. The system also provides a real-time heat The event provided an opportunity map of fire risk, supporting the development to update our knowledge about fire All our operations have Emergency Response of preventive strategies and measures such protection and response, strengthen Plans and Fire Responder Teams who receive as positioning tank trucks at locations with a collaboration and transparency in our continuous training and instruction. Our higher risk for fire outbreaks. operations are also covered by Mutual Assistance relations with the event organizers and Plans (PAM) for joint firefighting operations in We also raise awareness about fire prevention delegates, and share experience, with their regions. through environmental education campaigns, the event agenda featuring subjects as described in the chapter “Social platform – such as operational assessments, Tank trucks are stationed at all mechanized community relations” of this Report. standardized criteria on determining harvesting fronts and wherever any hot work, root causes, firebreaks, and other topics. such as welding, is being carried out. As another measure in our field operations, firebreaks are established and kept clean and of sufficient width to contain the spread of any fires.
Biosev Sustainability Report 102 Crop Year 2019/2020 Environmental Harvesters education for equipped with employees and firefighting kits. communities. Trained and well- Guidance on equipped fire housekeeping and brigades. waste segregation.
Internal audits to assess Farm operations permitted compliance with fire control only with a tank truck on and prevention procedures. standby (for mechanized harvesting and hot work).
Mutual Assistance Fire Harvesting fronts Plans for firefighting provided with operations. protection smoking rooms. and control Preventive maintenance on equipment to prevent fuel Warning signs and spills and friction points patrols to prevent potentially causing ignition. arson.
Satellite-based fire monitoring and A fire hazard map to inform observation stations to rapidly strategic preventive and reactive detect fire outbreaks. Firebreak Fire decisions for high-risk areas. management and extinguisher maintenance. management.
Biosev Sustainability Report 103 Crop Year 2019/2020 Biodiversity on our agenda
The sugarcane we process is sourced from third- All our industrial plants are located in rural party cane fields under contract farming or land that is registered in the National Rural partnership agreements (for further information, Environmental Registration System (SICAR). see the chapter “Supplier management” of this Biosev’s Lagoa da Prata (Lagoa da Prata - MG), Report). Under these agreements, Biosev’s scope Leme (Leme - SP), Maracaju (Maracaju - MS – of management is in most cases limited to the this unit is currently in hibernation), Santa cane fields proper. Elisa (Sertãozinho - SP) and Vale do Rosário (Morro Agudo - SP) sites have protected The maintenance of any protected areas and areas within their boundaries and legal reserves on the property remain the we are responsible for their responsibility of the relevant landowners. Despite preservation. these limitations, Biosev encourages partners and contract farmers to protect these areas and provides guidance on subjects such as the Rural Environmental Registry and the Brazilian Forest Code. Where forest areas are specified as being under our responsibility, we ensure they are preserved and, if necessary, remediated.
Biosev Sustainability Report 104 Crop Year 2019/2020 As part of our continuous efforts to protect biodiversity, we: • have structured fire prevention and response • have special projects in place at some of our • have subscribed to the São Paulo measures, as described in the section “Fire sites; for example, our Lagoa da Prata (Lagoa Government’s Greener Ethanol Protocol protection and control”. da Prata - MG) operation has established a at all sites in São Paulo State. This protocol partnership with a clinic for the care of wild fosters initiatives such as: eliminating burnt- • monitor the fauna and floraat some of animals that are rescued in poor health. We cane harvesting (a practice that has already our sites under environmental license are working to gradually standardize our been discontinued), ensuring our suppliers requirements (Leme (Leme - SP), Rio Brilhante initiatives across different sites. are registered with the Rural Environmental (Rio Brilhante - MS) and Passa Tempo Registry (CAR), protecting and rehabilitating (Rio Brilhante - MS)) and under Bonsucro • have an Environmental Handbook for riparian vegetation, preserving the soil, certification requirements (Santa Elisa suppliers with guidelines and requirements enhancing water conservation and recycling, (Sertãozinho - SP). on compliance with the Forest Code and on implementing best practices for pesticide protecting native vegetation, available at: • have pesticide management procedures to use, protecting fauna, and preventing and www.biosev.com/sustentabilidade/cartilha- controlling forest fires. prevent the use of highly toxic pesticides ambiental/. (pesticides classified as 1A and 1B by the World Health Organization) and procedures for crop dusting.
Biosev Sustainability Report 105 Crop Year 2019/2020 Biosev’s engagement on climate change GRI 201-2, GRI 305-1, 305-2, 305-3, 305-4, 305-5
Climate change directly affects our planet, our societies, the global economy and our own industry. It is therefore a topic that concerns us and which we address on a continuing basis. Climate change was a main focus of discussion at the World Economic Forum (WEF) in Davos, Switzerland, in January 2020. For the first time in the event’s history, the WEF Risks Report ranked climate change as the single biggest global threat to business. Governments, organizations, businesses and people around the world have been mobilized to discuss how they can do their part to limit global temperature rise through initiatives to reduce greenhouse gas (GHG) emissions and improve energy efficiency. We have engaged around climate change by participating in the Brazilian government’s RenovaBio Program, by managing climate change risks, and by taking proactive action in managing carbon emissions.
Biosev Sustainability Report 106 Crop Year 2019/2020 RenovaBio: looking to the future
The Brazilian government’s National Biofuels The new program is expected to generate an problems such as eye and nose irritation and Policy (RenovaBio) will significantly benefit 11% reduction in the carbon intensity of Brazil’s damage to the respiratory system, which can society by increasing energy security and making energy mix by 2030. This would be equivalent, ultimately cause diseases such as lung cancer. a long-term contribution to the future of our according to data from the Brazilian Sugarcane planet. Industry Association (UNICA), to the benefit from The sugar and ethanol industry played an planting five billion trees. important advocacy role in the development of RenovaBio aims to expand production and use of RenovaBio, demonstrating that sustainability is an biofuels in Brazil and to reduce greenhouse gas For the environment, a reduction of CO2 and integral part of our business model. emissions as a result. other greenhouse gas emissions will help to limit global temperature rise, prevent ice caps from At Biosev, all our operations have been certified It will also reduce air pollution in major cities, as melting and sea levels from rising, reduce the within the RenovaBio Program and are already well as providing employment opportunities in frequency of extreme weather events (such as trading decarbonization credits (CBios). rural areas and supporting local development in typhoons, hurricanes, tornadoes, heavy rainfall, Incrementally, alongside implementation of the the municipalities hosting distilleries. droughts and frost), decrease ocean acidity levels program, we will also work to strengthen our and, ultimately, prevent the extinction of species industry’s contribution to a sustainable future for It will also provide greater predictability of the planet. biofuels demand to meet production targets, and the consequent loss of biodiversity. allowing players in the industry to plan new For human health, replacing fossil fuels with investments. alternative, renewable fuels will help to minimize
Biosev Sustainability Report 107 Crop Year 2019/2020 Managing climate-change risks GRI 201-2
Sugarcane fields, from which we derive our primary raw material, are exposed to the adverse effects from climate change, including extreme weather events (frost, droughts, windstorms and heavy rainfall) and changes in the incidence of crop pests, affecting yields. These risks can have significant adverse effects both on us and on our sugarcane suppliers. It is important that we stay a step ahead. As part of this, we invest in research and development due to unfavorable climate conditions. of new sugarcane varieties suited for different We can also accelerate or postpone sales climate conditions (for further information, see without adversely affecting operations or the section “Cane field quality” under “Cane field obligations of any nature. management”, in the chapter “Integrated cane field and mill operations” of this Report). We are energy self-sufficient. Cogeneration plants fueled by sugarcane bagasse produce Our flexible product mix and storage capacity (as enough electricity for plant requirements, plus a described in the section “Logistics management”, surplus that we sell to the grid. The electricity we in the chapter “Integrated cane field and mill produce is renewable (bioelectricity). operations”) make us highly adaptable and can help to mitigate potential impacts from climate Lastly, our operations are located in change. We are able to build product stocks geographically diverse locations in the states of for subsequent sale where it is necessary to Mato Grosso do Sul, Minas Gerais and São Paulo, accelerate the harvest to prevent further losses reducing our exposure to climate change risk.
