PS1: Assessment and Management of Environmental and Social Risks and Impacts 

E&S Policies. BioEnergia’s sustainability strategy and its Integrated Management Policy (IMP) commits to adoption of good international industry practices (GIIP), including (i) identifying and assessing EHS risks and establishing control measures, (ii) providing safe working conditions, (iii) managing the forestry plantations as per the Forestry Stewardship Council (FSC) principles and criteria, and (iv) complying with legal EHS requirements.

At corporate level, BioEnergia has adopted comprehensive sustainability and responsibility policies. The Energy Policy focuses on efficient energy use and conservation. The Environmental Policy aligns with the Paris Agreement, emphasizing compliance with environmental laws, pollution prevention, and efficient resource use. The External Stakeholder Policy ensures regular communication with local stakeholders. The Inclusion & Diversity Policy fosters a respectful workplace, especially for vulnerable groups. The Risk Management Policy outlines roles and responsibilities for risk management. The Human Rights Policy upholds fundamental rights. The Responsible Purchasing Policy promotes sustainability in the supply chain, requiring suppliers to meet standards in health, safety, human rights, ethics, and the environment, and encourages collaboration and innovation in sustainable procurement.

To align its E&S performance with IFC PS requirements and the World Bank Group Environmental, Health, and Safety (WBG EHS) General Guidelines, BioEnergia will (i) upgrade its corporate policies/procedures (environmental, risk management, and external stakeholder policies) to incorporate needed requirements, (ii) develop a land acquisition procedure aligned with PS5 requirements (ref. ESAP#11), including provisions for potential physical and/or economic displacement of persons/workers, and (iii) develop a biodiversity policy aligned with PS6 requirements, with emphasis on applying the Mitigation Hierarchy to ensure the non-conversion of natural habitats and demonstrate in the medium and long term No Net Loss and/or Net Gain (as applicable) of key biodiversity values (ESAP#1). Specifically, the policies/procedures will address PS/WBG EHS gaps as per ESAP#2, ESAP#3, ESAP#4, ESAP#5, ESAP#6, ESAP#7, ESAP#8, ESAP#9, ESAP#10, ESAP#11, ESAP#12, ESAP#13, ESAP#14, and ESAP#15 below.

Identification of E&S Risks and Impacts. BioEnergia identifies and manages E&S risks and impacts by adhering to Brazilian legal and regulatory requirements. The company maintains a structured risk management framework to identify and assess potential E&S risks and impacts, as outlined in its Risk Management Policy, which is guided by ISO 31000, IMP, and the Environmental Policy. This framework ensures the identification and assessment of potential E&S risks and impacts, including those associated with land acquisition, where legal, environmental, and social due diligence is conducted in compliance with national regulations. To avoid or mitigate potential E&S risks and impacts from its forestry operations, BioEnergia has implemented specific E&S (forestry) procedures, in addition to the FSC’s P&C. However, the current E&S risk identification process needs improvements for alignment with PSs requirements, particularly PS1 (Stakeholder Engagement Plan - SEP), PS2, PS3, PS5, PS6, and PS7. Going forward, BioEnergia will enhance its E&S risk assessment procedures to align with PS/WBG Guidelines. These enhancements will include (i) improvements in evaluating air quality, emissions, noise pollution, and biodiversity risks and impacts, and (ii) strengthening the identification and management of social risks, including stakeholder engagement, land acquisition issues, and (iii) updating the social risk registry in accordance with the revised procedures (ESAP#2).

BioEnergia current plantations, silviculture, and kilns operations have valid environmental licenses and permits. The company developed an Environmental Impact Assessment (EIA) study in 2012 and secured its permit in 2013. BioEnergia also developed two additional EIAs for the 29,600 ha recently acquired, obtaining the environmental permits (Operating Licenses - LO) for both areas: Jogil and SADA. These studies comply with Brazilian environmental regulations and include silvopastoral activities, such as eucalyptus plantations. The assessment for the remaining 13,000 ha has not started as the land has not yet been acquired. Due to changes in the state environmental regulation, EIAs are no longer required for land/asset acquisitions or the expansion of charcoal production capacity. To identify and evaluate E&S and impacts of the Project aligned with PS requirements, BioEnergia will develop a PS-compliant Environmental and Social Impact Assessment (ESIA), and an E&S Management Plan (ESMP) for all its operations, including new asset acquisitions and industrial facilities, in alignment with IFC PS requirements, WBG EHS Guidelines, and national regulations (ESAP#3). This will include, but not limited to, (i) an air quality impact assessment (ref. ESAP#5), (ii) an ecosystem services risk assessment (ref. ESAP#9), focusing on potential air emission impacts on nearby receptors and the dependence of communities on water resources within all operational areas, (iii) and assessment of potential risks of gender-based violence and harassment (GBVH) that may arise in neighboring communities and truck driver rest stops due to timber transportation (ref. ESAP#7).

