While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards

PS 1 - Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and Working Conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 - Community Health, Safety and Security
PS 6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources

This project has been classified as Category B under IFC's Policy on Environmental and Social Sustainability (2012). Based on IFC’s review of available information, the proposed investment is expected to have limited, site-specific adverse E&S impacts, which are largely reversible and can be addressed through existing mitigation measures and the application of good international industry practices (GIIP). Key E&S risks and impacts identified include: (i) need to develop a formal Environmental and Social Management System and a written E&S policy in line with IFC PS; (ii) lack of an Environmental and Social Impact Assessment (ESIA) for the proposed investments; (iii) risks related to labor, potential natural habitat conversion to forestry plantations, and OHS risks, primarily related to timber sourcing in the supply chain; (iv) need to implement a grievance mechanisms for communities and workers; (v) risks of non-compliant effluent discharges into the Tranqueras water stream; and (vi) OHS risks associated with transportation activities in project facilities in Tacuarembo.

IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.

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

E&S Policies. Arboreal does not have a written Environmental and Social (E&S) policy. To align with IFC Performance Standards, Arboreal will develop and implement an E&S policy consistent with the principles set forth in IFC PS. The E&S Policy will include E&S objectives and principles that will guide the Company’s E&S performance; and a framework for the E&S assessment and management process, and a commitment to comply with applicable laws and regulations. The E&S Policy will include statements prohibiting the sourcing of timber from uncertified plantations or from any plantations established after January 1, 2020, within the AZE site (see PS6 Supply Chain section for further details) (ESAP #1).

E&S Management System (ESMS). Arboreal has an established ESMS in line with national regulations and is generally aligned with IFC PS1. However, the ESMS lacks written procedures for setting E&S objectives, monitoring requirements, E&S performance assessment, and continuous improvement. As part of ESAP #2 (item a), Arboreal will enhance its management system and develop a consolidated ESMS manual aligned with the requirements set forth in: PS1, the WBG EHS General Guidelines, the WBG EHS Guidelines for Board and Particle-based Products, the WBG EHS Guidelines for Forest Harvesting Operations, and the WBG EHS Sawmilling and Wood-based Products (2007). The ESMS manual will include, as a minimum: (i) the E&S Policy (ESAP#1); (ii) E&S risks and impacts identification procedure; (ii) documented procedures and operational plans to address the identified risks and impacts; (iii) EHS organizational capacity and required competencies; (iv) an emergency preparedness and response plan; (v) documented mechanisms for stakeholder engagement and community grievance mechanisms; (vi) plans for E&S monitoring, reporting, and continuous improvement review processes. The ESMS manual will cover ESHS and supply chain aspects.

Identification of E&S Risks and Impacts. Arboreal identifies and manages E&S risks and impacts through compliance with national standards and permit requirements. In 2021, Arboreal prepared an Environmental Impact Assessment (EIA) to expand the Environmental Authorization originally granted to Tigoral S.A. (October 2016), covering six timber drying chambers, boiler refurbishment, electrical distribution upgrades, and installation of service piping for steam, condensate, water, compressed air, and fire protection. The Environmental License associated with this expansion has not yet been granted. To align with PS1 requirements, and as part of ESAP #3, Arboreal will (i) obtain the Environmental License for the project’s expansion, and (ii) implement the appropriate E&S Management Plans when applicable.

Regarding the proposed investment, and to enhance the alignment with IFC Performance Standards, Arboreal will as part of ESAP #4, develop a supplemental E&S Assessment aligned with PS requirements and the applicable WBG General and sector-specific EHS Guidelines, including those for Board and Particle-based Products (2007), Forest Harvesting Operations (2007), and Sawmilling and Wood-based Products (2007). The supplemental E&S Assessment will provide sufficient level of detail for the proposed investments and include: (i) the preparation of ambient air quality analyses, (ii) air dispersion modeling, (iii) ambient noise modeling, (iv) effluent and runoff characterization and effluent discharge monitoring. To mitigate any potential E&S impacts derived from these aspects, Environmental and Social Management Plans (ESMPs) resulting from the assessment will be developed and implemented. For further details, refer to the below Section on E&S Management Programs. The supplemental E&S Assessment will also cover current operations.