Biosev Sustainability Report 108 Crop Year 2019/2020 A proactive approach to managing carbon emissions GRI 305-1, 305-2, 305-3, 305-4, 305-5
Biosev not only works to mitigate exposure to fermentation vats and from bagasse combustion 3.7% on a tCO2e/tc (metric tons of CO2 equivalent climate change risks, but also takes a proactive in boilers for cogeneration. Our biogenic per metric ton of sugarcane processed) basis, approach to managing emissions. emissions have a carbon-neutral cycle, in which including scope 1, 2 and 3 emissions. On the CO2 is first removed from the atmosphere as same basis, total emissions decreased by 2.5%. We annually develop greenhouse gas (GHG) sugarcane crops develop and is then returned to emissions inventories to gauge our impacts and the atmosphere via combustion or fermentation. These reductions were enabled by positive identify opportunities for improvement. Our These emissions have a much lesser impact on factors that are within Biosev’s control, including inventory data is compiled and calculated with climate change compared with non-biogenic a decrease in diesel combustion thanks to support from a specialized consulting firm, in emissions, such as emissions from burning fossil improved operational efficiency; reduced input accordance with the GHG Protocol framework fuels, which releases greenhouse gases into the purchases combined with higher logistics and and ISO 14064-1. air that had previously been stored and inert for transportation efficiency; and the use of rail freight for transporting products. Based on the inventory results, much of our millions of years in the form of petroleum. emissions (86.6% in crop year 2019/2020) are We have made important progress in reducing Per tonnage crushed, our emissions in the crop biogenic emissions (from renewable sources). emissions. Non-biogenic emissions—the most year were as follows: These emissions are generated, for example, critical for global warming—were reduced by by the fermentation of sugarcane juice in
Biosev Sustainability Report 109 Crop Year 2019/2020 Greenhouse gas emissions and emissions intensity Crop Year Crop Year Crop Year Disclosure Operation Change 2017/2018 2018/2019 2019/2020 Non-biogenic emissions (non-renewable sources) t CO e 831,808 638,427 696,388 9.08% Scope 1 2 t CO2e/tc 0.0255 0.0241 0.0257 6.85% t CO e 2,159 1,054 1,299 23.17% Scope 2 2 t CO2e/tc 0.0001 <0.0001 <0.0001 20.65% t CO e 884,232 616,038 536,923 -12.84% Scope 3 2 t CO2e/tc 0.0271 0.0233 0.0199 -14.62% t CO e 1,718,199 1,255,519 1,234,610 -1.67% Totals 2 t CO2e/tc 0.0526 0.0474 0.0457 -3.68% Biogenic emissions (renewable sources)
t CO2e 9,659,509 7,962,115 7,940,685 -0.27% NOTES: Scope 1 (1) t CO2e/tc = metric tons of CO2 equivalent per metric ton t CO2e/tc 0.2957 0.3006 0.2936 -2.31% of sugarcane processed. t CO e - - - 0.00% (2) The greenhouse gas inventories for 2018/2019 and Scope 2 2 2019/2020 excluded emissions from the Giasa (PB) facility t CO e/tc - - - 0.00% (which was sold during crop year 2018/2019) and the 2 Estivas (RN) facility (which was sold during crop year t CO2e 24,229 11,976 6,769 -43.48% 2019/2020). Scope 3 (3) Three methodological changes were introduced for the t CO2e/tc 0.0007 0.0005 0.0003 -44.64% 2019/2020 inventory: the method of calculating emissions t CO e 9,683,738 7,974,091 7,947,454 -0.33% from bagasse storage was perfected; emissions from Totals 2 forest fires were reclassified as “non-biogenic” rather than t CO2e/tc 0.2964 0.3010 0.2939 -2.37% "biogenic”; and rail transportation was included in product transportation calculations after the raw database was Total Emissions modified to segregate road from rail transportation. (4) Scope 1 - direct greenhouse gas emissions; t CO e 11,401,937 9,229,609 9,182,064 -0.52% (5) Scope 2 - indirect greenhouse gas emissions; Totals 2 (6) Scope 3 - Emissions generated by stakeholders in the t CO2e/tc 0.3490 0.3484 0.3395 -2.55% value chain including those producing key inputs, providing logistics services (raw materials haulage and product % biogenic emissions % 84.93% 86.40% 86.55% 0.16 p.p. distribution) and providing waste disposal services.
Biosev Sustainability Report 110 Crop Year 2019/2020 Water stewardship GRI 303-1, 303-2, 303-3, 303-4, 303-5
We use water to process sugarcane at our mills. In 2020 we used the World Wide Fund for department based on flow meter readings or Nature’s (WWF) Water Risk Filter to enhance estimates. Most plants have online metering In crop year 2019/2020 our water intensity (m³/ our analysis of water stress risk. Half of our systems providing real-time water consumption tc) decreased by 5.8%. operations, accounting for 65% of total water and wastewater data. consumption in crop year 2019/2020, are in areas We source water from rivers or from wells under Water intensity per ton of sugarcane processed appropriate water resource permits. Water is with significant water stress (moderate, high or very high risk), which underscores the importance is monitored on a daily basis, with this indicator used for irrigation and in mill processes (for including water consumption throughout the steam generation, washing, cooling and other of our water stewardship program and efforts to reduce consumption. entire year (crop season and off-season). We applications). set annual water reduction targets that reflect After it is used in mill processes, the residual Biosev’s efforts to reduce water consumption our production estimates and potential efforts water is treated and incorporated into the vinasse have included investments as well as other to reduce consumption. Water consumption is byproduct for use in fertigation under a Vinasse initiatives, including: awareness campaigns, included as an indicator in our “HSE Scorecard”, Application Plan (PAV), and in accordance with regular in-field leak inspections, preventive, a tool we use to measure performance against applicable regulations. As a result, no effluents predictive and corrective maintenance, and different HSE indicators that directly affect the are discharged into water bodies. monitoring as part of the PRISMA program and variable compensation earned by the leadership during managerial meetings. team. Our operations have quantitative and qualitative water monitoring programs as a requirement An ERP system (Sigind) used by our process under their environmental licenses. management team improves our management of performance indicators. Data on water We have also continued to advance our Water withdrawal and disposal is compiled by Stewardship Program to further reduce the the Health, Safety and Environment (HSE) amount of water we use and the volume of wastewater we generate.
Biosev Sustainability Report 111 Crop Year 2019/2020 Total water withdrawal by source Crop Year Crop Year Crop Year Withdrawal Operation Change 2017/2018 2018/2019 2019/2020 Volume (ML) 4,657.43 5,874.82 5,540.56 -5.69% Groundwater m3/tc 0.14 0.21 0.20 -0.31% Surface Volume (ML) 34,312.62 26,666.94 23,461.90 -12.02% water m3/tc 1.05 0.93 0.87 -7.00% Volume (ML) 38,970.05 32,541.77 29,002.45 -10.88% Total m3/tc 1.20 1.14 1.07 -5.79%
Total withdrawal in water-stressed areas during the crop year Volume Disclosure Source Distribution (ML) Groundwater 5,541 19% Total withdrawal Surface water 23,462 81% Total withdrawal 29,002 100% Groundwater 2,336 8% Water-stressed areas Surface water 16,480 57% Total withdrawal 18,816 65% Groundwater 3,204 11% Areas without water stress Surface water 6,982 24% Total withdrawal 10,186 35% NOTES: (1) Water withdrawal for industrial consumption on an annual basis (crop season + off-season). (2) “tc” means metric tons of sugarcane processed. (3) Total water withdrawal refers to freshwater sources (≤1,000 mg/L of total dissolved solids). Our operations do not consume seawater/brackish water, produced water or third-party water. (4) The data for 2019/2020 excludes the Estivas (RN) operation, which was due to be sold at the beginning of the crop year; the sale was completed in September 2019. Our records include crush and water consumption data for those assets that were in operation during the reporting periods. If we were to include only the assets that are currently in operation, the total reduction would also be significant, from 1.11 m³/tc in 2018/2019 to 1.07 m³/tc in 2019/2020, confirming the success of our water stewardship program.
