While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
PS 7 – Indigenous Peoples
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
PS5 (Land Acquisition and Involuntary Resettlement) and PS8 (Cultural Heritage) are not expected to apply to this project for the following reasons. The Company leases land for sugarcane plantations and owns the land where its existing industrial plants are located. During appraisal it was determined that no involuntary resettlement was involved in acquiring or otherwise accessing these lands. While the Project does not contemplate the expansion of Biosev''s plantation areas, any future land leasing for sugarcane plantations would be market-based transactions involving existing agricultural areas or pasturelands where no involuntary resettlement is expected to take place. No cultural heritage was encountered during the course of the appraisal and assessment of this Project as the Company''s facilities and plantations are located in consolidated agricultural areas.

This is category A project according to IFC’s Policy on Social and Environmental Sustainability. It is possible that potential significant adverse environmental or social risks and/or impacts to indigenous groups (Terena, Kaiowá and Guarani) in the area of influence of Biosev''s sugarcane plantations and its suppliers in the south of Mato Grosso do Sul State could be diverse, irreversible, or unprecedented.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. Biosev has agreed to adopt a variety of mitigations measures that include, but not limited to, additional OHS risk assessment and enhancing overall safety conditions at industrial sites (sugar mills); following Bonsucro standard of sugar/ethanol production; adopting World Bank Group EHS guidelines air emission’s requirements for new boilers; and develop/formalize relevant policies to avoid the lease of land or purchase of sugarcane produced on land within indigenous reserves.

Biosev manages E&S aspects/impacts and hazards/risks of its operations by following the corporate ESMS framework of its sister company, Louis Dreyfus Commodities Brasil S.A. This includes articulating an EHS policy and all basic elements of an Integrated Management System in line with international standards for EHS management systems such as ISO 14000 and OHSAS 18000, as described below:



Environmental and Social Assessment: Biosev identifies most relevant risks and impacts from its operations, including air emissions, effluents, solid wastes and main OHS risks under a Risk Prevention Plan (Plano de Prevenção de Riscos Ambientais – PPRA) required under Brazilian regulations. While greenfield developments have to complete a full EIA process according to Brazilian environmental licensing requirements, the expansion of existing plants can be achieved through the completion of a full EIA or a simplified Rapid Environmental Assessment, depending on the nature of the expansion, its expected impacts and a preliminary assessment by the local environmental authority of the proposed project. Biosev completed a full EIA for its sugar mill in Rio Brilhante, built between 2006 and 2008. Complementary Impact Assessments for industrial expansions were completed for the Lagoa da Prata, Maracajú, Passa Tempo, Continental and Leme units.



However, regardless of licensing requirements, Biosev systematically identifies risks/hazards and aspects/impacts from all of its operations following an internal ESMS procedure as well as through periodic audits.



Going forward, as set forth in ESAP, Biosev will (i) map its critical processes and review/improve its risk analysis management system that covers all OHS risk assessment on such critical processes related to personal and process safety; (ii) use the Hazard and Operability (HAZOP) methodology as a tool to continuously monitor the critical processes mapped as per item (i); and (iii) establish a plan to address the gaps identified in the monitoring process referred to in item (ii).



Furthermore, Biosev will (i) conduct, together with independent consulting firm(s), an analysis of the possible gaps between the current status and practices of Biosev’s mills and the Brazilian national OHS safety standards (NRs) and workplace OHS risk assessment for its sugar mills; and (ii) in the event that any gaps are identified, establish a corrective action plan to bring all units into full compliance with Brazilian national OHS safety standards (NRs).



Management Programs: In Brazil, Environmental and Social Management Programs are first designed during the licensing phase, and all EIAs must have an attached set of management programs to avoid, control and mitigate identified impacts from the projects (called PBA, Plano Básico de Ação, in Portuguese). For the mills that were built before EIA requirements in Brazil, the Company is required to present equivalent management programs to the relevant environmental authorities a
s a condition of the environmental license. These plans most often include an E&S management plan for the construction phase (when applicable), monitoring and management programs for waste streams, environmental noise and air quality monitoring, surface water quality monitoring, vinasse application program and traffic safety and control, among others. The Company has adopted several policies and procedures to manage human resources and OHS, including, among others, OHS programs required under Brazilian law, such as a Risk Prevention Plan (Plano de Prevenção de Riscos Ambientais – PPRA), an Occupational Health Monitoring Plan (Programa de Controle Médico da Saúde Ocupacional – PCMSO), a Hearing Protection Program (Programa de Conservação Auditiva) and a Respiratory Protection Program (Programa de Proteção Respiratória). Biosev also has specific procedures for hazardous work (working at heights, hot work, working with electrical systems, working in confined spaces, working in explosive settings, etc.), which must follow the Company''s mandatory procedure for approving hazardous work activities. The agriculture division also has an annual sugarcane plantation and harvesting management program that includes specific procedures for soil conservation, use of fertilizers and integrated pest management.



Going forward, for the mills that produce crystal and/or refined sugar, Biosev will also develop and implement a food safety management program in line with the requirements of Brazil''s federal food and health authority, ANVISA, for Good Manufacturing Practices (GMP) in sugar production.



Management Capacity: At the corporate level, Biosev has an EHS manager reporting directly to the Competitiveness Director, as well as, at the cluster level, dedicated teams of EHS staff assigned to the mills and reporting to an operational officer. Each sugar mill has a dedicated environmental analyst and a team of OHS professionals (safety engineers, safety technicians, doctors and nurses) reporting to a person responsible for EHS at the cluster level, who then reports to the operational officer. Operational staff, task leaders, division managers and site managers share EHS performance responsibilities with the local, not corporate, EHS team, and the individual job performance of these senior managers is tied to and evaluated on the basis of the EHS performance of the specific site or regional cluster for which they are responsible at the operational level.