E&S Management System & Programs. As part of its Integrated Management System (IMS), BioEnergia holds certifications and adheres to the requirements of ISO 14001 (Environmental Management System), ISO 45001 (Occupational Health and Safety Management System), and ISO 14064 (Greenhouse Gas Emissions and Inventory) across its upstream and processing operations. The Integrated Management System (IMS) includes procedures for identifying E&S risks and impacts, ensuring legal and regulatory compliance, stakeholder communication, training, supplier E&S requirements, emergency response, and internal audits. The IMS also encompasses E&S management and monitoring programs, covering water consumption, waste management, waste collection, packaging, disposal, and the monitoring and assessment of High Conservation Value (HCV) Areas. In its forestry operations, BioEnergia holds Forest Stewardship Council (FSC) certifications for Forest Management and Chain of Custody. These certifications ensure control and minimization of significant environmental impacts, including the use of agrochemicals, consumption of natural resources, biodiversity protection, emissions, and health and safety. The 42,000 ha of lands acquired by BioEnergia through this proposed investment will achieve FSC certification (see PS6 section below).

E&S Organization Capacity/Competency. The E&S affairs at BioEnergia are managed by multiple in-house teams, supported by Aperam’s corporate offices and specialized service providers. At the project level, BioEnergia has an environmental and OHS team of 56 staff members led by an executive manager who reports to the operations director. The executive manager is supported by a forestry manager with two analysts, an environmental specialist with one supervisor, four analysts, one coordinator, and one technical assistant, an integrated processes manager with three supervisors, four analysts, five inspectors, six laboratorians, and four technicians, and an Occupational Health and Safety (OHS) manager with two doctors, one nurse, one psychologist, fourteen technicians, one engineer, and two supervisors. The social development team comprises three professionals dedicated exclusively to BioEnergia. They are supported by Aperam Acesita Foundation, which oversees Aperam’s Corporate Social Responsibility (CSR) activities with communities in the project's area of influence, as well as other organizations. To address the social component's footprint ensuring alignment with IFC’s PSs, BioEnergia will, as part of ESAP#2, strengthen the E&S team by adding a dedicated qualified social specialist. This specialist will be responsible for assessing social impacts and risks, developing programs to manage these impacts, and leading stakeholder engagement efforts.

Emergency Preparedness and Response (EPR). BioEnergia has developed an Emergency Preparedness and Response Plan (EPRP) that addresses various scenarios, including (i) product leaks or spills, (ii) fires in fixed installations or forestry, (iii) sudden illness situations (including confined spaces, work at height, and electrical installations or services), (iv) work incidents involving confined spaces, heights, and electrical installations or services, and (v) the overturning of cargo transport vehicles. The company has developed a comprehensive fire prevention plan/procedure that integrates fire prevention and response with firefighting services and surveillance, including staff training programs, emergency brigades, audit protocols, and a 24-hour real-time monitoring system.

EPR - Forest Fires. The company actively monitors and combats potential fires using a combination of viewpoints, camera monitoring, drones, and other technologies. The company employs nine observation towers equipped with high-definition rotating cameras, monitored 24/7 from a control center in its office located in Capelinha, MG. This continuous monitoring enhances communication between brigades during potential fire outbreaks. The company has five fire brigade teams distributed across four regions: Capelinha (13 people plus a supervisor), Minas Novas (15 people plus a supervisor), Itamarandiba (18 people plus a supervisor), Turmalina/Veredinha (15 people plus a supervisor), and the district of Mendonça (10 people plus a supervisor). In total, 71 assistants and 5 supervisors are trained to fight forest fires. Also, BioEnergia has six pick-up vehicles equipped with fire-fighting kits, including motor pump sets, hose reels, nozzles, and water reservoir tanks, along with essential firefighting tools like rakes, dampers, and hoes. During the drier months, the company allocates extra resources to fire prevention and response efforts. BioEnergia will review and update its Emergency Preparedness and Response procedure to include community participation in exercises and communication processes (ESAP#8) (see PS4 section for more details related to community health, safety, and LFS risks to its infrastructure).

E&S Monitoring and Reporting. BioEnergia conducts regular internal audits reviewed by senior management and has extensive EHS monitoring procedures. The company tracks various key performance indicators (KPIs) such as water consumption, CO2 emissions, ecosystem recovery, fire reduction, pesticide use reduction, and safety metrics, such as Lost Time Injury Frequency Rate. Committed to transparency, BioEnergia publicly discloses several E&S KPIs in its annual sustainability report. To ensure continuous performance review of its operations, BioEnergia will (i) update its environmental KPIs, including those related to noise, water, and air quality/emissions, to align with IFC Performance Standards and WBG EHS General Guidelines, and (ii) enhance its social KPIs by incorporating indicators for grievances management and ongoing engagement with NGOs and stakeholders, ensuring continuous performance review, adhering to the updated performance-based requirements outlined in its Sustainability Policy (ESAP#4).

