This is a Category B project according to IFC’s 2012 Policy on Environmental and Social Sustainability due to limited and site-specific E&S risks and impacts associated with existing sugar, ethanol and energy production activities in Brazil. These can be avoided or mitigated by adhering to recognized Good International Industry Practices (GIIPs). Key E&S risks and impacts from this project are (i) labor / OHS issues regarding workers in the USV industrial site and sugarcane plantations, including exposure of workers to wildfires in plantations and extreme heat events, (ii) air emissions from biomass boilers, (iii) water consumption, wastewater (vinasse) treatment and discharge, and hazardous material management, (iv) community health, and life and fire safety.                                                   

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

E&S Management System (ESMS). Jalles Machado has developed and implemented an integrated management system (IMS) covering quality, environment, fair trade, food security, logistics, labor and occupational health aspects of its agricultural and industrial operations. The system is based on the international framework of ISO 9001, and ISO 14001 for which the company also holds the certifications. In July 2023, the company successfully completed the ISO 45001 certification process at UJM, followed by UOL in 2024, ensuring compliance with Occupational Health and Safety Management System (OHSMS) standards. This process included mapping all processes, procedures, and tools related to OHS, along with comprehensive reviews of record-keeping, control, and analysis practices. Jalles plans to extend this certification to USV in the coming years. Going forward, the company will further enhance its ESMS by incorporating ISO 45001 requirements at USV (ESAP#1).

In addition, Jalles maintains several international sustainability standards, including Good Management Practices B2 Plus: Production of Feed Ingredients (GMP + B2 Plus); Food Safety System Certification 22000 (FSSC 22000); Bonsucro, Sedex Members Ethical Trade Audit (SMETA); KOSHER; HALAL; Fair Trade; non-Genetically Modified Organism (non-GMO); several organic certifications and a national certification of no child labor (Abrinq Foundation). The production of organic sugar is verified through organic certifications for the Brazilian, American, European, and Asian markets (Korea, China, and Japan). Jalles also holds the Regenerative Organic Certified (ROC) certification. The company has obtained RenovaBio certification for all three units within the group (https://jalles.com/sobre-nos/).

E&S Policies. Jalles Machado has an established environmental policy within its IMS, demonstrating its commitment to shareholder and client satisfaction, valuing and promoting people, respecting the environment, preventing pollution, complying with relevant laws and regulations, and continuously improving performance. The policy includes a statement from the Director underscoring management’s commitment to development and improvement. This ensures communication at all levels on the importance of meeting customer, regulatory, and legal requirements; establishing policies for quality, food safety, security in the value chain, logistics, environment, and occupational health and safety; setting objectives and goals through critical evaluations; and providing necessary resources. The integrated ESMS policy is tied to specific objectives and performance indicators. Additionally, the company’s website offers an overview of its E&S responsibility programs and displays all certifications held (http://www.jallesmachado.com/en/home/).

Identification of E&S Risks and Impacts. Jalles identifies and manages E&S risks and impacts through compliance with applicable Brazilian legal and E&S regulatory permits and requirements. The company maintains a risk management structure to identify and assess potential risks and impacts, including air emissions, water and wastewater, solids waste and main OHS risks under a Risk Prevention Plan (Programa de Gerenciamento de Riscos - PGR) required under Brazilian regulations. As part of the Accident Prevention Program, the OHS Manager completed a Job Safety Analysis (JSA) to define and control hazards associated for process, jobs, or procedures which were related to accidents. The USV mill, acquired from Dow Chemical in 2022, developed an ESIA for the production of hydrated alcohol to supply an ethylene and polyethylene plant. After acquiring the plant, Jalles updated the E&S license to initiate ethanol production and sugarcane crushing. USV meet Brazilian E&S regulations, with E&S Management Plans (ESMP) developed and implemented per the Terms and Conditions (T&Cs) of its E&S license.

E&S Management Programs. Jalles has established comprehensive E&S Management Programs to proactively avoid, control, and mitigate operational impacts in accordance with environmental licensing and PS1 requirements. These programs are manage by Jalles’ Sustainability Department and integrated into the company’s IMS with a strong focus on continuous improvement. They include detailed monitoring and management of waste streams, air quality, water and groundwater usage, vinasse application, biodiversity (fauna and flora), traffic safety, field and agricultural activities, erosion processes, and protected areas (e.g., Reserva Legal). Jalles has developed and implemented a range of SOPs for HR and OHS, addressing both direct and indirect workforce management. Following the recent acquisition of USV, Jalles is actively working to standardize these SOPs across the organization, though full integration into the IMS is still in progress. As part of ESAP#1, Jalles will integrate USV operations into the IMS, aligning SOPs to ensure a smooth integration and optimize operational efficiency across all departments.

