Environmental and Social (E&S) policies, risk assessment and management system. Zilor has a documented sustainability policy aligned to the voluntary standards to which it adheres, such as Bonsucro and Renovabio. Zilor employs an Integrated Risk Matrix, collaboratively developed across company departments, to assesses the risks of its milling and plantation operations, including environmental, health and safety, labor, and reputational risks, and determine the necessary controls. Specifically for the current project, Zilor has conducted the required environmental impact assessments (EIA) study to secure the environmental licenses for the installation of the new boiler and transmission line. Zilor will include the assessment of social risks, including health, safety and security risks to communities in the company’s area of influence, into its Integrated Risk Matrix (ESAP#1). All plantations sourcing sugarcane, including those of agricultural partners, are Bonsucro certified. While the Quata mill and Biorigin units hold ISO 14001 certification, the Barra Grande unit is not yet certified.

E&S organizational structure. Zilor has a dedicated EHS team headed by a Corporate EHS Manager and EHS Coordinators at each facility and supported by 8 EHS specialists at corporate level and 16 across the operations. The EHS team is responsible for overseeing the company’s compliance with environmental licenses and legal EHS requirements, including waste management, air emissions, effluent discharge, use of residual wastewater as fertigation, and restoration of permanent protection areas (APP). The team is also responsible for the internal Bonsucro audits in Zilor’s operations and among agricultural partners. The company monitors key performance indicators (KPIs), such as energy and water consumption, and use of agrochemicals, and has an environmental monitoring program to comply with legal requirements (i.e., waste generation, air emissions and effluents). 

Emergency Preparedness and Response. Zilor has trained emergency brigades and documented emergency response plans for each facility detailing roles and responsibilities, emergency equipment, and response protocols for the identified emergency scenarios. The fire safety equipment is included in the company’s computerized maintenance management system. Fire prevention and control in sugarcane plantations is covered under PS4 section (see below). Zilor has multiple reservoirs for water storage ranging from few thousand to 3 million cubic meters. Zilor commissioned to a qualified consultant a dam risk assessment, and dam surveillance, maintenance, and emergency plans for the Barra Grande reservoir Castelhano.

Supply Chain. Zilor procures more than 90% of raw sugarcane for their milling operations from land they own or lease, either managed directly or through 16 agricultural partners. Sugarcane acquired from the spot market or independent producers constitutes less than 3% and 5% of the overall volume, respectively. The sugarcane purchased from the spot market is traceable to the plantation. All sugarcane suppliers are required to sign a contractual agreement, committing to meet a list of specified environmental and social standards aligned with Bonsucro P&C. The EHS team conducts annual internal Bonsucro audits across all its agricultural partners, and verification audits of independent producers through an internal verification protocol. External auditors from Bonsucro randomly select a sample of agricultural partners (approximately one-third) for annual audits. Zilor only plants in cultivable areas outside areas of permanent protection (APP) and/or Legal Reserves.  Zilor will provide evidence to IFC that their own properties comply with requirements to protect land as required under the Brazilian Forest Code. Zilor will also work with landowners of leased cropland to ensure that they are registered in the CAR (Rural Environmental Registry / Cadastro Ambiental Rural) and comply with Brazilian Forest Code requirements (ESAP#2). Finally, Zilor will update its procedures to verify that third-party suppliers comply with the Brazilian Forest Code (ESAP#3).

HR Policy/Procedures, Working Conditions and Terms of Employment. Zilor has documented HR policies and procedures that are consistent with the national labor regulations and PS2 requirements and apply to all employees. Each worker receives a written contract that describes the working conditions and terms of employment, including wages, workhours, rest periods, and overtime. Overtime work is electronically monitored and paid as per national regulations. Employees are represented by different trade unions depending on their function and location. Union representatives are allowed to publicize union's activities within the company, and annual negotiations with trade unions address salary adjustments, working hours, and working conditions.

