This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability as the potential adverse E&S risks and/or impacts which are generally site-specific, are largely reversible and can readily be addressed thorough mitigation measures as discussed below. Key E&S risks and issues for this project include (i) effective implementation of EHS management systems, (ii) potential workers agrochemical exposure and workers’ occupational health and safety (OHS) risks from farming and processing activities, (iii) fair and safe working conditions for employees and contractors, and (iv) stakeholder engagement and nearby community health and safety impacts.  Other E&S potential impacts include risk of cotton dust explosion and emergency response preparedness; agrochemical management; management of security forces, etc.                                                  

 Environmental and Social Assessment and Management System. Amaggi has a structured E&S Management System (MS) to identify and manage the environmental and social impacts of all its units’ activities, products, and services. It includes specific corporate policies and procedures, E&S operational controls and impacts identification, and management and monitoring plans. Moreover, to validate effectiveness of mitigation measures of E&S risks and impacts, Amaggi conducts yearly internal audits to all units and undergoes external audits as part of certifications renewal process of voluntary standards (e.g. Better Cotton Initiative, BCI). The implementation of the audits outcomes and recommendations become part of the annual performance objectives for all directors and managers. Specifically, Amaggi assessed the potential impacts from the cotton production expansion, such as those from increase on agrochemical use. Amaggi’s ESMS practices and procedures are aligned with the IFC PSs and applicable WBG EHS guidelines. However, for the implementation of the proposed cotton production and processing projects, Amaggi will develop and/or update existing procedures and protocols in line with IFC PS 1 as explained in the paragraphs below. Key E&S impacts and risks identified in the assessment process, and their respective mitigation measures are discussed in more detail in the relevant sections of this ESRS.

Policy. Amaggi has a corporate environmental, health, safety, and social policy that is implemented across all its operations in which it commits to environmental protection, reduction of E&S impacts, pollution prevention, compliance with Brazilian legal and regulatory requirements, protection of human rights and aims towards continuous improvement; and it is based on transparency and good governance principles. Its mission includes core values such as integrity, respect to the environment, simplicity and humility, participative management, commitment, innovation and entrepreneurship, and respect for partners. The policy it is communicated to all employees at hiring. In addition, it has a Code of Ethics and a Code of Conduct which also address E&S aspects such as relations with environment and with relevant stakeholders (https://www.amaggi.com.br/en/sustainability/socio-environmental-management/.) Amaggi’s corporate E&S policy is aligned with the IFC PSs.

In 2017, Amaggi released its strategic vision until 2025 and started implementing it as part of its Global Sustainability Positioning (https://www.amaggi.com.br/sustentabilidade/posicionamento-global/). It is based on six principles: (i) economic viability, add value to shareholders and employees, and share value with society, contributing to local development; (ii) be socially and environmentally responsible, and promote the continuous improvement of socio-environmental management in its operations and in the value chain; (iii) ensuring good governance and transparency in its operations, through legal compliance and risk management; (iv) promote respect for human rights and decent work in its operations and in the value chain; (v) promote personal and professional growth of employees, valuing diversity and seeking continuous improvement in working conditions, health and safety; and (vi) contribute to the promotion of food and nutritional security.

It also commits to stimulating responsible expansion of agricultural production in areas already open (e.g. modified habitats), and in the transformation of degraded areas into increasingly productive areas; avoiding new conversions of native vegetation for agriculture development; continuing investing in technology in the field and effective implementation of good agricultural practices (GAPs), and in systems to allow land use, pesticides, fertilizers, and inputs use optimization, respecting and protecting human rights, in particular local communities, indigenous peoples and family producers, respecting the right to land use, including the principle of free, prior and informed consent (FPIC); supporting mechanisms that value forests and natural resources; promoting solutions for protection, conservation and recovery of high biodiversity conservation and carbon stock areas, in addition to the adequate management of waste and water resources; working continuously to reduce greenhouse gas (GHG) emissions from products produced and originated by Amaggi, as well as its carbon footprint.

Based on this review, IFC confirmed the alignment and consistency of Amaggi’s’ sustainability and EHS policy framework applied to all its cotton operations with the requirement of IFC Performance Standards and WBG EHS Guidelines.

Management Programs. Amaggi has a robust corporative E&S management system (ESMS), consistent with ISO 14001 management system structure, for all its cotton farming and processing activities and operations. Specifically, for its cotton operations, its ESMS is based on the requirements of Responsible Brazilian Cotton (ABR) which in turn is aligned with the Better Cotton Initiative (BCI). All these performance-based E&S requirements are handled in an integrated manner addressing the risks and mitigations of all its operations (https://www.amaggi.com.br/en/sustainability/certifications/) and are aligned with IFC PSs and the WBG EHS Guidelines. 

Specifically, Amaggi’s ESMS includes EHS risk assessment procedures; EHS Standard Operating Procedures (SOPs); agricultural best practices procedures (i.e., soil nutrition management, pest control and Integrated Pest Management (IPM) methods, authorized agrochemicals, grains harvesting); natural resource protection and optimization (i. e., preventing soil erosion, water conservation, reduction and recycling, energy saving, conservation and restoration plan), own and third party employee training curriculum; and monitoring and reporting, among others. It also includes specific procedures for critical providers (i. e., fuel, biomass residues, etc.); air emissions and wastewater controls; solid and hazardous waste management; materials handling and storage; spill prevention and response; and emergency preparedness and response. Furthermore, it also has detailed procedures for KPIs tracking and auditing of own- and third-party operations, among others. Based on the corporate procedures and protocols, Amaggi also has specific procedures and protocols for each of its operations. Specifically, for the proposed project, as indicated in the paragraphs below the company will update identified EHS procedures in place for the Itamarati, Tanguro, Agua Quente and Tucunare cotton farms, and will develop the needed procedures for the new cotton plant to be installed at the Tanguro cotton farm.

As part of its ESMS, Amaggi also has a detailed risk assessment procedure for the development of new projects to identify E&S impacts, establish mitigation measures, and oversee the effectiveness of such measures.  As the cotton farming expansion and construction and operation of the new cotton facility do not have any associated additional footprint and pose limited E&S impacts, the local authorities did not require ESIA studies. However, as a requisite to obtain its operating license, the company conducted and submitted an assessment of impacts and mitigations based on its own risk assessment procedure.  As part of evaluating the E&S risks and impacts, it also developed corresponding EHS management plans aligned with the local requirements, IFC PSs and with the WBG General and Sector-specific (Annual Crop Production) EHS Guidelines.)

