IFC’s appraisal did not identify Indigenous Peoples (IP) inside the operational footprint of the Cerrado Project and its area of influence. The company’s land acquisition due diligence E&S process includes the identification of IP in the territory to avoid purchasing land with presence of IP in its area of influence. As such, PS7 was not considered relevant for the review of this Project.

Professional archeologists were stationed on the construction site and construction workers were informed during induction training about the requirement to inform Suzano in case archaeological artifacts were found during excavations. As earthworks are completed and archeological remains were not found, PS8 was not considered relevant for the review of this Project.                                                    

This is a Category A project according to IFC’s Policy on E&S Sustainability because it may cause significant adverse E&S risks and impacts that may be diverse and irreversible. The main risks associated with this project are (i) population influx; (ii) occupational health and safety risks; (iii) hazardous material transportation and storage; (iv) water and air emissions; (v) potential impacts on natural habitat and biodiversity; (vi) land acquisition; and (vii) labor compliance by contractors.                                                 

Environmental and Social Policies

Suzano published its Sustainability Strategy (ref. “Commitment in Renewing Life”) in 2020 which is structured across two pillars: People and Planet. In addition, Suzano has adopted corporate-level policies, including climate change, human rights; ombudsman; integrated risk management; diversity and inclusion; relations with stakeholders; relations with indigenous peoples and traditional communities; environmental management; health, safety, and quality of life; sustainable procurement of wood supply; and genetically modified trees.

 Environmental and Social Management System

Many of the components of an E&S Management System (ESMS) exist but there is not yet a consolidated ESMS for the Cerrado Project. Suzano will develop and implement an ESMS aligned with IFC PS requirements for construction and for operations as indicated in ESAP#1.  The ESMS will encompass both industrial and forestry activities and will incorporate the following elements: (i) policy; (ii) identification of risks and impacts; (iii) management programs; (iv) organizational capacity and competency; (v) emergency preparedness and response; (vi) stakeholder engagement; and (vii) monitoring and review. Evidence of ESMS development will be the ESMS Manual describing all the components and processes and providing all the links to the main procedures and documents to make it operational.

Identification of Risks and Impacts

Notwithstanding the processes and procedures described above, the project needs to improve the E&S risk identification and assessment procedure. As part of ESAP#1, Suzano will improve the risk identification and assessment practices for all the components of the Cerrado Project. Suzano will update the Risk Registry based on the updated procedure, consolidating the E&S risks/impacts identified for every sphere (environment, social, health and safety, labor).

Management Programs

In September 2018, the environmental authority (IMASUL) issued the Installation License releasing the site for construction. The issuance was based on Suzano submitting the Environmental Management Plan (EMP). The EMP complies with Brazilian legal requirements but is based on the 2014 ESIA and has not been updated. Plantations to supply the Cerrado mill are managed as per the forestry management plan and operational procedures developed for Suzano’s plantations that supply the Horizonte mill in Tres Lagoas, MS. As part of ESAP#1, Suzano will prepare an E&S management plan (ESMP) for all the components of the Cerrado Project with appropriate management programs/actions that address every significant risk/impact listed in the Risk Registry. The ESMP will describe the managerial measures, where and when the measures should be implemented, responsible party for implementation, and expected results (indicators). Once operating in 2024, the Cerrado mill will have a modern computerized system for process control and maintenance practices used to ensure process safety and minimize discharges and losses. In addition, air emissions and effluents will be monitored continuously to promptly address any exceedances.

Organizational Capacity and Competency.

Emergency Preparedness and Response.

Suzano has established an emergency response team and fire brigade to response to emergencies in the industrial site. The team has completed site specific training to prepare for potential risks and emergencies related to the project. The planning group for the emergency response team meets regularly to evaluate current and future site conditions and adjust the plan as needed. Procedures, training, and drill schedule for exercises, have been prepared for high-risk activities such as confined space rescue, works at heights rescue, car accidents and use of related rescue equipment. Key pieces of equipment are in place or planned. As part of the plant, fire water tanks will be built, and water cannons will be established at strategic locations.

The ESIA includes a preliminary hazard analysis (PHA) to identify the potential hazardous events linked to the explosions and leakages of hazardous materials. No catastrophic or critical hazards, with the potential of severely or moderately impacting people outside of the mill site, were identified. Suzano has drafted an emergency plan that identifies the most significant emergency scenarios (e.g., explosion and leakages in the recovery boiler, leakages in the chemical plant) and response procedures. Suzano will finalize the emergency plan before start-up and will regularly update it.  IFC will review the emergency plan during project supervision. According to the drafted plan, the EHS Manager will be responsible for it and emergency brigades will receive 8-hour refresher training twice per year.

Emergency Preparedness and Response - Forest fires

Forest fires are a key risk affecting eucalyptus plantations in Brazil that can severely impact the sustainability of the business and the safety of neighboring communities. Effective fire prevention, detection and response is critically important for the Cerrado Project as there has been a marked increase in the number and area affected by fires in UNF-MS in the last five years. Forest fire monitoring and response assets are in place for the Cerrado Project, however there is no guiding plan associated with all aspects of fire prevention, detection, response, training and chain-of-command. Likewise, there appears to be no formal plan pertaining to coordination with neighboring communities beyond their involvement in fire spotting. To mitigate the risks and potential impacts of forest fires, as per ESAP#2, Suzano will develop a formal Fire Prevention, Detection, Response, Training and Communication Plan specific for the Cerrado Project, including consultation, training, and coordination with neighboring communities for the preparation and response to emergencies. 

Monitoring and Review.

Suzano has established a corporate reporting system that includes the public disclosure of consolidated E&S indicators aligned with the company’s policy objectives. http://centraldesustentabilidade.suzano.com.br/en/indicators/all-indicators/.