Supply Chain Risk Assessment & Management System. BioEnergia has adopted Aperam’s Corporate Responsible Purchasing Policy, reinforcing its commitment to sustainability throughout its supply chain. This policy mandates that suppliers adhere to stringent health and safety, human rights, ethical, and environmental standards. BioEnergia encourages suppliers to collaborate within their sectors and with BioEnergia to continually enhance their responsible and sustainable procurement practices. The policy applies to all Aperam buyers, suppliers, contractors, and their affiliates, covering all products and services purchased by Aperam (see PS6 section for more details).

PS2: Labor and Working Conditions

As of June 2024, BioEnergia's workforce consists of approximately 1,798 permanent direct workers. In response to increased mechanization of planting and harvesting processes, BioEnergia has transitioned and trained high-performing rural workers into machine operator roles, offering them permanent, full-time contracts. Overall women representation in Bioenergia’s workforce reached 21.5% in 2023, while 78.5 % was men.

Human Resources Policies and Procedures. BioEnergia’s HR policies are aligned with PS2 requirements, and encompass human rights, code of conduct (CoC), ombudsman, diversity and inclusion, health and safety, quality of life, recruitment and selection, and disciplinary measures.

Working Conditions and Terms of Employment. Bioenergia is committed to ensuring fair and equitable standards for wages, benefits, and health and safety working conditions. Terms of employment for both direct employees and contracted workers are established in accordance with local labor laws and collective agreements (CBA) with unions, ensuring compliance with PS2 requirements. There is robust evidence of monitoring working conditions, including contract verification, payment of social security benefits and monthly salaries, and recording of working hours and overtime. This monitoring is conducted for direct employees by an internal auditing team and for contracted workers by an external service provider. All workers, whether direct or outsourced, receive the same comprehensive induction training package. This training includes health and operational safety, the code of conduct, and the channels for raising complaints and grievances.

Non-discrimination and Equal Opportunity. Non-discrimination in the workplace is a core principle of BioEnergia's corporate recruitment and selection policy. Bioenergia's Human Rights Policy, approved by the Leadership Team and last updated by the Aperam Disclosure Committee on November 26, 2018, applies to all employees and contractors. This policy includes provisions for communication channels, contractual obligations for third parties and contractors, and established grievance mechanisms to ensure adherence to human rights standards across the organization. Also, it ensures equal treatment of all candidates, regardless of race, color, religion, gender, social class, sexual orientation, political affiliation, union membership, age, disability, marital status, or origin. The company is also committed to diversity and inclusion, with specific policies in place to support these values. The company is on track to meet its public commitments by 2025 to increase the employment of women and create a 100% inclusive environment for LGBTQIAP+ individuals and people with disabilities.

Retrenchment. BioEnergia does not anticipate retrenchment at the time of the appraisal, and no significant layoffs have occurred recently.

Workers Organization. Labor rights in Brazil are enshrined in the Constitution and the Consolidated Labor Laws (Consolidação das Leis do Trabalho - CLT). Labor relations are highly regulated, including the requirement for most categories of workers to belong to a union. At BioEnergia, the workforce is represented by two different unions: Sindicato dos Trabalhadores nas Indústrias Carvoejamento, Reflorestamento e Similar Gerais (SINDEX - MG) and Sindicato dos Trabalhadores nas Indústrias da Extração de Madeira e da Lenha de Itamarandiba e Turmalina (STIEMLIT - MG). Currently, 39.8 % of the workforce is unionized.

Protecting the Workforce. BioEnergia adheres to Brazil's minimum age legislation, which require 18-years old as the minimum age for employment. The company verifies the age of workers during application, recruitment, and contracting. The HR system automatically blocks any attempt to register a new employee below the legal working age. BioEnergia engages trainees aged 16-17 through the Brazilian government's Jovem Aprendiz training program, adhering to all program requirements, including limited work hours to accommodate schooling and prohibitions against hazardous labor for trainees. The company has no cases of child labor or forced labor in the labor courts. Under its Human Rights Policy, BioEnergia explicitly prohibits child and forced labor. The company also implements initiatives at industrial sites and plantations to raise awareness about zero tolerance for GBVH, and child abuse.