E&S Organization Capacity/Competency. At the corporate level, Jalles' sustainability team includes a dedicated manager for the areas of Risk Management and Internal Controls (Governance, Risk, and Compliance - GRC), Environmental Responsibility and Sustainability (RAS), and Quality. Additionally, there is also a manager responsible for OHS matters. Both managers report directly to the CEO. Each unit has a specialized team composed of environmental analysts, safety engineers, OHS coordinators, nurses, and doctors. Jalles offers extensive training programs, including EHS induction for new employees and contractors, as well as regularly scheduled regulatory and job-specific training on working at heights, confined spaces, electrical and pressure vessel safety, machine and boiler operations, and pesticide handling. Procedures and training for hazardous tasks are part of the company’s strict protocol for approving high-risk work activities.

Emergency Preparedness and Response (EPR). Jalles has implemented mandatory ERP plans in compliance with Brazilian laws, which includes provisions and contingency plans to prevent fires, and respond to emergencies in the event of fire outbreaks. Each mill has comprehensive fire-fighting plans in place, encompassing monitoring and surveillance systems, strategically placed observation points, necessary Personal Protective Equipment (PPE), designated critical points, fire brigade maps, criticality maps outlining structures, identification of local communities, maintenance of firebreaks, and a detailed emergency plan outlining personnel and available resources. While Jalles is committed to completing a climate risk assessment by November 2024 and implementing its EPRP with worker health protections, there remains an opportunity to strengthen the project’s E&S resilience against climate impacts like wildfires and extreme heat. Going forward, the company will update its EPRP to include protocols and response mechanisms for wildfires and extreme heat events, following national requirements and international good practices (ESAP#2).

Monitoring and Reporting. Jalles Machado monitors the main aspects and impacts from its operations included in mandatory monitoring programs as part of provided licenses (surface water quality, fauna and flora, air emissions, aquatic ecosystem, social development, solid wastes generation and disposal, etc.) as well as for internal indicators such as work-related injuries, water use, and fuel and pesticide consumption. Under the mandatory PGR, OHS exposure to hazardous agents such as noise, dust and heat is monitored annually. The company also has mandatory occupational health monitoring programs in place (Plano Médico de Controle da Saúde Ocupacional - PCMSO,), which include periodic medical surveillance, such as audiometry, eye testing, blood pressure, diabetes and urine and blood testing, to detect any exposure to workplace contaminants or other risks.

The company reports environmental compliance information to the environmental authorities, which includes the completion of required actions under the terms of its environmental licenses, such as monitoring air emissions from boilers and the transport fleet, wastewater quality and disposal, surface water quality data, water use permits, compliance with Brazilian biodiversity set-asides (Reserva Legal), and solid and hazardous waste management, among other details.

Supply Chain Assessment and Management. Jalles Machado sources 100% of its sugarcane from established agricultural lands, where planting and harvesting are fully managed by the company. Jalles conducts a thorough supply chain risk assessment, focusing on minimizing operational disruptions and securing sustainable practices across its value chain. Given its reliance on agricultural inputs and field production, Jalles has implemented efficient agricultural management techniques, including mechanized planting and harvesting, as well as irrigation systems designed to mitigate risks associated with weather variability. The company holds Bonsucro certifications that reinforce its commitment to sustainable sourcing, The company also adhere to Fair Trade principles, ensuring ethical labor conditions and fair economic practices throughout their supply chain.

PS2: Labor and Working Conditions 

As of August 2024, Jalles Machado directly employed 7,234 workers across its three mills. Of these, 22 percent are women and 78 percent are men. Blue-collar workers, including those in agriculture and industry sectors, comprise 85 percent of the total workforce, while 15 percent are administrative staff, supervisors, technicians, coordinators, and managers. With the adoption of 100% mechanization in the sugarcane planting and harvesting process several years ago, the need for sugarcane cutters and other workers involved in heavy manual labor is minimal. The company also hires approximately 861 seasonal workers annually, mainly for industrial equipment maintenance, and the majority of the workforce is hired locally.