Non-discrimination and Equal Opportunity and Worker’s Grievance Mechanism. Zilor’s Code of Ethics encourages non-discrimination and equal opportunities and condemns all forms of harassment including sexual harassment. Zilor has a Diversity and Inclusion program that implements regular awareness raising campaigns to combat race, gender discrimination and (sexual) harassment, while delivering nonviolent communication training for leaders. Zilor’s recruitment policy mandates that at least one female candidate must be interviewed for all leadership positions (starting at supervisor level). An internal survey conducted by an independent qualified consultant with over 170 employees, found no widespread discriminatory practices, with women reporting a sense of safety. Zilor has a grievance mechanism accessible 24/7 that allows for submission of anonymous grievances by employees and workers from contractors and suppliers (https://www.canaldeeticazilor.com.br/).

Workers Engaged by Third Parties. Agricultural partners and independent suppliers are required to sign a contractual agreement, committing to meet specified E&S standards, including adherence to Brazilian labor regulations and the prohibition of child and forced labor. Zilor conducts unannounced annual audits of labor compliance by reviewing documentation from a representative sample of workers. While no major non-compliances have been detected by Zilor, the company is not conducting a systematic verification of labor compliance including conditions of any provided workers’ accommodations. Zilor will prepare and implement a communication plan to consistently enhance awareness about the company's grievance mechanism among the workforce of agricultural partners and independent suppliers (ESAP#5).

Occupational Health and Safety. Zilor's Occupational Health and Safety (OHS) program includes the Hazard Identification and Risk Assessment Program (PGR) and the Medical Surveillance Program (PCMSO), ensuring compliance with Brazilian legal requirements. The PGR evaluates workplace risks, defines controls, and specifies necessary personal protective equipment (PPE). The company has established job safety analysis (AST), permit to work (PT), lock-out tag-out (LOTO), and safe work procedures, and machinery pre-operational checklists, alongside an OHS training program aligned with Brazilian regulatory standards (NR) and behavioral safety initiatives. Employees and contractors are informed of their right to refuse work in potentially hazardous situations. Internal biannual audits involve cross-facility teams to minimize bias. The Lost Time Injury Frequency Rate (LTIFR) is below reference values for the sector according to OSHA 2019 data. The OHS team evaluates all reported near misses, including formulating corrective action plans in collaboration with the operational team. Despite these measures, the following uncontrolled hazards were identified during IFC’s site visit: ((i) numerous exposed hazardous moving parts were identified in the sugar mills, and access to areas with heavy moving parts were found unlocked and with easy to access to them, posing a risk of serious injuries. Zilor will conduct a machine safety risk assessment based on Brazilian NR12 regulations and industry safety best practices (ESAP#6). Subsequently, Zilor will develop and implement a comprehensive corrective action plan to address the identified risks; (iii) certain areas lack collective fall protection systems, including handrails and toeboards, posing a risk of falls from heights. Zilor will conduct an inspection of its industrial units, install appropriate collective fall protection systems in the required areas, and include these in the regular inspection and maintenance program (ESAP#7); (iv) during the field visit, it was observed a human-machine interaction in the biomass unloading area that could result into an accident with serious consequences. Additionally, in 2021, a fatal accident occurred in the sugar loading area involving a worker struck by a forklift. In farming operations, hydration and resting areas are provided for the employees inside the buses that have been adapted for these purposes. However, additional access to shade and hydration may be required for workers in the field that are far from the unit. In addition, the PCMSO does not have a specific program to assess the risk of chronic kidney disease (CKD) among workers exposed to heat (e.g., manual sowing). Creatinine tests are only performed for monitoring employees who have already been declared to have renal problems. Zilor will conduct a risk assessment for workers exposed to heat stress, implementing necessary controls, and medical surveillance measures. The outcomes will be documented in a program that will be communicated to agricultural partners, and which implementation will be monitored by Zilor (ESAP#8).

Zilor outlines OHS contractor requirements in a documented contractor management procedure including instructions for critical activities. Before workers can enter the site, contractors must submit documentation confirming compliance with labor requirements and the necessary OHS training, and workers must attend a mandatory 4-hour OHS induction session delivered by Zilor. Contractor workers are required to always carry the ID badge provided by Zilor. However, various opportunities for improvement in contractor safety practices during welding activities at the new boiler construction in Barra Grande were identified. Examples include the absence of inspection of contractor’s equipment, some of which were observed in poor maintenance conditions; inadequate storage of compressed gases; suboptimal workplace housekeeping (combustible materials close to the welding places, tripping hazards generated by the extension cords and materials on the floor); non-compliance with required personal protective equipment (PPE); open hot work permits for the entire shift posing a risk of loss of control, and a crane operator with an expired license. Zilor will enhance its contractor safety program, including regular inspections, reporting and follow up with contractors to ensure the closure of deviations (ESAP#9).

