Environmental and Social Assessment and Management System (ESMS). Jalles Machado has implemented an Integrated management system (IMS) covering quality, environment, fair trade, food security, logistics, labor and occupational health and safety aspects of its agricultural and industrial operations. The system is based on the international framework of ISO 9001, and ISO 14001 for which the company also holds the certifications. In addition, Jalles Machado holds the following certifications: Good Management Practices B2 Plus: Production of Feed Ingredients (GMP + B2 Plus); Food Safety System Certification 22000 (FSSC22000); KOSHER; HALAL; Fair Trade; non-Genetically Modified Organism (non-GMO); several organic certifications and a national certification of no child labor (Abrinq Foundation). In July 2018, the company obtained Bonsucro certification for which the Company was recertified in September 2019. The company is in process of preparing a certifiable OHS management system under the ISO 45001 standard. The certification audit is scheduled for early 2022. On its website, the company presents its environmental and social policy, an overview of its environmental and social responsibility programs and all certifications it holds (http://www.jallesmachado.com/en/home/).

Policy. Jalles Machado has a written policy as part of its IMS stating its commitment to ensure the satisfaction of its shareholders and  clients; to value people by promoting and integrating them; to respect the environment and prevent pollution; to comply with Brazilian legislation and applicable regulatory requirements; and, to seek continuous improvement of its EHS performance. In addition, a Director’s commitment is included stating that the management team of Jalles Machado is committed to the development and improvement of their sustainability management, ensuring that there is communication at all levels, on the importance of meeting the requirements of its customers, and of the regulatory and legal requirements; the establishment of the policies on quality, food safety, security in the value chain, logistics, environment, occupational health and safety at work; of its objectives and goals by conducting critical risk analyzes; and for the provision of the necessary technical and financial resources. The integrated ESMS policy is linked to specific objectives and targets with respective key E&S performance indicators.

Identification of Risks and Impacts. The company identifies material impacts and risks from its operations, including air emissions, effluents, solids waste and main OHS risks under a Risk Prevention Plan (Plano de Prevenção de Riscos Ambientais – PPRA) required under Brazilian regulations. As part of the Accident Prevention Program, the OHS Manager completed a Job Safety Analysis (JSA) to define and control hazards associated for process, jobs, or procedures which were related to accidents. The Jalles Machado sugar mill was built in 1981 before the existence of environmental regulations, including the Environmental and Social Impact Assessment (ESIA) requirements in Brazil. However, the Otavio Lage plant, operational since 2011, underwent a full ESIA process according to Brazilian environmental licensing requirements.  For the proposed increase of capacity of the aforementioned project at Otavio Lage mill and plantations, an ESIA was not required as the regulatory threshold of 30% is not exceeded (the proposed capacity increase being no more than 20%).

Management Programs. Jalles Machado already developed a comprehensive set of E&S Management Programs to avoid, control and mitigate identified impacts of their operations, as per its environmental licenses and within the scope of its Integrated ESMS, with a focus on continuous improvement. These plans include monitoring and management programs for waste streams; air quality monitoring, vinasse application program, fauna and flora monitoring, traffic safety and control, environmental monitoring of field/agricultural activities; monitoring of erosion process, among others. The company has adopted policies and procedures to manage human resources and OHS matters related to its own activities and contracted workforce, including, among others, OHS programs required under Brazilian law (i.e. PPRA) and OHS Monitoring, including medical surveillance tailored to different functions.

Organizational Capacity and Competency. At the corporate level, Jalles Machado has two sustainability managers; the first one assigned for the maintenance of the Integrated ESMS, certifications and operational environmental and quality matters; the second one assigned for OHS matters. The environmental sustainability manager reports to the Director of Operations while the OHS manager reports to the Human Resources (HR) Director. Under their supervision, there is a dedicated team of E&S staff at each site, including an ESMS analyst, environmental analysts, safety engineers, OHS coordinators, nurses and physicians. As part of the Corporate Governance program with IFC, Jalles Machado has a Board of Directors in place with an independent board member. EHS performance review and Sustainability workplan are standard agenda items for the board meetings and comes under the responsibility of the independent board member.