Human Resources Policies & Procedures. The company’s HR policies, detailed in the comprehensive Labor Manual, adhere to Brazilian legal standards and align with PS2 requirements. The implementation of HR procedures is led by the HR department. The manual, readily accessible to all employees, covers essential HR policies, including workers' rights and obligations, remuneration, working hours, disciplinary actions, career development, travel benefits, social responsibility, communication, and grievance handling.

Jalles has also adopted a Code of Conduct (CoC), which outlines the company's core values and ethical principles, including integrity, professionalism, transparency, and social responsibility. Designed to guide the conduct of employees, managers, and affiliates, it addresses crucial areas such as conflict of interest, anti-discrimination, environmental stewardship, and worker rights. The CoC emphasizes a respectful workplace, free from harassment, and promotes equal opportunity, environmental responsibility, and compliance with Brazilian labor laws. Additionally, the CoC enforces ethical standards in business operations, such as preventing conflicts of interest, safeguarding confidential information, and promoting fair competition.

Working Conditions and Terms of Employment. Jalles is committed to ensuring fair and equitable standards for wages, benefits, and health and safety working conditions, aligned with PS2 requirements. Employees are hired through written contracts, undergo induction and training, and complete transparent end-of-employment procedures. The standard workweek is 44 hours, with a maximum of 10 hours per day, including overtime. Each shift includes a mandatory 1-hour meal break and two 15-minute breaks. Biometric time clocks track hours worked, ensuring accurate calculation and payment of overtime. Sick leave is provided upon a physician's recommendation, and after 15 days of absence, workers are covered by a mandatory social security program. Work terms such as hours, rest periods, and leave policies, including annual, sick, and maternity leave, are regulated by law and collective bargaining agreements (CBAs) with unions.

Beyond legal requirements, Jalles offers additional benefits like health insurance, life insurance, and dental care. Plant workers receive subsidized meals, while rural workers are given meal vouchers. Every two years, an employee satisfaction survey is conducted, with results shared and benchmarked. The company complies fully with social security taxes, with mandatory monthly contributions from both employer and employees under the national social security system.

Non-discrimination and Equal Opportunity. Although forced/child labor, harassment and discrimination are treated as crimes under Brazilian law, the company also states its views and commitments against such practices in its CoC. Both the hiring process and the approach to promotion follow well established policies and procedures and are based on merit and competencies. No evidence of discrimination was found during appraisal. The company has initiated an integrity program in 2019 to ensure an effective implementation of it CoC through internal integrity procedures, audits, and whistleblowing. GBV related complaints can be lodged via the internal grievance mechanism and can be done anonymously.

Workers Organization. Labor rights in Brazil are enshrined in the constitution and the consolidated labor laws (known as Consolidação das Leis do Trabalho, or CLT, in Portuguese), and labor relations are highly regulated under the country’s laws and labor practices, including the requirement for most categories of workers to belong to a union. In Jalles Machado’s case, the workforce can belong to one of two unions at each workplace depending of the nature of the job (e.g., Union of industry/administration or agriculture). Jalles negotiates CBAs with the local unions and includes salary increases, profit sharing, overtime bank, and benefits. There are union representatives working at all sites, and they organize internal workers’ committees to participate in the CBA process.

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

Worker’s Grievance Mechanism. The Jalles Integrity Channel serves as a platform to listen, support, and address potential irregularities. It is available for all employees as well as external parties, including clients, suppliers, and the community. Previously managed internally by company employees until 2022, the channel underwent significant improvements during the 2023/24 season as part of the Compliance Program implementation. These enhancements included a review of the types of reports, the creation of dedicated workflows, a revision of the Procedure for Receiving, Investigating, and Handling Reports through the Integrity Channel, and updates to the Disciplinary Measures Policy. Currently, an independent, third-party specialized company is responsible for investigating and handling reports. This company presents findings to the Integrity Committee, which then decides on the application of disciplinary measures. The GRC team manages both the Integrity Channel's service provider and the Integrity Committee. This change strengthens independence, reduces conflicts of interest, and ensures confidential reporting to protect whistleblowers' anonymity.