The monitoring of construction activities focuses on EHS and is based on inspections conducted by the EHS consulting company whose results are presented on weekly and monthly reports. As a result, there is not yet a Cerrado Project comprehensive E&S Monitoring Plan, but rather a summary of activities that provide relevant information which does not have a proper structure to facilitate follow up, analysis and corrective action, if needed.

At the project level, the process of E&S monitoring for the mill is mainly regulatory driven. Like the environmental management programs, the monitoring programs are described in the EMP. These are mostly sampling and analysis activities outside the fence and include aspects, such as biodiversity, ambient air and water quality, and noise. Reports on results are submitted to the environmental authority (IMASUL) for compliance.

As part of ESAP#1, Suzano will prepare an E&S Monitoring Plan (ESMoP) for all the components of the Cerrado Project that follows every managerial measure defined in the ESMP and addresses every significant risk/impact.

To ensure that the company’s E&S policies and procedures are being properly implemented, as part of ESAP#1, Suzano will develop, implement, and maintain an internal audit program for the Cerrado Project as part of its ESMS. Audits will be performed annually as a minimum, and results will be reviewed by senior management for continuous improvement.

Supply Chain - Wood

All third-party wood supply to Suzano (100%) is covered by FSC® and PEFC/Cerflor Chain of Custody certification (FSC-STD-40-004 and ABNT NBR 14790:2014). The wood must also comply with Suzano’s Wood Supply Policy, which states that the company will not procure wood from areas where native vegetation was converted after July 2020. As per Suzano’s Wood Procurement Procedure, the E&S teams must review the information and provide a favorable opinion prior to procurement. All wood will be purchased standing and Suzano or its forestry contractors will be responsible for harvesting and log transportation to ensure the chain of custody and mitigate labor and safety risks.

Cumulative impacts

The 2014 ESIA includes air and water models to assess the pulp mill’s impact on air and water quality. The Air Dispersion modeling was updated in 2021 confirming that the mill is not expected to significantly impact ambient air quality. While the modeling did not consider the incremental impacts from other sources of air pollutants, no other significant emitters are present in the area. The lack of a cumulative impact assessment considering other water users and sources of discharges in the Rio Pardo is addressed in ESAP#7.             

Working Conditions and Management of Worker Relationship

As of September 2022, the mill construction site had mobilized over 5,000 workers of EPC and EPCM contractors and their subcontractors. The Cerrado Project expects to employ more than 4,000 contracted workers during 20 months with an estimated peak of 10,000 mobilized workers in the second quarter of 2023. Construction is scheduled to be completed in the second half of 2024. Once in operation, the Cerrado Project will employ 482 direct employees at the mill.

Forestry operations rely mostly on specialized forestry contractors. As of May 2022, the Cerrado Project employed 930 forestry workers, out of which 860 through forestry contractors. Once forestry operations stabilize, the Cerrado Project will employ 2,070 forestry workers, 670 will be Suzano’s direct employees and 1,400 will be workers of forestry contractors for silviculture, harvesting and transportation.

Human Resources (HR) Policies and Procedures

Suzano’s HR Policies include Human Rights, Code of Conduct, Ombudsman, Diversity and Inclusion, Health and Safety and Quality of Life, Recruitment and Selection, and Disciplinary Measures. Most of IFC PS2 aspects are covered, including specific mention (in the Human Rights Policy) to ILO conventions and IFC Performance Standards.

Working Conditions and Terms of Employment

Terms of employment for direct employees and contracted workers are established as per local labor laws and collective agreements with unions and comply with PS2. Evidence of monitoring of working conditions such as the verification of contracts, payment of social security benefits and monthly salaries, recording of working hours and overtime is in place and covers both direct employees (monitored by internal auditing team) and contracted workers (monitored by an external service provider). All workers (own and outsourced) receive the same induction training package, which includes aspects of health and operational safety, code of conduct and channels for raising complaints and grievances.

Workers’ Organizations

Suzano’s policy on Human Rights guarantees the right for collective bargaining and freedom of association in accordance with IFC PS2. Conditions of employment for forestry and construction workers in the Cerrado Project are established by collective bargaining agreements (CBAs) with their respective trade union (i.e., rural workers, civil construction, assembly, catering, security, etc.). The CBAs are negotiated every two years. Aspects related to workers' organization are systematized in an internal procedure for Union Creation and Organization under the responsibility of Labor Relations and Payroll within the Human Resources department.

Non-discrimination and Equal Opportunity

Non-discrimination in the workplace is covered under Suzano’s corporate Recruitment and Selection policy, which includes commitments to equal treatment of candidates in selection processes, without distinction with regards to race, color, religion, gender, social class, sexual orientation, political party or union membership, age, disability, marital status, and origin. With regards to diversity and inclusion, Suzano has relevant policies and is on track to meet its public commitments to employ 30% of women and Black employees in leadership positions, and to have a 100% inclusive environment experienced by LGBTQIAP+ people and people with disabilities, by 2025.

Overall women representation in Suzano’s workforce reached 16.9% in 2021, an increase of 1.9p.p. from the previous year, and more than 50% of the employees hired through Suzano’s internship and trainee programs were women. As of May 2022, women representation among contracted workforce in the Cerrado Project was 12% in forestry operations and less than 5% at the mill site.

Grievance Mechanism

The workers’ grievance mechanism is centralized under Suzano’s corporate Ombudsman (‘Ouvidoria’ in Portuguese) which focuses on ensuring the implementation of Suzano’s Code of Conduct across its operations. In the Cerrado Project, Suzano’s Ombudsman communication channels are communicated and advertised across the construction site as well as in workers accommodations through visible signs, although not always consistently in smaller workers accommodations and forestry work fronts. Workers can reach the system via website, phone or e-mail with complaints centralized at Suzano’s corporate level and then moved internally to the relevant departments at project level. During the appraisal, Suzano was also in the process of appointing site level ‘ouvidores’ tasked with monitoring construction workers grievances and other concerns on the ground. Workers also rely on parallel contractor-level channels to raise grievances. Such claims, even when resolution is the responsibility of the contractor, should be monitored centrally by Suzano to enable the proactive oversight of working conditions as per IFC PS2 and wider social risks.