Training. Jalles Machado has training programs that include an EHS induction for new employees and contractors, as well as periodically repeated job-specific and regulatory trainings, such as working at heights, working in confined spaces, electrical and pressure vessel safety, work as machine or boiler operators, handling and use of pesticides, etc. Specific procedures and the associated training program for hazardous work are part of the company's mandated procedure for approving hazardous work activities (ref. permit to work system). 

Monitoring and Reporting. Jalles Machado monitors the main aspects and impacts from its operations included in mandatory monitoring programs as part of the Terms and Conditions (T&Cs) of its environmental licenses (surface water quality, fauna and flora, air emissions, aquatic ecosystem, social development, solid wastes generation and disposal, etc.) as well as for internal indicators’ monitoring purpose such as work-related injuries, water use, and fuel and pesticide consumption. These are reflected into its annual Sustainability Report (using GRI-G-4 Guidelines). The company has an internal audit team consisting of 75 management system auditors from different functions. They perform cross-audits of the different operations on a monthly basis on 17 different aspects, including regulatory requirements (known as “requisitos legais” in Portuguese), as covered by the Integrated ESMS. Conformity score of 80% is normally reached. Findings, corrective measures and due date for closure are reported to the senior management and are a key performance indicator (KPI) for all management.

Under the mandatory PPRA, OHS exposure to hazardous agents, such as noise, dust and heat, is monitored annually. The company also has mandatory occupational health monitoring programs in place (PCMSO, or Plano Médico de Controle da Saúde Ocupacional), which include periodic medical surveillance (such as audiometry, eye testing, blood pressure, diabetes and urine and blood testing) to detect any exposure to workplace contaminants or other risks.

On a monthly basis, key EHS performance indicators (resource efficiency, OHS, emergency preparedness, environmental incidents, waste generation, etc.) are reported to management, which are then discussed duringthe monthly meetings of the Sustainability Committee. The Committee consists of Directors, the HR manager and two Sustainability managers. An analysis of the internal audit findings and corrective measures are also discussed in these meetings. The company also reports its environmental compliance to the relevant authorities. Information provided to environmental authorities includes the completion of required actions under the T&Cs of respective environmental licenses to operate, such as air emissions monitoring from boilers and the transport fleet, wastewater quality and disposal, surface water quality monitoring data, water use permits, compliance with Brazilian biodiversity set asides (known as reserva legal, in Portuguese), and solid and hazardous wastes management, among others details.

Working Conditions and Management of Worker Relationship. Jalles Machado workforce comprises of approximately 3,552 permanent workers and 861 seasonal workers. With the adoption of 100% mechanization of the sugarcane planting and harvesting process several years ago, cane cutters and other seasonal workers involved in heavy manual labor are no longer needed in significant numbers. When the company started to harvest mechanically, cane harvesters were offered a job in the company’s rubber tree plantations. The majority of workforce is hired locally in the city of Goianésia. Approximately 83% of the workforce is male and 17% female, which is consistent with this industry/sector gender breakdown in Brazil. No significant increase of the workforce occurred as part of the IFC 2017 investment and is not expected for this proposed loan

The human resources (HR) policies included in the labor manual and practices, clearly articulated and readily available to workers, adhere to all Brazilian legal requirements regarding working conditions and management of the employer-worker relationship. Employees are hired on the basis of written contracts, undergo an induction and training process, and end-of-employment formalities are carried out in a transparent and orderly fashion. Time clocks are biometric and readily accessible to the workforce, and overtime is calculated and paid using this information. Jalles Machado reported paying all employer social security taxes and other legally mandated benefits.

In addition, the company provides a series of benefits that go beyond Brazilian legal requirements, including additional health insurance, complementary pension plan, life insurance and dental care. Subsidized meals are provided for all plant workers during working hours, and vouchers are provided to rural workers who bring their own meals to the fields. Every two years, the company undertakes an employee satisfaction survey. The results are communicated to all employees and includes a sector benchmark. The most recent survey gave the company an overall score of 83%. Jalles Machado overall scores higher when benchmarked against other companies in Brazil. In the survey, lower ratings were given to internal communications and communicating gratitude, which the company is working on to improve. In 2019, Jalles Machado was voted, by Great Place To Work, one of the ten best companies to work in the Midwest Region of Brazil (https://www.jallesmachado.com/en/news/jalles-machado-is-one-of-the-ten-best-companies-to-work-in-the-midwest-region-of-brazil)

Workers’ Organization. Labor 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 Jalles Machado’s case, the workforce can belong to one of two unions at each workplace depending of the nature of the job (e.g., Union of industry/administration or agriculture). Jalles Machado negotiates collective bargaining agreements (CBAs) with the local unions and includes salary increases, profit sharing, overtime bank, and benefits. There are union representatives working at all sites, and they organize internal workers’ committees to participate in the CBA process. 