A new campaign was launched to promote the effective use of the Integrity Channel (https://jalles.com/sobre-nos/#integridade). The system is accessible online and supports anonymous internal and external reports through email (jalles@canaldeintegridade.com.br), a direct hotline (0800 591 4168), and a dedicated website/intranet (https://canaldeintegridade.com.br/jalles/). Jalles maintains formal records and consolidated data on all reports received, including follow-up actions and resolutions. As of August 2024, covering the entire 2023/24 harvest season (April 2023 to March 2024), a total of 236 reports were received and processed, with 234 finalized and 2 under review. Of the 234 finalized cases, 215 were considered valid, while 19 fell outside the channel's scope. Among the 215 valid cases, 120 lacked sufficient data, 39 were deemed unsubstantiated, 39 were partially or fully substantiated, and 17 remained inconclusive.

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

Occupational Health & Safety (OHS). Jalles Machado has a well-structured team managing OHS hazards and risks of its workforce, in line with Brazilian labor requirements, aligned with PS2 requirements and the World Bank Group (WBG) General EHS Guidelines. Mandatory OHS programs are in place, including risk prevention plans, health monitoring plans, accident prevention committee, and emergency response plans. The company adheres to national regulatory standards, specifically NR33, NR13, and NR10, collective preventive measures are implemented, and PPE is provided. Safety inductions and PPE use are also mandatory for visitors and third parties before accessing Jalles’ operation.

In July 2023, Jalles Machado achieved ISO 45001 certification at UJM followed by UOL in 2024, after conducting extensive reviews of safety processes, controls, and documentation. The company plans to extend this certification to USV in the future (refer to ESAP#1). Jalles is working to integrate and standardize OHS procedures within USV’s operations. During due diligence, minor construction activities were ongoing at the USV industrial site, particularly on internal roads, where sidewalks, driveways, and signage were incomplete. Going forward, Jalles will enhance USV's OHS practices by integrating the mill's operations into the company’s OHS procedures, ensuring alignment with corporate standards and PS2 requirements (ESAP#3).

Jalles Machado has mechanized its harvesting and planting processes, minimizing the need for manual labor and reducing associated risks, including chronic kidney disease (CKD) and other OHS concerns, which are managed under its PGR and PCMSO. Industrial automation keeps worker exposure to processing area hazards low, with confined spaces clearly marked and safety rules enforced per Brazilian standards and WBG EHS guidelines. The company provides extensive OHS training, including an annual accident prevention week and the "Ver com os Pés" program, where executives conduct site visits to reinforce safety awareness. In 2023, Jalles prioritized leadership accountability and identified ten critical risks, supporting safe behavior with “golden rules” and disciplinary measures to maintain standards. Although Jalles’ OHS practices align with PS2 requirements, further actions to enhance the project’s E&S resilience against climate impacts, such as extreme heat, are still needed. As part of ESAP#3, the company will implement proactive measures to protect workers from extreme heat through Occupational Health and Safety Plans (OHSP) that include heat stress guidelines, hydration, rest breaks, and shaded areas. Regular training and awareness programs will also be provided to help workers recognize and respond to heat-related illnesses.

The company achieved a notable reduction in lost-time accident rates, dropping from 1.38% to 0.25%, and a decrease in notifiable accidents from 35% to 25%, encompassing incidents involving third parties. In 2018, 96 lost-time accidents occurred resulting in a lost-time accident rate of 15. With the hiring of a new experienced OHS manager in the same year, the company took a rigorous approach of the effective implementation of its OHS management practices, including accident prevention. In 2023, Jalles reported a Loss Time Injury Frequency Rate (LTIFR) of 1.4 for UJM, 0.8 for UOL, and 1.6 for USV per 1,000,000 work hours, reporting 8 lost-time accidents at UJM, 3 at UOL, and 6 at USV. These rates are well below the 2022 OSHA industry benchmarks, which recorded 20 accidents per 1,000,000 hours in the Agriculture, Forestry, Fishing, and Hunting sector, and 9.5 accidents for the Cane Sugar Manufacturing industry (https://www.bls.gov/web/osh/table-1-industry-rates-national.htm).

In 2022, Jalles reported a fatal tractor rollover accident. A root cause analysis was conducted, and preventive measures were integrated into the company's OHS procedures. These enhancements include specific equipment usage alerts, assisted operations for inexperienced employees, technology-driven monitoring systems for operators, and improved lighting systems. Real-time fatigue monitoring is also under consideration for future implementation.

Jalles Machado ensures safety compliance with annual inspections of pressure vessels, preventative maintenance via SAP, and staff training. The company has implemented machinery protections, fall prevention measures, and electrical circuit assessments to mitigate risks, applying Lock-out, Tag-out (LOTO) procedures and a Permit to Work System for high-risk tasks. Health assessments are mandatory at hiring, periodically, and at contract termination, covering clinical and specific tests based on job exposure. Jalles also monitors workplace hazards through a formal risk prevention program and risk assessment of operations.