Biosev Sustainability Report 112 Crop Year 2019/2020 ECONOMIC AND FINANCIAL PERFORMANCE
Biosev Sustainability Report 113 Crop Year 2019/2020 Strategy and economic and financial performance in the 2019/2020 crop year GRI 102-15 Our approach to economic and financial As a result of our management turnaround, on global economies, driving industries into a management is based on the following pillars: transformation and repositioning efforts, situation of clear contraction, with Brazil and its Biosev’s financial health has now improved. sugar and ethanol industry being no exception. Strong economic and financial performance in the 2019/2020 crop year have confirmed the These factors include: Financial discipline validity of our business strategy and our focus • Recent and successive shocks in global on improving operational efficiency and product markets, which have exacerbated concerns margins. among investors and governments about the impacts of the COVID-19 pandemic on global Enhancing the profitability of our We have also successfully reduced interest supply chains, the pace of economic activity products and operations rates on our loans in both US dollars and reais. and, ultimately, the results of operations of Most of our debt now has medium or long-term corporations, increasing the risk of a global maturities. recession and leading to downward revisions of growth projections for Brazil’s economy in Closer integration across We incurred no new debt in the crop year and departments and businesses paid off existing debt. 2020 and 2021. • Highly volatile sugar prices in international In addition, following negotiations with key markets. creditors (with prior approval from Management), • The challenges created by exchange-rate (1) Cost reduction we secured waivers for breaches of certain fluctuation and the systematic weakening of (2) covenants for the financial year ended March the Brazilian real against the US dollar over 31, 2020, as detailed in the Financial Statements the period in question, despite monitoring and for that period. A focus on operational efficiency, mitigation action taken by the Company. productivity and process Our breach of those covenants is directly related improvements to a series of unforeseen and unforeseeable factors which have had a significant impact
NOTES: (1) A pardon or postponing of a debt obligation or release from a contractual obligation. (2) Obligations imposed on borrowers.
Biosev Sustainability Report 114 Crop Year 2019/2020 Key results GRI 102-7, 102-56
Below we review some of our key results in the 2019/2020 crop year:
Net revenue Products(1)(2)
Net revenue—excluding the non-cash Net Revenue ex-HACC Crop Year Crop Year Sugar: revenues were down 11.4% due to Change effects from the hedge accounting (R$ thousand)(1) 2018/2019 2019/2020 the more ethanol-heavy production mix and (HACC) of foreign-denominated debt— lower volumes of sugar sold. Sugar 1,727,580 1,530,531 -11.4% was R$ 6.8 billion, up 7.6% from the previous crop year. Domestic Market 324,436 199,097 -38.6% Ethanol: revenues increased by 9.5%, Foreign Markets 1,403,144 1,331,434 -5.1% reflecting the Company’s strategy of This primarily reflects the higher optimizing sales by prioritizing products and Ethanol 2,695,807 2,952,987 9.5% volumes of ethanol exports, revenue periods with higher value capture (higher from the performance of export Domestic Market 2,537,662 2,426,564 -4.4% average prices), with the increase partly contracts linked to the maturities of Foreign Markets 158,145 526,423 232.9% offset by lower volumes sold in the domestic debt contracts denominated in foreign Electricity 450,216 464,508 3.2% market. This strategy reflects the Company’s currency, and higher average ethanol Total 4,873,603 4,948,026 1.5% ability to maximize the share of ethanol in prices, and was partly offset by the the production mix. Other Products 1,447,931 1,856,261 28.2% fact that in the previous crop year we Bagasse, services Electric power: revenues rose by 3.2% on still reported revenues from Northeast 45,043 36,721 -18.5% cluster assets. If revenues from the and other the back of higher sales volumes, with the Commodities increase partly offset by lower average prices Northeast cluster were excluded for 1,402,888 1,819,540 29.7% comparison with the current crop year, exports in the relevant periods. net revenue would have been 14.9% Total Net Revenue ex- 6,321,534 6,804,287 7.6% Other products: revenues improved by higher in crop year 2019/2020. HACC 28.2%, largely reflecting strong performance in commodity exports.
NOTE: (1) Data for crop year 2018/2019 includes the Northeast cluster. (2) If the Northeast cluster were excluded for a like-for-like comparison, sugar revenues would have decreased by 1.6% in 2019/2020 and ethanol revenues would have increased by 19.1%.
Biosev Sustainability Report 115 Crop Year 2019/2020 Cost of Goods Sold (COGS) Cash-basis COGS ex-resale/IFRS16 was R$ 2.0 billion, down 12.1% on the previous crop year. The decrease reflects operational cost reductions as part of an ongoing cost and operational optimization program, the fact that figures for the previous crop year included costs in the Northeast cluster, and the Company’s strategy of optimizing sales by prioritizing products and periods with higher value capture. Unit cash-basis COGS decreased by 2.8%, reflecting operational cost reductions as part of an ongoing cost and operational optimization program.
Biosev Sustainability Report 116 Crop Year 2019/2020 EBITDA We ended crop year 2019/2020 with an adjusted Crop Year Crop Year EBITDA Breakdown (R$ thousand)(1) Change EBITDA ex-resale/HACC/IFRS16 (excluding the 2018/2019 2019/2020 effects on net revenue from resale transactions, Net Revenue 6,232,172 6,538,086 4.9% the non-cash impact of hedge accounting for COGS (Cash) (4,187,338) (4,670,775) 11.5% foreign-denominated debt, and IFRS16) of Gross Income (Cash) 2,044,834 1,867,311 -8.7% R$ 1.8 billion, an increase of 12.9%, with an EBITDA margin ex-resale/HACC of 42.7%, an SG&A (Cash) (442,403) (433,475) -2.0% improvement of 7.3 p.p., and unit EBITDA ex- TEAG - Equity Income/Loss in the Fiscal Year(2) (2,974) (553) -81.4% resale/HACC of R$ 65.2 per metric ton, an Other Operating Income/(Expense) (125,740) 70,753 -156.3% increase of 21.7% compared to the previous crop Nonrecurring Items 52,618 49,633 -5.7% year. Adjusted EBITDA 1,526,335 1,553,669 1.8% These results are primarily due to the reduction Adjusted EBITDA Margin 24.5% 23.8% -0.7 p.p. in cash-basis COGS ex-resale/IFRS16, the higher Resale effect(3) (53,818) (57,283) 6.4% net revenue in the crop year, and the Company’s HACC effect(4) 89,362 266,201 197.9% strategy of optimizing sales by prioritizing EBITDA ex-resale/HACC 1,561,879 1,762,587 12.9% products and periods with higher value capture, as previously described. EBITDA Margin ex-resale/HACC 35.4% 42.7% 7.3 p.p. Crush volume (‘000 t) 29,163 27,044 -7.3% Unit Adjusted EBITDA (R$/t) 52.3 57.4 9.8% Unit EBITDA ex-resale/HACC (R$/t) 53.6 65.2 21.7%
NOTES: (1) Not including the effect of IFRS16. (2) Equivalent to the Company’s 50% interest in TEAG (Guarujá Sugar Export Terminal). (3) Reverses the effects of sugar, ethanol and electricity sales and export performance. (4) Reverses the non-cash accounting affects of hedge accounting for foreign-denominated debt.