Human Resources Policies and Procedures. As mentioned above, Jalles Machado has a Labor Manual which references HR specific policies. These policies include workers’ rights and obligations, remuneration, working hours, disciplinary actions, career development, travel benefits Policy, Social Responsibility Policy, internal and external communications, including workers’ grievances, training and education, etc. This HR Manual, including policies and procedures, is compliant with IFC PS2 requirements.

Working Conditions and Terms of Employment. Many aspects of the work contract (such as working period, rest period, overtime, annual, sick and maternity leave) are defined by law and under CBAs with worker’s unions. The standard working period is 44 hours per week and the daily working period cannot exceed 10 hours (overtime included). There are a mandatory 1-hour break for meals (lunch or dinner) during each shift and two 15 minutes breaks. Sick leave is granted but requires a physician assessment/request, and after 15 days of absence, workers are covered by mandatory social security program. There is a national social security system in which both company and workers make monthly mandatory deposits.

Non-discrimination and Equal Opportunity. Although forced/child labor, harassment and discrimination are treated as crimes under Brazilian law, the company also states its views and commitments against such practices in its Code of Conduct. Both the hiring process and the approach to promotion follow well established policies and procedures and are based on merit and competencies; no evidence of discrimination was found during appraisal.

Gender and Gender Based Violence. Completing the IFC’s Contextual Gender and GBV risk tool resulted in a medium risk for agribusiness in Brazil. The company has initiated an integrity program in 2019 to ensure an effective implementation of it Code of Conduct through internal integrity procedures, audits and whistleblowing. GBV related complaints can be lodged via the internal grievance mechanism and can be done anonymously. The Integrity Committee will handle these and other complaints in relation to the Code of Conduct. The company is considering putting in place a confidential counsellor. There has not yet been any harassment complaint.

COVID-19 Contingency Measures. Jalles Machado has introduced stringent COVID-19 contingency measures based on a risk assessment of its operations. In total, they have identified 300 workers who belong to the high-risk group (i.e. 60 years and older, pregnant women workers with chronic diseases) and have asked them to stay at home. They receive their full salaries which are paid on average 50/50 by the company and the government. All workers are screened at the start of their shift and asked to stay home if they have any of the described symptoms. At the time of this appraisal, 15 workers were in quarantine and still receiving their full salary and benefits. There have been no layoffs yet and there is no plan for such. All administrative staff works from home and at-site workers are maintaining social distancing. Commuting transport is still offered with limited people on the bus and meals are provided with all precautions (social distancing and regular full sanitization). So far, Jalles Machado has had five positive COVID cases with four recoveries and one worker passing away. This worker was suffering from a chronic disease. The company has provided support and counseling for the family. The management team communicates on a regular basis with all its employees via the available internal channels (i.e. intranet, e-mail. WhatsApp and the Jalles Machado app) and external channels (banners and local TV).

Retrenchment. In November 2016, before IFC 2017 investment, the company had to lay off 253 employees when droughts resulted in low yields of cane. Brazilian law includes a series of regulations to protect workers in case of retrenchment. This includes national lump-sum program, one-month prior communication of the need to lay someone off, negotiation with unions, and state sponsored unemployment security. These regulations were followed and comply with the retrenchment requirements of IFC PS 2. In spring 2017, after conditions had improved, 90% of those laid off were rehired. The current number of employees of 3552 is an increase to the number of employees (3377) accounted in 2019. No retrenchment is considered due to the COVID-19 crisis.

Grievance Mechanism. Jalles Machado’s worker grievance system is part of the HR policy as well as the company's Code of Conduct, which applies to all employees. There are three channels for workers to raise complaints: (i) with their line managers, (ii) directly through HR personnel; or (iii) through email in case there is the need of anonymous complaints. Complaints raised through this latter channel are reviewed by the company’s Ombudsperson, as part of the Integrity Committee. Such complaint pass through a fully confidential process under HR supervision/coordination that meets on an as-needed basis and has considerable internal authority to take corrective actions. Jalles Machado has formal records and consolidated data from all complaints, including follow-up actions and resolutions.