E&S Management Programs. Arboreal has an Environmental Management Plan (PGA) that broadly aligns with PS requirements. However, in the absence of an ESIA for the proposed investments, it is not possible to confirm whether the mitigation measures included in the PGA are sufficient to address all current E&S risks and impacts vis-à-vis IFC PS. To address this, Arboreal will augment its ESMS by developing a comprehensive set of written E&S management programs to cover key areas, such as: OHS, air emissions and dust control, waste and hazardous materials management, effluent and stormwater management, pest control, traffic safety, and energy and water efficiency. Additional elements will include a robust training and awareness program for workers and an environmental monitoring program, which will incorporate a biodiversity baseline study (ESAP #2 item b).

Arboreal has a document control system for contractor companies and workers, which requires legal documentation such as ID, health certification, as well as safety rules for the plant, for construction, and for supply contractors. As part of ESAP #5 Arboreal will develop a specific policy for managing E&S requirements for contractors. This will include: (i) a formal procedure for evaluating and selecting contractors based on their ability to meet applicable EHS standards; (ii) contractual clauses that clearly define E&S obligations and compliance monitoring requirements; (iii) systems for verifying that contractors maintain necessary permits, implement hazard controls, and provide adequate training and PPE to their workforce; and (iv) mechanisms for regular auditing, reporting, and corrective actions to address non-conformance, in line with IFC Performance Standards.

E&S Organization Capacity/Competency. Arboreal has a structured HR and Support Services organizational structure that includes Environmental, Safety, and Governance functions. Currently, the team consists of two staff responsible for environmental matters (one recently appointed), two safety staff with one additional position pending, and one governance specialist. The Company engages specialized consulting firms to conduct activities such as air emissions, ambient air quality and groundwater monitoring, and ambient noise measurements, and maintains an on-site nurse. As part of ESAP #6, Arboreal will finalize the recruitment needed to fully resource its E&S functions, including consideration of an additional environmental position and a dedicated social specialist/coordinator.

Emergency Preparedness and Response (EPR). Arboreal has an Emergency Action and Evacuation Plan for both the production plants and the forests used by the company, designed to comply with national laws, supported by periodic drills, a trained first-response team, and a fire-fighting system that includes strategically placed firebreaks. To further align the Plan to IFC requirements, Arboreal will, as part of ESAP #7, update its Emergency Action and Evacuation Plan of the affected population to include climate-related risks and adaptation strategies, including consultations with communities to identify any additional emergency scenarios that may affect the community and corresponding response and mitigation measures. The updated Plan will establish a Fire Safety Drill Program coordinated with local communities and fire brigades, provide community training on wildfire management and evacuation, and maintain records of participation.

Monitoring and Reporting. Arboreal monitors the main aspects and impacts from its operations as part of its environmental permits (e.g., atmospheric emissions, noise, effluents, groundwater, receiving water body). As part of ESAP #2 item b, Arboreal will strengthen and implement a consolidated E&S monitoring program with established standards and E&S KPIs for the project.

Supply Chain Assessment and Management. Arboreal has established operational procedures for supplies and OHS, covering service provision, materials entry, and incoming trucks controls. A quality traceability mechanism ensures oversight of critical inputs, requiring suppliers to submit documentation in advance for review and approval before accessing the plant, in line with health and safety protocols.

The Company has obtained an FSC Chain-of-Custody Certificate, valid until 20 February 2027, which remains valid subject to satisfactory surveillance audits. The certification, assessed against FSC-STD-40-004 V3-1 and FSC-STS-50-001 standards, covers the purchase and sale of FSC 100%, FSC?Mix, and FSC?Controlled Wood logs, boards, engineered timber products, sawdust, and chips, under both transfer and percentage systems. The most recent audit, conducted on February 25, 2025, identified?one new minor non-conformance related to use of correct labels, which Arboreal has addressed. However, the Company does not carry a risk assessment of the sourcing of supplies for social and biodiversity risks, including those related to labor, natural habitat conversion, and relevant health and safety risks. Although most of the wood supply comes from FSC® certified plantations, FSC certification does not cover all natural habitat requirements as established in PS6 (see PS6 supply chain section for further details). As part of ESAP #8, Arboreal will develop and implement a Supply Chain Risk Assessment framework with risk filters for social and biodiversity risks in the supply chain, including: (i) a communication strategy to inform all primary suppliers of labor requirements, (ii) controls to address transportation risks, (iii) contractual clauses prohibiting forced labor and child labor, (iv) compliance with the code of conduct, and (v) contract provisions excluding sourcing timber within the AZE from forestry plantations established after January 1st, 2020, aimed at preventing significant conversion of Natural and/or Critical Habitats, particularly non-forested Natural Habitat. The Supply Chain Risk Assessment framework should include regular monitoring and E&S reporting mechanisms.