Resource Efficiency and Greenhouse Gas (GHG) emissions

Water consumption. Total water consumption in Barra Grande was 2.8 million m3 during the 22/23 harvest year. According to WRI’s Aqueduct Water Risk Atlas, Zilor’s units are not located in regions of high-water stress. Sugarcane plantations exclusively use industrial wastewater and vinasse for fertigation. Zilor has made significant investments in reducing water consumption for industrial purposes, achieving a 30% reduction in water consumption from 22/23 to 23/24 in Barra Grande, from 0.78 to 0.55 m3/ton.. These values align with the WBG EHS Guidelines for Sugar Manufacturing (Table 2. Resource and Energy Consumption). The predominant source of water is derived from surface water bodies, with less than 2% sourced from groundwater. These sources are primarily tributaries of the Aguapeí-Peixe and Tietê-Jacaré rivers. Zilor participates as a member of the Aguapeí-Peixe and Tietê-Jacaré River Basin Committees, collaborating with local stakeholders to implement initiatives focused on the sustainable management of water resources in the region.

GHG emissions. Zilor is engaged in initiatives to reduce fuel consumption, primarily through the adoption of precise and digital agriculture practices. Noteworthy is the reduction in Scope 1 greenhouse gas (GHG) emissions from non-renewable sources, decreasing from 281 thousand tons of CO2e in 20/21 to 194 thousand tons of CO2e in 22/23. Scope 2 and 3 GHG emissions for the 22/23 harvest year were 7 and 10 thousand tons of CO2e, respectively. On the other hand, Scope 1 biogenic GHG emissions, primarily from the combustion of residual bagasse in the co-generators, increased from 2.9 million tons (20/21) to 3.2 million tons CO2e (22/23). Concurrently, Scope 2 and 3 GHG biogenic emissions for the 22/23 harvest year were 371 thousand tons and 500 tons of CO2e, respectively.

Pollution Prevention

Wastewater and water quality. Except for small quantities of treated sanitary effluent (less than 100 m3/day per plant) discharged into superficial water bodies, all industrial wastewater and vinasse is reused for fertigation of sugarcane, which used is permitted by the environmental authority. Treated sanitary effluent is monitored quarterly and complies with legal requirements and WBG EHS Guidelines.

Air emissions and ambient air quality. As part of the project, Zilor will replace two 150 ton/h boilers with a more efficient 300 ton/h boiler in Barra Grande. As a result, the energy production capacity will increase from 80.3 MW to 130.3 MW in Barra Grande. Wet scrubbers are installed in the remaining boiler (180 ton/h in Barra Grande) and the new boiler (300 ton/h in Barra Grande). The removal efficiency of particulate matter (PM) guaranteed by the equipment supplier is 97%. Nevertheless, the guaranteed PM emissions are above WBG EHS General Guidelines (Table 1.1.1. WHO Ambient Air Quality Guidelines). NOx guaranteed emissions do comply with WBG EHS General Guidelines.  

Per request of the environmental authority (CETESB), Zilor conducted air dispersion modeling for PM10 and NOx comparing the old (using the emission values from the most recent monitoring) and new (using the guaranteed emission values) situation in Barra Grande mill. The maximum concentration of PM10 in the new scenario is below that with the old boilers and complies with local ambient air quality guidelines. Final environmental operating license was issued in November 2023, after the results of air emissions monitoring proved compliance with legal limits for PM10 and NOx.

The air dispersion modeling mentioned above did not consider the presence of other significant emitters in the same airshed. In addition, as Zilor has not been required to monitor ambient air quality, the modeling relied on ambient air monitoring data from the Bauru meteorological station situated 40 km North-West from the mills. As per ESAP item #10, Zilor will undertake a baseline assessment of ambient air quality in sensitive receptors in its area of influence and conduct air dispersion modeling considering all significant emitters in the airshed. Based on the outcomes, Zilor will prepare an ambient air quality and air emissions monitoring program to ensure that the wet scrubbers are working properly and determine if additional mitigation requirements are required..