Worker’s Grievance Mechanism. BioEnergia's worker grievance system is embedded within the company's comprehensive HR policy and CoC, which applies to all employees. A comprehensive procedure is in place to address grievances, independently of the entry channel, ensuring transparency and consistency with PS2 requirements. A mechanism is also established for recording and reporting grievances, and the process is well communicated to all workers and third-party contractors. Workers can raise complaints through three channels: their line managers, HR personnel, and the Ethics Hotline (Linha Ética), a confidential mechanism enhanced over the past two years and managed by BioEnergia's internal audit and compliance team. Complaints submitted via the Ethics Hotline undergo a fully confidential process and are reviewed by an Internal Ethics Committee that meets regularly and possesses significant internal authority to take corrective actions.

Workers Engaged by Third Parties. BioEnergia utilizes external companies for cleaning, maintenance, waste transportation and security services. The HR department manages contracting, whereas the OHS team is responsible for ensuring OHS compliance. The process involves a detailed labor/OHS checklist, and the Compliance team assesses all contracts before signing. BioEnergia maintains its own fleet for workers transportation from its offices to the operation areas (e.g., plantations).

Occupational Health & Safety (OHS). BioEnergia has a well-structured team managing OHS hazards and risks in compliance with Brazilian labor requirements. The company has implemented mandatory OHS programs and holds ISO 45001 certification. These programs include risk prevention plans, health monitoring plans, accident prevention committees, and emergency response plans. BioEnergia provides appropriate personal protective equipment (PPE) when necessary and is gradually implementing collective prevention measures.

The company has identified all confined spaces and developed procedures for working inside them, aligned to Brazilian safety requirements (NR33) and the WBG EHS Guidelines. BioEnergia has conducted an inventory of all pressure vessels, documenting technical specifications and developing maintenance logs for each vessel, in accordance with the relevant Brazilian safety standard (NR13). The company is also assessing its plants to identify gaps in compliance with Brazilian safety standards such as Safety of Electrical Systems (NR10) and Machinery Protection (NR12). BioEnergia offers comprehensive OHS training and awareness programs, including weekly safety dialogues and an OHS induction program. Since 2007, the company has not registered any severe or fatal accidents in its facilities or operations. In 2023, the company's Loss      Time Injury Frequency Rate (LTIFR) was recorded at 0.45 accidents per 200,000 work hours, which is significantly lower than the 2022 OSHA industry benchmark of 2.2 accidents per 200,000 work hours.

Kiln operators work independently, managing the kiln carbonization process. Production assistants in the charcoal-making units (CMU) perform tasks assigned by the team supervisor, including opening doors and sealing kilns. At the start of each shift, operators consult the supervisor to review chimney, wall, and dome temperatures, as well as the gas burner operation. This information guides operational decisions. Strategically placed, thermocouples continuously monitor temperatures in various zones of the kilns. The company does not outsource any services directly involved in the charcoal carbonization process. Charcoal transportation vehicles are equipped with safety mechanisms, and procedures such as real-time monitoring and fatigue controls are in place to ensure safety (see PS4 section for more details related to Road Traffic Safety).

Supply Chain. Aperam’s Corporate Responsible Purchasing Policy requires suppliers to adhere to stringent OHS, and human rights, aligned with PS2 requirements. All Aperam/BioEnergia buyers, suppliers, contractors, and their affiliates must eliminate all work-related injuries and comply with BioEnergia’s CoC. BioEnergia audits and ranks suppliers based on technical and social criteria, including the presence of children, and forced labor. Non-compliance or poor performance may result in immediate contract suspension. As of the appraisal, no evidence of child or forced labor has been found in the supply chain (see the PS6 section for more details).

PS3: Resource Efficiency and Pollution Prevention 

Resource Efficiency (energy/water). In terms of energy consumption, BioEnergia's usage in 2023 included 6,500,000 liters of diesel, 475,000 liters of gasoline, and 1,300,000 kWh of electricity, sourced primarily from the grid. The company also utilized 15 liters of heavy oil, 7,000 liters of light oil, and 63,000 liters of herbicides and agricultural defensives. Notably, BioEnergia has reduced its fertilizer usage by 65%, predominantly using organic fertilizers, and has started incorporating a recycled product, agrosilicon, to enhance soil quality. By 2023, the company aims to decrease energy consumption by 27%.

Water conservation is a critical component of BioEnergia's operations. In 2022 and 2023, BioEnergia's water consumption increased from 357,000 m³ to 399,000 m³, driven by a 5% rise in charcoal production and a 53% increase in nursery production. 51% (203,000 m³) of the water used was sourced from rainwater, while the remaining 49% (196,000 m³) was drawn from reservoirs. The company conducts monthly monitoring of its dams, adhering to the parameters set out in DN COPAM 08/2022. Despite this overall increase, BioEnergia achieved a reduction in water usage per ton of charcoal, from 0.358 to 0.347 m³, and per thousand seedlings produced, from 6.85 to 5.61 m³. This improvement was made possible by BioEnergia's strategic water management approach, which includes several key initiatives: (i) the use of hydrogel in planting, reducing water consumption by up to 40% by retaining soil moisture and minimizing water needs; (ii) focusing planting activities exclusively during the rainy seasons of January, February, March, October, November, and December; (iii) constructing small rainwater catchment basins along roadsides, which help control soil erosion and contribute to the replenishment of the local water table; and (iv) implementing a water circulation system that allows for the reuse of 32% of the water used in seedling production, thereby significantly enhancing resource efficiency.