PS2: Labor and Working Conditions

As of September 2025, the Company has 214 direct and 26 indirect employees, of whom 19% are women. All employees are hired in compliance with national labor laws. As a result of the expansion, the Company plans to create 45 new jobs.

Human Resources Policies & Procedures: Arboreal operates an integrated HR Management System aligned with its corporate strategy, and Uruguayan labor laws. The system covers recruitment, onboarding, training, professional development, payroll and benefits administration, time and leave management, and performance evaluations across its industrial, forestry, and corporate operations. HR policies promote equal opportunity, non-discrimination, transparent hiring, continuous training, OHS integration, and pay equity. These commitments are formalized through standardized job postings, background checks, safety inductions with PPE issuance, maintenance of personnel records, tracking of required training, documented performance reviews, and legally compliant exit procedures.

Although Arboreal’s HR system generally aligns with most of the PS2 requirements, an integrated HR Manual is yet to be developed and implemented. Arboreal will strengthen the dissemination of its HR policies and procedures by developing a comprehensive HR Manual that integrates all existing HR policies/procedures. This document will include a zero-tolerance policy against discrimination and harassment, explicitly prohibits forced and child labor, and reaffirm Arboreal’s commitment to equal opportunity and fair treatment for all workers. The Company will also improve the internal divulgation of its HR Manual and include detailed descriptions of: (i) employment terms; (ii) working hours; (iii) benefits; (iv) vacation; (v) leave; (vi) hiring and dismissal procedures; (vii) zero tolerance for forced and child labor; and (viii) zero tolerance for discrimination, harassment, and gender-based violence (ESAP #9).

Working Conditions and Workers’ Organization: Arboreal provides adequate workplace facilities, including cafeterias, changing rooms, and resting areas, to support employees' well-being. Arboreal respects the right of association and collective bargaining in accordance with Uruguayan labor legislation, and International Labor Organization (ILO) Conventions ratified by the country. Although no formal labor union has been established within the Company to date, Arboreal maintains open and constructive communication channels with its employees. Regular meetings and feedback mechanisms allow workers to present suggestions and discuss matters related to working conditions, OHS, and welfare with senior management. This participatory approach aligns with the principles set forth in PS2. (see ESAP #9 for more details).

Workers’ Grievance Mechanism: Arboreal does not have a formalized grievance mechanism for employees. Workers’ concerns are raised informally with supervisors, the HR team, or elected worker representatives, who follow up on issues until these are resolved. To better align the grievance redress system to IFC requirements, the Company will, as part of ESAP #10, design and implement an Internal Workers’ Grievance Mechanism aligned with IFC PS2. The mechanism will: (i) provide accessible and confidential channels for submitting complaints, including anonymous options; (ii) designate responsible personnel for receiving and addressing grievances; (iii) establish defined timelines for acknowledgment and resolution; (iv) include procedures for documenting and tracking complaints; (v) address specifically cases of harassment, discrimination, and gender-based violence; and (vi) ensure confidentiality and protection from retaliation for all users. This system will be communicated to all employees and contractors and monitored for effectiveness.

Protecting the Workforce: Uruguay is a signatory to several of the ILO conventions, including those related to the abolition of forced labor and the prohibition and elimination of the worst forms of child labor. Although Arboreal already complies with national legislation by not hiring individuals under 18, the Company will explicitly prohibit forced and child labor through implementing its HR Manual (see ESAP#9 for more details).