Waste management. Zilor has a Solid Waste Management Plan aimed at minimizing waste generation and ensuring proper disposal in compliance with environmental regulations. Key industrial by-products generated in the industrial process are systematically reused. Bagasse serves as biomass for clean energy generation, vinasse and industrial wastewater is utilized for fertigation in sugarcane crops, and filter cake, boiler ash, and soot are used to produce organic fertilizer. Recyclable waste is donated to community organizations. Hazardous solid waste is collected in the temporary waste storage facility and then disposed of by companies licensed by the environmental authority.

Pesticide use and management. Zilor has an integrated pest management (IPM) program involving pest scouting, action thresholds, and biological controls. The application of pesticides follows documented procedures to prevent negative impacts on workers and the environment. Adhering to Bonsucro requirements, Zilor and its agricultural partners do not use active ingredients classified as WHO Ia (extremely toxic) or WHO Ib (highly toxic). Agricultural partners are restricted to using products pre-approved by Zilor. Agrochemicals and empty packages are stored in facilities with a waterproof floor, clear signage, and restricted access.

Fire. As harvesting is fully mechanized, there is no use of fire in sugar plantations. However, accidental or criminal fires can still impact the plantations. Ascana, the association of sugarcane producers in the region, with Zilor's support, maintains regular communication with stakeholders to enhance awareness of fire risk prevention and conducts 24/7 fire monitoring using remote cameras. Zilor and its agricultural partners have trained fire response brigades and all Ascana members participate in a mutual response plan. Over the past four sugar cane harvesting seasons, an average of 1 to 3% of Zilor’s production has been affected by fire. A fire prevention and response plan for sugarcane plantations is also documented.

Transportation. Zilor and its agricultural partners are responsible for the transportation of sugarcane to the mills. Zilor's operational center employs GPS monitoring to track the fleet, including shifts, routes, and speed. Additionally, fatigue detection cameras are installed in the fleet owned by Zilor and its partners. Zilor reports that no serious incidents have occurred. Transportation of finished product (sugar and ethanol) is the responsibility of Copersucar, a Brazilian sugar and ethanol trading company. Once the products leave Zilor's facilities, ownership transfers to Copersucar.

Security Forces. Zilor employs a private security company for access control in its industrial facilities. Security guards are unarmed and their functions and expected conduct is detailed in a documented work instruction. In the field, the fire monitoring team conducts 24/7 patrols in plantations. Zilor has reported no incidents or complaints related to the private security teams.

Biodiversity Conservation. The company operates two mills, as well as produces and purchases agricultural products essential to its core business from the Upper Parana Atlantic Forest and Cerrado ecoregions in the state of Sao Paulo, classified as Endangered and Vulnerable respectively by the WWF. The Barra Grande mill will not expand its footprint as a result of this investment, beyond the installation of a 23-km 138-kV transmission line (TL) routed from Barra Grande to Barra Bonita.

The 23-km 138-kV TL will cross mainly modified habitat. No natural habitat will be converted. However, given that the TL will cross 10 waterbodies and the presence of migratory birds, Zilor will (i) design the TL to be raptor safe to prevent bird electrocutions; (ii) hire an ecologist to identify sensitive areas along the TL route; (iii) install bird flight diverters in sensitive habitat to be maintained for the duration of the project. The company will also (iv) hire a consultant with experience in fatality monitoring to design a fatality monitoring program for birds, (v) hire biologists to undertake fatality monitoring (ESAP#12).