Per ESAP#3, Suzano will revise the workers’ grievance mechanism for the Cerrado Project to be aligned with IFC PS2. The mechanism will (i) include additional channels that allow for submission of confidential and anonymous grievances by those without access to technology (e.g. complaint boxes in accommodations and cafeteria); (ii) include project level direct contacts; (iii) be adapted and rely on specially trained personnel to address gender-based violence and harassment (GBVH) grievances with a survivor-centered approach; (iv) include the monitoring and oversight of grievances raised through contractors’ own mechanisms. The grievance procedure will describe how workers issues and concerns are identified, registered, escalated, analyzed, and resolved. Grievances will be analyzed to identify and address systemic problems. Suzano will also ensure that available communication channels are disseminated in all accommodations and work fronts, including among mill and forestry workers.

Protecting the Work Force

Suzano, under its Human Rights Policy, has provisions against the use of child and forced labor, and initiatives are implemented on the construction site and at plantations to raise awareness on the zero tolerance for GBVH and child abuse. Violations of workers’ rights have been previously recorded in Brazil in the forestry sector due to the living conditions of sub-contracted workers.  Mitigation of this risk is discussed in the sections Supply Chain and Workers Engaged by Third Parties, below.

Occupational Health and Safety

Health and Safety programs for the Cerrado Project are divided among the three main activities including: (i) the mill site construction; (ii) forestry operations; and (iii) transportation for the movement of wood from the forestry areas to the mill (covered in IFC PS4 section below).

Most of the day-to-day implementation of the Health and Safety program in the mill construction site has been assigned to a specialized EHS consulting company who has been previously involved in several similar projects. The company works directly with construction contractors and sub-contractors coordinating efforts with the safety specialists within each of these organizations. Prior to any work, the job safety analysis and control measures prepared by the contractor must be reviewed and approved by the EHS consulting company and overseen by EHS internal team. Monitoring programs have been established in the construction site. Data on deviations, near-misses and injuries is communicated in reports and dashboards on a weekly and monthly basis. A governance panel reviews the dashboard, looking at key information such as incidents by company and by body part at risk. The information is analysed to help reduce future risks and incidents. The governance panel also reviews corrective action planning to ensure necessary immediate actions are taken and timelines are respected for longer term improvements. As of June 2022, the industrial site had 5 million workhours with no lost time injury.

Suzano has established a Health and Safety program for forestry operations. The program is implemented by Suzano’s forestry OHS team and is applied equally to employees and contractors. The program includes: (i) risk mapping, planning, and mitigation of key hazards; (ii) inspections; (iii) promotion of a safety culture; (iv) positive reinforcement and recognition programs; and (v) recording and analysis of safety statistics and accident investigation. Progress on work plans, safety statistics, and recognitions are discussed in monthly meetings with Suzano’s forestry teams and contractors for improved engagement and cooperation. No lost time injury had occurred from January to May 2022.

COVID-19 contingency measures. The Cerrado Project has established a worker health committee which has been implementing action plans and tracking information related to COVID-19.  Originally there were daily meetings to examine information about cases and required support for workers. As the pandemic progressed and the project and community cases diminished, committee meetings shifted to weekly. Action plans continued and were adjusted to the evolving conditions of the project. Throughout the pandemic, healthcare professionals have been monitoring the actions plans, and cases statistics providing additional guidance.

Depending upon the severity, cases are either handled locally, sent to near-by community medical centers or transported to more distant, larger cities where better resources exist for severe cases. A guide for pandemic response was prepared and provided to contractor companies to assist with implementation of prevention programs and other requirements related to medical works, living quarters and necessary hygiene.

Supply Chain

Suzano has more than 20,000 suppliers and service providers (fornecedores). Potential suppliers are informed in advance of Suzano’s HR policies and must commit to Suzano’s E&S standards (https://portaldofornecedor.suzano.com.br/seja-fornecedor). Approved suppliers are evaluated periodically and may have their contracts cancelled if deviations from Suzano’s procurement policies are identified.

In addition, for the procurement of wood, Suzano has a Wood Supply Policy and Wood Procurement Procedure, which include provisions for site visits to third-party suppliers to verify working conditions during wood harvesting and log transportation activities. In the initial years of operations, Suzano will require wood from third-party suppliers for the Cerrado mill. All this wood will be purchased standing at the farms, and Suzano, or its forestry contractors, will be responsible for harvesting and log transportation mitigating labor and safety risks.

Workers Engaged by Third Parties

In addition to forestry contractors, Suzano relies on Timber Investment Management Organizations (TIMOs) for the establishment and management of plantations. TIMOs are contractually required by Suzano to obtain FSC® certification. No additional labor monitoring is performed by Suzano.

For workers accommodations, Suzano provides guidelines establishing the required standards as per legal requirements to the accommodation providers, which are then monitored by the external service provider. Accommodations of contracted forestry workers are monitored by Suzano on a biannual basis.

To ensure that the Cerrado Project’s systems and processes are adequate to monitor working conditions, as per ESAP#4, Suzano will conduct (i) an audit of workers accommodations against legal requirements and IFC Guidance Note on Workers’ Accommodations; (ii) a labor audit to review terms of employment and working conditions for direct and contracted workers engaged by TIMOs; and (iii) a review of the labor monitoring and audits conducted by the external service provider and how non-compliances are communicated and enforced with contractors. Suzano will prepare a corrective action plan to address any deficiencies identified, including increase direct oversight by Suzano’s HR department, if necessary.