Biosev Sustainability Report 117 Crop Year 2019/2020 EBITDA less CAPEX Capital Expenditure Changes in EBITDA less CAPEX in the period were as follows: Capital expenditure was R$ 1.2 billion in the 2019/2020 crop year, a decrease of 7.7% compared to the previous crop year. Crop Year Crop Year (R$ thousand)(1) Change 2018/2019 2019/2020 This reflects our strategy of reducing costs and increasing EBITDA ex-resale/HACC 1,561,878 1,762,587 12.9% competitiveness by optimizing cane-field operations to increase CAPEX 1,269,552 1,171,899 -7.7% longevity and productivity, and implementing cropping systems that maximize the use of byproducts from our mills. Capital EBITDA ex-resale/HACC less CAPEX 292,326 590,687 102.1% expenditure was allocated primarily to crop establishment and replanting, and was partly offset by lower expenses on crop Selling, general and administrative management and plant maintenance. expenses Capital Expenditure (R$ Crop Year Crop Year Change Selling, General and Administrative Expenses ex-IFRS16 were a total of R$ 433.5 thousand) 2018/2019 2019/2020 million, decreasing 2.0% from the previous crop year. Expansion 40,457 17,302 -57.2% Crop Year Crop Year Cash-basis SG&A (R$ thousand)(1) Change Operation 802,564 768,039 -4.3% 2018/2019 2019/2020 Selling (209,393) (175,117) -16.4% Mill 130,556 101,114 -22.6% Shipping (145,950) (124,389) -14.8% Field 62,447 23,969 -61.6% Loading (50,814) (38,947) -23.4% Planting 134,970 229,308 69.9% Commission, wharfage and other (12,629) (11,781) -6.7% expenses Crop Management 466,208 396,229 -15.0% General & Administrative Expenses (233,010) (258,358) 10.9% Other 8,382 17,419 107.8% Personnel (122,122) (127,225) 4.2% Deferred - Off-season 426,531 386,558 -9.4% Services (80,353) (104,326) 29.8% CAPEX 1,269,552 1,171,899 -7.7% Other (30,535) (26,807) -12.2% SG&A (Cash) (442,403) (433,475) -2.0%
NOTE: (1) Not including the effect of IFRS16.
Biosev Sustainability Report 118 Crop Year 2019/2020 Indebtedness Biosev’s gross debt was R$ 7.3 billion at March Reflecting the factors described above, net debt The following graph shows our cash position and 31, 2020, 22.4% higher than at March 31, was a total of R$ 6.1 billion, on a level with the debt repayment schedule with the waiver: 2019, primarily reflecting the effects from the previous crop year. 33.4% weakening of the Brazilian real against Cash and repayment schedule Some of our loan contracts contain covenants the US dollar on foreign-denominated debt, (R$ million) which as of March 31, 2020 had been breached. and was partly offset by principal and interest However, we secured waivers from the relevant R$ US$ payments of respectively R$ 273.8 million and creditors and have therefore maintained the R$ 464.8 million in the crop year. maturities and all other terms and conditions 847 380 under the original loan contracts. The balance of cash and short-term Cash 1,227 investments was R$ 1.2 billion, of which 31.0% The table below provides a breakdown of Biosev’s was denominated in US dollars. The year-on- debt, reflecting the waiver: year change in the balance of cash and short- 103 396 term investments is largely due to repayments 20/21 499 of principal and interest in each period.
334 2,799 21/22 3,133
Indebtedness (R$ million) 3/31/2019 3/31/2020 Change 167 3,005 Gross Debt (5,979) (7,321) 22.4% 22/23 3,172 Short Term (543) (499) -8.1%
Long Term (5,436) (6,823) 25.5% 68 295 Cash and Short-Term Investments 1,329 1,227 -7.7% 23/24 363 Net Debt (4,650) (6,094) 31.0% Adjusted EBITDA ex-LTM 1,526 2,098 37.5% 19 137 24/25 to Net Debt to Adjusted EBITDA 3.05x 2.90x -4.7% 27/28 156
Biosev Sustainability Report 119 Crop Year 2019/2020 Net income in the period GRI 102-56 Net income ex-IFRS16 in crop year 2019/2020 was a loss of R$ 1.5 Financial information has been independently audited. To read our complete billion, compared to a loss of R$ 1.2 billion in the previous crop year. Financial Statements, visit: https://ri.biosev.com/en/notices-and-results/results-center/ As previously discussed, this primarily reflects foreign-exchange variance, lower mark-to-market adjustment and settlement gains, and GRI 102-45 decreased earnings on short-term financial investments in the period, and was partly offset by higher net revenue and by the Company’s The entities included in our financial statements are: Biosev S.A., Biosev strategy of optimizing sales by prioritizing products and periods with Bioenergia S.A., Biosev Bioenergia Internacional S.A., Biosev Terminais higher value capture. Portuários e Participações Ltda., Biosev Comercializadora S.A., Crystalsev Comércio e Representações Ltda., Sociedade Operadora Portuária de São Paulo Ltda., Terminal de Exportação de Açúcar do Guarujá Ltda. (TEAG), Crystalsev Participações Ltda., Crystalsev Serviços de Intermediação de Negócios Ltda., Crystalsev Bioenergia Ltda., Crystalsev Fomento Mercantil Ltda. and CTC- Centro de Tecnologia Canavieira S.A.
Biosev Sustainability Report 120 Crop Year 2019/2020 Statement of Added Value(1) GRI 201-1 The Statement of Added Value depicts the wealth created by the Company and how that wealth is distributed among our various stakeholders, as follows: Disclosure 3/31/2020 3/31/2019 1- Revenue 7,409,055 6,947,185 1.1) Sales 7,058,688 6,798,701 1.2) Estimated losses on doubtful accounts (797) 72 1.3) Other operating income 351,164 148,412 2- Inputs purchased from third parties (3,705,075) (3,777,312) 2.1) Costs of products sold and services provided (1,212,315) (1,718,138) 2.2) Material, electricity, outsourced services and other (2,710,207) (2,036,740) 2.3) Net gain from changes in fair value of biological assets and other 222,447 (22,434) 3- Gross added value (1-2) 3,703,980 3,169,873 4- Depreciation and amortization (1,898,027) (1,455,132) 5- Net added value produced by the Company (3-4) 1,805,953 1,714,741 6- Transferred added value 66,975 127,141 6.1) Equity in income of associates (8,952) (11,373) 6.2) Finance income 75,927 138,514 7- Added value to be distributed (5+6) 1,872,928 1,841,882 8- Distribution of added value 1,872,928 1,841,882 8.1) Payroll and related charges 587,324 655,323 Direct compensation 413,656 435,914 Benefits 125,619 156,710 FGTS 48,049 62,699 8.2) Taxes, charges and contributions 51,370 388,755 Federal (215,237) 61,274 State 266,434 327,391 Municipal 173 90 8.3) Interest on third-party capital 2,785,482 1,996,934 Rent 331,971 485,340 Interest and foreign-exchange variance 2,453,511 1,511,594 8.4) Interest on equity (1,551,248) (1,199,130) Net income for the financial year (1,551,248) (1,199,130)
NOTE:(1) Amounts in thousands of Brazilian reais - R$
Biosev Sustainability Report 121 Crop Year 2019/2020 GOING FORWARD GRI 102-15