Training: Biosev has structured training programs that include an EHS induction for new employees (and contractors) as well as job-specific training such as working at heights, working in confined spaces, work as machine or boiler operators, handling and use of pesticides, operating vinasse irrigation equipment, etc.



Monitoring and Reporting: Biosev monitors relevant indicators of the its operations, such as work-related injuries, air emissions, watershed quality, field application of vinasse wastewater
, pesticide consumption, water consumption and solid waste generation and disposal. As required by law, Biosev''s mills report specific indicators to CETESB (Companhia de Tecnologia de Saneamento Ambiental), Imasul (MS), FEAM (MG), Sudema (PB), Idema (RN) and IBAMA (Instituto Brasileiro de Meio Ambiente) on an annual basis. Under the mandatory PPRA (Programa de Prevensão de Riscos Ambientais), OHS exposure to hazardous agents such as noise, dust and heat is also monitored at all sites. Biosev also has mandatory occupational health monitoring programs in place (PCMSO, or Plano Médico de Controle da Saúde Ocupacional), which include periodic clinical assessments as well as regular testing (such as audiometry, eye testing, blood pressure, diabetes and urine and blood testing) to detect potentially noxious exposure to workplace contaminants or other risks.



As mentioned above, Biosev conducts periodic internal EHS audits as required by its existing Integrated Management System. Through this system, all sites periodically report key EHS performance indicators, which are then reviewed and discussed during operational management meetings. Key performance indicators are reported to senior management and discussed in periodic meetings.



External Communications and Grievance Mechanisms: Brazilian legislation related to environmental and social performance does not have specific requirements regarding external communications and grievance mechanisms for a sugar and ethanol producer. Nonetheless, Biosev has sought over recent years to improve its external communications on sustainability issues, including through the publication of its first sustainability reports (for 2011-12 and 2012-13), and it has expressed great openness to continuing this process and developing channels for receiving and addressing external complaints.



Biosev currently has four different tools for external communication and grievance mechanisms: (a) for its own employees and third-party employees that work at least partially inside Biosev’s premises, the Company makes available its “Linha Ética” (or Ethics Hotline – see more details in PS2 below); (b) for all the communities in which Biosev has its mills, the Company makes available a toll-free hotline (0800) that is publicized at the mills and in local media; such a toll-free hotline is managed by Biosev’s EHS department that is available to receive complaints from all different local stakeholders, but with a focus on EHS matters; (c) for clients, Biosev has a toll-free number (0800) duly advertised on its website that is available to receive complaints regarding Biosev’s products and other matters regarding its relationship with its clients; and (d) for shareholders, investors and analysts, Biosev has its IR department contact details ready to receive any request for information, complaints or suggestions. Going forward, the Company’s plans include the creation of a new position whose responsibilities would include stakeholde
r engagement, government relations, and external communications to continue enhancing a management focus on Biosev''s approach to these issues. Part of this person''s responsibilities will be to develop a company-wide Stakeholder Engagement Plan and to ensure that all stakeholders – and not just clients – are well-aware of the possibility of using the 0800 telephone number to raise any type of grievance with the Company.



On-going Reporting to Affected Communities: As noted above, the Company has produced a sustainability report, based on the Global Reporting Initiative standards and aimed at informing customers, suppliers, banks, investors, and employees about its activities in this field. Biosev''s first sustainability reports, which covered 2011-12 and 2012-2013, was rated to be at GRI''s Level B, which is considered intermediate. Together with the actions mentioned below under PS7 (Indigenous Peoples) and the section below on Stakeholder Engagement, Biosev will take measures under the ESAP to improve its reporting to affected communities. Part of this approach will be to create a new position within the Company to improve local stakeholder engagement in general and reporting to affected parties in particular.

Working Conditions and Management of the Worker Relationship: Biosev''s workforce comprises approximately 15,000 permanent workers countrywide, with a relatively limited number of employees hired on a temporary basis for harvest-related duties (known as safristas). With the move towards greater mechanization of the planting and harvesting process, cane cutters and other workers involved in heavy manual labor are no longer needed in significant numbers, except at the mills in the Northeast (particularly Giasa mill in Paraíba and to a lesser extent Estivas mill in Rio Grande do Norte). From its previous, large-scale rural workforce, Biosev has transitioned and trained good performers into operator roles hired on permanent, full-time contracts. Some regions such as Mato Grosso do Sul have no temporary harvest workers, or safristas, at all. In the remaining regions of its operations, the company hires a total of about 1,840 harvest-related workers as cane cutters (in the Northeast and Minas Gerais) and as harvester operators (Minas Gerais and São Paulo State).



Through its human resources policies and practices – which are clearly articulated and readily available to workers – Biosev seeks to abide by all Brazilian legal requirements regarding working conditions and management of the employer-worker relationship, to promote a positive work environment, and to retain and motivate its workforce. Employees are hired on the basis of clear contracts, they undergo an induction and training process, and end-of-employment formalities are carried out in a transparent and orderly fashion. Time clocks are mostly electronic and readily accessible to the workforce, and overtime is calculated and paid. Biosev pays all employer social security taxes and legally-mandated benefits. As the Brazilian government is moving towards an automated system for reporting on employer payments of social security taxes and similar payroll charges – for which full compliance is required by June 2015 – the company is already modifying its workforce registration and payroll systems to meet this deadline.



In addition, the Company provides a series of benefits that go beyond Brazilian legal requirements, and its system for performance-based pay extends from corporate-level executives and senior managers at the regional and mill levels to operational levels. With the help of external consultants, the company is also undergoing a salary benchmarking process across all hierarchical levels. Career advancement, including through additional training and education supported by the Company, is encouraged through the grading of positions, performance feedback given based on objective indicators, and performance-based promotions. The IFC met numerous employees who had advanced from entry-level positions to ones with significant responsibility, and virtually all Biosev employees interviewed by the IFC reported a highly positive work environment in which they felt valued and motivated.