Demobilization will peak few months before commissioning of the plant. To mitigate negative impacts of demobilization on contracted workers and receiving communities, per ESAP#5, Suzano will prepare a demobilization plan including: (i) a monitoring mechanism to ensure payment of severance package to demobilized workers; (ii) provisions to support demobilized workers (e.g., help with resume, providing information on employment opportunities, documentation of work/training in the project, etc.); (iii) communication of demobilization timeline to workers, local authorities and local businesses; (iv) proactive programs to ensure re-entry of non-local workers to their place of origin; and (v) monitoring of workers’ liabilities in hosting communities such as unpaid bills and damage compensation.  NNnnnnn                                                   

The Cerrado pulp mill will produce kraft bleached eucalyptus pulp. Technical specifications of this greenfield pulp mill are beyond Best Available Technology (BAT). Specifically, the elimination of fossil fuel in lime kilns thanks to black liquor gasifiers, efficiency recovery boiler, low pressure steam systems, pressurized liquid to evaporators, widespread use of variable speed drives in electrical system, double connection to grid, use of ultra filtration/reverse osmosis for boiler feedwater (less back wash), internal reuse of process water for log washing, extra points of incineration for dilute non-condensable gases (DNCG) and transfer without venting for concentrate non-condensable gases (CNCG). Mitigation technologies, such as primary and secondary (biological) treatment, emergency basin (21 hours), and collection and segregation of all stormwater and reuse, are aligned with BAT. Technical equipment specifications provide assurance that the mill with meet international standards, such as WBG EHS Guidelines for Pulp and Paper (2007) and European Union BAT (2001) for air, water, and solid waste.

Resource Efficiency

Steam and power use will be well within international standards and WBG EHS Guidelines for Pulp and Paper (Table 3) (8 GJ/ADt and 527/660 KWh/ADt). All the energy required by the mill will be generated on site thanks to the biomass and recovery boilers, and the black liquor gasifiers.

Water Consumption

Mill

During operations, the Cerrado mill will utilize the Pardo River as a source of water and receptor of effluent at the following rates: (i) withdraw rate (2.8 m³/s); (ii) discharge rate (2.4 m³/s); (iii) consumption rate (0.4 m³/s). About 85% of the water intake returns to the Pardo River as treated effluent. Water use per unit of production (24 m³/ADt) is well below WBG EHS Guidelines for Pulp and Paper (Table 1a. Kraft bleached pulp). The consumption rate represents approximately 0.8% of the Q7,10 low flow of 54 m3/s and 0.4% of the average flow of 120 m3/s. In comparison, the total demand for water in the Pardo River is approx. 6 m³/s. This represents approximately 11% of the Q7,10 low flow and 5% of the average flow.

Plantations

Land acquired for the eucalyptus plantations is located within the subbasins of the Rio Pardo and Rio Verde, both tributaries of the Parana River. According to the WRI Water Risk Atlas, water stress – measured as the ratio of total water withdrawals to available renewable surface and groundwater supplies – in these subbasins is low. Equally, Think Hazard (www.thinkhazard.org) assess the risk of water scarcity in the municipality of Ribas do Rio Pardo as very low.

Eucalyptus plantations are not irrigated. Seedlings are only watered with the use of water trucks when planted (4 liters/plant) and up to four more times in the following weeks to ensure their survival.  No additional water for irrigation is abstracted after the plantation is established. The Cerrado Project has obtained the required water extraction permits from IMASUL and consumption for the initial watering requirements is reported regularly.

Through a partnership between eight forestry companies (including Suzano) and the Institute of Brazilian Forestry Science and Research Institute (IPEF), the Cooperative Program of Monitoring and Modeling of Microbasins (PROMAB) conducts long term monitoring in 24 microbasins (8 in Suzano’s microbasins) throughout Brazil. Preliminary results show that mosaic landscapes have a positive effect on water availability. Suzano is in the process of selecting a new microbasin in the Cerrado Project to be added to the monitoring program.

In addition, Suzano has publicly committed, as per its corporate Sustainability Strategy, to increase water availability in critical watersheds (identified as watersheds with significant presence of eucalyptus, where water supply is low, and demand is high). Currently, Suzano has identified three such watersheds in the Cerrado Project. Suzano will adapt management practices (e.g., reducing plant density, extending rotations, integrating agroforestry systems) to reduce water consumption by plantations in these watersheds, which will be monitored to ensure management practices are effective.

The current rainfall encountered in the project area of influence (varying from 1,200 to 1,500 mm) allows a constant replenishment of the shallow and deep underground aquifers. Recent data of the aquifer variation has not been done in project area by the MS authorities since 2010. As such, to monitor the underground water level within the footprint of the eucalyptus plantations in the Cerrado Project, as per ESAP #6, Suzano will install a network of piezometers for such monitoring.

Pollution Prevention

Air Emissions and Ambient Air Quality

The main sources of air emissions are the recovery boiler, the biomass boiler, and the two lime kilns for the reprocessing of calcium carbonate into calcium oxide. Equipment performance guarantees provided by manufacturers comply with WBG EHS Guidelines for Thermal Power Plants. Predicted performance levels of NOx air emissions is expected to comply.

Air emissions during construction are typically dust generated from earth moving activities and fumes from heavy equipment. Management of these conditions are contemplated in the ESIA and management plans are defined in the EMP. Road dust in the construction site is currently controlled through water tanks. Condition of equipment (including emission of fumes) is verified by Suzano before is released to be used in the construction site.