Occupational Health & Safety (OHS): Arboreal’s OHS Management System (OHSMS) aims to ensure proper hazard identification and risk assessment for both employees and contractors. The OHSMS prioritizes actions to prevent accidents through appropriate control measures and covers all production processes and work areas. It features a defined responsibility structure, with management ensuring resource availability, safety technicians conducting risk analyses and planning actions, and supervisors and operators actively identifying hazards, implementing corrective measures, and providing technical expertise. Regarding health aspects and protection of the personnel, the company for the fabrication of the products utilizes non-formaldehyde-based adhesives and has implemented ventilation systems to control emissions of VOCs.

Arboreal’s risk assessment methodology involves identifying, classifying, and evaluating hazards based on job hazard analysis (JHA) evaluating probability and severity. Risks are categorized as low, medium, or high, with treatment prioritized accordingly. Control measures follow a hierarchy: hazard elimination or substitution, technical controls, administrative controls, and PPE. The system also includes procedures for reassessing risks when changes occur in facilities, processes, or after drills and real emergencies. In 2024, the Company maintained a Lost-Time Injury Frequency Rate (LTIFR) 18.5 injuries per million hours worked, which is below international benchmarks.

Workers Engaged by Third Parties: Arboreal engages third-party contractors primarily for forestry, logistics, and maintenance activities. The Company requires all contractors to comply with applicable national labor, OHS, and social security regulations. Periodic reviews are conducted to verify the completeness and validity of documentation related to employment contracts, payroll, and social security contributions for outsourced personnel.

PS3: Resource Efficiency and Pollution Prevention

Energy. The total electricity consumption from September 2024 to August 2025 was 15,141,683.40 kWh, with 98% of the energy sourced from renewable sources, reflecting the country’s commitment to sustainable energy. Arboreal has implemented measures to optimize energy efficiency and reduce consumption. Efforts to minimize electricity usage include the replacement of traditional lighting systems with low-consumption LED technology, which significantly reduces energy demand. Additionally, Arboreal has transitioned its forklift fleet from 100% diesel equipment in 2020 to over 50% electric units today, reducing fossil fuel consumption and associated emissions.

Water. Arboreal’s total water consumption is 85 m³/day, primarily for production processes (95%) and staff consumption (5%). To reduce water usage, Arboreal has adopted measures such as installing automatic shut-off taps and replacing conventional cisterns in toilets with dual flush systems. In the production process, the Company utilizes a Contraflow wood dryer, which dries 50% of the volume and eliminates the use of sprays during the final conditioning stage, significantly reducing water consumption. These measures demonstrate Arboreal’s proactive approach to water conservation and resource efficiency. Arboreal sources water from permitted groundwater wells and although it monitors water quality, it currently does not monitor water abstracted.

Air Emissions. Arboreal has conducted comprehensive ambient air quality monitoring (PM10 and PM2.5) in accordance with local regulations to establish baseline data for the project area and has conducted air emissions monitoring of PM, SO2, and NOX for the boiler. All tested parameters were found to be within the Air Quality Standard Values outlined in current regulations. Measured levels at the boiler were not compared with local regulations. Additionally, Arboreal has incorporated the “Ecovent” system in its drying area, which optimizes processes and reduces emissions into the air. As part of ESAP#2, Arboreal will enhance its monitoring program to assess measured levels. As part of ESAP #4, Arboreal will develop a supplemental E&S Assessment which will consider new emissions from proposed investments in line with the WBG General and Industry-specific EHS Guidelines.

Greenhouse gas emissions. The Project’s greenhouse gas (GHG) emissions accounting reflects the substitution of high-carbon building materials with sustainably sourced mass timber products. By producing cross-laminated timber (CLT), glued laminated timber (GLT), and other engineered wood products from FSC- and PEFC-certified sources, the Project’s operational emissions are estimated at 2,193 tCO2e per year, resulting in an avoidance of approximately 13,711 tCO2e annually compared to the baseline scenario.

Noise: Noise emissions are monitored by a third-party contractor as a part of the company’s PGA and in line with approved sampling methodologies per national regulations. Mitigation measures are defined in the EIA submitted in 2022 to ensure compliance with local and international standards. The Company has implemented technologies that reduce operational noise, such as drying systems with fewer vents, thereby decreasing the volume of air exchange with the outside and cutting noise from the chambers. Routine monitoring confirms that noise levels remain within regulatory limits, and any exceedances would be addressed through corrective and preventative actions.