La
bor rights in Brazil are enshrined in the constitution and the consolidated labor laws (known as Consolidação das Leis do Trabalho, or CLT, in Portuguese), and labor relations are highly regulated under the country''s laws and labor practices, including the requirement for most categories of workers to belong to a union. In Biosev''s case the workforce belongs to approximately 50 different unions, divided by occupation and region. The employer''s association in the sugarcane sector, UNICA, is currently in the midst of negotiations on sector-wide accords in which the main issue is the question of pay increases, a difficult issue for employers given low sugar and ethanol prices. At the operational level, relations with the unions are characterized as good, reflecting efforts over the last number of years by Biosev’s management to overcome previously contentious issues. For example, at the Rio Brilhante mill the Company reports that the unions generally come directly to the Company with any complaints on behalf of members, rather than going to the labor court system, demonstrating confidence in the company''s ability to resolve such problems.



In light of Brazil''s historic problems in safeguarding the rights of rural workers, especially cane cutters, the IFC reviewed the collective bargaining agreements signed with the unions of such workers in the Northeast, where Biosev continues to rely on manual labor for harvesting. The agreements, which appear to be highly detailed, covered issues ranging from pay (guaranteed salaries, plus the mechanisms for calculating production-based bonuses beyond the base pay and overtime) to payment methods, procedures for hiring and firing workers, and housing, transport, and working conditions, including restrictions on hazardous work (e.g. applying pesticides) for certain categories of more vulnerable workers, use of appropriate protective equipment and other precautionary measures, and the provision of rest areas and bathroom facilities for fieldworkers. Among various measures specifying unionization-related rights, union representatives are empowered to accompany Ministry of Labor inspectors conducting spot checks in the field. Average pay packets for manual cane cutters, including fixed and performance-based pay, appear to constitute a living wage.



Biosev''s worker grievance system is grounded in its overarching HR policy, particularly the company''s Code of Conduct, which applies to all employees. There are three channels for workers to raise complaints: with their line managers, through HR personnel, and then via Linha Ética (Ethics Hotline), which is a confidential mechanism strengthened in the last two years and managed by Biosev''s internal audit and compliance team. Complaints raised through this latter channel pass through a fully confidential process with recourse to an Internal Ethics Committee that meets on a regular basis and has considerable internal authority to take corrective actions.



Protectin
g the Workforce: Biosev scrupulously follows Brazil''s legislation on minimum age. The company checks the worker''s age at time of application, recruitment, and contracting. For example, the company''s HR system automatically blocks any attempt to register a new employee below the legal working age. The company does engage trainees of 16-17 years of age under the Brazilian government''s Novo Aprendiz training program, but it follows all requirements of the program, including limited work hours to allow for participants'' schooling and prohibitions against exposing trainees to any forms of hazardous labor. Biosev has no cases of child labor or forced labor in the labor courts.



Occupational Health and Safety: Biosev has a well-structured team managing OHS hazards and risks facing the workforce, in line with Brazilian labor requirements. As mentioned above, Biosev has mandatory OHS programs in place, such as risk prevention plans, health monitoring plans, an accident prevention committees, and emergency response plans. The company is gradually implementing appropriate collective prevention measures, and where necessary, Biosev also provides appropriate personal protective equipment (PPE). According to Biosev''s sustainability report, the injury frequency rate during the last season (2012-13) was 25.5 accidents per million hours worked, which is considered above international reference values However, 2014 accident rates show a significant reduction in this trend: 10 accidents per million worked hours. Biosev is strengthening its EHS structure and implementing specific programs to reduce accident rates. As described in the PS1 section, Biosev will (i) map its critical processes and review/improve its risk analysis management system that covers all OHS risk assessment on such critical processes related to personal and process safety; (ii) use the Hazard and Operability (HAZOP) methodology as a tool to continuously monitor the critical processes mapped as per item (i); and (iii) establish a plan to address the gaps identified in the monitoring process referred to in item (ii).



Biosev has adopted centralized warehouses for pesticide storage. In such facilities, products are segregated by hazard class, the floor is sealed, the area is contained, and proper ventilation is installed. Biosev has identified all confined spaces, and it has developed a procedure for working inside them consistent with Brazilian safety requirements (NR33) and WBG’s EHS general guidelines. Biosev mills are in different stages of conducting an inventory of all pressure vessels, documenting their technical specifications and developing maintenance books for individual vessels, under a corporate program in accordance with the relevant Brazilian safety standard (NR13). Biosev is also conducting an assessment of all of its plants to identify gaps with Brazilian safety standards such as Safety of Electrical Systems (NR10), Machinery Protection (NR12), Buildings (NR8), Transport, Mov
ing, Storage and Handling of Materials (NR11) and so forth. Going forward, as set forth in ESAP and mentioned above in the PS1 section, Biosev will (i) conduct, together with an independent consulting firm, an analysis of the possible gaps between the current status and practices of Biosev’s mills and the Brazilian national OHS safety standards (NRs) and workplace OHS risk assessment of its sugar mills; and (ii) in the event that any gaps are identified, establish a corrective action plan to bring all units into compliance with Brazilian national OHS safety standards (NRs).



In addition, as set forth in the ESAP, Biosev will improve its current ergonomic prevention effort by conducting an ergonomic assessment of its workplaces at those mills that have yet to do so, in accordance with the requirements of Brazil''s NR17 worker safety standard. It will implement required corrective actions and a management program to prevent such injuries. The Company will also develop and implement the mandatory plans required under Brazilian worker safety standards for hearing and respiratory protection.



Workers Engaged by Third Parties: Biosev hires external companies for transport, housekeeping, maintenance, some specialized agricultural functions (e.g. applying pesticides) and guard services. In order to save on some costs, however, third-party truckers, who constitute one of the largest groups of outsourced personnel, are being reduced, and more sugarcane transport being brought in house. (Biosev''s preferred option is now to own and operate its own trucks; its second-best option is to rent trucks but provide its own drivers.) In addition, Biosev is moving toward bringing routine equipment maintenance functions in house. For example, operators of mechanized planters/harvesters are being trained how to conduct basic maintenance on their machines.