Noise

Aside from the noise monitoring during the 2014 ESIA preparation process, an ambient noise monitoring program has been established by Suzano per requirement of the Installation License and takes place on bi-annual basis at nine locations in the vicinity of the mill. The 2014 ESIA considered noise impacts to be negligible as the town of Ribas do Rio Pardo is approximately 8 km away from the pulp mill site.

GHG Emissions

More than 12.0 million tons of CO2 will be sequestered annually by the eucalyptus plantations as trees are planted in degraded lands or pastures. After harvesting, trees will be replanted, maintaining the forest coverage in the land, while the carbon contained in the harvested trees will be transformed into fiber pulp and renewable energy. A portion of these removals, around 0.6 million tons of CO2/year can be verified as voluntary carbon credits. The biomass and recovery boilers will feed turbogenerators with a nominal capacity of 384 MW. The plant will consume 200 MW and the remaining 184 MW will be sold into the Brazilian grid (about 1.7 GWh per year). Considering the Brazilian grid emissions factor (0.2 kg CO2/kWh), this represents 336,000 tons of CO2 equivalent avoided emissions each year.

The main source of GHG emissions in pulp mills is the consumption of fossil fuels in the lime kiln as all the electricity required is generated on site from wood waste in the recovery and biomass boilers. Thanks to the integration of wood gasification, no fossil fuels will be required.

The forest management and harvesting operations as well as log transportation to pulp plant are expected to emit approximately 70,000 tons of CO2 equivalent per year. The wastewater treatment plant is expected to emit zero tons of CO2 equivalent per year. Suzano will report the Cerrado’s GHG emissions as part of the Annual Monitoring Report (AMR) once the Cerrado Project is fully operational.

Wastewater and Water Quality

Process effluents will be treated in a wastewater treatment plant with primary and secondary (biological) aerobic treatment. Effluents will be released into the Pardo River at an estimated rate of 2.4 m³/s. The performance guaranteed values for the wastewater treatment plant comply with WBG EHS Guidelines for Pulp and Paper (Table 1a. Kraft bleached pulp), except for total phosphorus. However, predicted performance levels for total phosphorus is expected to comply based on data from Suzano’s Horizonte II plant in Tres Lagoas, which relies on similar technology and basic inputs. The Cerrado mill will have online monitoring through the treatment process that can be used to reduce phosphoric acid dosage in the biological treatment, thus reducing the concentration of Total Phosphorus.

Data available in the 2014 ESIA to characterize baseline water quality for the Rio Pardo are limited to a summary of measured temperature, pH, conductivity, turbidity and dissolved oxygen for the period 2007 to 2013, and one field sampling campaign in March 2014 consisting of three sample locations in the Rio Pardo and one sample location in the Corrego do Retirinho. Quarterly ambient water quality monitoring is currently on-going at nine sample locations per requirement of the Installation License. The results of these monitoring campaigns show concentrations of total phosphorus, phenols and hydrogen sulphide not in compliance with CONAMA Resolution 357/2005 for Class 2 rivers.

The 2014 ESIA did not provide an assessment of potential impacts of water abstraction and effluent discharge on the Pardo River other than a mixing zone assessment for color and BOD. As part of ESAP#7, Suzano will conduct a study to assess whether the Cerrado mill could (i) result in any exceedance of ambient water quality standards in the Rio Pardo, as per CONAMA Resolution 357/2005 for Class 2 rivers; and (ii) result in an increased risk of eutrophication or other potential impacts on the Mimoso reservoir downstream. The study will consider existing ambient water quality and the cumulative impact of other water users and sources of discharges in the area. Based on the results, Suzano will review if corresponding mitigation measures are adequate and implement additional mitigation measures if needed.

Waste

Hazardous Materials

The plantations that will supply the Cerrado Project are located around Ribas do Rio Pardo, approximately 230 km west of the larger forestry operations center at Tres Lagoas. Agrochemicals are currently stored in Tres Lagoas and distributed to the farms from a temporary warehouse located near Ribas do Rio Pardo. A new storage and handling facility will be constructed on the mill site to service the Cerrado Project farms. It is expected that the new facility will be ready in October 2022.

Pesticide Use and Management

The company’s integrated pest management (IPM) guidelines are presented in a manual that covers all forestry operations. The document provides comprehensive information on pesticides and herbicides including application rates, seasonality (insects and diseases), weed control vs stages of forest development, and control methods. Pest and disease management involves detection, monitoring, and control. A dedicated contractor is responsible for pest scouting. Information is sent weekly to a corporate department with experts in phytopathology and entomology, who provide pest management recommendations. Pest control is enabled via a range of methods including cultural such as manual collection and destruction; etiological such as the use of attractants, life-cycle interruption, dispersive; genetic such as use of resistive clones; biological including use of natural parasites; and chemical.

The IPM manual also lists the approved pesticides to be used by Suzano. All pesticide procurement is done by Suzano and delivered to forestry contractors as needed. None of the listed products contain active ingredients classified as ‘Extremely Hazardous’ (Class Ia) or ‘Highly Hazardous’ (Class Ib) by the World Health Organization (WHO) and all have been approved by the relevant local authorities and FSC®. Like other forestry companies in Brazil, Suzano is a member of the Brazilian Forestry Science and Research Institute (IPEF) and participates in the Cooperative Program in Forest Protection (PROTEF) to promote integrated management of forest pests and diseases and find alternatives to products listed as dangerous by FSC®. The primary pest of concern are leaf-cutting ants. Sulfuramid-based pesticides are the dominant control method. Ant control baits made with sulfuramid are applied before harvesting and planting and in case of an ant infestation. Sulfuramid is rated as a ‘Class II’ (moderately hazardous) substance by the WHO but is an organic persistent pollutant included in the Stockholm Convention; Brazil holds an exception under Annex B of the Convention for its use as ant bait.