Biosev Sustainability Report 122 Crop Year 2019/2020 With our financial position now strengthened, As part of our Operational Competitiveness Strategic drivers for a we are able to better plan our strategyin the Program, which we described throughout this context of Biosev’s ongoing transformation and Report, we will continue to explore and capture sustainable future: operational turnaround, while not losing focus opportunities to further catalyze our continuous on financial and people management. improvement efforts. In the short term, we will continue to advance In terms of our strategic direction for sustainable our strategy of improving cash generation and development, following the recent definition reducing and/or eliminating costs and losses, of our Strategic Sustainability Drivers, we will with a strong focus on financial discipline, now incrementally target efforts in this direction. restructuring liabilities, improving operating We are well underway on this journey of Technology Social efficiency, and prioritizing our more profitable transformation. businesses and assets. This will be supported by sound people management practices, as our employees will be instrumental in enabling us to Future sales commitments enhance results, without neglecting our ethical, social and environmental responsibility, and with We are party to certain agreements under which a relentless focus on employee safety. we commit to sell firm volumes of sugar and ethanol in future crop years. In our field and mill operations, to ensure a more effective transition as part of the current At March 31, 2020, we had commitments to sell Products Environmental transformation, we will continue to strengthen an 1,693,385 metric tons of sugar (1,099,374 metric 3 operational culture that is focused on maximizing tons of sugar at March 31, 2019) and 211,440 m 3 value capture from each metric ton of crushed of ethanol (225,755 m of ethanol at March 31, sugarcane—in the medium-term, this strategic 2019), as well as electricity supply commitments direction should be reflected in decisions on undertaken during auctions and in the free investments to expand crush capacity; in the contracting environment, for a total of 7,595 short term, it should be factored in decisions on GWh (7,614 GWh at March 31, 2019), with these contract renewal, borrow farmland and individual commitments continuing to 2035. bonus targets. Economy Supply chain
Biosev Sustainability Report 123 Crop Year 2019/2020 APPENDIXES
Biosev Sustainability Report 124 Crop Year 2019/2020 Performance tables
Crop Year Crop Year Crop Year Economic Performance GRI Change 2017/2018 2018/2019 2019/2020 Statement of Added Value – Direct economic value generated and distributed – R$ ‘000 201-1 1. Revenue 7,704,053 6,947,185 7,409,055 7% 2. Inputs purchased from third parties (5,097,985) (3,777,312) (3,705,075) (2%) 3. Gross added value 2,606,068 3,169,873 3,703,980 17% 4. Depreciation and amortization 1,498,830 1,455,132 1,898,027 30% 5. Net added value produced by the Company 1,107,238 1,714,741 1,805,953 5% 6. Transferred added value 46,951 127,141 66,975 (47%) 7. Total added value to be distributed 1,154,189 1,841,882 1,872,928 2% 8. Distribution of added value 1,154,189 1,841,882 1,872,928 2% 8.1- Payroll and related charges 689,207 655,323 587,324 (10%) 8.2. Taxes, charges and contributions 18,447 388,755 51,370 (87%) 8.3. Interest on third-party capital 1,716,410 1,996,934 2,785,482 39% 8.4. Interest on equity (1,269,875) (1,199,130) (1,551,248) 29% Mechanization rate (including partnership, lease and contract farming agreements) Mechanized Harvesting 94.5% 99.1% 99.9% 0.8 p.p. Mechanized Planting 86.5% 7.3% 0.0% (7.3) p.p. Percentage of third party-sourced sugarcane Third party-sourced sugarcane 35.6% 36.2% 38.1% 1.9 p.p.
Biosev Sustainability Report 125 Crop Year 2019/2020 Crop Year Crop Year Crop Year Environmental Performance GRI Change 2017/2018 2018/2019 2019/2020 Water Total water withdrawal by source 303-3 Withdrawal for plant water (‘000 m3) Groundwater 4,657.43 5,874.82 5,540.56 -5.69% Surface water 34,312.62 26,666.94 23,461.90 -12.02% Total 38,970.05 32,541.76 29,002.45 -10.88% Plant water intensity (m3/metric ton of sugarcane) Groundwater 0.14 0.21 0.20 -0.31% Surface water 1.05 0.93 0.87 -7.00% Total 1.19 1.14 1.07 -5.79%
Greenhouse gas emissions (t CO2 e) Non-biogenic emissions (non-renewable sources) Scope 1 305-1 831,808 638,427 696,388 9.08% Scope 2 305-2 2,159 1,054 1,299 23.24% Scope 3 305-3 884,232 616,038 536,923 -12.84% Subtotal 1,718,199 1,255,519 1,234,610 -1.67% Biogenic emissions (renewable sources) Scope 1 305-1 9,659,509 7,962,115 7,940,685 -0.27% Scope 2 305-2 - - - 0.00% Scope 3 305-3 24,229 11,976 6,769 -43.48% Subtotal 9,683,738 7,974,091 7,947,454 -0.33% Emissions - total 11,401,937 9,229,609 9,182,064 -0.52% % Non-biogenic emissions 15.1% 13.6% 13.4% -0.2 p.p. % Biogenic emissions 84.9% 86.4% 86.6% 0.2 p.p.
Biosev Sustainability Report 126 Crop Year 2019/2020 Crop Year Crop Year Crop Year Environmental Performance (continued) GRI Change 2017/2018 2018/2019(2) 2019/2020(2) Greenhouse gas emissions intensity (t CO2 e/tc)(1) Non-biogenic emissions (non-renewable sources) Scope 1 305-4 0.0255 0.0241 0.0257 6.64% Scope 2 305-4 0.0001 <0.0001 <0.0001 20.60% Scope 3 305-4 0.0271 0.0233 0.0199 -14.59% Subtotal 305-4 0.0526 0.0474 0.0457 -3.59% Biogenic emissions (renewable sources) Scope 1 305-4 0.2957 0.3006 0.2936 -2.33% Scope 2 305-4 - - - 0.00% Scope 3 305-4 0.0007 0.0005 0.0003 -44.60% Subtotal 305-4 0.2964 0.3010 0.2939 -2.36% Emissions - total 0.3490 0.3484 0.3395 -2.55% Reduction of greenhouse gas emissions (%) Changes are indicated in the relevant table. These reductions in greenhouse gas emissions were enabled by positive factors that are within Biosev’s control, including a decrease in diesel combustion thanks to improved 305-5 operational efficiency, reduced input purchases combined with higher logistics and transportation efficiency, and the use of rail freight for transporting products. NOTES: (1) t CO2e/tc = metric tons of CO2 equivalent per metric ton of sugarcane processed. (2) The greenhouse gas inventories for 2018/2019 and 2019/2020 excluded emissions from the Giasa (PB) facility (which was sold during crop year 2018/2019) and the Estivas (RN) facility (which was sold during crop year 2019/2020). Scope 1 - Direct greenhouse gas emissions Scope 2 - Indirect greenhouse gas emissions Scope 3 - Emissions generated by stakeholders in the value chain including those producing key inputs, providing logistics services (raw materials haulage and product distribution) and providing waste disposal services.
Biosev Sustainability Report 127 Crop Year 2019/2020 Crop Year Crop Year Crop Year Environmental Performance (continued) GRI Change 2017/2018 2018/2019 2019/2020 Water discharge Total water discharge 303-4 0 0 0 0.00% Waste Recycling rate(3) - 82.1% 83.9% 84.4% 0.5 p.p Non-compliance with environmental laws and regulations There were no There were no There were no cases exceeding cases exceeding cases exceeding (1) the Company’s the Company’s the Company’s Total fines 307-1 materiality materiality materiality - threshold (R$ 1 threshold (R$ 1 threshold (R$ 1 million). million). million). There were no There were no There were no cases exceeding cases exceeding cases exceeding (1) the Company’s the Company’s the Company’s Cases brought through dispute resolution mechanisms 307-1 materiality materiality materiality - threshold (R$ 1 threshold (R$ 1 threshold (R$ 1 million). million). million). Total number of non-monetary sanctions 307-1 2 0 4 Supplier environmental assessment
New suppliers that were screened for legal compliance (documents, licenses and 308-2 NR(2) 1,522 2,843 86.79% mandatory training)
Third-party employees cleared for induction in our operations. NR(2) 12,525 7,817 -37.59%
NOTES: (1) Since, and including, crop year 2017/2018 we have reported fines in cases brought through dispute resolution mechanisms only when above the Company’s materiality threshold (R$ 1 million). (2) NR - Information not reported due to not being required by the GRI G4 methodology at the time of the report. (3) Includes historical data for our Northeast and Maracaju assets.