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

PS3: Resource Efficiency and Pollution Prevention 

Resource Efficiency. Jalles Machado meets its electricity needs through cogeneration from bagasse-fueled thermal power plants, with 95% of its energy consumption sourced from renewables certified through Renovabio. In 2023, the company’s total energy consumption reached 11,374,100 GJ, excluding fleet vehicles and Liquid Petroleum Gas (LPG), and produced 268 GWh of bioenergy, exporting 64% to the grid. Its cogeneration capacity spans 65 MW at UJM, 68 MW at UOL, and 41.5 MW at USV. Cogeneration at UJM and UOL is carried out by Albioma Esplanada Energia (“Albioma”), in which Jalles owns 40% and 35% of the company, respectively, whereas cogeneration at USV is fully owned by Jalles Machado S.A. through Jalles Bioenergia (JBIO). In September 2023, Jalles and Albioma inaugurated the first vinasse biogas mill at UOL. The biogas is then used in boilers to produce 22 GWh of energy, which is exported to the National Interconnected System (SIN, in Portuguese).

Sugarcane cultivation relies on rainfall, fertigation, and irrigation (pivot). Water is sourced from surface water, and irrigation water is abstracted from rivers and from dams, with the appropriate environmental licenses and water intake permits. The water is pre-treated (chlorination) and tested for bacteria weekly in the company’s internal lab and every 6 months by an external laboratory. Groundwater is extracted from wells for use in the restaurant and as drinking water. The company's water consumption is 62,551,000 cubic meters, with a water intake of 1.53 cubic meters per ton of cane (m³/tc). Values are measured monthly, and all consumption points are monitored via GPS. The Agricultural Control Planning Department (PCA) is responsible for measuring and processing the data, and the company adheres to the granted water intake limits. Water intake values exceed the WBG EHS Guidelines for Sugar Manufacturing (0.5 to 0.9 m³/tc). Going forward, Jalles will develop and implement a water resources management plan to reduce water intake at its mills, aiming to decrease water consumption and direct withdrawal and limit water usage to 0.5 to 0.9 m³/tc. Annual water usage monitoring reports will be provided to IFC to verify the company’s progress in the upcoming crop seasons (ESAP#4).

Air Emissions. Air emissions in sugar manufacturing primarily arise from particulate matter produced by bagasse-fired steam boilers, dust from unpaved roads and work areas, and sugar drying and packing. Biomass boilers are the most significant point sources of air emissions. The company conducts annual emissions monitoring to comply with Brazilian regulations (CONAMA 382/06 and COPAM 187/2013), which are less stringent than World Bank Group EHS guidelines (e.g., particulate matter (PM): 390 mg/Nm³, nitrogen oxides (NOx): 350 mg/Nm³). A review of 2022 reports confirmed boiler compliance with Brazilian standards. Key monitoring parameters include average gas temperature, velocity, flow rate, humidity, and isokinetics, alongside concentrations of particulate matter, nitrogen oxides (NO2), and sulfur oxides (SO2).

The recently acquired mill (USV) reported (2022) PM at 56.56 mg/Nm³ and NO? at 402.73 mg/Nm³, slightly exceeding WBG EHS Guidelines. As outlined in the 2020 ESRS (#44203), in the event of the purchase of new boilers, Jalles will implement additional measures to align with PS3 requirements. Going forward, due to the acquisition of USV, the company will (i) conduct pollution emission dispersion modeling and (ii) implement emission control systems to meet the World Bank Group Environmental, Health, and Safety General Guidelines (WBG General EHS Guidelines) for small combustion facilities (<50 MWth) (https://www.ifc.org/content/dam/ifc/doc/2000/2007-general-ehs-guidelines-air-emissions-and-ambient-air-quality-en.pdf) (ESAP#5).