In addition to saving costs, these trends will minimize the vulnerabilities that Biosev faces in monitoring contractor compliance with labor laws, including OHS requirements. For its contractors, Biosev has a highly detailed checklist system to ensure that they are fully observing legal requirements with regard to their own workforces. Procurement, which manages contracting, the EHS team, and HR are all involved in applying the checklist, requesting necessary documentation, and checking compliance before payments are authorized. Third-party workers undergo an EHS induction process upon their arrival at site, and permission is granted for third-party workers engaged in hazardous work activities through the same procedures used standardly by Biosev for its own workforce.



Supply Chain: Biosev reports having some 1,280 cane suppliers, who are contractually required to show payment of social security taxes and similar employer payroll charges before the company will pay them. Going forward, and as set forth in ESAP, Biosev will develop a procedure to confirm the absence of forced and child labor across its supply
chain, cross-checking with the Ministry of Labor child and forced labor lists, and phase out any suppliers that may be enrolled in one of these lists.

Air emissions: Boilers are the single largest source of air emissions from Biosev operations. Biosev monitors emissions from all of its boilers every year, seeking compliance with Brazilian requirements under CONAMA Res. 382/06 and 436/11, which are less stringent than World Bank/IFC EHS guidelines. Going forward, as set forth in ESAP, Biosev will deploy emission control systems for any new boilers it might purchase for greenfields or brownfields (excluding the replacement of existing boilers), consistent with the requirements of the World Bank/IFC EHS Guidelines (specifically, the requirements of the EHS General Guidelines for small combustion facilities of less than 50MWth as well as the requirements of the EHS Guidelines for thermal power units with regard to boilers with a thermal power capacity greater than 50MWth ).



Effluents: Wastewater from sugar/ethanol mills include: (i) process wastewater from ethanol production (vinasse), (ii) wastewater from cane washing, (iii) wet scrubber blow down from stack gas scrubbing, and (iv) miscellaneous wastewaters. Biosev’s mills do not discharge wastewater into rivers or surface water bodies, and all such wastewater is mixed together and used as a fertilizer in the sugarcane plantations under a ferti-irrigation management program. Biosev mills have formal plans for vinasse application in the fields following the standards of Brazil''s environmental authorities for wastewater used in sugarcane plantations. Vinasse is pumped to the fields through pipelines or trucks, intermediary storage ponds are lined with high density polyethylene covers to prevent groundwater contamination, and the amount of wastewater applied in the plantations is determined by the soil characteristics and the nutrient needs of the crop.



Sustainability of Water Resource: Sugarcane cultivation in Biosev’s operation relies mainly on natural rainfall and vinasse application. In some cases in the drier Northeast region of Brazil (Estivas and Giasa mills), rescue irrigation is performed during the peak of the dry season. Water is extracted from surface or groundwater sources for process operations in the mills, and Biosev informed the IFC that they have obtained all required permits from state governments to extract such water. Water usage at the mills varies from 0.7 to 1.3 m3/ton-cane. This is consistent with sector benchmarks and the reference values in the WBG’s EHS Guidelines for sugar production.



Greenhouse Gas Emissions: Biosev mills self-generate all energy for their needs from sustainable resources through co-generation of electricity from thermal power plants fed with sugarcane bagasse and other sources of biomass. Estimated carbon dioxide emissions from the mills far exceed 25,000 tons annually, but considering that this is renewable energy from sugarcane plantations, most of the mills'' GHG CO2 emissions are offset through GHG CO2 captured from the atmosphere by growing sugarcane plants. This acts as a natural offse
t. In addition, most of the ethanol that Biosev produces is used as a renewable fuel in the national vehicle fleet. Therefore, although Biosev mills generate high volumes of gross GHG emissions, net emissions from the Company''s operations can be considered negative (as they are sequestered in the sugar plantations and off-set in the ethanol that replaces use of fossil fuels).



Integrated Pest Management: Integrated Pest Management is employed at all plantations. Biosev uses biological control techniques to control the sugarcane borer population with the Cotesia flavipes parasite, and Drury larvae are controlled with Metharizium bacteria. Only approved chemicals and fertilizers are used, and application rates and methods are adapted to optimize consumption. As set forth in the ESAP, Biosev will continuously monitor and review its list of pesticides and will phase out any products that fall under WHO Class 1a and 1b over time. As mentioned above, Biosev has a centralized system of storing and handling pesticides. Biosev only uses tractors with protective cabinets for spraying operations, and handling, storage and use of agricultural chemicals follow national regulations and can be considered best practices.



Hazardous Materials: Biosev sugar mills use and store significant amount of chemicals such as soda, sulfur acid, chlorine, cyclohexane and pesticides. A variety of storage arrangements can be found at different mills, but all of them have bulk chemical storage areas, with secondary containment, risk identification, warning signs, access control and emergency kits and showers. However, given differences in maintenance levels and in the age of the plants, significant variation can be found in the quality of chemical storage facilities. As set forth in the ESAP and as part of the OHS gap analysis mentioned above in the PS2 section, if any gaps are identified, Biosev will develop an action plan to ensure that all chemical storage facilities are compliant with Brazilian standard requirements.



Solid Wastes: Sugar mills produce significant amount of organic wastes (filter cake, ashes from boilers and sand from sugar production tanks). These are taken to a composting area, where they are piled up and mixed together to enable the composting process. This mixture is allowed to rest for 30 days and then applied to the fields. Metal scrap is segregated, stored outdoors and sold for recycling. The solid waste from administrative areas and dining halls is collected and disposed of through the local public waste system or licensed private landfills. Biosev collects all empty pesticide containers and sends them to certified recycling companies.