Wastewater Management. Arboreal monitors sanitary and industrial wastewater effluents through established monitoring points, following approved methodologies. All monitoring data is incorporated into the company’s PGA and submitted to the relevant authorities as required. Industrial wastewater is primarily generated by production processes, including wood drying and boiler operations, with some measures in place to maintain effluent quality within permissible limits. Sanitary wastewater volumes have been reduced through water-saving technologies in staff facilities, such as automatic shut-off taps and dual-flush cisterns. However, the Company has not yet characterized its effluents and does not separate rainwater runoff from process wastewater. Currently, treated water is discharged into the Tranqueras watercourse following overflow from the treatment ponds.

In June 2025, Arboreal commissioned a specialized consultant to review its effluent management system. The review identified 11 opportunities for improvement and their correspondent corrective actions. Arboreal has implemented 5 of the recommended actions with the remaining 6 pending implementation. As part of ESAP #11, Arboreal will develop and implement a time-bound action plan to address all measures identified in the consultant’s report, with the objective of achieving full compliance with wastewater management and discharge regulations.

Solid Waste Management. Arboreal has established procedures to manage both hazardous and non-hazardous solid wastes, supported by monitoring and record-keeping systems to track the quantities and types of waste generated. The Company seeks to minimize waste generation by optimizing processes and improving resource efficiency. Waste is treated or disposed of through approved methods and at third-party waste management facilities, which are subject to audits and inspections. No significant waste management incidents, such as spills or improper disposal, have been reported, and corrective measures are embedded in operational protocols to prevent recurrence. Under ESAP #2 item b, Arboreal will develop a waste management plan for the disposal of waste— including wood yard and the sawdust pile—accumulated south of the Tajamar pond and currently exposed to runoff that could enter the pond, where overflow discharges into the Tajamar creek. The plan will be aligned with corresponding requirements set forth in the WBG EHS General Guidelines.

Hazardous Materials. Hazardous materials used in Arboreal’s production processes are cataloged, with quantities documented and storage facilities designed to contain and prevent releases. Materials are stored in designated areas with containment measures that meet regulatory specifications. Adhesives and any other hazardous inputs are sourced and stored under controlled conditions to minimize environmental risk. Ongoing reviews of material use aim to substitute less hazardous alternatives where feasible, aligning both internal safety objectives and external environmental guidelines. No hazardous material releases have been reported, and the Company operates under a strict policy to prevent such incidents. The waste management plan that will be developed as part of ESAP #2 item b will include necessary provisions related to hazardous waste management as well.

PS4: Community Health, Safety and Security

Infrastructure and Equipment Design and Safety. The Project is located within an authorized industrial zone, on land with suitable topography and low exposure to environmental hazards such as flooding or fires. Arboreal operates its facilities under approved safety policies and standards, incorporating preventive measures such as controlled vegetation and clear perimeters to support fire prevention and site isolation. The Company has received visits and inspections from the Fire Department in 2024 and 2025, and personnel have participated in fire safety and first aid drills, including the use of automated external defibrillators. Training records are kept up to date, covering both internal and external programs. Safety procedures include regular verification and maintenance of fire protection systems, industrial equipment, and site infrastructure to ensure operational integrity and compliance with national regulations. There is no direct risk to the communities from the production plant. However, refer to Section on ERP in PS1 above for additional information and requirements on emergency preparation and evacuation of the communities in case of wildfires or other probable risks scenarios.

Road safety. Arboreal has not yet established an E&S Transport Management Plan to ensure the safe transportation of materials and personnel. Currently, the Company oversees and approves safety plans of its transport and harvest contractors. Both Arboreal and contractors are subject to UPM’s Non-Pulpable Wood Manual which is regularly audited by UPM to meet the highest standards. The Company provides training and policies for transport safety, including circulation norms for open cargo and log transporters. These measures aim to minimize risks to affected communities and ensure compliance with national standards. To align its transportation practices to IFC PS, Arboreal will, as part of ESAP #12, update its road safety policy to: (i) incorporate measures for preventing and responding to gender-based violence and harassment (GBV) and other social risks; and (ii) establish requirements for reviewing and approving transportation contractors’ safety plans. The Company will also develop a time-bound implementation plan, train drivers and contractors on the updated provisions, and monitor compliance.