Biosev Sustainability Report 128 Crop Year 2019/2020 Crop Year Crop Year Crop Year Social Performance GRI Change 2017/2018 2018/2019 2019/2020 Workforce by region Total workforce by region 102-8 Midwest 102-8 3,183 2,803 2,135 -23.83% Northeast 102-8 2,463 1,612 447 -72.27% Southeast 102-8 8,935 8,227 7,196 -12.53% Total 102-8 14,581 12,643 9,778 -22.66%
Employee turnover(1) By region Midwest 401-1 3.06% 5.68% 2.90% -2.78 p.p. Northeast 401-1 4.84% 7.66% 1.45% -6.21 p.p. Southeast 401-1 2.02% 3.66% 3.19% -0.47 p.p. By gender Men 401-1 2.73% 4.88% 3.03% -1.85 p.p. Women 401-1 2.47% 1.46% 3.27% 1.81 p.p. By age 18-25 401-1 4.51% 10.90% 6.13% -4.77 p.p. 26-30 401-1 3.08% 5.41% 3.44% -1.97 p.p. 31-40 401-1 2.69% 4.31% 2.70% -1.61 p.p. 41-50 401-1 2.28% 3.51% 2.47% -1.04 p.p. 51-60 401-1 1.90% 2.54% 2.23% -0.31 p.p. Over 60 401-1 1.46% 5.41% 1.57% -3.84 p.p.
NOTE: (1) Figures computed on a monthly basis.
Biosev Sustainability Report 129 Crop Year 2019/2020 Crop Year Crop Year Crop Year Social Performance (continued) GRI Change 2017/2018 2018/2019 2019/2020 Hiring Rate(1) 1.86% 5.16% 3.07% -2.09 p.p. By region Midwest 401-1 1.50% 8.36% 2.67% -5.69 p.p. Northeast 401-1 4.09% 6.71% 2.46% -4.25 p.p. Southeast 401-1 1.41% 3.76% 3.22% -0.54 p.p. By gender Men 401-1 1.90% 5.58% 3.02% -2.56 p.p. Women 401-1 1.25% 0.00% 3.62% 3.62 p.p. By age 18-25 401-1 3.82% 16.52% 7.07% -9.45 p.p. 26-30 401-1 2.31% 7.37% 3.44% -3.93 p.p. 31-40 401-1 1.91% 4.79% 2.73% -2.06 p.p. 41-50 401-1 1.49% 3.49% 2.32% -1.17 p.p. 51-60 401-1 0.96% 1.85% 1.90% 0.05 p.p. Over 60 401-1 0.27% 0.45% 0.78% 0.33 p.p.
Termination rate(1) 3.52% 4.08% 3.03% -1.05 p.p. By region Midwest 401-1 4.55% 2.99% 3.14% 0.15 p.p. Northeast 401-1 2.78% 8.60% 0.45% -8.15 p.p. Southeast 401-1 5.62% 3.57% 3.15% -0.42 p.p. By gender Men 401-1 3.57% 4.18% 3.04% -1.14 p.p. Women 401-1 2.78% 2.93% 2.92% -0.01 p.p. By age 18-25 401-1 4.62% 5.28% 5.19% -0.09 p.p. 26-30 401-1 3.99% 3.45% 3.44% -0.01 p.p. 31-40 401-1 3.60% 3.82% 2.67% -1.15 p.p. 41-50 401-1 3.16% 3.53% 2.62% -0.91 p.p. 51-60 401-1 2.89% 3.23% 2.56% -0.67 p.p. Over 60 401-1 2.64% 10.37% 2.35% -8.02 p.p. NOTE: (1) Figures computed on a monthly basis.
Biosev Sustainability Report 130 Crop Year 2019/2020 Crop Year Crop Year Crop Year Social Performance (continued) GRI Change 2017/2018 2018/2019 2019/2020 Women employees Officers/Directors/CEO 405-1 21.24% 25.00% 23.08% -1.92 p.p. Managers 17.07% 10.53% 13.95% 3.42 p.p. Supervisors 14.18% 14.47% 12.98% -1.49 p.p. Specialists 34.50% 30.16% 23.53% -6.63 p.p. Coordinators 7.77% 8.09% 6.35% -1.74 p.p. Other Positions 6.08% 7.30% 7.15% -0.15 p.p. Percentage out of total workforce 6.39% 7.56% 7.34% -0.22 p.p. Employees over 50 Officers/Directors/CEO 38.50% 31.25% 14.29% -16.96 p.p. Managers 13.40% 15.79% 16.28% 0.49 p.p. Supervisors 11.25% 15.79% 9.16% -6.63 p.p. Specialists 2.06% 6.35% 1.92% -4.43 p.p. Coordinators 9.83% 11.43% 10.41% -1.02 p.p. Other Positions 13.55% 20.51% 15.36% -5.15 p.p. Percentage out of total workforce 13.41% 20.07% 14.99% -5.08 p.p. Changes in PwDs(1) Percentage out of total workforce 1.67% 2.82% 1.76% -1.06 p.p.
NOTE: (1) Based on the workforce as at March 31 each year.
Biosev Sustainability Report 131 Crop Year 2019/2020 Crop Year Crop Year Crop Year Social Performance (continued) GRI Change 2017/2018 2018/2019 2019/2020 Rights of indigenous peoples Incidents of violations involving the rights of indigenous peoples 411-1 0 0 0 0.0% Local communities Social investment, in reais (R$) 201-1 397,339 1,140,388 1,337,971 17.3% Percentage of operations with Local Engagement Programs 413-1 100% 100% 100% 0 p.p. Percentage of operations with Social and Environmental Impact Assessments 413-1 100% 100% 100% 0 p.p. Percentage of operations with Local Development Programs 413-1 100% 100% 100% 0 p.p. Social and economic compliance Non-compliance with laws and regulations in the social and economic area(1) Monetary value of significant fines (R$) 419-1 0 0 0 0.0% Total number of non-monetary sanctions 419-1 0 0 0 0.0% Cases brought through dispute resolution mechanisms 419-1 0 0 0 0.0% NOTE: (1) No fines were imposed for non-compliance with laws and regulations regarding the supply and use of products and services. We have not reported information on other social and economic laws and regulations as it was not deemed material in the Company’s materiality assessment.
