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
ESMS. Agronorte manages E&S risks and impacts related to its operations mainly through compliance with applicable national standards and regulatory permits. However, the Company does not have a systematic process to identify, assess, and manage E&S risks beyond local legislation requirements, and management and monitoring programs are limited to regulatory compliance. As per ESAP #1, Agronorte will establish an ESMS aligned with IFC PSs. The ESMS will include at the minimum: i) E&S policy; ii) identification of hazards and assessment of risks and impacts, including climate risks; iii) management plans, including emergency preparedness and response; vii) stakeholder engagement plan and community grievance mechanism; and viii) monitoring and review mechanisms.
Organizational capacity. Agronorte’s organizational capacity to manage E&S matters is limited and primarily focused on regulatory compliance. There is no dedicated E&S department at the corporate level, and E&S responsibilities are distributed across existing functions, with one person overseeing HR and another responsible for environmental matters. The OHS function is more structured with an OHS coordinator supported by occupational safety technicians, as well as the Internal Commission for Accident Prevention (CIPA) and Emergency Brigades. As the Company expands its operations, additional coordination, resources, and specialized functions will be needed to manage E&S risks. As per ESAP #2, Agronorte will strengthen its E&S function to oversee E&S matters and support the implementation of the ESMS. The Company will appoint suitable qualified personnel, including specialists in environmental, social, human resources, road safety and supply chain matters, and will define clear roles and responsibilities for E&S oversight at both the corporate and Project site levels.
Supply chain. Agronorte’s supply chain primarily involves sourcing soy, corn, sorghum and animal by-products for animal feed production, and wood biomass for driers and boilers. With the expansion to Minas Gerais, the Company’s sourcing strategy will be adjusted to prioritize regional suppliers in the states of Minas Gerais, Sao Paulo and Goias. Agronorte has mapped approximately 40 potential immediate suppliers within a 200 km radius, among which are agricultural cooperatives, global trading companies, and medium to large independent rural producers.
Key E&S risks associated with Agronorte’s supply chain include potential child and forced labor, unsafe working conditions, and natural habitat conversion. In the north, all of Agronorte’s producers are traceable to the origin and the Company has a basic verification system as a signatory to the Green Grains Protocol (Protocolo Verde dos Graos) from Para state. However, Agronorte does not have a formal sustainable sourcing policy nor a risk screening system to monitor suppliers’ E&S performance. As requested by ESAP #3, the Company will develop a Supply Chain Management System (SCMS) aligned with PS2 and PS6 requirements. The SCMS will include: (i) a sustainable sourcing policy committing Agronorte to source deforestation and conversion-free commodities and prohibit purchases from suppliers involved in child or forced labor or illegal land conversion, (ii) a supplier mapping and risk assessment process supported by geospatial tools; and (iii) a verification process to monitor high-risk suppliers. As part of the risk screening process, Agronorte will check: (i) that the property or the property owner (including other direct family members) does not appear on the (a) Ministry of Economy (Secretariat of Labor) embargo for forced labor risk list (ref. “Lista Suja”) or (b) IBAMA’s (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renovaveis) embargo for illegal natural habitat conversion; (ii) geographic coordinates for each farm, and its existing Legal Forest Reserve and Permanent Protected Areas as registered in CAR (“Cadastro Ambiental Rural”) to determine if: (a) natural habitat is not intact within the Legal Forest Reserve and Permanent Protected Areas registered in CAR; and, (b) farm infringement is occurring on Conservation Units, Alliance for Zero Extinction (AZE) and World Heritage Sites (WHS), Indigenous or Quilombola Lands or land claims registered with INCRA. Further, wood biomass will be purchased from FSC certified sources and contracts with suppliers will have clauses establishing zero tolerance for child/forced labor, inadequate working conditions and conversion of natural habitat.