The company actively implements the Água Nossa de Cada Dia program (‘Our Daily Water’ program), dedicated to enhancing water sustainability within the community and restoring degraded areas to protect springs and watercourses. Through this initiative, 32 springs in the region have been successfully restored, 1,500 native seedlings have been planted, and educational seminars, including a specialized spring recovery course, have been conducted to engage the community.

Greenhouse gas emissions. BioEnergia’s greenhouse gas inventory follows ISO 14064-1 standards and the Brazilian GHG Program Protocol guidelines, methodologies recognized by the World Steel Association. For the fourth consecutive year, the company has balanced its greenhouse gas emissions (scope 1 and 2) by removing an equivalent amount from the atmosphere. In 2023, the company generated 414,000 t/CO2e and removed 450,000 t/CO2e, largely thanks to its eucalyptus plantations and native forest reserves.

BioEnergia has addressed potential E&S climate risks, including heatwaves, drought, and wildfires, through targeted adaptation measures. These include providing regular shaded breaks, drinking water, and adequate PPE for workers, implementing a rainwater capture system and a water reduction plan, and establishing an Emergency Response Plan for wildfire outbreaks.

Air Emissions. BioEnergia operates seven CMUs, producing between 5,300 and 6,900 tons of charcoal per month each. These units have been consistently operational for over 20 years. The company uses three kiln models: RAC 220 (64 units), RAC 700 (161 units), and the advanced FAP 2000 (14 units). The FAPs 2000, developed by BioEnergia, are fully automated with centralized control, offering superior cost efficiency, sustainability, emissions control, and safety. BioEnergia plans to replace 121 older kilns with FAP 2000 models by 2027, timed with the depreciation of existing kilns for a seamless transition.

According to data from the Palmeiras CMU, pollutants in the smoke before smoke-burning (the supplemental combustion of the emissions from the carbonization process) were identified as soluble tar (5.79%), insoluble tar (19.6%), and methane (0.782%). Soluble and insoluble tars contain polycyclic aromatic hydrocarbons (PAHs) and phenolic compounds. The six existing CMUs are estimated to emit 7.37 tons of PAHs, 13,481 tons of phenolic compounds, and 2,580 tons of methane annually. To enhance smoke-burning efficiency and ensure complete combustion of pollutants, BioEnergia has adopted a kiln synchronization routine and developed new gas burners equipped with real-time monitoring software, operating at 900-1,100 °C. Despite this, smoke-burning currently operates at 70% of the time due to the high moisture content in firewood during the rainy season and necessary repairs to smoke pipelines. Although BioEnergia has made significant improvements in reducing emissions and is committed to maintaining high standards in air quality management at its CMUs, going forward, the company will look for opportunities to increase the percentage of the time that emissions are controlled by smoke-burning and conduct a comprehensive air quality impact assessment (AQIA) as described below, and implement any needed mitigation measures, to ensure compliance with all applicable emissions and ambient air quality standards (ESAP#5).

The AQIA will cover all CMUs and involve obtaining ambient air quality data from existing or newly established monitoring sites around these units and nearby sensitive areas. This data collection will focus on pollutants such as NOx, PM10, PM2.5, phenolic compounds, and PAHs, across different seasons, with meteorological conditions also reported. The methods used will be reviewed by the IFC before monitoring begins. In addition to ambient air quality data, stack emissions data will be gathered from kilns under different operating conditions, both with and without smoke-burning. This testing will be conducted by experienced professionals and will include detailed measurements such as stack height, diameter, exit velocity, temperature, and emissions of various pollutants. Furthermore, dispersion modeling of air quality impacts will be performed by a specialized company, with IFC approval of the methodology. This modeling will assess both the individual and cumulative impacts of CMUs, using IFC-approved models, and will compare results against international standards.

The results of the AQIA, including a detailed description of the facilities, modeling methodologies, and the comparison of emissions and air quality impacts, will be compiled into a comprehensive report. This report will also outline recommended mitigation measures to address any non-compliance issues identified during the assessment. Corrective actions will be developed and implemented as necessary to bring the facilities into full compliance with applicable standards.