Biosev Sustainability Report 132 Crop Year 2019/2020 GRI content index KEY SDGs = Sustainable Development Goals UNGC = United Nations Global Compact
GRI Standard Reference page or disclosure Omissions SDGs UNGC Standard disclosures GRI 101: Foundation 2016 Organizational Profile GRI 102: Standard disclosures 2016 GRI 102-1 Name of the organization Page 12 GRI 102-2 Activities, brands, products, and services Page 12 GRI 102-3 Location of the organization's headquarters São Paulo - SP GRI 102-4 Location of operations pages 12 and 13 GRI 102-5 Ownership and legal form Page 12 GRI 102-6 Markets served Page 12 GRI 102-7 Scale of organization Pages 9, 12, 38, 54 and 115 GRI 102-8 Information on employees and other workers Pages 54 and 60 8.8, 10.3 6 GRI 102-9 Supply chain Pages 88 to 93 3 GRI 102-10 Significant changes to the organization and its Pages 88 to 91 supply chain GRI 102-11 Precautionary principle or approach Our approach to managing operations is guided by the Precautionary Principle (established in the Rio Declaration on the Environment and Sustainable Development at the Rio-92 Conference). This principle states that where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing cost-effective measures to prevent environmental degradation. Page 31
Biosev Sustainability Report 133 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC GRI 102-12 External initiatives Pages 19, 52, 66, 96 and 98 GRI 102-13 Membership of associations Page 96 Strategy GRI 102: Standard disclosures 2016 GRI 102-14 Statement from senior decision-maker Page 4 GRI 102-15 Key impacts, risks, and opportunities Pages 4, 6, 15, 16, 19, 28, 31, 40, 44, 46, 81, 88, 98, 114 and 122 Ethics and integrity GRI 102: Standard disclosures 2016 GRI 102-16 Values, principles, standards, and norms of Pages 14, 19, 27, 28 and 54 16.3 10 behavior GRI 102-17 Mechanisms for advice and concerns about ethics Pages 28 and 31 16.3 10 Governance GRI 102: Standard disclosures 2016 GRI 102-18 Governance structure Pages 19 and 27 Stakeholder engagement GRI 102: Standard disclosures 2016 GRI 102-40 List of stakeholder groups Pages 22 and 23 GRI 102-41 Collective bargaining agreements Pages 22, 59 and 76 8.8, 8.8.2 GRI 102-42 Identifying and selecting stakeholders Pages 22 and 23 GRI 102-43 Approach to stakeholder engagement Pages 22 and 23 GRI 102-44 Key topics and concerns raised Pages 22 and 23 Reporting practices GRI 102: Standard disclosures 2016 GRI 102-45 Entities included in the consolidated financial Page 120 statements GRI 102-46 Defining report content and topic Boundaries Pages 22 and 25 GRI 102-47 List of material topics Page 24
Biosev Sustainability Report 134 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC GRI 102-48 Restatements of information Any effects of any restatements of information provided in previous reports and the reasons for such restatements, where applicable, are described in footnotes throughout this Report. GRI 102-49 Changes in reporting No material changes GRI 102-50 Reporting period April 1, 2019 to March 31, 2020. GRI 102-51 Date of most recent report Biosev Sustainability Report 2018/2019, published in 2019. GRI 102-52 Reporting cycle Annual. GRI 102-53 Contact point for questions regarding the report Introduction page GRI 102-54 Claims of reporting in accordance with the GRI Introduction page Standards GRI 102-55 GRI Content Summary Pages 133 to 146 GRI 102-56 External assurance Financial disclosures are consistent with International Financial Reporting Standards (IFRS). The Financial Statements were audited by BDO RCS Auditores Independentes S/S and can be viewed on our website at https://ri.biosev. com/en/. Non-financial disclosures have not been independently audited. Pages: Introduction, 115 and 120
Economic Disclosures Material topic: Economic performance GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 81 7 GRI 103-2 The management approach and its components Page 81 GRI 103-3 Evaluation of the management approach Page 81
Biosev Sustainability Report 135 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC GRI 201: Economic performance 2016 GRI 201-1 Direct economic value generated and distributed Pages 81, 82, 121 and 125 8.1, 8.2, 8.2.1, 9.1, 9.4, 9.4.1, 9.5, 17.1.2 GRI 201-2 Financial implications and other risks and Pages 38, 106 and 108 13.1 7 opportunities due to climate change Material topic: Market presence GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 38 and 66 7 GRI 103-2 The management approach and its components Pages 38 and 66 GRI 103-3 Evaluation of the management approach Pages 38 and 66 GRI 202: Market presence 2016 GRI 202-1 Ratio of standard entry level wage by gender Pages 38 and 66 1.2, 5.1, 8.5 6 compared to local minimum wage GRI 202-2 Proportion of senior management hired from the Page 60 8.5 6 local community Material topic: Indirect economic impacts GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 81 and 82 GRI 103-2 The management approach and its components Pages 81 and 82 GRI 103-3 Evaluation of the management approach Pages 81 and 82 GRI 203: Indirect economic impacts 2016 GRI 203-2 Significant indirect economic impacts Pages 81 and 82 1.2, 3.8, 8.2, 8.3, 8.5
Biosev Sustainability Report 136 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC Material topic: Procurement Impacts GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 92 GRI 103-2 The management approach and its components Page 92 GRI 103-3 Evaluation of the management approach Page 92 GRI 204: Procurement practices 2016 GRI 204-1 Proportion of spending on locally-based suppliers Page 92 8.3, 9.3.1 Material topic: Anti-corruption GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 31 GRI 103-2 The management approach and its components Page 31 GRI 103-3 Evaluation of the management approach Page 31 GRI 205: Anti-corruption 2016 GRI 205-1 Operations assessed for risks related to corruption Pages 31, 88 and 93 16.5.2 10 GRI 205-2 Communication and training on anti-corruption Page 31 16.5.2 10 policies and procedures GRI 205-3 Confirmed incidents of corruption and actions Page 31 16.5.2 10 taken Material topic: Anti-competitive behavior GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 46 GRI 103-2 The management approach and its components Page 46 GRI 103-3 Evaluation of the management approach Page 46 GRI 206: Anti-competitive behavior 2016 GRI 206-1 Legal actions for anti-competitive behavior, anti- Page 46 16.3 trust, and monopoly practices
Biosev Sustainability Report 137 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC Environmental Disclosures Material topic: Water & effluents GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 111 and 112 GRI 103-2 The management approach and its components Pages 111 and 112 GRI 103-3 Evaluation of the management approach Pages 111 and 112 GRI 303: Water and effluents 2018 GRI 303-1 Interactions with water as a shared resource Pages 111 and 112 6.4 8 GRI 303-2 Management of water discharge related impacts Pages 111 and 112 6.5, 14.2, 8 15.1, 15.5 GRI 303-3 Water withdrawal Pages 111 and 112 6.4, 6.4.2 7.8 GRI 303-4 Water discharge Pages 111 and 112 3.9, 6.3, 6.4, 8 12.4, 14.1 GRI 303-5 Water consumption No effluents are discharged into water bodies; 6.3, 6.4.1, 8 all water withdrawals are consumed (GRI 303-3) 8.4, 12 Pages 111 and 112 Material topic: Emissions GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 106 to 110 GRI 103-2 The management approach and its components Pages 106 to 110 9.4, 12.4, 7, 8, 9 12.5, 13.1, 13.3, 14.2, 14.3, 15.1 GRI 103-3 Evaluation of the management approach Pages 106 to 110 GRI 305: Emissions 2016 GRI 305-1 Direct (Scope 1) GHG emissions Pages 106 to 110 3.9, 9.4.1, 7, 8 12.4, 14.3, 15.2
Biosev Sustainability Report 138 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC GRI 305-2 Energy indirect (Scope 2) GHG emissions Pages 106 to 110 3.9, 9.4.1, 7, 8 12.4,13.1, 14.3, 15.2 GRI 305-3 Other indirect (Scope 3) GHG emissions Pages 106 to 110 3.9, 12.4, 7, 8 13.1,14.3, 15 GRI 305-4 GHG emissions intensity Pages 106 to 110 13.1,14.3, 8 15.2 GRI 305-5 Reduction of GHG emissions Pages 106 to 110 13.1,14.3, 8.9 15.2 Material topic: Environmental compliance GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 98 and 128 GRI 103-2 The management approach and its components Pages 98 and 128 9.4, 12.4, 12.5, 13.1, 13.3, 12.2, 14.3, 15.1 GRI 103-3 Evaluation of the management approach Pages 98 and 128 GRI 307: Environmental compliance 2016 GRI 307-1 Non-compliance with environmental laws and Pages 98 and 128 16.3 8 regulations Material topic: Supplier environmental assessment GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 89 and 93 GRI 103-2 The management approach and its components Pages 89 and 93 GRI 103-3 Evaluation of the management approach Pages 89 and 93 GRI 308: Supplier environmental assessment 2016 GRI 308-1 New suppliers that were screened using Pages 89 and 93 8 environmental criteria GRI 308-2 Negative environmental impacts in the supply Pages 89 and 93 8 chain and actions taken