Protecting the Workforce. Jalles Machado follows Brazil's legislation regarding minimum age required for employment (18 years old). The company checks the worker's age at time of application, recruitment, and contracting. The company does engage trainees of 16-17 years of age under the Brazilian government's Jovem 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. In addition, the company has a program to train and retain people with disabilities seeking to meet mandatory quota from the Ministry of Labor in Brazil: AGODEFE (Association of disabled people of Goianésia) registry; APAE (Association of Parents and Friends of disabled people) registry; INSS (National Institute of Social Security) registry; MTE (Ministry of Labor and Employment) registry; Professional courses; Disclosure of vacancies in Radio and Newspaper; Leadership Training for Hiring People with Disabilities. Currently, 38 people with a disability work at the company.

Occupational Health and Safety. Jalles Machado has a well-structured team managing OHS hazards and risks of its workforce, in line with Brazilian labor requirements. As mentioned under PS1, Jalles Machado has mandatory OHS programs in place, such as risk prevention plans, health monitoring plans, Accident Prevention Committee, and emergency response plans. There are appropriate collective prevention measures, and the company provides the necessary Personal Protective Equipment (PPE). Adherence to strict use of PPE was observed during the March 20 SSV. There is a procedure that requires logging of visitors as well as an obligatory safety induction. Visitors are also required to wear the PPE. Furthermore, it was noted that walkways for visitors and employees are not visibly separated from the driveways. As per ESAP item #1 and noted during the March 2020 SSV, the company has clearly defined all walkways and crossing at both sugar mills. This also includes protective guards on walkways next to the main transport roads.

Accident rates have dropped significantly in the past years and are now well below the international reference values (i.e. 7 lost-time accidents for sugar production and 8 lost-time accidents for crop production per million of hours worked in the U.S.). In 2018, 96 lost-time (LT) accidents occurred with 868 lost days resulting in a lost-time accident rate of 15. With the hiring of a new experienced OHS manager in 2018, the company took a rigorous approach of the effective implementation of its OHS management practices, including accident prevention. Part of this was the fulfilment of ESAP item #2, in which the company completed a review of the root causes of all accidents, corrective measures taken, and training effectiveness of the accident’s root-cause analysis between 2015 and 2018. The outcome was used to develop an accident prevention program which was completed in April 2019. It included behavioural based observations to increase safety awareness, introduction of the ten golden rules on OHS and JSAs involving the workers at their workstations. In addition, the company annually organizes an accident prevention week. In June 2017, a fatality occurred during harvesting at the farm near to the Otavio Lage sugar mill. It was reported to and investigated by the Ministry of Labor and the local police. The conclusion was that the worker had not followed the safety rules. As a result, the company strengthened the harvest safety rules and the monitoring thereof. The company reported for 2018, 58 vehicle collisions and 48 for 2019. These accidents involve company vehicles either on the public road or internal road system. Part of the prevention program focused on a further assessment of the causes and identified measures included a defensive drivers’ course for all company drivers, speed control in the cars, maintenance monitoring of all vehicles and a focus on drivers’ safety during the month of May. Drivers must pass the course to be eligible to drive and can be recognized by a sticker on their employee pass.

Jalles Machado has automated its industrial processes which results in only a small number of workers being inside the processing area, significantly reducing the exposure of workers to inherent risks typically found in a sugar and ethanol mill operation. Jalles Machado has identified all confined spaces, which are identified with warning signs and workers must follow safety rules for working inside them consistent with Brazilian safety requirements (NR33) and WBG’s EHS general guidelines. Review of records showed that Jalles Machado undertakes annual inspections of all pressure vessels ensuring compliance with national safety requirements (NR13) including preventative maintenance using SAP and training of staff. At the sugar mills, Jalles Machado has invested in machinery protection, deploying appropriate protection to exposed moving parts and pinch points. Fall prevention measures for working at heights, such as guardrails, lifelines and platforms were found in place. Regarding the assessment of its electrical circuits (Relatório Técnico de Insepeção das Instalações Elétricas according to Brazilian safety standard NR10), necessary investments have been made to address any deficiencies. When repair or maintenance is undertaken, a Lock-out, Tag-out (LOTO) procedure is applied. Workers are instructed to use the “right of refusal” when they identify being at risk. The company has a Permit to Work System in place for high risk jobs for both company workers and contractors. The system effectiveness was assessed during the last SSV of IFC in March 2020 when the sugar mills were under maintenance.