Furthermore, Amaggi’s ESMS also includes an E&S contractors’ procedure to ensure that contractors also implement adequate environmental pollution control, and occupation health and safety (OHS) aspects and comply with all labor laws applicable to its own employees. The procedure also includes requirements for incidents and near-misses recordkeeping, as well as, for follow-up actions to prevent re-occurrences, and establishment of their own workplace conditions monitoring program. As previously indicated, this procedure will be applied for the construction and operation phase of the proposed projects.

In 2019, all cotton produced at the Amaggi own farms received the ABR/BCI certification. In 2020, the Tanguro farm was BCI certified while the remainder three farms were going through the re-certification process. Amaggi will continue obtaining BCI recertification for all the cotton production farms, which will include the expansion areas at Tanguro, Itamarati, Tucunaré and Agua Quente farms (ESAP#1.)

The BCI certification covers (i) the promotion of water stewardship (i. e., availability and quality) - Amaggi does not use irrigation in any of its farms, including its cotton farms; (ii) good soil management; (iii) responsible biodiversity and land use (i. e., develop biodiversity management plans, identify/map biodiversity resources, identify/restore degraded areas, enhance populations of beneficial insects as per Integrated Pest Management (IMP) plans, ensure crop rotation/protection of riparian areas;  (iv) adoption of the high conservation value (HCV) approach, respecting the right of local communities and indigenous peoples; (v) decent work (i. e., status of women, prohibition of child labor, salaries, OHS, forced-bonded labor); (vi) reduction of harmful impact of crop protection products (CPP) through IPM, plant breeding and appropriate cultivar selection; (vii) effective management systems (i. e., continuous improvement plans, effectiveness of training, developing and implementing an effective data management system, key sustainability issues); and (viii) care for and preserve fiber quality.

By applying its ESMS and through the internal and external audits, Amaggi confirms that its primary commodity (in this case, cotton) production is carried out in line with its corporate policy framework and commitments and in a responsible manner, respecting the applicable Brazilian EHS legislation and human rights and responsible work policies and practices; and responsible relationship with workers and the community.

Based on the review of the E&S Management Plans for the cotton farm conversion and the cotton processing plant, IFC concluded that the plans and sample of audits provided were of good quality. In addition, Amaggi stated in its 2019 Sustainability report that it complied with all the Brazilian legal and regulatory framework. Amaggi has not incurred on any material penalties or fines for legal, economic, environmental, and social issues over the last three years.

IFC’s appraisal concluded that the design, comprehensiveness, and implementation effectiveness of Amaggi’s ESMS implementation and practices for its cotton operations are well aligned with global best practices. It also confirmed that Amaggi risk assessment procedure for the proposed new assets and/or cotton farm conversion has been effectively implemented and met IFC Performance Standards’ requirements and WBG EHS Guidelines. 

None of Amaggi’s farms, including its cotton farms, have agricultural production areas within conservation units and indigenous lands. Specifically, for the Itamarati cotton production plant, Amaggi was not required to conduct any specific assessment related to potential impacts from the farm and proposed plant to the IPs as FUNAI (Fundacao Nacional do Indio, Indigenous National Foundation in English) requires doing so whenever sources are located less than 10 km distant from the closest IPs. Although the Itamarati farm is located 4 Km distant from IP communities the actual cotton processing plant is located at a distance greater than 10 km. In addition, Amaggi indicated there is no history of engagement between the company and these communities.

Organizational Capacity and Competency. Amaggi has a governance structure focused on sustainability. The company’s Board of Directors, which includes the Sustainability Director, oversees E&S policies and management practices and receives information on performance implementation of the company’s E&S commitments and obligations. The Compliance and Risk Committee and the directors in their monthly meetings, also address compliance and implementation effectiveness of E&S aspects. The Sustainability, Communications, and Compliance Department focuses on the implementation of the sustainability strategy, programs, and targets, complying with Brazilian EHS legislations and commitments, and monitoring. The Corporate Sustainability team is composed of an E&S manager; three supervisors; and thirteen environmental and social professionals (e.g. forestry and agronomic engineers, environmental/sanitary engineers, biologists, social experts). In addition, each production site, has assigned EHS professionals to plan, coordinate and implement all needed E&S specific actions. Furthermore, Amaggi has a dedicated Human Resources (HR) Department to oversee the implementation of its policies and procedures as per the Brazilian labor law. As needed, and specifically for the assessment of new projects including cotton production expansion and logistical support for this expansion as well as the installation of the cotton plant, Amaggi counts on the technical support of external consultants to carry out studies, prepare projects, and monitoring, as needed. IFC’s review concluded that Amaggi has assigned sufficient and competent technical resources in its EHS function to successfully develop and implement its E&S management system and programs, including for the assets under this IFC financing.

Emergency Preparedness and Response. Amaggi has corporate emergency response procedures which are the base for the development of the specific emergency response plans (ERPs) and prevention procedures for each Amaggi’s unit addressing specific risk profiles and local legislations and are based on best safety standards, engineering design and risk management practices. The ERPs include risk scenarios (e.g. fire, explosion, spills, collision, ramming and shipwreck, human injury); list of closest outside support (e.g. fire company, hospital, police, ambulance), fire prevention equipment; operational actions, emergency response measures; emergency response equipment; needed training, maintenance and controls for reliability of needed response equipment, evacuation routes, post event clean-up, procedures to conduct emergency drills, emergency brigades configuration, etc. All units conduct periodic emergency preparedness training and at least, once-a-year emergency response drills. The ERPs comply with the local authorities and WBG General EHS Guidelines requirements.

As part of this proposed project, Amaggi will (a) upgrade the ERPs for the Itamarati, Tanguro, Tucunaré and Agua Quente farms, to include the cotton expansion and upgrade, as needed, the firefighting prevention systems, and (b) upgrade the ERP for the new cotton processing plant at Itamarati and at the three existing plants; (ESAP#2 and ESAP#3.)

Training. Amaggi’s management team developed a comprehensive and structured EHS and HR training plan and curriculum based on approved corporate policies and operations specific plans and procedures and workplace risk assessment and performance, as indicated in paragraphs below. The training is provided to all Amaggi’s permanent, temporary, and seasonal workers, contractors, and service providers.