Noise emissions. BioEnergia has implemented a workplace noise monitoring procedure in compliance with Brazilian safety standards and corporate OHS procedures, including providing appropriate PPE to workers. Although noise monitoring plans were not provided, BioEnergia reports that current noise levels meet Brazilian safety requirements. Going forward, BioEnergia will provide noise management and monitoring plans. If the monitored noise levels exceed the WBG Guidelines (Section 1.7 Noise) limits, the company will reassess noise levels in CMUs and silviculture areas against the WBG General EHS Guidelines and implement additional preventive and mitigation measures (ESAP#6).

Wastewater Management. BioEnergia has implemented a comprehensive wastewater management program in compliance with Brazilian national regulations and aligned with PS3 requirements. The company also adheres to National Law 12,305/2010, which establishes the National Solid Waste Policy (PNRS) and mandates proper waste management for public sanitation, urban solid waste, industrial waste, and hazardous waste, the CONAMA Resolution 430/2011, COPAM/CERH-MG No. 1, of May 5, 2008, and its internal procedure. Surface and groundwater monitoring occurs semi-annually. Wastewater from BioEnergia offices, primarily from drinking and cleaning purposes (e.g., cafeteria, toilets, and showers), is discharged to municipal wastewater collection networks in compliance with local regulations. Liquid effluents generated from bathrooms, industrial kitchens, and dining halls total 181,930 kg of sanitary waste and 57,600 liters of sink effluent.

Based on the reported data, no industrial effluents from the charcoal process are released into the environment. The wood vinegar (pyroligneous acid extract) is thermally destroyed in the combustion zone of the smoke burner. Wood tar (the black oily fraction from raw pyrolysis liquids), accumulates in the smoke burner inlet box and is collected and bottled if needed. No liquid residue is released outside the system. Additionally, the company is engaged in R&D to develop by-products, currently selling 4,000 tons of bio-oil annually from wood tar as renewable fuel.

Solid Waste Management. BioEnergia adheres to stringent waste management procedures in compliance with Brazilian national regulations and aligned with PS3 requirements. Its solid waste management strategy involves detailed planning, implementation, and management procedures aimed at minimizing waste production. The company ensures adequate collection, safe storage, treatment, transport, and final disposal of all waste generated. Solid waste in the company offices and CMUs is generated daily from garbage collection, kitchens, and dining halls, including meal preparation and post-consumption leftovers. Solid wastes such as plastics and metallic cans are directed to proper treatment or recycling. Biochar (charcoal fine particles) are made available to small farmers of the region, within the company's Family Farming Social Program, for use as an organic soil amendment and conditioner, and it is added to crops and forest plantations as a proven carbon capture strategy. By 2030, the company aims to recycle 97% of its waste.

Hazardous Materials. BioEnergia has established robust procedures for the safe storage and handling of hazardous materials to prevent accidents and incidents. A comprehensive database containing Material Safety Data Sheets (MSDS) is maintained within the production area, ensuring that employees have immediate access to critical safety information. Additionally, BioEnergia has developed and implemented programs to manage hazardous substances, focusing on the prevention of incompatibility issues and the mitigation of emissions during emergencies.

Pesticide Use and Management: BioEnergia employs native biological control methods to manage up to 95% of pests in its plantations, significantly reducing the need for chemical pesticides. Based on the data provided, the company neither purchases, stores, nor uses World Health Organization (WHO) Class Ia (extremely hazardous) or Class Ib (highly hazardous) pesticides, aligned to PS3 requirements and international good practices.

PS4: Community Health, Safety and Security 

Community Health and Safety. BioEnergia’s safety measures encompass hazard emission detection, alarm systems, pressure relief devices, emergency isolation valves, and shutdown equipment aligned with international design codes and PS4 requirements. Accidental fires in eucalyptus plantations are the major hazards risk associated with BioEnergia’s operation that can potentially impact local communities (see Life and Fire Safety section below for more details).

Road Traffic Safety. BioEnergia has its own truck fleet and complies with legal and regulatory road safety requirements, including Brazilian regulatory standard N.11 (transportation, movement, storage, and handling of materials). BioEnergia plans to transport the wood from the new plantations using its own truck fleet. The company operates 28 forestry rodotrains (tritrem), 150 small vehicles, and 120-130 charcoal transport trucks, all equipped with real-time monitoring and fatigue controls. The company’s CoC enforces zero tolerance for gender-based violence, sexual exploitation, abuse, and harassment. Drivers receive safety training, including defensive driving courses, and GBVH awareness training, and must hold a psychological fitness certificate that is periodically renewed. They also undergo annual medical checks, and trucks are inspected annually to ensure safety.