Sustainable Management of Living Natural Resources. The company currently procures 90% of raw sugarcane for their operations from land they own or lease that was previously modified habitat, either managed directly or through 16 agricultural partners with production certified by Bonsucro and International Sustainability and Carbon Certification CORSIA (ISCC). Annually, the company verifies plantation sites for habitat conversion following Bonsucro requirements and cutoff date (January 1, 2008). The company owns 35,000 ha and manages 5,800 ha of permanent preservation areas and legal reserves. Given the significant biodiversity values associated with the landscape, such as Botucatu Escuerzo (IUCN Red List CR; National Red List EN) and Black Lion Tamarin (IUCN Red List EN; National Red List EN), Zilor will retain an independent qualified consultant to recommend and incorporate targeted biodiversity monitoring into Bonsucro’s biodiversity-related certification requirements (ESAP#13). 

No adverse impacts are expected given sustainable management of existing plantations under Bonsucro certification and maintenance of natural habitat in Legal Reserves and Areas of Permanent Protection as required under Brazilian Forest Code. Zilor will publicly commit that any plantations not yet certified as sustainably managed by Bonsucro will become certified or be independently verified for good management practices following Bonsucro requirements. (ESAP#14).

Approximately 50 ha of existing plantations overlap the Rubiao Junior Alliance for Zero Extinction (AZE) Site (KBA/AZE). This AZE was established in 2018 to protect remaining habitat of a critically endangered-CR listed amphibian (Izecksohn’s Treefrog). Global Forest Watch, Google Earth Pro imagery and MapBiomas Brazil show these plantations have been established for more than 20 years. An improvement of the environmental management (and therefore positive impact) is expected as the company will be requiring Bonsucro certification for these (and other) areas. To proceed with this investment the company obtained consent from the AZE Secretariat with respect to confirming that there will be no impacts to targeted frog species. Zilor will implement additional program/s to promote and enhance the conservation aims and effective management of the Rubiao Junior Alliance for Zero Extinction (AZE) site, based on the results of the consultation with the AZE Secretariat and other relevant stakeholders (ESAP#15).

HR Policy/Procedures, Working Conditions and Terms of Employment. Zilor has documented HR policies and procedures that are consistent with the national labor regulations and PS2 requirements and apply to all employees. Each worker receives a written contract that describes the working conditions and terms of employment, including wages, workhours, rest periods, and overtime. Overtime work is electronically monitored and paid as per national regulations. Employees are represented by different trade unions depending on their function and location. Union representatives are allowed to publicize union's activities within the company, and annual negotiations with trade unions address salary adjustments, working hours, and working conditions.

Non-discrimination and Equal Opportunity and Worker’s Grievance Mechanism. Zilor’s Code of Ethics encourages non-discrimination and equal opportunities and condemns all forms of harassment including sexual harassment. Zilor has a Diversity and Inclusion program that implements regular awareness raising campaigns to combat race, gender discrimination and (sexual) harassment, while delivering nonviolent communication training for leaders. Zilor’s recruitment policy mandates that at least one female candidate must be interviewed for all leadership positions (starting at supervisor level). An internal survey conducted by an independent qualified consultant with over 170 employees, found no widespread discriminatory practices, with women reporting a sense of safety. Zilor has a grievance mechanism accessible 24/7 that allows for submission of anonymous grievances by employees and workers from contractors and suppliers (https://www.canaldeeticazilor.com.br/).

Workers Engaged by Third Parties. Agricultural partners and independent suppliers are required to sign a contractual agreement, committing to meet specified E&S standards, including adherence to Brazilian labor regulations and the prohibition of child and forced labor. Zilor conducts unannounced annual audits of labor compliance by reviewing documentation from a representative sample of workers. While no major non-compliances have been detected by Zilor, the company is not conducting a systematic verification of labor compliance including conditions of any provided workers’ accommodations. Zilor will prepare and implement a communication plan to consistently enhance awareness about the company's grievance mechanism among the workforce of agricultural partners and independent suppliers (ESAP#5).