Monitoring and Review. To ensure fulfillment of its corporate EHS policy commitments and targets, and to monitor its E&S performance, Amaggi has established a comprehensive monitoring system, including KPIs, to identify resource efficiency and cleaner improvements production opportunities; and measure the specific performance of all its operations against Brazilian and IFC PSs requirements, WBG EHS Guidelines and BCI P&C. With the support of the Sustainability Division, environmental analysts assigned to each cotton unit conduct periodic environmental and workplace monitoring. Each unit has a detailed monitoring plan, including the parameters to be measured, frequencies, and responsibility personnel for the measurements. It monitors liquid effluents, quality of surface and groundwater and soil conditions, air emissions and noise, effluents, etc. and leading and lagging OHS indicators. It also follows the asset-level KPIs established during risk assessment and mitigation measures to verify implementation effectiveness, performance optimization, including surface water and groundwater consumption, biomass and other fuels consumption, energy use, agrochemicals consumption, residues generation, for each unit. Furthermore, it also conducts internal annual EHS audits of all units. Finally, as part of the BCI certifications process, the units also undergo external audits. For the proposed projects financed by IFC, the monitoring plan will monitor water, energy, and fuels consumption and liquid effluents, air emissions, noise, and workplace conditions and has been already established for the proposed operations.                                                  

 Human Resources Policies and Procedures. Amaggi has adopted a corporate Human Resource (HR) policy, procedures, and a Code of Conduct that are applicable to its permanent and temporary employees, and third-party contractors for all business areas. These policy and procedures make explicit reference to recruitment, terms of employment, employee conduct, compensation and benefits, grievance mechanism, training, and development. The policy is consistent with the Brazilian labor legislation and IFC PS2 requirements, including adequate working conditions, non-discrimination and equal opportunity, freedom of association, zero-tolerance to sexual and other forms of harassments, and prohibition of child and forced labor. Amaggi’s HR department is composed of four main areas: (i) Attraction and Selection, (ii) Organizational Development, (iii) Corporate Education and (iv) Compensation. The corporate office oversees HR matters which liaise with regional head offices. Induction and training programs on HR policies are tailored to the needs of each business area and provided to Amaggi’s corporate employees and employees of all its operations.

Working Conditions and Terms of Employment. Amaggi currently has 6,373 direct employees (85% men and 15% women) and 610 third-party workers, excluding transportation companies, 7% in the Commodities business area, 49% in the Agro business area, 37% in the Logistics and Operations business area, 1% in the Energy business area, and 6% at the corporate level. Amaggi prioritizes local and regional labor force, which has resulted that employees are distributed in the Midwest region (64%), North region (25%), and South region (0.3%.)

The Itamarati farm has approximately 1,000 combined permanent and seasonal workers, the Tucunare farm has approximately 800 combined permanent and seasonal at workers, the Tanguro farm has approximately 500 combined permanent and seasonal workers, and the Agua Quente farm has approximately 350 combined permanent and seasonal workers. As part of the farms cotton expansion, the number of employees will increase by an estimated 20 % at the Itamarati farm, 22% at the Tucunare farm, and 10% at the Agua Quente farm. For the construction of the new Itamarati cotton processing plant, Amaggi will hire 160 additional employees and for the operation phase, it will hire 80 employees.

Amaggi has approximately 2,300 employees in the Logistics and Operations business area. Out of these, it has an average of 60 own truck drivers specifically for the cotton transportation at the cotton farms.

Amaggi complies with Brazilian labor legislation for minimum wage, benefits, working hours, shift times, overtime payment, etc. During the cotton harvest season (June to August), working hours are around 7 hours and 20 minutes from Monday to Saturday. Amaggi does not hire workers under 16 years as required by local law. Amaggi offers its workers competitive salaries and all basic benefits guaranteed by Brazilian labor law. In addition, it also provides additional benefits, such as access to private health insurance, life insurance, transportation, meal services, and housing benefits, among others.

Amaggi Agro provides accommodation to 1,087 workers and its families at the Itamarati farm, to 174 workers and its families at the Tucunare farm, to 373 workers and its families at the Tanguro farm, and to 155 workers and its families at the Agua Quente farm. As per its workers’ accommodation procedure, Amaggi conducts internal audits three times per year. The most recent inspections to these farms were conducted in Sept. 2020. Additionally, external audits were also conducted as part of the BCI certification in early 2020. The findings of these internal and external audit reports confirmed that Amaggi complied with adequate conditions for workers’ accommodations in line with Brazilian requirements, good international industry practices (GIIPs) in terms of safety, hygiene, access to basic services, comfort, and gender consideration and with IFC PS2 requirements (ref. IFC/EBRD Workers’ accommodation: processes and standards, August 2009.)

At Itanorte Village, located inside the Itamarati farm, AMAGGI provides housing for workers and their families, including 430 houses and 15 accommodation facilities. In addition, there are two schools, a health center, four churches, and small businesses such as food markets, bakeries, hairdressers, among others. Employees and their families do not pay rent or housing fees, such as water and energy. The village is located 5 km from the cotton plant and truck drivers are not allowed to drive through the village. AMAGGI’s security personnel conducts security patrols at the village, in addition to the police patrols. During interviews with workers and community members, it was reported that the village is not impacted by noise, dust or traffic from the company’s operations and is a safe location to live.

Covid-19 Status. As a result of the COVID-19 pandemic, the company has not laid-off workers but has made temporary adjustments to its workforce by adapting to the national and local labor laws. The company has paid full salaries to the employees during the lockdown period. There have been 527 cases so far, which were treated and did not have significant health impacts on the overall company’s workforce. Furthermore, the company established a COVID-19 Crisis Committee, chaired by the CEO that holds weekly meetings, and developed and implements a COVID-19 Contingency Plan, along with the specific COVID-19 contingency plans for each of the company units. With these measures, the company is addressing infection prevention, and control and response, consistent with the provisions under PS2, PS4, and the Interim Advice for IFC Clients on Preventing and Managing Health Risks of COVID-19 in the Workplace.

Specifically, the company has established social distancing protocols for workers at plant sites and for administrative activities, it established homework-based since mid-March 2020. Even though, the farms activities have not been modified as the farming duties are typically performed with sufficient distances among workers, Amaggi is implementing health and hygienic measures at the farms. In addition, Amaggi´s grains warehouses and storing processes have been functioning normally as these activities do not required a large number of staff and the hygiene measures established ensure safety. Moreover, the company extended life insurance coverage for employees and dependents that have been affected by COVID-19, as the insurance in place does not have coverage for COVID-19; it is also offering psychological and legal support employees and their dependents and financial assistance for employees and COVID-19 doctors and nurses’ guidance; and as part of its COVID prevention program, the company has conducted awareness training on hygiene at home (i. e., emotional health tips; care and prevention tips; etc.)