Life and Fire Safety (LFS). Arboreal has established and implemented robust Life and Fire Safety (LFS) management plans throughout all production facilities. These plans encompass regular fire drills, comprehensive first aid training, the provision and maintenance of fire protection, and other critical safety equipment. The company systematically maintains up-to-date records of all internal and external training sessions, with recent fire safety sessions held in 2025. Plant design strictly adheres to the Uruguayan fire code and applicable regulations, ensuring facility layouts, equipment placement, and emergency procedures meet or exceed legal requirements. In addition, the regional fire departments conducted thorough inspections of Arboreal’s plants in 2024 and 2025, delivering targeted fire safety training to personnel and verifying compliance with safety standards. These measures guarantee compliance with national regulations and reinforce the corporate culture of safety and preparedness, promoting a secure working environment for employees and the community.

The Cross Laminated Timber (CLT) components and panels supplied by the company for community building construction strictly adhere to the standards set by recognized international organizations, including the International Code Council (ICC) in the United States, the European Technical Assessment (ETA), and other international regulatory councils. These certifications ensure compliance with all relevant criteria, such as timber stress grade, load-bearing capacity, fire resistance ratings, structural joint specifications, and installation procedures. For every project, the company provides confirmation through these certifications that the design, construction, and final installation of CLT products fully meet the requirements established by these certifying authorities, thereby guaranteeing safety, quality, and regulatory compliance for end users.

Security Personnel. Arboreal has an outsourced company that provides private security services, with unarmed guards, and provides its staff with training on topics related to: (i) equality and non-discrimination; (ii) fair treatment; (iii) health and safety; and (iv) respect for and promotion of human rights. No gaps or improvement opportunities vis-à-vis IFC PS4 were noted during the appraisal process.

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources

Protection and Conservation of Habitats. Arboreal’s sawmill is in the Uruguayan savanna ecoregion, in a predominantly rural landscape containing a mosaic of Natural Habitats (grasslands, streams and riparian forests) and Modified Habitats (pasturelands and timber plantations). The mill site is not situated within any Legally Protected Areas or Internationally Recognized Areas. Over the past 5 years, there has been limited (~0.5 ha) footprint expansion consisting of mill facilities built over previously Modified Habitat. The site lies about 11 km south-southwest from the North Ravines and Grasslands AZE site.

The Company has not conducted a biological baseline survey for sawmill operations. While adverse impacts are not suspected on ecosystems, the biota of the freshwater and riparian habitats receiving the runoff outflow is unknown. Initial biodiversity screening did not reveal recorded occurrences of globally endangered or vulnerable species. To align with PS6 requirements, as part of ESAP #13, the Company will undertake a biological baseline study of the freshwater and riparian natural habitats that receive Arboreal’s water discharge and then evaluate the results to determine if there are potential impacts and biodiversity values that should be monitored in the future. This proposed monitoring plan should include, if necessary, the definition of the biological groups to monitor in the future, the best location for downstream (impact) and upstream (control) sampling points, and the ideal sampling frequency. If a biodiversity monitoring plan is found to be required, this will be described in the Environmental Management Plan part of the ESMS.

Supply Chain. Arboreal’s log supply comes from pine plantations that adhere to responsible forest management covered by FSC® certification standards, except for one small uncertified plantation. Arboreal does not own any plantations and has three modalities of log supply: (i) delivered by the supplier, (ii) collected by Arboreal from roadsides of the supplier’s plantations, or (iii) harvested and transported by Arboreal from the supplier’s plantations. The majority of the woodshed overlaps with the North Ravines and Grasslands AZE site, protecting two globally Critically Endangered species, the range-restricted Redbelly Toad (Melanophryniscus langonei) and the cactus Parodia nothorauschii. To align with PS6 requirements aimed at preventing significant conversion of Natural Habitat, Arboreal will develop a biodiversity policy establishing a prohibition of both: (i) timber sourcing from any uncertified plantation, as well as (ii) timber sourcing from within the AZE site from plantations established after Jan 1, 2020 (ESAP #1).

Arboreal currently sources its timber from four suppliers, and all of them hold FSC® certification. As part of ESAP #8 Arboreal will also add to their timber supply contracts a “long-term” provision that supply chain will not include sourcing from forestry plantations within the AZE that were only converted to forestry plantations after January 1st, 2020.