Suzano has developed, in partnership with Fundacao de Estudos e Pesquisas Agricolas e Floresta (FEPAF), a corporate procedure for the monitoring of watersheds to assess the impact of silvicultural activities on ambient water quality (Monitoramento Hidrológico em Microbacias Operacionais). The procedure includes the monitoring of glyphosate, aminomethylphosphonic acid (resulting from the degradation of glyphosate), and sulfuramide. Samples are collected in accordance with the annual silviculture and harvesting plan. Data collection for the Cerrado Project will begin on the fourth quarter of 2022.                                             

Project-induced in-migration

The Cerrado Project expects to employ more than 4,000 contracted construction workers during the next 20 months with an estimated peak of 10,000 mobilized workers in the second quarter of 2023. As of September 2022, the Project has already mobilized more than 5,000. Non-resident construction workers lodge in hotels and camps located in the outskirts of Ribas do Rio Pardo. These housing units are built and managed autonomously by third parties who offer accommodation services to construction contractors. Despite significant efforts to increase local recruitment opportunities through vocational training in partnership with the national institute for industrial training (SENAI, for its acronym in Portuguese) and local hiring events, the limited availability of skilled labor locally will mean that the number of non-resident construction workers will further increase as works progress from civil construction to electromechanical assembly.

As the influx of a large male-dominated workforce and upsurge in truck traffic is likely to increase the risks of GBVH in the project’s area of influence, Suzano’s Social Development team, with the support of the NGO Childhood Brazil, is leading the ‘Agente do Bem’ program. The ‘Agente do Bem’ are Suzano’s and contractors’ personnel trained by Childhood whose role is: (i) to raise awareness and sensitize co-workers on GBVH and child abuse through toolbox talks in the construction site; (ii) provide psychosocial first aid (‘escuta empática’, in Portuguese) in the event of a GBVH disclosure; and (iii) disseminate Suzano’s 0800 (free) Ombudsman Channel. As part of the ‘Agente do Bem’ program, Childhood is also collaborating with municipal institutions dedicated to the protection of children, youth and women to structure the referral pathway of services for GBVH survivors.

Despite the ‘Agente do Bem’ program, Suzano’s Code of Conduct does not define the expected behaviour of workers in the community, and Suzano has not conducted a GBVH risk assessment in areas surrounding workers accommodations. Workers conduct at the accommodation and worker-community interactions surrounding workers accommodations is currently not being monitored, nor has the community been engaged or sensitized on how to report any misconduct by Suzano’s third-party workers. At present, any worker misconduct outside the fence of the accommodation is considered the responsibility of the local authorities. Associated impacts, such as the attraction of small businesses and the provision of legal and illegal services, that have a direct impact on the health and safety of these communities, is also left under the responsibility of the local authorities. It is understood that accommodations in urban areas are required to prepare a neighborhood impact study. However, accommodations located in proximity to Ribas do Rio Pardo were reportedly not required to undertake the study as they are formally located outside the urban area.

Per ESAP#8, Suzano will update its Human Rights Policy to define the expected behaviour of workers beyond project premises and beyond working hours – including sexual harassment, exploitation and abuse in local communities, rules for interactions with local communities, and disciplinary procedures – and will integrate this in the induction training for employees and contractors (including security guards) and in communication campaigns inside the workplace and within communities at risk.

Per ESAP#9, Suzano will conduct a GBVH risk assessment in the neighborhoods surrounding workers accommodations and proposed logistics/trucking operations (such as rest areas/truck stops). The assessment will identify vulnerable groups at risk of GBVH (e.g., women headed households, school children), including the collection of socio-economic data of these impacted groups. Based on the results of the assessment, Suzano will prepare and implement additional prevention and response measures to mitigate any identified impacts and monitor them. The neighbourhoods adjacent to the workers accommodation facilities will be included in the Stakeholder Engagement Plan to ensure they are aware of the impacts and mitigations, the worker’s Code of Conduct and how to access the Community Grievance Mechanism.

The project-induced immigration due to job expectations and formal and informal business opportunities further increases the demand of public services such as potable water and sanitation, waste collection, health services, among others. Considering that Ribas do Rio Pardo has a population of less than 30,000 inhabitants, its capacity to absorb the population influx is low. To discourage immigration, contractors are required to hire workers in their place of origin. In addition, as a condition of the environmental licensing, Suzano established a Committee of Sustainable Development with representatives of the municipal legislative and executive branches, and civil society to identify local needs and priorities. As part of this process, Suzano committed to transfer US$9 million to the municipality of Ribas do Rio Pardo for the expansion and construction of health care facilities and housing for vulnerable population (including the construction of 150 houses for homeless migrants or those living in illegal settlements). In addition, Suzano has engaged Instituto Votorantim to support the elaboration of a participatory master plan to guide the urban expansion of the municipality.

Transportation

An off-site logistics center has been established to organize deliveries to the construction site with a work permit to help ensure efficient and safe delivery of materials. Suzano’s main planning consideration has been to reduce the use of public roads for the hauling of wood. The Cerrado Project will include the construction of a tunnel and bridge to divert a large proportion of wood transport fleet onto private access roads thus reducing interactions and risk on public highways.  It is estimated that the majority of all wood transport will be on Suzano’s private roads. A central control tower and fleet monitoring (telematics) will track all aspects of logistics in the future. The finished product will be transported to seaports via railway further reducing road traffic and the risk of vehicular accidents involving the public.

Security Personnel

Access to the construction site is controlled at checkpoints by unarmed security guards. All employees, contracted workers, and visitors entering the site must carry an identifying badge issued by Suzano. No armed security is used for the transportation of materials and products. 