Worker’s Organizations. Brazilian labor law protects collective bargaining and the right to strike as well as defines minimum wage, overtime rates and working hours, worker’s compensation, and entitlements. The external audit reports conducted for BCI certification in 2019 confirm that Amaggi’s HR policy and practices comply with national legislation, supporting the rights of freedom of association and collective bargaining.

Since Amaggi’s employees are located in various regions and sectors across its four business areas, the percentage of unionized employees varies from 0.3% to 69% depending on sector and region. Specifically, for the cotton operations, 100% of direct drivers have joined in Union of Workers in Road Transportation in the State of Rondônia; and 100% of workers of the cotton farms have joined in Federation of Agricultural Workers in Mato Grosso and Rural Workers’ Unions. Collective bargaining negotiations are typically conducted annually. Out of the total eleven companies’ collective bargaining agreements (CBA) successfully signed up to July 2020, two of those are associated with Amaggi’s cotton operations. Workers no unionized also benefit from the agreements reached in the CBAs. There is no history of recent labor strikes among Amaggi employees.

Non-Discrimination and Equal Opportunity. Amaggi’s policies on non-discrimination and equal opportunities specify equal opportunities, fair treatment, and non-discrimination based on race, nationality, disability, social class, age, gender, marital status, religion, and political positions. These policies are applied to its own and contractors’ employees and are aligned with IFC PS2. This commitment is reflected in HR policies, diversity and inclusion policy, code of conduct, operational procedures, staff guiding actions, third-party contractors, and suppliers. Amaggi provides equal employment opportunity to all applicants and its selection decisions are merit based.

Gender. Amaggi’s Code of Conduct includes, among other aspects, the prohibition of sexual harassment and repudiates all forms of discrimination, including those based on gender, along with the corresponding disciplinary measures; it applies to all its employees and contractors. To further strengthening the prevention and control of the risk of sexual harassment and GBV, Amaggi will develop a procedure to include provisions addressing sexual harassment and GBV, as part of their HR practices. These provisions will include (i) definition of sexual harassment and GBV, (ii) steps and process of implementation, (iii) responsibilities of supervisors and managers, (iv) appropriate channels for presenting sexual harassment and GBV related grievances, and (v) disciplinary measures. The client will train HR staff and grievance handling committee for consistent implementation of the policy and communicate it to all employees, contractors, and suppliers (ESAP#4.)

For gender equality measures, Amaggi has worked on a fair and transparent performance evaluation methodology, which resulted that female employees have higher compensation than male employees in 70% of all job categories analyzed. Additionally, Amaggi has improved family-friendly working conditions by recently extending the length of maternity leave from 4 to 6 months.  As the company’s ratio of male and female employees remains low in most of the job categories, except for the administrative positions, Amaggi should aim to develop an equal opportunity strategy to (i) promote female employees and contractors for technical and operational positions and (ii) identify, mitigate, and control safety risks for women in the work environments, as needed, to ensure safe work environment for female employees.

Retrenchment. There has not been retrenchment in the past three years, and no retrenchment is anticipated as a result of the new proposed cotton projects. Amaggi follows the HR policy and procedures that aligns with the requirements of PS2 for any individual dismissals. If collective dismissals are anticipated in the future, Amaggi will develop the corresponding retrenchment plan in line with PS2 requirements.

Worker’s Grievance Mechanism. Amaggi has established a confidential grievance channel (https://www.canalconfidencial.com.br/amaggi/) and a toll free hotline available 24 hours 365 days that allows employees and third-party contractors to file anonymous grievances related to non-conformities to the Code of Conduct (e.g. corruption, sexual and moral harassments) and internal policies and procedures, without retaliation. Grievances are received and classified by a third-party contractor and channeled to Amaggi’s assigned team within the HR directorship who administers the grievance mechanism. This team leads the investigation and resolution process and reports to the Ethics and Conduct Committee. The Committee further validates the resolution process, verifies the investigation report, and publishes the grievance KPI report quarterly.

Amaggi’s grievance mechanism has been recently updated to better explain about responsible departments, the process of handling and resolution, the disciplinary measures, and times of resolution/feedback and it is aligned with IFC PS2.  As part of this proposed project, Amaggi will enhance the workers’ grievance mechanism, including adequate training of personnel, to receive and appropriate handle grievances or concerns related to sexual harassment and gender-based violence at workplace (ESAP#5.) The updated grievance mechanism will grant confidentiality for employees who report such incidents and allow for involvement of the survivor in the decision-making process about grievance handling. 

Protecting the Workforce. Amaggi strictly prohibits the use of child labor and forced labor in its own operations for either permanent and/or temporally employees, third-party contractors, and suppliers (https://www.amaggi.com.br/en/suppliers/how-we-act/.) Amaggi’s policies and procedures stipulate that hiring of workers less than 16 years old is not allowed and the verification of age is required through proof of an official identity document as part of the recruitment process. Additionally, Amaggi directly hires and supervises seasonal workers for harvesting activities at its own farms to minimize the risk of the use of child and forced labor. Amaggi’s cotton farms targeted by this investment (Água Quente, Tanguro, Tucunaré and Itamarati farms) are certified by Responsible Brazilian Cotton (Algodão Brasileiro Responsável: ABR), which is aligned with Better Cotton Initiative (BCI). This Standard provides zero tolerance for child labor and forced labor. The most recent BCI audits conducted in 2019 confirm that there have been no issues related to under-age workers and forced labor in the three cotton farms. Additionally, Amaggi has been a signatory of the National Pact for the Eradication of the Slave Labor (InPACTO) since 2005, which is a multi-stakeholder initiative dedicated to engaging companies to promote decent work and keep supply chains free of slave labor. As part of its requirements, Amaggi has submitted annual monitoring report to InPACTO, which validates the process of assessment and monitoring to prevent and control the risk of the use of forced and child labor.

As part of its ESMS, Amaggi has a control system to prevent any form of child labor or forced labor for its service providers, which includes rigorous screening and monitoring. Each area of business screens service providers against the “Dirty List” published by the Ministry of Economics and the results are further evaluated and approved by the Supply and Sustainability Departments prior to proceeding with a contract. All business areas are internally audited on annual basis and selected business units by random sampling are further audited externally.

Workers Engaged by Third Parties. Amaggi has a contractor’ E&S protocol through which the contractors undergo a thorough evaluation including ability to address Amaggi’s E&S requirements prior to being selected. Once selected, they are required to sign the company’s Code of Conduct and E&S policies and procedures and, as needed, the contractors’ employees attend the same HR/OHS training programs offered to Amaggi’s direct employees conducting similar duties. Furthermore, contractors who do not meet basic EHS/HR standards are removed from the list of service providers. These requirements are aligned with PS2.