Biosev Sustainability Report 139 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC Social Disclosures Material topic: Employment GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 60 GRI 103-2 The management approach and its components Page 60 GRI 103-3 Evaluation of the management approach Page 60 GRI 401: Employment 2016 GRI 401-1 New employee hires and employee turnover Pages 60, 63 and 66 5.1, 8.5, 8.6, 6 10.3 GRI 401-2 Benefits provided to full-time employees that are Pages 57 and 58 3, 5.4, 8.5 not provided to temporary or part-time employees GRI 401-3 Parental leave Page 59 5.1, 5.4, 8.5 6 Material topic: Occupational health and safety GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 15 and 70 GRI 103-2 The management approach and its components Pages 15 and 70 GRI 103-3 Evaluation of the management approach Pages 15 and 70 GRI 403: Occupational health and safety 2018 GRI 403-1 Occupational health and safety management Pages 15 and 70 3.8, 8.8 6 system GRI 403-2 Hazard identification, risk assessment, and Page 70 3.8, 8.8 6 incident investigation GRI 403-3 Occupational health services Page 76 3.8, 8.8 6 GRI 403-4 Worker participation, consultation, and Page 70 3.8, 8.8 6 communication on occupational health and safety GRI 403-5 Worker training on occupational health and safety Page 70 3.8, 8.8 6 GRI 403-6 Promotion of worker health Pages 58 and 76 3.8, 8.8 6
Biosev Sustainability Report 140 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC GRI 403-7 Prevention and mitigation of occupational health For contractors, our supplier selection and 3.8, 8.8 6 and safety impacts directly linked by business onboarding system is managed by third-party relationships firm. The supplier screening process includes reviewing documentation demonstrating compliance with occupational health & safety requirements. We also provide induction training on HSE in those cases where contractors will work on-site in our field or mill operations. Page 93 GRI 403-8 Workers covered by an occupational health and Page 15 3.8, 8.8 6 safety management system GRI 403-9 Work-related injuries Page 78 3.8, 8,8, 6 8.8.1 GRI 403-10 Work-related ill health Page 77 3.8, 8.8 6 Material topic: Training and education GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 65 GRI 103-2 The management approach and its components Page 65 GRI 103-3 Evaluation of the management approach Page 65 GRI 404: Training and education 2016 GRI 404-1 Average hours of training per year per employee Page 65 4.3, 4.3.1, 6 4.4, 4.5, 5.1, 8.2, 8.5, 10.3 GRI 404-2 Programs for upgrading employee skills and Page 55 and 65 8.2, 8.5 transition assistance programs GRI 404-3 Percentage of employees receiving regular Page 57 5.1, 8.5, 10.3 6 performance and career development reviews
Biosev Sustainability Report 141 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC Material topic: Diversity and equal opportunity GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 60 to 62 and 66 GRI 103-2 The management approach and its components Pages 60 to 62 and 66 GRI 103-3 Evaluation of the management approach Pages 60 to 62 and 66 GRI 405: Diversity and equal opportunity 2016 GRI 405-1 Diversity of governance bodies and employees Pages 60 to 62 and 66 5.5.2, 8.5, 6 16.7.1 GRI 405-2 Ratio of basic salary and remuneration of women Página 66 and 67 8.5, 10.3 6 to men Material topic: Non-discrimination GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 28 GRI 103-2 The management approach and its components Page 28 GRI 103-3 Evaluation of the management approach Page 28 GRI 406: Non-discrimination 2016 GRI 406-1 Incidents of discrimination and corrective actions Page 28 5.1, 8.8 6 taken Material topic: Freedom of association and collective bargaining GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Pages 59 and 93 GRI 103-2 The management approach and its components Pages 59 and 93 GRI 103-3 Evaluation of the management approach Pages 59 and 93 GRI 407: Freedom of association and collective bargaining 2016 GRI 407-1 Operations and suppliers in which the right to Pages 59 and 93 8.8 3 freedom of association and collective bargaining may be at risk
Biosev Sustainability Report 142 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC Material topic: Child labor GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 93 GRI 103-2 The management approach and its components Page 93 GRI 103-3 Evaluation of the management approach Page 93
GRI 408: Child labor (2016) GRI 408-1 Operations and suppliers at significant risk for Page 93 8.7, 16.2 5 incidents of child labor Material topic: Forced or compulsory labor GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 93 GRI 103-2 The management approach and its components Page 93 1 GRI 103-3 Evaluation of the management approach Page 93 GRI 409: Forced or compulsory labor 2016 GRI 409-1 Operations and suppliers at significant risk for Page 93 8.7 4 incidents of forced or compulsory labor Material topic: Security practices GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 28 GRI 103-2 The management approach and its components Page 28 GRI 103-3 Evaluation of the management approach Page 28 GRI 410: Security practices 2016 GRI 410-1 Security personnel trained in human rights policies Page 28 16.1 1 or procedures
Biosev Sustainability Report 143 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC Material topic: Rights of indigenous and traditional peoples GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 81 GRI 103-2 The management approach and its components Page 81 1 GRI 103-3 Evaluation of the management approach Page 81 GRI 411: Rights of indigenous peoples 2016 GRI 411-1 Incidents of violations involving rights of Page 81 2.3 1 indigenous peoples Material topic: Human rights assessment GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 89 to 94 GRI 103-2 The management approach and its components Page 89 to 94 GRI 103-3 Evaluation of the management approach Page 89 to 94 GRI 412: Human rights assessment 2016 GRI 412-1 Operations that have been subject to human All of our operations have conducted human 5, 10, 16 1 rights reviews or impact assessments rights risk assessments on a sampling basis, with a focus on supply chains with higher risks for violations. In addition to our whistleblowing channels, we have other controls in place for sugarcane suppliers and services suppliers. For further information, see the chapter “Supplier management” of this Report. Page 89 to 94 GRI 412-2 Employee training on human rights policies or - 1 procedures GRI 412-3 Significant investment agreements and contracts Page 89 to 94 2 that include human rights clauses or that underwent human rights screening
Biosev Sustainability Report 144 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC Material topic: Local communities GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 55 GRI 103-2 The management approach and its components Page 55 1 GRI 103-3 Evaluation of the management approach Page 55 GRI 413: Local communities 2016 GRI 413-1 Operations with local community engagement, Pages 55, 65, 66, 82, 99 and 102 1 impact assessments, and development programs GRI 413-2 Operations with significant actual or potential Page 54 1.4, 2.3 1 negative impacts on local communities Material topic: Public policy GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 96 GRI 103-2 The management approach and its components Page 96 GRI 103-3 Evaluation of the management approach Page 96 GRI 415: Public policy 2016 GRI 415-1 Political contributions Page 96 16.5 10 Material topic: Social and economic compliance GRI 103: Management approach 2016 GRI 103-1 Explanation of the material topic and its Boundary Page 132 GRI 103-2 The management approach and its components Page 132 GRI 103-3 Evaluation of the management approach Page 132
Biosev Sustainability Report 145 Crop Year 2019/2020 GRI Standard Reference page or disclosure Omissions SDGs UNGC GRI 419: Social and economic compliance 2016 GRI 419-1 Non-compliance with laws and regulations in the In crop year 2019/2020 no significant fines or 16.3, 16.5.2 social and economic area non-monetary sanctions were imposed for non- compliance with laws and regulations regarding the supply and use of products and services. We define significant fines as those exceeding R$ 1 million. We define significant non-monetary sanctions as those which significantly exceed the sanctions incurred in the ordinary course of business, or which pose a significant reputational or operational risk to the business. Page 132
Biosev Sustainability Report 146 Crop Year 2019/2020 Credits SÃO PAULO HEAD OFFICE (CASP) Biosev | Av. Brigadeiro Faria Lima, 1.355 – 11° andar São Paulo/SP | CEP 01452-919 | Phone: (11) 3092-5200
This Sustainability Report has been prepared as a collective effort of the entire Biosev team. Any questions and requests for additional information on this report can be submitted by e-mail to [email protected].
General coordination - Biosev Health, Safety & Environment; Corporate Communications & Corporate Social Responsibility; and Investor Relations Departments.
GRI Consulting, Materiality and SDG Assessment, Design & Revision Combustech Tecnologia da Combustão
Content writing, edition and revision and editorial coordination Eduardo Dantas
Design and layout RXMG- Rener Cançado
Translation Ivan Van Rheenen and Roger Barlow, LATAM Translations
Photos Biosev image archive *Photos of people shown without masks were obtained from the Company’s image archive and were taken either prior to the pandemic or with adequate safety precautions.
Biosev Sustainability Report 147 Crop Year 2019/2020