Community Health and Safety

As a general practice, sugar mills are located in rural areas far from urban concentrations, which significantly reduces the risks to community health and safety. Potential risks to communities from Biosev operations could arise primarily from the explosions of ethanol tanks or sugar storage silos, air emissions from boilers, fugitive air emissions from trucks (dust) and aerial application of herbicides (to speed the sugarcane maturation process).



Biosev conducts aerial spraying of crops through contracted companies using crop-spraying airplanes. As set forth in the ESAP, Biosev will develop a specific management program to bring all aerial operations into compliance with Brazilian regulatory requirements. In addition, to improve oversight of these operations and minimize risks, Biosev will approve and enforce specific procedures to avoid the risks and impacts to community health and other crops associated with aerial spraying of chemicals.



Biosev sugar mills have a GIS-based system to manage sugarcane transport, which automatically defines better routes taking into account the distance, quality of the roads and existing traffic restriction on truck flows around cities. Biosev has a specific procedure for sugarcane transport including relevant safety provisions, such as overall safety of the trucks, warning signs, emergency equipment and driver training. In addition, light vehicles are equipped with GPS trackers to ensure that maximum speeds are not exceeded, and ignition systems relying on individualized activation keys show which drivers are using which vehicles, thereby enabling immediate identification of any unsafe drivers.



Going forward, Biosev will map out small rural villages and settlements across existing access roads used for sugarcane transportation and define applicable control and mitigation measures to reduce the risks and impacts to these communities.



Life and Fire Safety: Biosev''s mills are in different stages of deploying all required life and fire safety equipment such as fire detectors, alarm systems, hydrants, foam chambers and portable extinguishers according to São Paulo State''s fire authority standard, IT 27/2004. Biosev has an action plan and schedule to secure all necessary permits from local fire departments (Auto de Vistoria do Corpo de Bombeiros, or AVCB, in Portuguese). This plan will be completed in 2019. In addition, under Brazilian safety standard NR10, industrial sites are classified according to their risk of explosion, and in those areas considered to be of high risk (e.g. distilleries, sugar storage warehouses or soy silos), Biosev is installing access control systems, explosion relief systems and intrinsically safe electrical equipment.



Emergency Preparedness and Response: Biosev sites have the required emergency response plans covering all emergency scenarios such as fires, explosions and environmental leaks as well as fire brigade, evacuation and communication p
lans.



As mentioned above under PS1, Biosev will further improve its Risk Management Plans including (i) safety records of process maintenance; (ii) maintenance and assurance of critical systems integrity; (iii) operational procedures; (iv) training and (v) updated Emergency Preparedness and Response Plan (Plano de Ação de Emergencial, or PAE, in Portuguese).



Security Personnel: Biosev does not have armed guards at any of its facilities. The Company relies on a combination of preventive actions, GPS tracking of vehicles, use of surveillance cameras, and unarmed, third-party guards to provide security for its facilities, equipment and personnel. Security guards are trained extensively in dialogue-based methods and avoidance of the use of force for resolving problems, and any suspected cases of criminal activity are turned over to the police for investigation. There have been no reported cases of abuses by security personnel. Under the ESAP, Biosev will issue a clear written policy on its security practices in line with the requirements of PS4.

Protection and Conservation of Habitats: Sugarcane plantations are located exclusively in areas traditionally used for agriculture, and no direct conversion of natural habitats to croplands or significant loss of biodiversity is expected from this project.



Depending on the region of the country (determined by biome), Brazilian farmers are required to set aside 20% to 80% of their lands as biodiversity conservation areas and to protect buffer zones along rivers and around water bodies. If deficient, riparian buffer zones should be reconstituted, and biodiversity conversation areas can be offset through the protection of intact areas in the same region. Biosev sugar mills have a program to protect and reforest riparian areas and implement ecological corridors following CETESB requirements. Since the land used by Biosev to grow sugarcane is located on leased farms or those of suppliers, Biosev will implement a program to educate and help landowners in its supply chain to achieve compliance with the Brazilian Forest Code and meet requirements for biodiversity set-asides.



Sustainable Management of Living Natural Resources: As mentioned above, sugarcane plantations are located on already-converted land in consolidated agricultural areas in São Paulo, Mato Grosso do Sul, Paraíba and Rio Grande do Norte States. Biosev has mapped all production areas according to how CTC (Brazil''s Sugarcane Technology Center) categorizes environments for sugarcane production based on local topography, soil class and fertility, risk of erosion, rainfall, temperature and sunlight. Soil conservation techniques are applied in the fields including contour planting, terracing and planting design to avoid run-off. Sugarcane leaves and straw are left on the ground to preserve the soil’s humidity and mitigate the risk of erosion.



Biosev takes advantage of all possibilities to use organic wastes from sugar/ethanol production, including vinasse mixed together with other suitable wastes, in the plantation fields to reduce the need for chemical fertilizers. When such chemical fertilizers are applied, the prescription is based on soil fertility analysis and plantation extraction needs. As mentioned above, Biosev monitors pests, which it seeks first to control through biological agents. When used, agrochemical products are administered by qualified agronomists based on pest infestation and economical level of control.



The pre-harvest burning of sugarcane fields is being progressively eliminated in São Paulo State, following an agreed-to schedule between the sector as a whole and the state environmental authority (Secretaria de Meio Ambiente in Portuguese). Harvesting is already close to 100% mechanized within those plantations, in both São Paulo and Mato Grosso do Sul, where the Company manages the full production process, including harvesting. In São Paulo State, Biosev will completely eliminate pre-harvest burning (including by suppliers) by 2017, in accordance with
the legislation in force there. In the Northeast, pre-harvest burning, which helps to prepare the cane fields for manual cutting, is still mandatory due to the unfavorable topography (sloping) that impedes mechanized harvesting.