Jalles Machado conducts mandatory pre-hiring, periodic and contract termination health assessments of all employees that include basic clinical assessment and additional tests, such as audiometry, diabetes, high blood pressure, and blood tests cholinesterase and leucocytes counts, depending on an individual’s job function and exposure to identified risks. Jalles Machado monitors worker’s exposure to hazards in the workplace under its mandatory workplace risk prevention program and has conducted a formal hazard/risk assessment of its operations.

Jalles Machado completed mandatory respiratory protection plan and ergonomic assessment of the workplace, according to the requirements of Brazil's NR17 worker safety standard and implemented required corrective actions and a management program to prevent such injuries.

Basic infrastructure is provided for workers in the fields including safe transportation, mobile trailers with toilets, appropriate space for meals and break rests, fresh water supply in accordance with Brazilian labor standard NR31. Since all field activities have been mechanized, field jobs are now mainly filled with qualified machine operators. Harvesting operations are run 24hs in three shifts of 8hs periods. There is a one hour of mandatory break for meals and two other mandatory breaks for personal needs in between.

Workers Engaged by Third Parties. Jalles Machado hires external companies for transport, aerial spraying as well as maintenance and repair works. For its contractors, Jalles Machado has a procedure and checklist system to ensure that they are fully observing legal OHS and labor requirements with regard to their own workforce. Procurement, which manages contracting, EHS (the safety, health, and environment team), and HR functions 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 to the site, and permission is granted for third-party workers engaged in hazardous work activities through the same procedures used by Jalles Machado for its own workforce.

Supply Chain. Risks of harmful child labor, forced labor, and/or significant OHS risks in sugarcane sourcing are not present due (i) to the 100% mechanization of the harvesting practices; (ii) all sugarcane processed by the company comes from its own agricultural production.

Energy. All energy needs are self-generated from sustainable resources through co-generation of electricity from two thermal power plants fed with bagasse, one at each mill. Jalles Machado’s sugar mill has a power generation capacity of 40 MW and Otavio Lage’s sugar mill has a capacity of 48 MW. The Company sold the co-generation operations of both mills to the power company Albioma Participações do Brasil (“Albioma”) a French limited company active in Brazil since 2014. For the Jalles Machado mill, the company kept a 40% stake. Jalles Machado is introducing solar power for its irrigation pumps as electricity is most expensive between 6am - 9pm. This is in process in the sugar fields near Jalles Machado mill. Furthermore, the company has signed a MOU to develop a biogas plant to produce biogas for energy in phase 1 and methane in phase 2. The methane will replace diesel for the company’ trucks used in internal transports.

Air emissions. The biomass boilers are the largest source of point source air emissions from Jalles Machado’s operations; there are 2 boilers with a power capacity of 100 MWth each. The company monitors air emissions on an annual basis, achieving compliance with Brazilian requirements, which are less stringent than the World Bank EHS guidelines, i.e. Particulate Matter (PM) 390 mg/Nm3 and NOX 350 mg/Nm3. The company reported that the boilers of the thermal plant at Otavio Lage, owned and managed by Albioma, are monitored annually. Review of the 2019 report show that the boilers meet the Brazilian’s regulatory requirements.

Although currently not foreseen, Jalles Machado will deploy emission control systems for any new boilers it might purchase consistent with the requirements of the WBG EHS Guidelines (specifically, the EHS General guidelines requirements for small combustion facilities <50MWth and EHS guidelines for thermal power units for boilers with thermal power capacity > 50MWth). In the event of procurement of new boilers or reconditioning of old equipment with increase of power capacity, in addition to compliance to local emissions legal requirements, Jalles Machado will conduct pollution emission dispersion models prior to the construction/remodel of new boilers and demonstrate that air emissions will not result in pollutant concentrations that reach or exceed relevant ambient quality guidelines and standards by applying national legislated standards.