Suzano’s forestry assets are safeguarded by unarmed mobile patrols. The patrimonial surveillance team in Cerrado is composed of four guards and one supervisor who report to Suzano’s Security Manager. Security guards belong to a third-party security provider. Per security records, the most common irregularities in forestry plantations are the presence of livestock, illegal waste dumping, unauthorized access, and theft. Surveillance is undertaken by car; for non-accessible areas, the use of drones is planned. Forestry workers and drivers can also inform security by radio when they observe situations requiring attention.

Use of force is not permitted by Suzano. If the situation cannot be resolved cooperatively, the security team is instructed to record the incident and leave the area. The situation is then handled by Suzano’s security, social and legal departments, as needed. Security guidelines are documented in Suzano’s Operational Procedures for Patrimonial Vigilance and for Resolution of Land Conflicts. Overall, the security team has maintained a positive relationship with neighboring residents and farmers in the Cerrado Project area.

To qualify for a security position, prospective candidates must have a certificate of training issued by the federal police. Guards are screened based on background checks to ensure past police records are appropriate.  During the hiring process, candidates are interviewed to ensure they have the skills and profile required for the position, including the use of IT systems such as computers and apps, and knowledge of the forestry industry. Security guards receive training on nonviolent communication, management of conflicts, approaching techniques, respect for gender and race diversity.                                                 

The Cerrado Project is located within the Cerrado Woodland and Savannas ecoregion (WWF), which is characterized by high levels of endemism and considered one of the richest of all tropical savanna regions. Suzano’s forestry base in MS, including eucalyptus plantations supplying wood to Suzano’s pulp mill in Tres Lagoas, will reach around 600,000 ha. Plantations will be located largely in pastures dominated by exotic grasses. The risk of significant conversion or degradation of natural habitats is considered to be low given that the region has been in use for cattle ranching since the 1980s. 

In July 2020, the company established a policy and position paper on zero-deforestation, as part of its Wood Supply Policy, which states that Suzano will not grow plantations in areas that are occupied by native vegetation or converted after signature of the policy. The policy also states that Suzano will not grow plantations in areas that were deforested illegally even if prior July 2020. Effective July 2020, an assessment is conducted prior to acquiring/leasing land to review E&S aspects which includes geoprocessing by external consultants to verify if natural habitat conversion has taken place. Following acquisition, field surveys are conducted to delineate modified habitat (where eucalyptus can be planted) and natural habitat that will be set-aside above and beyond the 20% set-aside as Areas of Permanent Protection (APP) and Legal Reserves (LR) required by Brazil’s Forest Code (CAR) in the region.

As of September 2022, 33% of the land acquired to date has been identified as habitat to be set-aside (conservation areas). In addition, the company has committed to connect 500,000 ha of priority areas for biodiversity conservation in the Cerrado, Atlantic Forest and the Amazon by 2030 through the implementation of biodiversity corridors inside and outside areas where the company operates (referred to in this ESRS section as “voluntary conservation action”).

Based on the analysis of satellite imagery, it is estimated that less than 1% of the land acquired for the Cerrado Project was converted in the recent past by their previous landowners. Per ESAP#11, Suzano will: (i) review and revise its procedure of vegetation mapping and characterization in order to ensure alignment with IFC PS6 definitions of Natural and Modified Habitat to be applicable for the remaining areas to be planted; (ii) calculate the extent of Natural Habitat that was converted in the recent past before the company’s zero-deforestation policy was effective in July 2020; and (ii) conduct a  No Net Loss assessment comparing the estimated losses of Natural Habitat versus potential gains from the various set-asides. Any residual loss of Natural Habitat will be compensated by Suzano through the restoration of additional set-asides.

The terrestrial area of influence of the mill is classified as modified habitat. Patches of natural habitat, generally located closer to the Pardo River, are small and highly fragmented and have limited potential to sustain natural communities over the long term. None of these areas is therefore designated as critical habitat as it is highly unlikely that there are critical habitat qualifying species occurring with adequate concentrations to justify that designation. Removal of native vegetation has been authorized by the environmental authority and is limited to 10 ha for the construction of the pulp mill, bridge and access road, and 203 m3 of isolated trees along the TL right-of-way.

Suzano’s biodiversity monitoring program has identified several priority biodiversity values associated with the project area (forestry base) including restricted range plant species such as Homalolepis salubris and Xyris rigida (IUCN Red List – unassessed; National Red List Critically Endangered (CR)) and Dichoriste lavandulacea, Anemopaegma arvense, and Astraea cincta (IUCN Red List – unassessed; National Red List Endangered (EN)), Crowned Solitary Eagle (Buteogallus coronatus) (IUCN Red List EN; National Red List EN), and 14 species of birds and mammals categorized as Vulnerable (VU) either by the IUCN or the National Red List.

All endangered species of flora were registered in well-preserved formations, with Anemopaegma arvense and Homalolepis salubris also recorded in Secondary Forested Savannah. No adverse impact is expected on these species as these vegetation formations are set-aside by Suzano for protection. Occurrence of Critical Habitat for the Crowned Solitary Eagle is considered unlikely based on the results of a Critical Habitat assessment.

Per ESAP#12, Suzano will hire independent qualified consultants to develop a Biodiversity Monitoring Program to assess potential negative impacts on priority biodiversity values. Suzano will adapt its management practices based on the monitoring results.

The client has sited the 21 km 138 kV TL to avoid natural habitat, as possible, and will install bird diverters to avoid bird collisions where the TL crosses sensitive habitats as defined in the ESIA. 

Per ESAP#13, Suzano will use flapper bird flight diverters. The client will commit to maintaining the bird flight diverters for the life of the project. In addition, Suzano will design or retrofit the 21 km 138 kV TL to be raptor safe to prevent bird electrocutions. 