Arboreal has yet to develop a formal Stakeholder Engagement Plan (SEP) as required in IFC PS1. Under ESAP #14 Arboreal will develop and implement both a Stakeholder Engagement Plan (SEP) and a Communication Plan designed to ensure systematic, inclusive, and transparent engagement with affected communities and other stakeholders. These plans will include: (i) a methodology for stakeholder identification and analysis; (ii) stakeholder mapping and prioritization; (iii) tailored engagement and communication strategies adapted to the nature and influence of each stakeholder group; (iv) defined frequencies and formats for participation and consultation; (v) clearly assigned responsibilities for implementation; and (vi) monitoring and reporting procedures to evaluate the effectiveness of engagement activities.

Arboreal will develop and operationalize a Community Grievance Mechanism aligned with IFC PS1. This mechanism will provide accessible and culturally appropriate channels for receiving and addressing community concerns — including anonymous submissions — and will ensure timely acknowledgment, investigation, and resolution of grievances. It will also include specific procedures to address allegations of harassment, discrimination, and GBVH, particularly those that could involve interactions between workers and community members. The mechanism will incorporate principles of confidentiality, non-retaliation, and sensitivity to GBVH cases, and will be widely communicated to local communities and other external stakeholders throughout the project’s operational phases.

Contact Person: Craig Penfold
Company Name: Arboreal
Address: Ruta 26km. 224 Paso Santander, Tacuarembó, Uruguay
Email: craig.penfold@arboreal.com
Phone: +598 92 239 039

Broad Community Support is not applicable for this project.