Greenhouse gas emissions. Jalles Machado was the first company of the sugar-ethanol industry in Brazil to sell carbon credits under the United Nations’ Clean Development Mechanism (CDM). Annually, the company complete an inventory of its CO2 emissions from its operations. The Project’s absolute greenhouse gas emissions include three mills, using the carbon intensity provided by Jalles in 2023. The primary sources of avoided emissions are: (i) bioethanol production, which replaces gasoline; and (ii) electricity generation from bagasse, which substitutes grid electricity. The total emissions, encompassing Scope 1, 2, and 3, were estimated at 379,492 tCO2e per year. The use of bagasse for electricity generation led to net avoided emissions of 61,197 tons, accounting for production emissions. Similarly, bioethanol production resulted in net avoided emissions of 467,635 tons after deducting production emissions. In total, the project achieved a GHG emission balance of 253,434 tons of avoided emissions when subtracting project-related emissions.

Noise emissions. Jalles adheres to national regulatory standards, including NR 7 and NR 15, which establish protocols to safeguard workers. As OHS procedures, the company conducts annual assessments per the terms specified in its environmental licenses. Recently, Jalles conducted a noise assessment for residential areas near the USV facility in compliance with CONAMA Resolution 01/1990 and NBR standards 10.151/2019 and 10.152/1987, which define acceptable noise levels for industrial activities. Measurements taken around the company’s perimeter, both day and night, at 20 locations indicated that only one point exceeded the daytime noise threshold of 70 dB(A), likely due to nearby truck traffic, while all other readings, including nighttime levels, remained within permitted limits. These results align with the WBG General EHS Guidelines (Section 1.7 on Noise).

Wastewater Management. Wastewater is derived from: (i) process wastewater from ethanol production (vinasse), (ii) wet scrubber blow down from stack gas scrubbing, and (iii) miscellaneous wastewaters. Jalles Machado does not discharge industrial wastewater into rivers or surface water bodies. The vinasse, industrial wastewater and filter cake are used as a fertilizer in the sugarcane plantations. Vinasse is stored in tanks to prevent groundwater contamination. The amount of wastewater applied in the plantations is determined by the soil characteristics and the nutrient needs of the crop.

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

Hazardous Materials. Jalles utilizes and stores substantial quantities of chemicals, including sodium hydroxide, sulfuric acid, chlorine, cyclohexane, pesticides, and ethanol. Various storage configurations are employed across different areas, all equipped with secondary containment, risk identification, warning signs, access control, as well as emergency kits and showers. A HAZOP assessment was completed for all ethanol tanks before they were taken into operation. Annually they are inspected in line with the American Petroleum Institute’ storage tank standards. Furthermore, a visual check of the tank’s integrity is done daily.

Pesticide Use and Management. The company's agricultural practices are designed to minimize environmental impact, utilizing water-efficient irrigation systems. At UJM, a significant portion of the sugarcane fields is managed organically. This cultivation method not only supports biodiversity but also reduces reliance on harmful agrochemicals, promoting a more sustainable and environmentally friendly production process.

In pest management, biological control is exclusively applied in organic farming, while conventional agriculture follows Integrated Pest Management (IPM), which combines biological and chemical controls. The use of Class I (extremely toxic) products is strictly avoided. All workers receive mandatory training under NR 31.7, along with routine operational training and management skill development, provided by in-house experts or external consultants. Jalles exclusively uses enclosed tractors equipped with cabins for spraying operations, ensuring worker safety. The handling, storage, and use of agricultural chemicals comply with national regulations and are considered best practices in the industry.

PS4: Community Health, Safety and Security 

Community Health and Safety. Although both sugar mills and agricultural production are located in a rural area, there are communities around its operations. Potential impacts to communities could arise primarily from the explosion of ethanol tanks, from the distillery and/or from sugar warehouses. Risks related to explosions from ethanol tanks are covered by its emergency preparedness and response plans as required by Brazilian laws, such as the risk prevention plan.

Air emissions from boilers, fugitive air emissions from trucks (dust) and drifts from aerial application of pesticides, can also negatively affect communities. The company conducts aerial spraying of crops by contracted companies using crop-spraying airplanes. A specific procedure is in place to avoid the risks and impacts to health and other crops associated with aerial spraying of chemicals. This entails monitoring weather conditions during aerial spraying, and safety exclusion buffer zones to protect towns, small villages, or households.

The company relies on a substantial fleet of third party-operated trucks to transport sugarcane from the fields to the processing facility, with plantations located an average of 20 km away. The majority of sugarcane is transported via an internal road network, thereby avoiding public roads, and minimizing impacts on surrounding communities.

Infrastructure and Equipment Design and Safety. Equipment used at Jalles Machado complies with regulatory safety requirements and is fitted with essential safety devices. Each piece of equipment undergoes annual inspections and is included in a thorough preventative maintenance program managed through SAP. Quantitative risk assessments have been conducted across all operations, and the risk management plan encompasses key areas such as maintenance and integrity of critical processes, operational procedures, training programs, accident investigation, emergency response, and regular audits of the risk management plan.