Pollution Prevention. Wastewater is derived from: (i) process wastewater from ethanol production (vinasse), (ii) wet scrubber blow down from stack gas scrubbing, and (iii) miscellaneous wastewaters. Jalles Machado does not discharge industrial wastewater into rivers or surface water bodies. The vinasse, industrial wastewater and filter cake are used as a fertilizer in the sugarcane plantations. Vinasse is stored in tanks to prevent groundwater contamination. The amount of wastewater applied in the plantations is determined by the soil characteristics and the nutrient needs of the crop. A HAZOP assessment (reviewed during the 2017 appraisal) was completed for all ethanol tanks before they were taken into operation. Annually they are inspected in line with the American Petroleum Institute’ storage tank standards. Furthermore, a visual check of the tank’s integrity is done daily.

Resource efficiency. Sugarcane cultivation in Jalles Machado’s operations relies on rainfall, fertigation and irrigation (pivot). Irrigation water is abstracted from rivers in the area of the plantations and also from rain fed dams with the appropriate environmental licenses. There is currently 8,500 ha under irrigation. Jalles Machado has an automated control system for water use in irrigation and is subject to a KPI; amounts to be applied are set by assessing soil moisture first. In 2019, targeted KPI was 7.12 m3/ton-cane for Jalles Machado’s agricultural operations while actual use was 4.30 m3/ton-cane. For Otavio Lage, the target versus actual use was on-par at 4 m3/ton-cane. Process water is sourced from rivers at both locations, treated, and used within a closed system and reused to ensure efficient use which is monitored, as subject to a KPI. The process water KPI has been improved from 2.87m3/ton cane processed in 2018 to 1.87m3/ton cane processed at Jalles Machado mill in 2019 and from 1.15 to 0.97 m3/ton cane processed at Otavio Lage mill. The water usage for the milling process (0.56 m3/ton-cane) is consistent with the Brazilian sugar sector benchmark of 0.5 – 0.9 m3/ton-cane. Water is extracted from groundwater wells for use in the restaurant and as drinking water. The water is pre-treated (chlorination) and tested for bacteria weekly in the company’s internal lab and every 6 months by an external laboratory. Jalles Machado reports to have all required water extraction permits from state governments. For the expansion of its irrigation system in 2017 to 3,500 ha, a hydrological study was completed on the company’s own initiative to assess the availability of water for irrigation from nearby rivers. It is a company policy to monitor the environmental flow (EF) of the river and in case the EF is impacted, the company will install a reservoir for which first an environmental assessment is completed. In the past years, the EF of the rivers at the Jalles Machado agricultural fields showed an adverse impact. As a result, the company is now retaining water in reservoirs, for which they increased the dams, from the rainy season and therefore are not abstracting water from the nearby rivers. For the Otavio Lage’ agricultural fields, the company can still extract water from the nearby river thereby observing the EF. The company is planning to increase its irrigation system by 2022 to 10,000 ha, consisting of pivot and subsurface drip irrigation. The 2017 investment included the irrigation investments for the first two years (ref, 3,500 ha).

Greenhouse Gas Emissions. Jalles Machado was the first company of the sugar-ethanol industry in Brazil to sell carbon credits under the United Nations’ Clean Development Mechanism (CDM). Annually, the company completes an inventory of its CO2 emissions from its operations. During the IFC appraisal in 2017, GHG estimate was 2,686,974 tons of CO2eq/year. This figure far exceeds IFC annual threshold of 25,000 tons to be reported annually. Considering that this is renewable energy from sugarcane plantations, the mills’ GHG CO2 emissions are naturally offset as they are captured from the atmosphere by growing sugarcane plants. In addition, part of the ethanol that Jalles Machado produces is used as a renewable fuel. Therefore, although Jalles Machado generates high volumes of gross GHG emissions, net emissions from the company's operations can be considered negative (as they are sequestrated in the sugar cane plantations and/or offset in the ethanol that replaces use of fossil fuels). Jalles Machado is certified under the RenovaBio program, a federal program to curb carbon emissions by 10% in 2028, in line with the UN Paris Agreement on climate change. Under RenovaBio, tradeable carbon credits known as CBIOs, will be granted to certified producers generating an extra revenue source.