At the time of this appraisal, BioEnergia lacks a comprehensive traffic and road safety management system for its logistics operations, including measures to assess and mitigate community health and safety risks along transportation routes. Going forward, BioEnergia will develop and implement corporate road safety procedures for vehicle operation, particularly on unpaved vicinal roads, in accordance with ISO 39001, WBG General EHS Guidelines (Section 3.4 - Traffic Safety), and Good Practice standards for Road Safety https://thedocs.worldbank.org/en/doc/648681570135612401-0290022019/original/GoodPracticeNoteRoadSafety.pdf). These procedures will include the use of alternative routes to avoid transit through neighboring communities, assess GBVH risks in the resting points for trucks, adequate signage such as speed limit signs, mechanisms for managing the driver’s fatigue, and safe driving protocols that prohibit cell phone use while driving and highlight dangerous intersections (ESAP#7).

Life and Fire Safety (LFS). BioEnergia has an established emergency response plan tailored to the specific risks of each facility. Facilities are equipped with an emergency brigade and can engage in mutual emergency response with other industries in the region. Fire brigade personnel receive training in several areas: prevention and firefighting (covering composition, propagation methods, extinguishing techniques, and general practices); basic first aid (including assessment, cardiopulmonary resuscitation, treatment of fractures and burns, and patient transport); evacuation and area isolation (training monitors to coordinate evacuation); and environmental impact mitigation. Training sessions are regularly conducted in compliance with Brazilian regulations. The current procedure does not involve the community living within or near the plantation areas. Going forward, BioEnergia will review and update its Emergency Preparedness and Response procedure to include community participation in exercises and communication processes (ESAP#8).

Management of Ecosystem Services. Aperam's sustainability policies encompass water quality monitoring, as well as identifying and assessing the impacts of forest management on surface waters associated with agricultural activities. BioEnergia will conduct an Ecosystem Services Risk Assessment for all operational areas, focusing on water resource dependence for communities, including surface and underground water quality (from soil preparation, pesticide application, etc.) and potential impacts on surface and groundwater availability. Mitigation actions will be developed as needed, in alignment with IFC PSs (ESAP#9). Additionally, this assessment will be integrated into the PS-compliant ESIA required under ESAP#4.

Security Personnel. BioEnergia has a property security department overseeing reception, concierge, surveillance, and patrol processes, with teams primarily outsourced except for 17 in-house analysts. The company has an operational instruction on the progressive use of force, detailing responsibilities, techniques, tactics, and principles for the progressive use of force. The security team comprises 57 professionals working 12 or 24-hour shifts, depending on the location, with remote monitoring by cameras in some substations. BioEnergia also has a forest monitoring center. It also has staff on duty in designated locations on the plantations for surveillance. Training for security teams is provided by the legally qualified outsourced company. The processing plants are fenced, equipped with Closed-Circuit Television (CCTV) systems, and adhere to strict entrance/exit protocols. The company employs a licensed security service provider, and security agents do not carry firearms. No incidents involving security personnel conduct have been reported by BioEnergia.

PS 5: Land Acquisition and Involuntary Resettlement

BioEnergia recently acquired 29,600 ha in two properties already planted with eucalyptus, and 13,000 ha are yet to be acquired (42,600 ha in total). The land is acquired through willing-buyer, willing-seller transactions. For the 29,600 ha, BioEnergia undertook Legal/E&S due diligence per national regulations and identified fourteen (14) nearby communities within the area of influence, none of which belong to Indigenous Peoples or Quilombola communities. This due diligence did not meet the PS5 requirements. Bioenergia will conduct an additional due diligence of the 29,600 ha already acquired to identify any residual risks / impacts and vulnerabilities resulting from the land acquisition from Jogil and Sada. If needed, measures will be available to Project Affected People (PAPs) on a case-by-case basis and corresponding with their vulnerability level and residual risk/impacts (ESAP#10).

For the 13,000 ha to be acquired, BioEnergia will prepare a land acquisition procedure aligned to PS5 to (i) identify any dependencies on the land by tenants, caretakers, sharecroppers, informal land users, and others, (ii) land use for crops, (iii) use of natural resources (e.g., consumption of water and forest products) that could lead to economic or physical displacement, (iv) potential impacts on Indigenous Peoples or Quilombola communities, and (v) potential economic displacement of formal and informal workers (ESAP#11). The procedure will include conducting socio-economic surveys of affected households and an impact analysis to identify and understand the magnitude of impacts and mitigation needed. If involuntary resettlement occurs, BioEnergia will develop and implement a Resettlement and Livelihood Restoration Plan (RLRP) that includes eligibility criteria, compensation, resettlement, livelihood restoration, and monitoring in accordance with PS5 requirements. The company will consult and engage with PAPs on the RLRP and provide information on accessing the Community Grievance Mechanism (CGM). BioEnergia will also book required balance sheet provisions to secure compensation of entitlement packages for eligible PAPs potentially impacted by the recent and future land acquisition