As set forth in the ESAP, Biosev will manage plantations in a sustainable manner following agribusiness good management practices as defined in the Bonsucro standard and verified by a credible third party, under an agreed-to schedule with IFC and maintaining such standards on a ready-to-be-certified basis after initial verification.



Supply Chain: No significant conversion of natural or critical habitats is expected from Biosev suppliers in this project.

The southern part of Mato Grosso do Sul State, where Biosev has three sugar mills, is a region traditionally inhabited by Guarani (also known by the name of their language, Ñandevu) and the related Kaiowá. (This section does not refer to other states where Biosev has operations, since there are no indigenous peoples residing nearby.) Two officially recognized Kaiowá indigenous reserves, Sucuriy and Panambi, are located within the area of influence of Biosev''s MS mills. Also, directly to the north and west of the mills is a region of traditional Terena occupation. A Terena reserve, Nioaque, lies some 10-12 kms to the west of the westernmost areas that Biosev leases, and another Terena reserve, Buriti, lies some 5-10 kms north-northeastward from lands planted with sugarcane by one of the Company''s suppliers.



Given the contentious nature of land issues in some Terena areas and particularly in the southern part of the state, where Kaiowá predominate, this section describes the historical process through which native populations were dispossessed of their lands and recent efforts by certain indigenous communities, supported by federal government institutions and NGOs, to reclaim areas of traditional occupation and have them recognized as official reserves. This process has brought such actors into direct conflict with non-indigenous farmers, who generally acquired their land through the state-sponsored, historical settlement process that occurred at the expense of indigenous communities or through the purchase of lands originally settled during earlier periods by non-indigenous farmers with official backing. This is therefore the context for the possible expansion of existing reserves or the creation of additional ones in or near Biosev''s area of operations. As this section describes below under the relevant action items in the ESAP, the Company does not source any sugarcane grown on land duly established as an indigenous reserve.



Based on the best information available at the time of IFC''s appraisal, the project does not involve any circumstances requiring free, prior, and informed consent (FPIC) of indigenous communities, such as resettlement, impacts on their critical cultural heritage, or impacts on lands and natural resources subject to traditional ownership or under customary use. In additional, based on existing information, there appear to be no adverse impacts on such communities directly attributable to the project''s operations. This includes the EIA and licensing process for the construction of Biosev''s Rio Brilhante mill, which lies approximately 30 kilometers from the closest reserve and for which indigenous communities were not considered to be impacted. Nonetheless, as the Company has not yet systematically surveyed nearby indigenous communities to understand possible impacts of its growing and transport operations, Biosev will take appropriate measures to begin a dialogue with such communities, jointly analyze the Company''s im
pacts and identify potential mitigation measures and engage in a process of informed consultation and participation, if required. These measures are described in greater detail below.



Historical Context: Following the Paraguayan War in 1864-70, Brazil took possession of the territory that now forms the southern part of the State of Mato Grosso do Sul. Since then, the lands of indigenous populations residing there – the Guarani and related Kaiowá – were progressively encroached upon and appropriated by non-indigenous settlers. Penetration of non-indigenous agribusiness began with the large-scale, government-backed production of the "mate" herb, consumed as tea, in the late 1800s. This process accelerated in the early decades of the 1900s through official policies which supported the expansion of the Brazilian state in the region, missionary activities and the extension of transport linkages to southern and southeastern Brazil. Eight indigenous reserves of approximately 3,000 hectares each were created by Serviço de Proteção aos Índios (SPI, or Indian Protection Service) between 1915 and 1928 to accommodate native populations expelled from their lands.



Later periods, such as in the 1930s-50s and then again in the 1960s and 1970s, saw large-scale expropriation of native lands through the titling process for non-indigenous settlers and the expansion of livestock-raising and agriculture in the region. It was also during this period, known as the March to the West, that the Brazilian state created the Colônia Agrícola Nacional de Dourados (CAND) specifically for what is now the southern part of Mato Grosso do Sul; it promoted the settlement of an eventual 267,000 hectares. Lands were ceded to settlers, who often temporarily employed indigenous workers to clear forests and prepare areas for livestock-raising and agriculture. Many Guarani and Kaiowá fled westward into Paraguay, some were killed, and others remained. Throughout this process, some family groups were able to maintain a precarious existence outside of established reserves, such as in settlements (known as aldeias) on or near their traditional areas, in remote corners of farms owned by settlers, or in inaccessible regions far from the main areas of non-indigenous settlement.



With the gradual democratization process of the 1980s, space increased for indigenous leaders to exert claims for the government to recognize additional reserves. The 1988 constitution, which followed the end of Brazil''s military dictatorship, radically changed the legal basis for advancing such claims. Article 231 of the constitution prohibits the forced removal of Indians from their traditional territories, and it guarantees them inalienable and exclusive rights over these lands, which are deemed "indispensable for the preservation of environmental resources necessary for their well-being and physical and cultural reproduction, according to their uses, customs, and traditions." Since then, the Brazilian stat
e has established a legal framework, institutional arrangements within the Fundação Nacional do Índio (FUNAI, the federal government''s agency for indigenous affairs, which replaced the discredited SPI in the 1960s) and administrative procedures for creating new indigenous reserves under Decree No. 1775/96. This process consists of technical studies involving accredited anthropologists, publication of the proposed reserve by FUNAI, an official declaration of the reserve by the Justice Ministry as an indigenous reserve, physical demarcation of the area, title searches and appraisals of physical improvements made by non-indigenous owners, a presidential designation of the area as a reserve and the process of removing non-indigenous settlers (including the resettlement of those entitled to such) and related measures.