Amaggi’s cotton farms hire third party companies to support activities including workers’ and raw materials transportation, meal service, waste collection, property security, pest control, cleaning, trucks and machines maintenance, and civil works. Amaggi has developed protocols to engage third parties through which it establishes contractual requirements for third-party firms complying with the company’s EHS policies and procedures, including compliance with Brazilian labor law related to non-discrimination, compensation, trainings, timely payment of salaries, neither child nor forced labor, occupational health and safety. In line with its procedure, Amaggi will select the needed contractors following a rigorous vetting of past E&S performance and current qualifications and will contractually require that the provisions of Amaggi’s ESMS be included in the agreed contracts.

Amaggi works with approximately 3,500 transportation companies (outsourced fleet) providing services to all its operations, which are hired per freight according to the National Land Transportation Agency (ANTT) regulations. In 2019, Amaggi implemented a transportation contracting and management platform called CARGUEIRO, through which the registered contractors are assigned for freights. In order to be registered in the platform, all outsourced transportation companies are screened by a third-party company to verify compliance with national requirements, including verification of drivers and vehicle’s documentation and permits. Any third-party employee can submit a grievance through Amaggi’s grievance mechanism and Amaggi management follows up with the contracting company, as necessary.

Occupational Health and Safety (OHS). Amaggi has a comprehensive OHS management system aligned with international certifications, such as ISO 45001, and aimed at preserving worker’s health and preventing and reducing occupational accident that is applied to each of its existing operating sites and will be also extended to the proposed project components. A team of qualified OHS specialists is in place to implement this management system at cotton farms and processing units. Amaggi’s OHS management system is based on three pillars, people, structures, and methods and actions to identify, evaluate, implement, and maintain improvements in the workplace and prevent negative impacts to people and the environment. It consists of 36 tools and establishes specific guidelines and procedures to systematically address OHS aspects in all its operations and ensure that the company's activities are conducted in accordance with the Code of Ethics and Conduct, policies, internal controls, and Brazilian OHS legislation. Amaggi’s OHS management system includes objectives; goals and indicators; training and development; organizational structure; legal compliance; standards and procedures; communication and promotion; risk management; audits, observations, and inspections; events management; contractor management; and emergency preparedness and response; among others. The system is set to promote prevention by involving, enabling, training, informing, and educating own and third parties’ employees in OHS aspects; as well as by requiring service providers to also comply with the company’s OHS system. As part of this system, it also maintains systematic control of all accidents/incidents; investigating their causes to prevent new occurrences; and seeking improve methods and work procedures to ensure safer and healthier work environment, aiming at zero risk of work-related occupational diseases and accidents. The results of OHS Amaggi’s workplace performance were noticeable in 2019. At all its operations, Amaggi has considerably reduced its injury frequency rate (LTIFR), from 5.31 in 2018 to 3.72 this year - a 29.81% reduction. The severity rate also was reduced from 265 to 138, and the number of accidents/incidents have been consistently reduced at all sites.  Specifically, for the cotton farms the Loss-Time Injury Frequency Rate (LTIFR) was 5.16 in 2018 and 4.13 in 2019 and the severity rate was 104.78 for 2018 and 145.61 for 2019.  The number of accidents/incidents reduced from 43 in 2018 to 35 in 2019.

The specific guidelines for communication, classification, investigation, and analysis of work accidents (including commuting accidents) of the OHS system are being also implemented at the cotton farms and the cotton processing plants. Furthermore, Amaggi’s detailed risk prevention program; aimed to preserve workers health and integrity, by anticipating, recognizing, evaluating, and controlling the occurrence of risks and hazards that exist or that may exist in the workplace; will continue being applied at the cotton farms after the cotton expansion production. Amaggi’s occupational health medical control program established to promote and preserve the health of all its workers which includes a computerized system with all occupational medical examinations conducted aimed to promote health, prevent diseases, and maintain the physical and mental integrity of its employees is also implemented  at the cotton farms and the cotton production plants. Other procedures in place at all operations include identifying, distributing, and supervising proper use of PPEs as per work risk condition; identifying and analyzing risks with the potential to cause personal and/or material losses, and implementing control measures to eliminate, minimize or control them; and using permit-to-work protocols. The cotton farms will maintain and extend as needed these practices to the cotton planting expansion. The OHS MS has provisions to conduct internal audits and formal OHS inspections to identify and correct any abnormalities; as well as, admission and on-the-job periodic OHS trainings emphasizing the risks in the work environment and the means to eliminate, neutralize or minimize them. As currently, after the cotton production expansion, Amaggi with continue conducting audits to the cotton farms and to the cotton processing plants. To further enhance the OHS conditions at all its units, Amaggi has focused in implementing behavioral safety practices, standardize behavioral safety trainings programs and track adherence to behavioral safety tools and practices by all units. It also developed a safe practice index as an indicator to measure the evolution of safety culture adherence, awareness, and commitment. These safety practices will continue to be implemented at the cotton farms.

Amaggi’s risk prevention program, which is applied to all its operations including the cotton farms and the currently operating cotton production facilities, identifies employees’ exposure to occupational risk (physical, chemical, biological) agents present in the work environment to ensure the prevention of accidents and occupational diseases and eliminate or minimize occupational risks. It also identifies the environmental agents, working methods, and chemicals involved in the operations that may affect the health of workers, the number of workers exposed and other work activities; qualitative and/or quantitative evaluation of the materials used, and adopting the needed measures to mitigate risks present in the work environment. Specifically, for handling and application of agrochemicals at all its farms including the cotton plantation farms, Amaggi has a detailed protocol including compulsory entry and periodic training prior to workers directly or indirectly handling and applying agrochemicals (i. e., operator, driver, assistant, coordinator, mechanic, et.), monitoring of potential workers exposure in working environment, periodical medical checkups, first aid procedures, proper use of personal protective equipment, safe storage and transportation procedures, procedures addressing ideal application conditions (i. e., humidity, wind, temperature), and emergency response measures among others. The trainings also include aspects related to Material Safety Data Sheets (MSDS) interpretation, emergency form and product instructions; toxicological classification of products; etc. Daily monitoring of the quality of the equipment is also carried out during the cleaning process and regular inspections are conducted to monitor adherence to good agrochemical application practices. This protocol will continue being used at the cotton farms once the cotton expansion production takes place.

In addition to the OHS programs aimed at promoting health, preventing occupational diseases and accidents, Amaggi also conducts admission and periodic medical examination for all its employees including those of the cotton farms and the cotton processing plants. All operations have appropriate medical services and focused medical check-ups targeted for those employees working in high risk working areas in order to monitor the evolutionary process of injuries and/or functional disorders resulting from work accidents or occupational diseases.