Occupational Health and Safety. Zilor's Occupational Health and Safety (OHS) program includes the Hazard Identification and Risk Assessment Program (PGR) and the Medical Surveillance Program (PCMSO), ensuring compliance with Brazilian legal requirements. The PGR evaluates workplace risks, defines controls, and specifies necessary personal protective equipment (PPE). The company has established job safety analysis (AST), permit to work (PT), lock-out tag-out (LOTO), and safe work procedures, and machinery pre-operational checklists, alongside an OHS training program aligned with Brazilian regulatory standards (NR) and behavioral safety initiatives. Employees and contractors are informed of their right to refuse work in potentially hazardous situations. Internal biannual audits involve cross-facility teams to minimize bias. The Lost Time Injury Frequency Rate (LTIFR) is below reference values for the sector according to OSHA 2019 data. The OHS team evaluates all reported near misses, including formulating corrective action plans in collaboration with the operational team. Despite these measures, the following uncontrolled hazards were identified during IFC’s site visit: ((i) numerous exposed hazardous moving parts were identified in the sugar mills, and access to areas with heavy moving parts were found unlocked and with easy to access to them, posing a risk of serious injuries. Zilor will conduct a machine safety risk assessment based on Brazilian NR12 regulations and industry safety best practices (ESAP#6). Subsequently, Zilor will develop and implement a comprehensive corrective action plan to address the identified risks; (iii) certain areas lack collective fall protection systems, including handrails and toeboards, posing a risk of falls from heights. Zilor will conduct an inspection of its industrial units, install appropriate collective fall protection systems in the required areas, and include these in the regular inspection and maintenance program (ESAP#7); (iv) during the field visit, it was observed a human-machine interaction in the biomass unloading area that could result into an accident with serious consequences. Additionally, in 2021, a fatal accident occurred in the sugar loading area involving a worker struck by a forklift. In farming operations, hydration and resting areas are provided for the employees inside the buses that have been adapted for these purposes. However, additional access to shade and hydration may be required for workers in the field that are far from the unit. In addition, the PCMSO does not have a specific program to assess the risk of chronic kidney disease (CKD) among workers exposed to heat (e.g., manual sowing). Creatinine tests are only performed for monitoring employees who have already been declared to have renal problems. Zilor will conduct a risk assessment for workers exposed to heat stress, implementing necessary controls, and medical surveillance measures. The outcomes will be documented in a program that will be communicated to agricultural partners, and which implementation will be monitored by Zilor (ESAP#8).

Zilor outlines OHS contractor requirements in a documented contractor management procedure including instructions for critical activities. Before workers can enter the site, contractors must submit documentation confirming compliance with labor requirements and the necessary OHS training, and workers must attend a mandatory 4-hour OHS induction session delivered by Zilor. Contractor workers are required to always carry the ID badge provided by Zilor. However, various opportunities for improvement in contractor safety practices during welding activities at the new boiler construction in Barra Grande were identified. Examples include the absence of inspection of contractor’s equipment, some of which were observed in poor maintenance conditions; inadequate storage of compressed gases; suboptimal workplace housekeeping (combustible materials close to the welding places, tripping hazards generated by the extension cords and materials on the floor); non-compliance with required personal protective equipment (PPE); open hot work permits for the entire shift posing a risk of loss of control, and a crane operator with an expired license. Zilor will enhance its contractor safety program, including regular inspections, reporting and follow up with contractors to ensure the closure of deviations (ESAP#9).

Resource Efficiency and Greenhouse Gas (GHG) emissions

Water consumption. Total water consumption in Barra Grande was 2.8 million m3 during the 22/23 harvest year. According to WRI’s Aqueduct Water Risk Atlas, Zilor’s units are not located in regions of high-water stress. Sugarcane plantations exclusively use industrial wastewater and vinasse for fertigation. Zilor has made significant investments in reducing water consumption for industrial purposes, achieving a 30% reduction in water consumption from 22/23 to 23/24 in Barra Grande, from 0.78 to 0.55 m3/ton.. These values align with the WBG EHS Guidelines for Sugar Manufacturing (Table 2. Resource and Energy Consumption). The predominant source of water is derived from surface water bodies, with less than 2% sourced from groundwater. These sources are primarily tributaries of the Aguapeí-Peixe and Tietê-Jacaré rivers. Zilor participates as a member of the Aguapeí-Peixe and Tietê-Jacaré River Basin Committees, collaborating with local stakeholders to implement initiatives focused on the sustainable management of water resources in the region.