Present-Day Context: Following the initial land claims of the 1980s-90s, a number of family groups within the Guarani (Ñandevu) and Kaiowá began reasserting their claims more forcefully in the mid-2000s. They did so by installing themselves in small camps within or close to the properties where they allege their traditional territories to be located. These actions – which were resisted by non-indigenous landowners and often led to judicial decisions ordering the removal of such camps – prompted the Federal Prosecutor''s Office (Ministério Público Federal, or MPF) to negotiate a legal agreement with FUNAI to accelerate the study process for new indigenous reserves. The agreement, known as a Compromisso de Ajustamento de Conduta or Termo de Ajustamento de Conduta (TAC), was initially signed in 2007 and witnessed by indigenous leaders. It required FUNAI to establish Technical Groups (Grupos Técnicos or GTs) to identify and delimit eligible indigenous reserves within seven different watersheds, and eight such GTs were created.



According to information provided by public institutions during the appraisal, this process could lead to the publication of studies and proposed borders for some 40 new indigenous reserves, only one of which has been released. However, due to the delays in the work of the Technical Groups – allegedly caused by their inability to complete their fieldwork in the face of hostility on the part of some local landowners – the MPF has sued FUNAI and sought fines for the lack of completion of the technical studies as of 2012. As of the time of the IFC appraisal, there was still no new deadline for the completion of studies. Some of these cases have received international attention from the media, NGOs, and multilateral organizations, including for example the UN''s Special Rapporteur on Indigenous People, who reported on some of these cases in 2010 and the alleged use of violence to thwart indigenous land claims (see pp. 39-40 of the summary of cases brought to the notice of the Special Rapporteur, available at www2.ohchr.org/english/bodies/hrcouncil/docs/15session/A.HRC.15.37.Add.1.pdf).



FUNAI puts the total indigen
ous population of Mato Grosso do Sul at 77,000, approximately 60,000 of whom live on established reserves. SESAI, the specialized branch of the Ministry of Health responsible for indigenous communities, estimates the Guarani and Kaiowá populations to have totaled 41,500 in 2010. Mato Grosso do Sul has 1.5 percent of its land designated as indigenous reserves, which is proportionally lower than other Brazilian states with significant native populations.



It is within this context that Biosev has undertaken – or will undertake – the following measures, which are also included in the ESAP. First, as a condition of disbursement by IFC, Biosev will formalize its stated policy (and publicize it on its website) that it does not lease land or purchase sugarcane produced on land within duly established indigenous reserves. The Company''s policy should refer to PS7 requirements that in the event that the participatory social impact assessment proposed below discovers any circumstances requiring free, prior, and informed consent of indigenous communities, Biosev will conduct such a process. Biosev will take measures to ensure that its proposed policy on indigenous issues is the subject of communication to such communities and other relevant stakeholders.



Given that the Company''s growing and transport activities might have impacts on indigenous communities, Biosev will designate a company officer and contract appropriate consulting services to assist it in developing dialogue with such communities with a view to understanding and mitigating any such impacts. Personnel will be appointed, and a TOR for the consultant will be prepared prior to the commitment of the IFC''s investment. The participatory social impact assessment will be concluded by December 2015. This dialogue and assessment process should also take into consideration non-indigenous stakeholders, particularly small-scale landowners, and it should be integrated into Biosev''s overall approach to stakeholder engagement (see the section on "Stakeholder Engagement," below).



In the event that any of these material impacts on indigenous communities are found to be potentially adverse, the client will conduct a process of informed consultation and participation (ICP), as required by para. 32 of PS-1. This process, if required, will be concluded by a date that allows for the client to meet the requirements for effective consultation, namely that it (i) begin early in the process of identification of environmental and social risks and impacts and continue on an ongoing basis as risks and impacts arise; (ii) be based on the prior disclosure and dissemination of relevant, transparent, objective, meaningful and easily accessible information which is in a culturally appropriate local language(s) and format and is understandable to affected communities; (iii) focus inclusive engagement on those directly affected as opposed to those not directly affected; (iv) be free of external manipulation, interfer
ence, coercion, or intimidation; (v) enable meaningful participation, where applicable; and (vi) be documented. In addition, the consultation process should capture both men’s and women’s views, if necessary through separate forums or engagements, and reflect men’s and women’s different concerns and priorities about impacts, mitigation mechanisms, and benefits, where appropriate.

Biosev is committed to developing an effective approach to stakeholder engagement, and it has already begun to put in place important elements of a comprehensive strategy. It has launched a grower loyalty program called Mais Cana (More Sugarcane), through which, amongst others, it helps to finance additional land purchases for growers. It plans to work with banks in order to provide such financing directly to growers in the future. Also, given that some cane growers also raise cattle, Biosev has developed some initiatives to help them to free up pastureland for cane production by providing animal feed produced at one mill more or less at cost and to help them negotiate better prices with slaughterhouses as a group.

In addition, Biosev has sought to be a responsible corporate citizen in the communities where it operates – and where it is often the major employer. It participates in relevant industry associations for the sugar sector, and it maintains highly constructive relations with local authorities. It engages in corporate citzenship activities in each of the communities where it works. For example, in the case of Mato Grosso do Sul, where Biosev has two mills in the municipality of Rio Brilhante, the Company donated two buildings where day care centers were established for c. 1,000 children from the community. At a number of its units, it has since 2011 operated a program called Liga pela Paz, or League for Peace, which promotes peace education and helps young people develop life skills to avoid violence, bullying and intolerance. This program is carried out through partnerships with municipal-level departments of education.

With other stakeholders Biosev has yet to develop a comprehensive, structured approach, particularly with regard to indigenous communities close to its Mato Grosso do Sul operations, as noted above under PS7. The Company did begin a process of stakeholder identification and mapping as part of its existing GRI reports on social and environmental performance indicators. Under the ESAP, Biosev will update and begin implementing a Stakeholder Engagement Plan. This will include identification of all relevant stakeholders and the development and use of the most appropriate channels for communication and dialogue with relevant stakeholders at each of its sites, in accordance with the requirements of PS1. As each of its mills operates in a unique context, the approach will be scaled appropriately for each setting, including as a function of the interests and needs of affected parties and the Company''s stakeholders as a whole.