PS2- Labor and working conditions
Working conditions and management of worker relationships. Agronorte has a Code of Ethics that sets expectations for professional conduct, including non-discrimination principles and the prevention of moral and sexual harassment. New employees’ onboarding covers internal rules, expected behavior, and operational procedures. Working conditions follow Brazilian Consolidation of Labor Laws (Consolidacao das Leis do Trabalho – CLT), including formal employment contracts, working hours, and leave. Although Agronorte respects the constitutional right to freedom of association, there are currently no unionized employees or active collective bargaining agreements. Under ESAP #4, the Company will consolidate and document its human resources policies and procedures in an Employee Handbook to ensure all workers receive clear information on their rights, including working hours, wages, overtime, compensation, benefits, equal opportunity, and their right to form or join unions.
Grievance mechanism. Grievances can be submitted directly to the head of HR or communicated through managers, leadership or institutional e-mail. However, Agronorte does not have a dedicated grievance channel nor a documented procedure. Going forward, as part of ESAP #5, Agronorte will establish a formal grievance mechanism and develop written procedures specifying: (i) available channels to submit grievances (including confidential, anonymous and sexual harassment complaints); (ii) roles and responsibilities for receiving, assessing and responding to grievances; (iii) defined timelines for taking action; and (iv) a system to log, track and report grievances and their status. The grievance mechanism will include a survivor centered procedure for managing SEAH related complaints, ensuring survivor protection and non retaliation, and facilitating access to appropriate support services, as needed. In addition, Agronorte will: (i) implement a dissemination strategy through inductions, training and periodic refreshers; (ii) appoint a committee to oversee grievance management; and (iii) ensure staff handling sexual harassment cases receive specialized training.
Protecting the workforce. The minimum hiring age at Agronorte is 18 for operational roles. Age verification is conducted during recruitment, and no underage apprentices are permitted to work in high-risk areas. All employment contracts are voluntary and formalized under the CLT regime. However, Company’s Code of Ethics does not explicit prohibit child or forced labor. Therefore, as per ESAP #6, the Company will update its Code of Ethics to include a clear commitment to preventing child and forced labor across its own operations and throughout its supply chain.
Occupational health and safety. The facility has adequate engineering controls in place to manage occupational and process safety risks typical of grain handling and feed manufacturing, including physical segregation of areas with potential combustible dust generation, appropriately rated electrical equipment in hazardous zones (ATEX), and machine safeguarding measures such as fixed guards, interlocks, and emergency stop systems.
Agronorte’s OHS practices follow applicable legal requirements established under the Brazilian Regulatory Norms (Normas Regulamentadoras – NR) issued by the Ministry of Labor and include an Occupational Risk Management Program (Programa de Gerencamiento de Riscos – PGR) and an Occupational Health Medical Control Program (Programa de Controle Medico de Saude Ocupacional – PCMSO). In 2025, Agronorte recorded two lost time incidents, corresponding to a Lost Time Injury Frequency Rate (LTIFR) of 0.2 per 200,000 hours worked, which is below the U.S. Bureau of Labor Statistics benchmark for animal food manufacturing (LRIFR of 1.1).
As required by ESAP #7, Agronorte will further enhance its existing OHS practices and programs as part of its ESMS, including: (i) updating the PGR and PCMSO for the plant, covering climate change risks; (ii) developing a monitoring program for working conditions, including exposure to noise, dust, lighting, temperature and ergonomic risks; (iii) developing standard operating procedures (SOPs) for high risks activities (e.g., lockout/tagout, work at heights, confined space entry, and chemical handling and storage); and (iv) establishing procedures for incident and near-miss reporting, communication, investigation, and corrective and preventive actions.
Workers engaged by third parties. Agronorte relies on contractors for specific tasks such as maintenance but controls to oversee and monitor its E&S performance are not formalized. As part of ESAP #8, the Company will develop a Contractor Management Plan establishing the E&S requirements that service providers should follow as well as Agronorte’s control and monitoring mechanisms.
PS3-Resource Efficiency and Pollution Prevention
Resource use. The plant relies on electricity from the public grid and eucalyptus biomass for thermal energy. Water is supplied through surface water abstraction from Rio Verde and overall consumption is low, as the production process is predominantly dry and does not require significant water use.