Life and Fire Safety (L&FS). Jalles Machado maintains a comprehensive emergency response plan that addresses all potential scenarios, including fires, explosions, and environmental leaks. This plan is supported by a trained fire brigade and detailed evacuation and communication protocols. Emergency drills are conducted annually across different shifts, encompassing both industrial and agricultural operations. All mills have achieved L&F safety certifications from the State of Goiás and Minas Gerais authorities, underscoring the company's commitment to safety and preparedness.

Security Personnel. Jalles Machado employs its own security personnel to manage access control at its mills. These guards receive specialized in-house training from a third-party provider, covering key protocols such as the appropriate use of force. No incidents involving security have been reported, and any future issues can be reported and documented through the company’s established grievance mechanism.

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources 

Protection and Conservation of Habitats. Jalles’s sugarcane plantations are located solely in areas traditionally used for agriculture, with no anticipated direct conversion of natural habitats to croplands or significant biodiversity loss associated with this project. Brazilian regulations require farmers to set aside 20% to 80% of their land for biodiversity conservation, as well as to protect buffer zones along rivers and water bodies, depending on the biome. Where riparian buffer zones are insufficient, restoration is required, and biodiversity conservation areas may be offset by protecting intact regions nearby.

Jalles conducts environmental assessments of sugarcane fields, ensuring compliance with mandatory riparian zones and biodiversity set-asides, all registered under the rural cadaster (CAR). Currently, all conservation set-asides in the cultivated areas meet or exceed the required 20%, ranging between 20% and 30%. Biodiversity offsets are either established on-site or compensated in other areas within regulatory timelines. For additional land, the company requires owners or lessors to meet biodiversity conservation requirements, covering offset costs, if necessary, which are then adjusted in the land price. In 2024, the company reported managing 41,000 hectares of protected areas.

Sustainable Management of Living Natural Resources. The company’s harvesting areas cover 33.7 thousand ha at UJM, 23.6 thousand ha at UOL, and 29.9 thousand ha at USV. Jalles achieved Bonsucro certification in July 2018, integrating all required measures and procedures from the Bonsucro standard into its IMS. The company employs a centralized ‘Agriculture 4.0’ management approach, integrating advanced technology and automation across planting, harvesting, soil preparation, irrigation, and cultural treatments. Automated planters, UAVs (drones), autopilot systems, and real-time monitoring tools enhance planting precision, field allocation, and resource efficiency. Soil preparation employs variable-rate inputs, mapping technology, and soil conservation models, while irrigation and herbicide application are carefully managed for water efficiency and targeted use. Jalles’ control centers leverage 4G connectivity for real-time operational updates, reducing resource usage and optimizing productivity. Additional technologies, like geoprocessing, varied-rate inputs, varietal management, drone monitoring, biological pest control, and custom apps for workforce management, further demonstrate Jalles Machado's commitment to sustainable and innovative agriculture.

Supply Chain. The risk of converting natural or critical habitats, leading to biodiversity loss, is not applicable since all sugarcane is sourced from established agricultural lands. Additionally, all owned and leased lands supplying Jalles Machado meet Goiás and Minas Gerais State’s set-aside requirement for biodiversity conservation. The company exclusively processes sugarcane from its own agricultural production.                                               

Jalles Machado has implemented measures to minimize potential impacts on nearby rural communities from noise, dust, and agrichemical drifts, particularly from truck traffic on unpaved roads and aerial spraying. As part of its previous ESAP, Jalles Machado implemented a communication and engagement program for affected communities, featuring mechanisms to address issues identified in consultations and to proactively resolve community concerns. Consultations with key stakeholders are conducted, with feedback recorded in a materiality matrix included in the Sustainability Report, published according to GRI standards. This program aligns with ISO 45001, ISO 9001:2015, and ISO 14001:2015 standards, reinforcing the company’s commitment to stakeholder engagement and responsive communication.                                                   

Contact Person: Rodrigo Penna de Siqueira

Company Name: Jalles Machado S.A.

Address: Rodovia GO-080 – Km 185 – Zona Rural. CEP: 76.388-899. Goianesia, GO.

Email:  rodrigo@jalles.com

Phone: +55 (62) 3389-9000