Per ESAP#14, Suzano will hire a qualified company with experience in fatality monitoring and familiar with the local fauna to implement a fatality monitoring program of birds and report annually on results for the first three years of project. The scope of the monitoring program will include the 21 km 138 kV TL. Based on the results, Suzano will review if mitigation measures are adequate and implement additional mitigation measures if needed.

Ecosystem Services

Forest Stewardship Council® (FSC®) certification requires the maintenance or improvement of attributes of High Conservation Value (HCV) areas. HCV are identified based on E&S criteria, including the provision of critical ecosystem services (e.g., watershed protection, soil erosion control) (HCV4), and areas that are fundamental to meet the basic needs of local communities (e.g., subsistence, health, water, nutrition) (HCV5), or of cultural significance (HCV6). As part of the FSC® certification process, the company will continue to identify priority ecosystem services (e.g., water use, flood retention, cultural ecosystem services).

Sustainable Management of Living Natural Resources

Suzano’s plantations in the Cerrado Project will be from responsible forest management covered by FSC® certification standards (FSC Plantation Standard for the Republic of Brazil: FSC-STD-BRA-01-2014 and FSC Controlled Wood FSC-STD-40-005).

Supply Chain

Until owned plantations mature in 2030, part of the wood required by the pulp mill will be supplied by third parties. All wood supply to Suzano (100%) is covered by FSC® and PEFC/Cerflor Chain of Custody certification (FSC-STD-40.004 and ABNT NBR 14790:2014). All wood is purchased standing and Suzano or its forestry contractors are responsible for harvesting and log transportation to maintain chain of custody and mitigate labor and safety risks. Checklists must be met prior to purchase which include respecting APP and LR areas within the plantations; not allowing livestock to use the planted blocks or planting within APPs and/or LRs; ensuring erosion control during harvests; and proper waste residue collection. The company assesses risk of each supplier, elevating verification according to risk level from legal documentation checks, analysis of satellite imagery to assess previous conversion of native vegetation, up to site visits. The client’s Wood Supply Policy (July 2020) reinforces its commitment to buy wood from plantations established exclusively in areas that were previously anthropized or that conversion, if any, did not occur after July 2020.                                           

At the project level, stakeholder engagement is managed by two different teams. Corporate Relations oversees engagement with government bodies and civil society. Social Development engages with neighbors and communities in the project’s area of influence as per guidance in the Operational Dialogue and Social Dialogue procedures. Suzano has established separate corporate guidelines to manage social investment and donations.

The Operational Dialogue procedure targets neighbors within a 3 km perimeter around Suzano’s industrial and forestry operations and aims at disseminating information on activities that will be carried out in the surrounding areas, identifying and discussing the potential adverse impacts of these activities, as well as defining related mitigation actions. According to the Operational Dialogue procedure, Suzano’s Social Development team must visit each neighbor 30 to 60 days prior to activities taking place in the area (e.g., planting, harvesting, etc.). Suzano has identified about 400 neighbors in the Cerrado Project that fall under this process.

The Social Dialogue procedure consists of a methodology to engage with communities potentially impacted by Suzano’s industrial and forestry operations in a broader area of influence than the above process. The methodology includes Participatory Rural Appraisal techniques to identify potential impacts and mitigation, the development of action plans in consultation with community representatives (‘Conselhos Comunitarios’), and semiannual meetings to review progress. Reportedly, all 15 communities within the area of influence of the mill and plantations have been engaged by Suzano’s Social Development team.

Email contacts and 0800 phone numbers to receive grievances are available on the Cerrado Project and corporate websites. A local 0800 phone number and WhatsApp contacts of the Social Development Team are communicated to stakeholders as part of the Operational Dialogue. Community relations are managed with the support of an IT platform called SISPART that includes the (i) registration of interactions with stakeholders; (ii) the management of social investments initiatives and programs; and (iii) the recording, categorization, and monitoring of community requests/complaints and coordination of responses by the relevant department.

Notwithstanding the existing procedures and processes described above, there are gaps in the existing stakeholder engagement process. For example, communities surrounding accommodations and PAP affected by land acquisition have not been engaged despite been directly impacted by the project.

Per ESAP#15, Suzano will review and update the Stakeholder Engagement Plan (SEP) for all Cerrado’s components. This will include: (i) stakeholder identification and mapping; and (ii) how the company defines the level of effort and types of engagement required for each stakeholder group based on anticipated risks and impacts, the magnitude and severity, and the degree of vulnerability of various stakeholders; and (iii) a SEP will be prepared and implemented for the construction phase considering the potential impacts to communities of the large construction workforce. The stakeholder mapping will be regularly updated (as a minimum every six months during construction and annually during operations) based on, among others, the incidences/irregularities recorded by patrimonial surveillance, and concerns/complaints submitted through the Grievance Mechanisms.

Per ESAP#16, Suzano will further improve its Community Grievance Mechanism through their stakeholder engagement process including: (i) disclosure of the mechanism to all identified stakeholders; (ii) additional channels for use at project level that allow for submission of confidential and anonymous grievances, and submission by those without access to technology (e.g. suggestion boxes at central locations like municipal offices); (iii) analysis of systemic issues; (iv) feedback mechanism to communities; (v) development of guidelines for resolution and response and coordination with operations, including appropriate methods to handle grievances or concerns related to GBVH, including complaints around security guards; (vi) training to staff for consistent implementation of the grievance mechanism including specific training to handle grievances or concerns related to GBVH; and (vii) periodic monitoring of the grievance mechanism with defined KPIs.         

Company: Suzano S.A.

Point of Contact: Fernanda Guinsburg Mendes

Title: Treasury

Telephone Number: +55 11 97264 9016

Email: f.mendes@suzano.com.br

Mailing Address: Av. Brg. Faria Lima, 1355 - Pinheiros, São Paulo - SP, 01452-002

Website: www.suzano.com.br