GHG emissions. Zilor is engaged in initiatives to reduce fuel consumption, primarily through the adoption of precise and digital agriculture practices. Noteworthy is the reduction in Scope 1 greenhouse gas (GHG) emissions from non-renewable sources, decreasing from 281 thousand tons of CO2e in 20/21 to 194 thousand tons of CO2e in 22/23. Scope 2 and 3 GHG emissions for the 22/23 harvest year were 7 and 10 thousand tons of CO2e, respectively. On the other hand, Scope 1 biogenic GHG emissions, primarily from the combustion of residual bagasse in the co-generators, increased from 2.9 million tons (20/21) to 3.2 million tons CO2e (22/23). Concurrently, Scope 2 and 3 GHG biogenic emissions for the 22/23 harvest year were 371 thousand tons and 500 tons of CO2e, respectively.

Pollution Prevention

Wastewater and water quality. Except for small quantities of treated sanitary effluent (less than 100 m3/day per plant) discharged into superficial water bodies, all industrial wastewater and vinasse is reused for fertigation of sugarcane, which used is permitted by the environmental authority. Treated sanitary effluent is monitored quarterly and complies with legal requirements and WBG EHS Guidelines.

Air emissions and ambient air quality. As part of the project, Zilor will replace two 150 ton/h boilers with a more efficient 300 ton/h boiler in Barra Grande. As a result, the energy production capacity will increase from 80.3 MW to 130.3 MW in Barra Grande. Wet scrubbers are installed in the remaining boiler (180 ton/h in Barra Grande) and the new boiler (300 ton/h in Barra Grande). The removal efficiency of particulate matter (PM) guaranteed by the equipment supplier is 97%. Nevertheless, the guaranteed PM emissions are above WBG EHS General Guidelines (Table 1.1.1. WHO Ambient Air Quality Guidelines). NOx guaranteed emissions do comply with WBG EHS General Guidelines.  

Per request of the environmental authority (CETESB), Zilor conducted air dispersion modeling for PM10 and NOx comparing the old (using the emission values from the most recent monitoring) and new (using the guaranteed emission values) situation in Barra Grande mill. The maximum concentration of PM10 in the new scenario is below that with the old boilers and complies with local ambient air quality guidelines. Final environmental operating license was issued in November 2023, after the results of air emissions monitoring proved compliance with legal limits for PM10 and NOx.

The air dispersion modeling mentioned above did not consider the presence of other significant emitters in the same airshed. In addition, as Zilor has not been required to monitor ambient air quality, the modeling relied on ambient air monitoring data from the Bauru meteorological station situated 40 km North-West from the mills. As per ESAP item #10, Zilor will undertake a baseline assessment of ambient air quality in sensitive receptors in its area of influence and conduct air dispersion modeling considering all significant emitters in the airshed. Based on the outcomes, Zilor will prepare an ambient air quality and air emissions monitoring program to ensure that the wet scrubbers are working properly and determine if additional mitigation requirements are required..

Waste management. Zilor has a Solid Waste Management Plan aimed at minimizing waste generation and ensuring proper disposal in compliance with environmental regulations. Key industrial by-products generated in the industrial process are systematically reused. Bagasse serves as biomass for clean energy generation, vinasse and industrial wastewater is utilized for fertigation in sugarcane crops, and filter cake, boiler ash, and soot are used to produce organic fertilizer. Recyclable waste is donated to community organizations. Hazardous solid waste is collected in the temporary waste storage facility and then disposed of by companies licensed by the environmental authority.

Pesticide use and management. Zilor has an integrated pest management (IPM) program involving pest scouting, action thresholds, and biological controls. The application of pesticides follows documented procedures to prevent negative impacts on workers and the environment. Adhering to Bonsucro requirements, Zilor and its agricultural partners do not use active ingredients classified as WHO Ia (extremely toxic) or WHO Ib (highly toxic). Agricultural partners are restricted to using products pre-approved by Zilor. Agrochemicals and empty packages are stored in facilities with a waterproof floor, clear signage, and restricted access.

Fire. As harvesting is fully mechanized, there is no use of fire in sugar plantations. However, accidental or criminal fires can still impact the plantations. Ascana, the association of sugarcane producers in the region, with Zilor's support, maintains regular communication with stakeholders to enhance awareness of fire risk prevention and conducts 24/7 fire monitoring using remote cameras. Zilor and its agricultural partners have trained fire response brigades and all Ascana members participate in a mutual response plan. Over the past four sugar cane harvesting seasons, an average of 1 to 3% of Zilor’s production has been affected by fire. A fire prevention and response plan for sugarcane plantations is also documented.