Integrated Pest Management. Integrated Pest Management (IPM), a well-established practice in the sector, is applied at all plantations and not only for organic sugar cane production. As included in their IPM plan, Jalles Machado uses biological control techniques to control the sugarcane borer population with the Cotesia flavipes parasite. Only approved chemicals, which a 2017 review showed that they do not include WHO Class 1a and 1b pesticides, and fertilizers are used. Application rates and methods are adapted to minimize field application. Jalles Machado only uses closed tractors equipped with cabinets for spraying operations, and handling, storage and use of agricultural chemicals follow national regulations and can be considered best practice.

Hazardous Materials. Jalles Machado uses and stores significant amounts of chemicals, such as soda, sulphur acid, chlorine, cyclohexane, pesticides and, of course, ethanol. A variety of storage arrangements can be found at different areas, but all of them have secondary containment, risk identification, warning signs, access control and emergency kits and showers.

Solid Wastes. Sugar mills produce significant amount of organic wastes (filter cake and ashes from boilers). The filter cake is used in fertigation and the ashes as fertilizer. Metal scrap is segregated, stored outdoors and sold for recycling. Jalles Machado collects all empty pesticide containers and delivers them to certified recycling companies. The solid non-recyclable waste from offices and dining halls is collected and disposed at the company’s landfills which holds a license from the State Environmental Secretary. Both sugar mills have their own landfill and are required to monitor groundwater quality twice a year. Results are reported to the authorities.  To date, no impact was identified.

Community Health and Safety. Although both sugar mills and agricultural production are located in a rural area, there are communities around its operations. Potential impacts to communities from Jalles Machado’s operations could arise primarily from the explosion of ethanol tanks, from the distillery and/or from sugar warehouses. Air emissions from boilers, fugitive air emissions from trucks (dust) and drifts from aerial application of pesticides, can also negatively affect communities.

Jalles Machado conducts aerial spraying of crops by contracted companies using crop-spraying airplanes. A specific procedure is in place to avoid the risks and impacts to health and other crops associated with aerial spraying of chemicals. This entails monitoring weather conditions during aerial spraying, prior communication with neighbours to advise them of spraying schedules and safety exclusion buffer zones to protect towns, small villages or households.

The company relies on a large number of third-party operated trucks to transport the sugarcane from the field to the plant. The average distance of sugarcane plantations is about 20km from the processing operation. All sugarcane is transported to the sugar mills via an internal road system thus avoiding the public road and communities. This approach is expected to be used for the cane expansion project as well.  In cases where transport over public roads cannot be avoided a risk assessment, as per their ESMS, will be completed and necessary measures and practices will be put in place.

Infrastructure and Equipment Design and Safety. Equipment utilized at Jalles Machado meets regulatory requirements regarding use of safety devices; such equipment is annually inspected and included in a comprehensive preventative maintenance program managed using SAP. Quantitative risks assessments for all operations have been completed and the risk management plan covers maintenance and integrity of critical processes, operational procedures, training program, investigation of accidents, emergency response and periodic audits of the risk management plan.

Emergency Preparedness and Response. Jalles Machado has a mandatory emergency response plan covering all emergency scenarios such as fires, explosions and environmental leaks as well as a fire brigade, evacuation and communication plans. Drills are conducted as per an annual schedule and cover different shifts as well as both the industrial and agricultural operations. Jalles Machado has the L&F safety certifications from the State of Goiás authority for both mills.

Security Personnel: Jalles Machado employs their own security guards to control access to the mills. Security guards are trained in-house by a third party, which included appropriate use of force. No incidences were reported by the company, which can be reported and recorded through the existing grievance mechanism.

Protection and Conservation of Habitats. The company’s 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. For the State of Goiás, a minimum threshold of 20% applies. 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. For the current area under cultivation, all set-asides have been satisfactory established ranging between 20 and 30%. In addition, the company manages a 16,374 ha of native forests of Cerrado biome in Cavalcante in the state of Goiás.

Jalles Machado conducts environmental assessments of the sugarcane fields and excludes the mandatory riparian areas and legal biodiversity set-asides from the sugarcane plantations. All sugar cane plantation areas are in compliance with the mandatory environmental and rural cadaster (CAR) to implement the regulatory requirements (offsets are either established on the farm or compensated in another area). Rehabilitation or compensation of biodiversity set-asides must follow regulatory timeframe for completion. For the additional land needed, Jalles Machado requires the owner/lessor to meet the biodiversity conservation requirements as part of the contract. If the owner/lessor cannot finance the offsets, the company will cover these costs, and this will be reflected in the land price.