The company has also established a corporate level OHS committee which advises Amaggi’s Executive Board about supporting the OHS activities and fostering the implementation of a preventive culture, and as per Brazilian legal requirements. It also has established an internal accident prevention commission (CIPA) at each unit staffed by workers and managers. 

As part of this proposed project, the Itamarati farm will implement additional prevention measures resulting from the installation of the cotton processing plant aiming to reduce the likelihood of explosion by cotton dust accumulation such as preventive and predictive maintenance of machinery and equipment; training to own and contracted employees about proper use of work equipment and associated potential dust explosion risks, and establish rigorous housekeeping plan. It will also enhance its firefighting equipment, alarms, emergency lighting, emergency response equipment, enforce smoking prohibition; and will conduct periodic emergency response drills; among other measures. It will also extend the OHS measures already in place at the Agua Quente, Itamarati, and Tucunare farms to the expansion areas (See ESAP# 2 and ESAP #3.)                                                  

 Resource Efficiency. As part of its strategy to contribute to a low carbon economy, Amaggi has adopted initiatives to generate its own energy needs from renewable resources, by either hydropower or solar energy, or by using biomass as fuel mostly from its own eucalyptus reforestation areas and by establishing programs in its agribusiness operations to optimize the use of inputs (agrochemicals, fertilizers, etc.), capture CO2 and nitrogen on the soil, etc.

For the drying process at its current cotton processing plants, Amaggi relies on renewable energy. It sources 90% of its biomass needs from its own eucalyptus reforestation areas and the remaining 10% (e.g. eucalyptus bark, wood residues, sawdust, forest cleaning material) from sustainable sources (e.g. FSC certified suppliers) in accordance with its rigorous biomass acquisition procedure. Amaggi anticipates becoming 100% biomass self-sufficient by 2023. Furthermore, for the cotton processing plants it is developing relevant resource-efficiency KPIs; specifically, it has developed the Kg of steam/ton processed KPI which will be monitored to determine its effectiveness, and thus added on to other KPIs (i. e, agrochemicals consumption/unit planted, nitrogen presence on the soil, etc.) the company has develop to monitor the overall performance and efficiency of its operations.

As part of its ESMS, Amaggi also has a water optimization management program which includes KPIs and water consumption monitoring at all its operations, in addition of its farms not being irrigated. The company establishes corporate and plant-level consumption reduction goals, according to the improvement opportunities identified during internal/external audits and implemented through its ESMS.

Water. Most of the water consumed at all Amaggi cotton farming and processing operations originates from groundwater. As Amaggi has set a corporate water consumption reduction target, it monitors and analyzes water consumption, on a monthly basis, at all its units. During the internal audits, it also conducts spot water consumption checks. All water extractions are authorized and licensed by the competent environmental authorities.

As Amaggi does not irrigate any of its farms, including its cotton production farms, it is not anticipated there will be any changes neither in the current consumption nor in the water source to satisfy water use needs as part of the cotton production expansion. Amaggi conduct water monitoring of nearby water bodies to ascertain the quality of nearby water bodies. The measured concentrations downstream are the same as those measured upstream, indicating there is no water surface degradation due to Amaggi’s cotton farming operations. The Tanguro, Itamarati, Tucunare and Aqua Quente cotton processing plants use water for close loop steam generation, for controlling product's moisture, and for cleaning of support facilities, toilets, and cleaning of machinery. The water, at these plants, is obtained from authorized groundwater wells present at the respective plants and the consumptions vary from 15 to 20m3.

GHG Emissions. In 2019, Amaggi continued to work on three major fronts related to climate change, in line with its above mentioned 2025 Sustainability Strategy by managing greenhouse gas (GHG) emissions, mitigating emissions, and promoting adaptation measures. Amaggi expects to contribute to low carbon agriculture by adopting no-till practices in all its farms including its cotton farms, enabling the incorporation and retention of carbon in the soil, applying pest biological control in its own cotton farms, reducing the application of synthetic nitrogen fertilizers (as N2O), and monitoring soil quality to control fertility and soil diseases with rational use of fertilizers and correctives which would result in a significant reduction of total GHGs. Amaggi prepared an annual inventory of GHG emissions according to the GHG Protocol methodology, in addition to implementing mitigation and adaptation actions, to contribute to the management of climate change. In 2019, in addition to the traditionally inventoried sources, such as the consumption of fuels, biomass and fertilizers, Amaggi also included emissions from crop residues (such as corn straw left on the soil after harvest) and calculated removals related to the incorporation of carbon in the soil, the result of better agricultural practices, such as no-till farming. The emission of the Tucunaré cotton processing plant, which is the only one already operating in stable conditions was approximately 84tonCO2 in 2019. The CO2 emissions for the remaining cotton processing plants will be calculated once they reach stable operations. However, it can be inferred that as all cotton processing plants have the same production and use the same technology, each may generate the same CO2 emissions as the Tucunare cotton facility for an estimated total of 336 ton of CO2 per year.   

Pollution Prevention

Air Emissions and Ambient Air Quality. The energy currently used and anticipated to be used for the proposed project is provided by the national grid. The cotton expansion farming production at the Itamarati, Tanguro, Tucunare, and Agua Quente farms will not generate noticeable air emissions or adversely impact workplace air quality. The Itamarati cotton processing plant, similar to the existing cotton processing plants, which consists of mechanically separating the fiber from the seeds while maintaining the intrinsic qualities of the fiber, will have highly efficient multicyclones to collect dust emissions prior to releasing gases and particulates to the atmosphere. In addition, the Itamarati cotton processing plant, similarly to the operating cotton processing plants, will use biomass (firewood, snares, wood residues, briquets) to fuel the boilers that will generate the steam needed for the drying process.

Similarly as for the other cotton processing plants, the Itamarati cotton plant will burn its biomass in a 8,000 kg/hr steam horizontal boiler designed with three fire passes and lowered grille for burning firewood. The boilers, which only operate between June and November and consume around 2.0 m3/h of biomass, have an automatic ash cleaning system which significantly reduces the emission of particulate to the atmosphere The boiler particulate emissions concentrations of the cotton production facilities already operating are in compliance with local as well as the WBG General EHS Guidelines Table 1.1. The Itamarati cotton production plant will also comply with the local and WBG EHS guidelines.  The fugitive dust in the external areas of the operation plants is constantly swept and the grounds are maintained humidified. This same practice will be adopted at the Itamarati cotton processing plant.