Transportation. Zilor and its agricultural partners are responsible for the transportation of sugarcane to the mills. Zilor's operational center employs GPS monitoring to track the fleet, including shifts, routes, and speed. Additionally, fatigue detection cameras are installed in the fleet owned by Zilor and its partners. Zilor reports that no serious incidents have occurred. Transportation of finished product (sugar and ethanol) is the responsibility of Copersucar, a Brazilian sugar and ethanol trading company. Once the products leave Zilor's facilities, ownership transfers to Copersucar.

Security Forces. Zilor employs a private security company for access control in its industrial facilities. Security guards are unarmed and their functions and expected conduct is detailed in a documented work instruction. In the field, the fire monitoring team conducts 24/7 patrols in plantations. Zilor has reported no incidents or complaints related to the private security teams.

Biodiversity Conservation. The company operates two mills, as well as produces and purchases agricultural products essential to its core business from the Upper Parana Atlantic Forest and Cerrado ecoregions in the state of Sao Paulo, classified as Endangered and Vulnerable respectively by the WWF. The Barra Grande mill will not expand its footprint as a result of this investment, beyond the installation of a 23-km 138-kV transmission line (TL) routed from Barra Grande to Barra Bonita.

The 23-km 138-kV TL will cross mainly modified habitat. No natural habitat will be converted. However, given that the TL will cross 10 waterbodies and the presence of migratory birds, Zilor will (i) design the TL to be raptor safe to prevent bird electrocutions; (ii) hire an ecologist to identify sensitive areas along the TL route; (iii) install bird flight diverters in sensitive habitat to be maintained for the duration of the project. The company will also (iv) hire a consultant with experience in fatality monitoring to design a fatality monitoring program for birds, (v) hire biologists to undertake fatality monitoring (ESAP#12).

Sustainable Management of Living Natural Resources. The company currently procures 90% of raw sugarcane for their operations from land they own or lease that was previously modified habitat, either managed directly or through 16 agricultural partners with production certified by Bonsucro and International Sustainability and Carbon Certification CORSIA (ISCC). Annually, the company verifies plantation sites for habitat conversion following Bonsucro requirements and cutoff date (January 1, 2008). The company owns 35,000 ha and manages 5,800 ha of permanent preservation areas and legal reserves. Given the significant biodiversity values associated with the landscape, such as Botucatu Escuerzo (IUCN Red List CR; National Red List EN) and Black Lion Tamarin (IUCN Red List EN; National Red List EN), Zilor will retain an independent qualified consultant to recommend and incorporate targeted biodiversity monitoring into Bonsucro’s biodiversity-related certification requirements (ESAP#13). 

No adverse impacts are expected given sustainable management of existing plantations under Bonsucro certification and maintenance of natural habitat in Legal Reserves and Areas of Permanent Protection as required under Brazilian Forest Code. Zilor will publicly commit that any plantations not yet certified as sustainably managed by Bonsucro will become certified or be independently verified for good management practices following Bonsucro requirements. (ESAP#14).

Approximately 50 ha of existing plantations overlap the Rubiao Junior Alliance for Zero Extinction (AZE) Site (KBA/AZE). This AZE was established in 2018 to protect remaining habitat of a critically endangered-CR listed amphibian (Izecksohn’s Treefrog). Global Forest Watch, Google Earth Pro imagery and MapBiomas Brazil show these plantations have been established for more than 20 years. An improvement of the environmental management (and therefore positive impact) is expected as the company will be requiring Bonsucro certification for these (and other) areas. To proceed with this investment the company obtained consent from the AZE Secretariat with respect to confirming that there will be no impacts to targeted frog species. Zilor will implement additional program/s to promote and enhance the conservation aims and effective management of the Rubiao Junior Alliance for Zero Extinction (AZE) site, based on the results of the consultation with the AZE Secretariat and other relevant stakeholders (ESAP#15).