Sustainable Management of Living Natural Resources. As mentioned above, sugarcane plantations are located on already-converted land and consolidated areas of crop plantations in the State of Goiás. Soil conservation techniques are applied in the fields including contour planting, terracing and planting design to avoid run-off. In order to demonstrate good management practices in their sugarcane production, the company has obtained Bonsucro certification in July 2018 (ESAP #3). All measures and procedures as required by the Bonsucro standard are managed as part of the IMS as mentioned under PS1. At the recertification audit in September 2019, the Jalles Machado agricultural operations scored 100% and the Jalles Machado mill, Otavio Lage mill and agricultural operations scored above 90% on the standard’s requirements demonstrating high compliance.

Jalles Machado takes advantage of all possibilities to use organic wastes from ethanol production, including vinasse mixed together with filter cake and industrial process water, 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, Jalles Machado monitors pests and seeks first to control pests through biological agents. When used, agrochemical products are prescribed by qualified agronomists based on pest infestation and economical level of control. The pesticides (fungicides, herbicides and insecticides) applied by the company fall into the WHO Classes II, III and U. All sugarcane is harvested mechanically so there is no need of pre-harvesting burns of sugarcane fields, and the straw is partly left on the fields to better protect the soil from erosion effects. Straw is also used as biomass for the boilers.

Supply Chain. Risks of natural and critical habitats conversion leading to loss of biodiversity is not applicable as all sugarcane is sourced from existing consolidated agricultural lands. In addition, all owned and leased lands from which Jalles Machado is sourcing from met the State of Goiás’ set aside of 20% threshold for biodiversity conservation areas. All sugar cane processed by the company comes from their own agricultural production.

External Communications and Grievance Mechanisms. The company uses numerous channels of external communications such as folders and brochures, a local radio program “Minuto Jalles”, their website and via social media. Public hearings were also conducted when the company had to present to the audience all the relevant conclusions from the ESIA for Otavio Lage sugar mill as well as all the mitigation measures required to control the impacts associated with the project.

Community grievance mechanism: Jalles Machado has channels of communication available for the general public, some which the company has disclosed at their website, including an email address, toll-free number and mail information: https://ouvidoria.jallesmachado.com/ The system has the means to receive, record, forward, treat and provide feedback to all complaints from the general public, and the company keeps records and shares results internally on managerial meetings. In the 2018/19 harvest period, the company did not receive any community complaints.

On-going Reporting to Affected Communities. Although impacts from sugarcane plantations are diffuse, it is expected that some rural villages or nearby farmers could be possibly affected by noise and dust emissions from trucks on the unpaved roads or unintentional agrichemical spraying drifts, especially from air spraying. Jalles Machado mapped villages and potentially impacted communities, and ensure they are informed about aerial spraying and truck traffic schedules and all mitigation measures. Jalles Machado has undertaken an assessment of interested parties (ESAP #4) as part of developing the ISO 45001 requirements and meeting the ISO 9001:2015 and ISO 14001: 2015 (stakeholder engagement process in IFC PS terminology). Jalles Machado has mapped all key stakeholders from around the sugar mills and plantations and conducts periodic consultations with critical ones (i.e. close to the company’s operations). Interviews are made and all the issues are included in a matrix of materiality. This matrix is part of the Sustainability report (using Global Reporting Initiative (GRI), which Jalles Machado has been publishing for the past three years.

Based on the stakeholder mapping and issues identification, Jalles Machado developed a specific communication and engagement program (ESAP #5) designed for affected communities that includes mechanisms to respond to specific issues that arise from consultations and pro-actively facilitate resolutions of affected communities’ concerns.

Contact Person: Rodrigo Penna de Siqueira

Company Name: Jalles Machado S.A.

Address: Rodovia GO 080 Km 75,1 – Fazenda São Pedro s/n – Zona Rural – Goianésia – GO – CEP. 76.388-899 - Brasil

Phone: +55 (62) 3389-9000

Facsimile: +55 (62) 3389-9099