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources 

Protection and Conservation of Habitats. None of the current areas owned by BioEnergia overlaps with legally protected areas or internationally recognized areas. The company will expand its operations within three ecoregions: Cerrado, Campos Rupestres montane savanna, and Bosques del interior de Bahia (WWF). The landscape is highly modified due to long established livestock farming and eucalyptus plantations. Remnants of Natural Habitat are mostly associated with legal reserves and/or areas of permanent preservation (Áreas de Preservação Permanente). The 29,600 ha of recently acquired land were two active eucalyptus farms (Jogil and SADA). Currently, about one-third of this land consists of established plantations, while the remainder includes Legal Reserves (LR) and Areas of Permanent Preservation (APP), with about 5,000 ha where natural regeneration of the Cerrado biome is ongoing. Priority biodiversity values in the area include several globally threatened, migratory and/or restricted range species and some of them are associated with Natural Habitat remnants (e.g., two bird species (Columbina cyanopis and Phylloscartes roquettei), a fish (Brycon devillei), and three plant species (Pilosocereus fulvilanatus, Uebelmannia buiningii, and Uebelmannia gummifera).

As 13,000 ha are yet to be acquired by BioEnergia, strengthening the company’s biodiversity management aligned with IFC’s PS6 will be required. Going forward, the company will (i) develop biodiversity procedures to define No Go areas, including mapping priority biodiversity areas, key biodiversity values, and habitats according to the PS6 approach, ensuring the application of the mitigation hierarchy and alignment with No Net Loss and Net Gain requirements, as applicable; (ii) conduct a biodiversity assessment to confirm habitat classification and determine appropriate mitigation measures; and (iii) enhance its biodiversity monitoring plan to encompass priority biodiversity values and ensure No Net Loss within the farm’s remnants and vicinity Natural Habitats (ESAP#12). Areas of native vegetation and areas where natural regeneration of the Cerrado biome could be classified as Natural Habitat under the PS6 approach will be protected from any project intervention.

Sustainable Management of Living Natural Resources. BioEnergia current plantations are Forest Stewardship Council (FSC) certified, and the company will continue to uphold this certification for all existing and planned plantations. Going forward, BioEnergia will obtain FSC certification for all new plantations in line with the FSC Plantation Standard for the Republic of Brazil (FSC-STD-BRA-01-2014), encompassing all new crops funded by IFC’s Use of Proceeds (ESAP#13).

Supply Chain: The company's charcoal production relies on both its own production and third-party wood suppliers from the State of Minas Gerais. In 2023, the company sourced 30,000 m3 of traceable wood from third parties for charcoal production, which represents less than 2% of the amount of wood processed by the company. BioEnergia will develop a Supplier Code of Conduct in line with PS6 requirements and a specific procedure for traceability, risk screening and monitoring of its supply chain. Additionally, an annual verification audit will be conducted to assess the effectiveness of BioEnergia's implementation of these standards. (ESAP#14).

PS7: Indigenous Peoples

Among the 30 communities in the area of influence of BioEnergia's existing operations, four (4) are Quilombola communities. These communities are included in the Aperam Acesita Foundation's stakeholder engagement and corporate social responsibility (CSR) programs. The Legal/E&S due diligence conducted did not identify any Indigenous Peoples or Quilombola communities in the area of influence of the 29,600 ha recently acquired. As per ESAP#1 and ESAP#11, BioEnergia will develop a land acquisition screening process to avoid risks and impacts on Indigenous Peoples or Quilombola communities.

Aperam's External Stakeholder Engagement Corporate Policy provides guidance on identifying, analyzing, communicating, and engaging with external local stakeholders. The company has established channels for receiving grievances and complaints, mapped communities in its area of influence, and maintains ongoing engagement with community leaders and local associations. However, the current engagement strategy does not include sharing and consulting on the risks, impacts, and social management measures of plantation and charcoal production.

Going forward, BioEnergia will (i) develop a Stakeholder Engagement Plan (SEP) based on updated stakeholder mapping, and (ii) update its grievance mechanism to ensure easy and culturally appropriate access for affected communities and stakeholders, aligned with PS1 requirements (ESAP#15). The SEP will identify stakeholders' impact levels, interests, concerns, and influence, and outline regulatory requirements for information disclosure and consultation. It will prioritize key stakeholder groups and provide a strategy for culturally appropriate information sharing and consultation. The SEP will also outline engagement resources and responsibilities and describe how feedback will be incorporated into the management system, with regular updates based on project changes. BioEnergia’s updated grievance mechanism will allow stakeholders to submit concerns, including anonymously. All communications will be registered, assessed, and addressed promptly. Actions to resolve issues and improve performance will be integrated into the management system. Grievances will be analyzed and reported to management to identify and address root causes, ensuring concerns are resolved consultatively, at no cost, and without retribution.

Company: Aperam S.A.

Point of Contact: Ana Escobedo

Title: Director of Communication

Email: ana.escobedo@aperam.com

Website: https://www.aperam.com/