Biosev S.A.Av. Brig. Faria Lima, 1355 - 11th floorZip code 01452-919São Paulo/SP - Brazil

Broad Community Support is not applicable for this project

Biosev(34607) Supervision Disclosure Snapshot – Version 3
Description	Anticipated Completion Date	Status	Comments	Completion Date
Biosev will (i) map its critical processes and review/improve its risk analysis management system that covers all OHS risk assessment on such critical processes related to personal and process safety; (ii) use the Hazard and Operability (HAZOP) methodology as a tool to continuously monitor the critical processes mapped as per item (i); and (iii) establish a plan to address the gaps identified in the monitoring process referred to in item (ii). Biosev will (i) map its critical processes and review/improve its risk analysis management system that covers all OHS risk assessment on such critical processes related to personal and process safety;	30-Sep-2015	Completed	Completed	5/31/2019
Biosev will (i) conduct, together with independent consulting firm(s), an analysis of the possible gaps between Biosev’s mills current status and practices and the Brazilian national OHS safety standards (NRs) and workplace OHS risk assessment of its sugar mills; and (ii) in case any gaps are identified, establish a corrective action plan to bring all units into compliance with Brazilian national OHS safety standards (NRs).	30-Jun-2015	Completed	Completed	8/28/2020
Biosev will (i) conduct, together with independent consulting firm(s), an analysis of the possible gaps between Biosev’s mills current status and practices and the Brazilian national OHS safety standards (NRs) and workplace OHS risk assessment of its sugar mills; and (ii) in case any gaps are identified, establish a corrective action plan to bring all units into compliance with Brazilian national OHS safety standards (NRs).	30-Dec-2015	Completed	Completed	8/28/2020
Biosev will (i) conduct, together with independent consulting firm(s), an analysis of the possible gaps between Biosev’s mills current status and practices and the Brazilian national OHS safety standards (NRs) and workplace OHS risk assessment of its sugar mills; and (ii) in case any gaps are identified, establish a corrective action plan to bring all units into compliance with Brazilian national OHS safety standards (NRs).	30-Apr-2016	Completed	Completed	8/28/2020
For the mills that produce crystal and/or refined sugar, Biosev will also develop and implement a food safety management program in line with the requirements of Brazil's federal food and health authority, ANVISA, for Good Manufacturing Practices (GMP) in sugar production.	30-Sep-2015	Completed	Completed	5/31/2019
Biosev will improve the current ergonomic prevention work conducting an ergonomic assessment of its workplaces, for those mills without it, in accordance to the requirements of Brazil's NR 17 worker safety standard, and it will implement required corrective actions and a management program to prevent such injuries	30-Dec-2016	Completed	Completed	5/31/2019
The Company will also develop and implement the mandatory plans required under Brazilian worker safety standards for hearing and respiratory protection.	30-Dec-2016	Completed	Completed	5/31/2019
Biosev will develop a procedure to confirm the absence of forced and child labor across its supply chain, cross-checking with the Ministry of Labor child and forced labor lists, and phase out any suppliers that may be enrolled in one of these lists.	30-Jun-2016	Completed	Completed	5/31/2019
Biosev will keep continuously monitoring and reviewing its list of pesticides and will present a plan to phase out all products that fall under WHO Class 1a and 1b, over time, if any.	30-Dec-2015	Completed	Completed	5/31/2019
Biosev will develop a specific management program to bring all aerial operations into compliance with Brazilian regulatory requirements. In addition, to improve oversight of these operations and minimize risks, Biosev will approve and enforce specific procedures to avoid the risks and impacts to health and other crops associated with aerial spraying of chemicals.	30-Dec-2015	Completed	Completed	5/31/2019
Biosev will map out small rural villages and settlements across existing access roads used for sugarcane transportation and define applicable control and mitigation measures to reduce the risks and impacts to these communities.	30-Jun-2016	Completed	Completed	5/31/2019
Biosev will implement a program to educate and help landowners in its supply chain to achieve compliance with the Brazilian Forest Code and meet requirements for biodiversity set-asides.	30-Jun-2016	Completed	Completed	5/31/2019
Biosev will manage plantations in a sustainable manner following agribusiness good management practices as defined in the Bonsucro standard and verified by credible third party, under an agreed-to schedule with IFC and maintaining such standards ready-to-be certified after initial verification	30-Jun-2016	Completed	Completed	5/31/2019
Biosev will formalize its stated policy (and publicize it on its website) that it does not lease land or purchase sugarcane produced on land within indigenous reserves dully established.	30-Jun-2015	Completed	Completed	3/31/2015
Biosev will designate a company officer and contract appropriate consulting services to assist it in developing dialogue with such communities with a view to understanding and mitigating any such impacts. Personnel will be appointed, and a TOR for the consultant will be prepared prior to the commitment of the IFC's investment.	30-Jun-2015	Completed	Completed	3/31/2015
Biosev will conduct a participatory social impact assessment taking into consideration non-indigenous stakeholders, particularly small-scale landowners, and it should be integrated into Biosev's overall approach to stakeholder engagement	30-Dec-2015	Completed	Completed	12/31/2016
Biosev will update and begin implementing a Stakeholder Engagement Plan. This will include identification of all relevant stakeholders and the development and use of the most appropriate channels for communication and dialogue with relevant stakeholders at each of its sites, in accordance with the requirements of PS1. As each of its mills operates in a unique context, the approach will be scaled appropriately for each setting, including as a function of the interests and needs of affected parties and the company's stakeholders as a whole.	30-Jun-2016	Completed	Completed	12/31/2016
Biosev will take measures under the ESAP to improve its reporting to affected communities and to create a new position within the company to improve local stakeholder engagement in general and reporting to affected parties in particular	30-Dec-2015	Completed	Completed	3/31/2015
Biosev will issue a clear written policy on its security practices in line with the requirements of PS4	30-Jun-2015	Completed	Completed	3/31/2015