For all farms, the anticipated ambient noise levels of the cotton processing plants varies from 34 to 40dBA in day and night-time in accordance to the WBG EHS guidelines. For the cotton plant, it will have the same safety measures as the currently operating cotton processing plants. Additionally, for the new cotton processing plant, as currently happens for the others, enclosure of equipment to reduce noise levels at source will be installed and workers exposed to higher workplace’s noise levels will be required wearing PPE for noise protection (e.g. ear plugs.)

Wastewater Treatment. Similar to the currently cotton operations, there will not generation of process water effluents neither from the Itamarati cotton plant nor from the cotton expansion activities. As for their domestic effluents, at the cotton farms, they will continue to be collected in septic tanks and treated on-site through a seepage field, as currently done, and for cotton processing plants it will handle Its domestic effluents in the same manner as for the currently operating cotton plants, through septic tanks.

Hazardous Materials. As part of its ESMS, Amaggi has specific procedures for the reception and handling of hazardous materials, such as fuels and chemicals. For fuels (i, e., gasoline, diesel, ethanol) loading, it has specified measures to prevent likelihood of spills and soil contamination. The storage tanks located at the various sites have double containment, are placed in impermeabilized areas, are connected to oil and water separators, and have available spill/leak prevention kits. They are periodically checked as part of the internal and external audits conducted.

Solid waste. As part of its ESMS, Amaggi has adopted a solid waste (hazardous and non-hazardous) management procedure which is applied to all its operations. The procedure includes the selective collection process applied to both hazardous and non-hazardous waste. The collection sites located at the farms, include the safety measures required by the local authorities and WBG EHS General Guidelines, including proper signaling, color coding, appropriate cover to prevent proliferation of vectors, waste getting into contact with rainwater or soil contamination. The procedure also includes environmental education campaigns to reduce waste generation and to conduct proper disposal. Access to temporary collection sites is restricted. Collection, recycling, or final disposal is done by authorized companies. Organic residues from all farms including the cotton farms are typically composted and used as soil enhancer at site. Thus, all cotton processing plants benefit from the existing solid waste management system already established at the farms. Similarly, as for the others, the Itamarati cotton plant process residues (cotton thin shell) will be sent either to the boiler or return to the farm.

Pesticide Use and Management. Amaggi has a detailed and comprehensive pesticide management program which is implemented at all its cotton farms. Some of the key aspects in this program include (i) Integrated Pest Management (IPM) by using preventive measures and observations of pests in the field to make necessary decisions in crop control; (ii) biological control through which Amaggi invests in biological diseases and pest control research and development aiming for more sustainable agriculture and less use of chemical pesticides; (iii) soil quality monitoring to assess fertility and potential presence of diseases and thus helping on the application of the adequate amounts of fertilizers and soil correctives and consequently reducing the use of agrochemicals; and (iv) selection of seeds and cultivars which are chosen according to their genetic potential for productivity, tolerance and resistance to pests, reducing the consumption of pesticides. Whenever it uses pesticides, it selects those according to efficiency and low toxicity. It does not use any of the WHO Class Ia and Ib pesticides and those internationally forbidden by the Rotterdam Convention and the Stockholm Convention on Persistent Organic Pollutants (POPs). Compliance is confirmed thought the independent third-party audits conducted as part of the various certifications processes (e.g. BCI). Fumigation is also conducted in the warehouses by licensed vendors and in accordance to local regulations.

Furthermore, Amaggi has also developed a Best Agricultural Practices Booklet, which include, among others, IPM and application of pesticides instructions and it is used at its own farms s to extend awareness of good agricultural practices (GAPs). In addition to its agronomists responsible for its cultivation areas, Amaggi also has a specialized qualified team of biologists and agronomic engineers conducting researcher on its own farms. These same practices will be extended to the cotton expansions programs at the Itamarati, Tucunare, Tanguro and Agua Quente farms.                                                  

 Transportation. Amaggi’s cotton distribution logistics is accomplished through a geographic corridors network for which it uses road transportation. As the use of road transportation carries the risk of involvement with road accidents, Amaggi has adopted a comprehensive management system for its transport operations through its Logistics and Operations Department. It has a qualified and dedicated team responsible for the implementation of the specific procedures and management programs focused on road traffic safety to manage its own fleet and transportation contractors. Specifically, to prevent potential community impacts from transportation, Amaggi has implemented a Responsible Logistics Program which addresses safety transportation procedures and protocols for prevention, awareness and contingency actions to mitigate impacts; accidents prevention, potential sexual exploitation/abuse of minors on highways; and other related aspects for own and contracted road professionals and to effectively implement the system, Amaggi also has specific checklist for its road fleets. As part of this program, Amaggi ensures the qualifications of the drivers (abilities, behavior, etc.) Also, throughout the year, it also promotes drivers’ awareness events about accident prevention and safety on the road while driving and has developed programs to increase the well-being of transport service providers. As transportation cover several company operations, the Responsible Logistics Program is coordinated by the corporate sustainability function, and carried out in conjunction with HR, Insurance, Logistics, Property Security, Communication and OHS areas.

As part of Amaggi’s ESMS, all operations are required to conduct the identification and evaluation of E&S risks and impacts including those associated with communities. Key risks associated with the cotton farming and processing operations include road accidents, and noise and dust from the warehouses. These are managed through specific management programs described under PS1 and PS3, in addition to the road transportation program described below.

Amaggi has approximately 900 trucks loading and unloading at all its operations every day, out of which 21 trucks loading/unloading daily at the cotton farming operations. Amaggi’s own fleet accounts for 7.5% of the transportation services, equivalent to 300 trucks, for which drivers are hired directly by Amaggi, and managed according to Brazilian requirements, and which are consistent with PS2 and PS4 requirements. Amaggi operations, including the Itamarati, Tucunare, Tanguro, and Agua Quente farms, have adequate facilities (i. e., resting areas and restrooms for the drivers and their families) available to direct and contracted truck drivers along the routes. In addition, the farms have dedicated areas with adequate infrastructure and wellbeing services (i. e., restrooms, restaurants, living area, shopping, wi-fi, safety cameras, etc.), available to the truck drivers while waiting for their turn for trucks loading/unloading. This measure is twofold as it focuses on drivers’ health and safety, but also minimizes the interaction between truck drivers and the local communities, managing potential impacts to community health and safety.