S.no	Description	Anticipated Completion Date
1	Develop and implement an E&S policy consistent with the principles set forth in IFC Performance Standards. The E&S policy will include: (i) E&S objectives and principles that will guide the Company’s E&S performance; (ii) a framework for the E&S assessment and management process; (iii) a commitment to comply with applicable laws and regulations; and (iv) statements prohibiting the sourcing of timber from uncertified plantations or from any plantations established after January 1, 2020, within the AZE site.	02/27/2026
2	Arboreal will: a. Develop and adopt a consolidated Environmental and Social Management System (ESMS) manual aligned with the requirements set forth in PS1, the WBG General EHS Guidelines, the WBG EHS Guidelines for Board and Particle-based Products, the WBG EHS Guidelines for Forest Harvesting Operations, and the WBG EHS Guidelines for Sawmilling and Wood-based Products. The ESMS manual will include, as a minimum: (i) E&S Policy; (ii) E&S risks and impacts identification procedure; (ii) documented procedures and operational plans to address risks and impacts identified; (iii) EHS organizational capacity and required competencies; (iv) an emergency preparedness and response plan; (v) documented mechanisms stakeholder engagement and community grievance mechanisms; (vi) plans for E&S monitoring, reporting, and continuous improvement review processes. The ESMS manual will cover ESHS and supply chain aspects.b. Develop a comprehensive set of written E&S management programs to address the current gaps in its PGA. These programs will cover key areas such as OHS, air emissions and dust control, waste and hazardous materials management (including a plan for the disposal of waste south of the Tajamar pond), effluent and stormwater management, pest control, traffic safety, and energy and water efficiency. Additional elements will include a robust training and awareness program for workers and an environmental monitoring program with established standards and E&S KPIs for the project, which will incorporate a biodiversity baseline study; and a specific policy for managing E&S requirements with contractors.	12/31/2026
3	Arboreal will (i) obtain the Environmental License for the 2021 project expansion; and (ii) implement the appropriate E&S Management Plans when applicable.	11/30/2026
4	Develop a supplemental E&S Assessment aligned with PS requirements, and applicable WBG General and sector-specific EHS Guidelines, including those for Board and Particle-based Products (2007), Forest Harvesting Operations (2007), and Sawmilling and Wood-based Products (2007). The supplemental E&S Assessment will provide sufficient level of detail for the proposed investments. The supplemental E&S Assessment will provide sufficient level of detail for the proposed investments. The supplemental E&S Assessment will include, but not limited to, the preparation of ambient air quality analyses and air dispersion modeling and ambient noise modeling, as well as effluent and runoff characterization and effluent discharge monitoring. To mitigate any potential E&S impacts derived from these aspects, Environmental and Social Management Plans (ESMPs) resulting from the assessment will be developed and implemented. The supplemental E&S Assessment will also cover current operations.	08/31/2026
5	Develop a specific policy for managing E&S requirements for contractors. This will include: (i) a formal procedure for evaluating and selecting contractors based on their ability to meet applicable EHS standards; (ii) contractual clauses that clearly define E&S obligations and compliance monitoring requirements; (iii) systems for verifying that contractors maintain necessary permits, implement hazard controls, and provide adequate training and PPE to their workforce; and (iv) mechanisms for regular auditing, reporting, and corrective actions to address non-conformance, in line with IFC Performance Standards.	11/30/2026
6	Finalize the recruitment needed to fully resource its E&S functions, including consideration of an additional environmental position and a dedicated social specialist/coordinator.	06/30/2026
7	Update the Emergency Action and Evacuation Plan to include climate-related risks and adaptation strategies, including consultations with communities to identify any additional emergency scenarios that may affect the community and corresponding response and mitigation measures. The updated Plan will establish a Fire Safety Drill Program coordinated with local communities and fire brigades, provide community training on wildfire management and evacuation, and maintain records of participation.	11/30/2026
8	Develop and implement a Supply Chain Risk Assessment framework with risk filters for social and biodiversity risks in the supply chain, including (i) a communication strategy to inform all primary suppliers of labor requirements; (ii) controls to address transportation risks; (iii) contractual clauses prohibiting forced labor and child labor; (iv) compliance with the code of conduct; and (v) contract provisions excluding sourcing timber within the AZE from forestry plantations established after Jan 1, 2020, aimed at preventing significant conversion of Natural and Critical Habitats, particularly non-forested Natural Habitat. It will include regular monitoring and reporting mechanisms	03/31/2027
9	Improve the internal divulgation of the HR Manual to include detailed descriptions of (i) employment terms; (ii) working hours; (iii) benefits; (iv) vacation; (v) leave; (vi) hiring and dismissal procedures; (vii) zero tolerance for forced and child labor; and (viii) zero tolerance for discrimination, harassment, and gender-based violence.	06/30/2026
10	Design and implement an Internal Workers’ Grievance Mechanism aligned with IFC PS2. The mechanism will: (i) provide accessible and confidential channels for submitting complaints, including anonymous options; (ii) designate responsible personnel for receiving and addressing grievances; (iii) establish defined timelines for acknowledgment and resolution; (iv) include procedures for documenting and tracking complaints; (v) address specifically cases of harassment, discrimination, and gender-based violence; and (vi) ensure confidentiality and protection from retaliation for all users.	08/31/2026
11	Develop and implement a time-bound action plan to address all measures identified in the consultant’s report on Wastewater Management (2025), with the objective of achieving full compliance with wastewater management and discharge regulations.	08/31/2026
12	Update the Road Safety Policy to: (i) incorporate measures for preventing and responding to gender-based violence and harassment (GBV) and other social risks; and (ii) establish requirements for reviewing and approving transportation contractors’ safety plans. Develop a time-bound implementation plan, train drivers and contractors on the updated provisions, and monitor compliance.	11/30/2026
13	Undertake a Biological Baseline Study of the freshwater and riparian natural habitats that receive Arboreal’s water discharge and then evaluate the results to determine if there are potential impacts and biodiversity values that should be monitored in the future. This proposed monitoring plan should include, if necessary, the definition of the biological groups to monitor in the future, the best location for downstream (impact) and upstream (control) sampling points, and the ideal sampling frequency.	02/26/2027
14	Develop and implement both a Stakeholder Engagement Plan (SEP) and a Communication Plan designed to ensure systematic, inclusive, and transparent engagement with affected communities and other stakeholders. These plans will include: (i) a methodology for stakeholder identification and analysis; (ii) stakeholder mapping and prioritization; (iii) tailored engagement and communication strategies adapted to the nature and influence of each stakeholder group; (iv) defined frequencies and formats for participation and consultation; (v) clearly assigned responsibilities for implementation; and (vi) monitoring and reporting procedures to evaluate the effectiveness of engagement activities.	08/31/2026