The Responsible Logistics Program has been in place since 2012 to (i) promote the well-being of truck drivers and ensure good service to partners; (ii) assist in the prevention and reduction of road accidents and claims; (iii) reduce the possibility of human rights violations in Amaggi operations and in the value chain; and (iv) encourage social and environmental responsibility in the value chain. As part of this program, Amaggi has in place a GPS tracking system to monitor and ensure drivers’ road safety practices. Additionally, Amaggi commissions internal and external audits to ascertain compliance with drivers’ working conditions, such as the approval process, documentations, drivers’ safety, resting areas condition. The outcomes of the latest audits indicate that the system is functional and effectively implement all procedures established.

As another associated risk related to transportation operations is the sexual exploitation of children and adolescents. As part of the Responsible Logistics Program, Amaggi has been partnering since 2014 with a civil society organization called Childhood Brazil in implementing the program ‘On the Right Track’ that seeks to protect children and adolescents against sexual exploitation, especially in vulnerable communities close to the highways used for the outflow of agricultural production. After conducting a risk assessment of main transportation routes in coordination with Childhood Brazil, Amaggi has being implementing own and third-party transportation operators’ sensitization trainings to control risks of sexual exploitation of youth and children along associated with road transportation. In addition, to the existing program that Amaggi has in place for third party transportation contractors, Amaggi ought to proactively continue working with them so that that they also establish prevention programs to address this matter. 

Also, as part of the CARGUEIRO program, Amaggi monitors the travel routes in terms of risks of accidents and crime and monitors these companies during the freights in terms of safety driving, impacts, and/or interactions with communities. Amaggi provides safe driving training and require that speed limit and working hours shall comply with the applicable legislation.

Even though Amaggi requires contracted transportation companies to comply with local and Amaggi’s own EHS requirements, as part of this project, Amaggi will further strengthening its oversight of transportation contractors by developing specific EHS requirements and make them part of the contracts with the contractor transportation companies (ESAP#6.) Furthermore, it will conduct yearly audits of the contractor drivers to ascertain their overall health and safety conditions while operating. Thus, it will develop an audit protocol to be used when conducting these audits (ESAP#7.)

Security Personnel. Amaggi has adopted corporate procedures for security control, including surveillance, CCTV (close circuit TV), alarm, and access control to its production units. All units have security cameras in place monitored 24 hours a day. The Corporate Security Team works closely with each operation/unit to hire private security contractors to provide security to safeguard its properties. On farms, security is guaranteed by armed and non-armed surveillance. As part of the hiring process and contractual agreements, Amaggi verifies that contractors have all documents, certifications, and trainings in compliance with the Brazilian requirements, and contractors are required to comply with Amaggi’s Code of Ethics and Conduct. As part of this proposed project, Amaggi will review its corporate security procedure to be consistent with IFC PS4, including principles of proportionality and good international practice in relation to hiring, rules of conduct, training, equipping, and monitoring of security contractors, and by applicable law (ESAP#8.) In addition, Amaggi will develop a security risk assessment, and a Security Management Plan for each cotton unit/farm (Itamarati, Tucunare, Tanguro, and Agua Quente) consistent with PS4 (ESAP#9.)                                                 

 Sustainable Management of Living Natural Resources. As indicated in PS1 (and ESAP#1) Amaggi’s cotton farms are BCI certified and it is also committed to maintain the certification in all its cotton production, guaranteeing that the expansion area is included.

Protection and Conservation of Biodiversity. As indicated above, the farm cotton expansion will take place in the already functioning Itamarati, Tucunare, Tanguro and Agua Quente farms for conversion of the second crop from corn to cotton. These farms, as all Amaggi own farms, are maintained in accordance with the Brazilian Forest Code and Brazilian environmental laws. Farm production activities are carried out outside of Conservation Units or any other legally protected areas. Furthermore, they, along with all Amaggi properties have had zero deforestation since 2008. This is confirmed through the periodic external audits the farms undergo as part of the various certifications processes (e.g., soy Moratorium, RTRS, BCI). Even though, the areas within the cotton farms that are conserved as Legal Reserves and Areas of Permanent Protection are Natural Habitat and are potentially within the area of influence of farming activities, there is not a baseline data  available to ascertain whether these areas support species for which the areas would be designated as Critical Habitat; thus, as part of this project, Amaggi will (a) develop a baseline study of the natural habitats that are conserved withing the cotton farms, (b) identify the biodiversity values (i. e., e.g., threatened and/or range-restricted species, habitat structure, and natural vegetation cover) to be monitored overtime, and (c) establish a monitoring plan for the identified indicators (ESAP#10.)

As already indicated above, Amaggi reinforced this commitment on the 2017 publication of its Global Sustainability Positioning and 2025 Vision Plan, where it reaffirmed its determination to achieve a no-deforestation and conversion free operations and supply chain. To further clarity its position, in 2019, Amaggi relaunched its commitment Towards a Grain Chain Free from Deforestation and Conversion, which covers its agricultural production and grain origination activities with rural producers in all regions where the company operates, inside and outside Brazil, including the Cerrado and Amazon Biomes.  Moreover, to monitor and ensure the maintenance of all of the areas dedicated to conservation, Amaggi uses dynamic satellite images provided by the National Institute for Space Research (Inpe), as well as on-site surveys.

Amaggi works to maintain the conditions of the Permanent Preservation Areas on its own farms, which include riverbanks, streams, lakes, or springs supported by a corporate and local team designated for the recovery of these areas, either through planting or by monitoring natural regeneration.

As at the current cotton processing plants, Amaggi will use biomass to generate steam at the new cotton processing plant. Ninety percent of the biomass will be obtained from Amaggi’s own eucalyptus plantations and the remaining ten percent will be sourced from suppliers that attend AMAGGI biomass socioeconomic requirements (https://d3w0jmyq4esgw1.cloudfront.net/wp-content/uploads/2020/11/Criteria-and-documents-required-for-critical-suppliers%E2%80%99-qualification.pdf.)  As part of this project, Amaggi will commission an external audit of its own eucalyptus plantations to verify that its practices are in line with a recognized international standard for sustainability, such as the Forest Stewardship Council (ESAP#11). The third-party biomass supply will include sawmill waste, briquette/sawdust; forest residue (e.g firewood, chips), rice husk. Amaggi has a detailed biomass assessment procedure through which prior to purchasing of any material, Amaggi will require evidence of the IBAMA, SEMA, and CAR authorizations; copies of environmental authorities approvals, such as certificate of authorization for consumption of forest products, authorization of removal of forest products, authorization for controlled open burns, among others; copies of environmental operating licenses, and confirmation that the providers have operational authorized environmental management plans. Confirmation of compliance is validated by Amaggi’s Sustainability Direction.