Liquid effluents. Limited amounts of effluents will be produced, including sewage and industrial effluents from boiler blowdown, equipment washing, and drainage from maintenance areas and will be treated in the existing Wastewater Treatment Plant (WWTP) prior to discharge into Rio Verde. A per ESAP #9, Agronorte will assess the adequacy, and if necessary, refurbish the WWTP to ensure compliance with the effluent standards set out in the WBG EHS Guidelines for Food and Beverage Processing (2007). Effluent quality monitoring procedures will be developed as part of the ESMS.
Air emissions. Air emissions mainly originate from biomass-fired boilers and from material handling and processing activities with primary pollutants being particulate matter and combustion-related emissions such as NO?, SO?, and CO. As per ESAP #10, Agronorte will assess the adequacy of air pollution control measures and if necessary, implement technically and financially feasible improvements to achieve compliance with air emissions standards of General EHS Guidelines. Air emissions monitoring procedures will be developed as part of the ESMS.
Contaminated areas. As part of its due diligence process, Agronorte conducted a preliminary environmental assessment (Phase I) to identify potential environmental contamination from past industrial activities. The assessment identified potential contamination risks primarily related to fuel storage, chemical handling, waste management and effluent treatment. As per ESAP #11, Agronorte will perform a confirmatory environmental investigation (Phase II), following CONAMA requirements, in identified potential source areas to verify the presence of soil and groundwater contamination. Based on the findings, Agronorte will present a time-based action plan which may include additional investigation, remediation measures, or risk management strategies.
Pest management. The Company currently uses aluminum phosphide (phosphine), a pesticide classified as highly hazardous by the World Health Organization (WHO), for the phytosanitary treatment of stored grain. As part of the ESMS (ref. ESAP # 1), Agronorte will develop and implement an Integrated Pest Management (IPM) plan, including the prohibition to use pesticides classified as WHO Class Ia (extremely hazardous) or Ib (highly hazardous) and will actively seek alternatives to phosphine.
Solid and hazardous waste. Solid and hazardous waste will be segregated and temporarily stored in a covered area with impermeable floors before being disposed of by licensed third parties. As part of the ESMS (ref. ESAP # 1), Agronorte will develop a Solid Waste Management Plan in line with legal requirements and PS3 provisions.
Management of hazardous materials. The Company uses limited quantities of hazardous materials (including phosphine tablets for grain fumigation, chemicals for water treatment, and diesel for the emergency generator) which are stored in a locked, ventilated room with containment trays. As part of the ESMS, Agronorte will develop a Hazardous Materials Management Plan (ref. ESAP # 1), covering safe storage, handling, and control of chemicals used onsite. The Plan will also incorporate climate-related risks such as flooding.
PS4-Community Health, Safety and Security
Community health and safety. The plant is located within the Tres Coracoes Industrial District along the BR-381 highway and is surrounded by industrial and logistics facilities, with no immediate residential populations. The nearest urban neighborhood is approximately 2 km away. Access is provided directly via the BR-381 road, avoiding heavy truck traffic through residential areas. As a result, potential community risks and impacts related to noise, traffic, air emissions, and safety are considered limited.
Emergency preparedness and response. The plant has a fire protection network combining detection, alarm, and suppression systems, including heat detection in silos through digital thermometry to identify hotspots. The EPRP to be developed as part of the ESMS (ref. ESAP # 1), will be disclosed to potentially affected parties, including surrounding facilities.
Road safety. For the Project, transportation will be outsourced through approved carriers. As per ESAP #12, Agronorte will develop a Road Safety Management System (RSMS), integrated into the ESMS to systematically identify, manage, and reduce road related risks associated with its operations. The RSMS will include (i) risk assessment and planning, including identification of SEAH risks, high-risk routes, and vulnerable road users; (ii) driver management, covering fitness for duty, training, behavior monitoring, and fatigue management; (iii) vehicle safety and maintenance, (iv) operational controls, such as speed management, journey planning, and contractor safety requirements; (v) incident and emergency response, including procedures for road accidents; and (vi) monitoring and reporting.
Security Personnel. The Project will rely on federally authorized outsourced private security with armed personnel. As part of the ESMS (ref. ESAP #1), the Company will develop a Security Management Plan in line with PS4 and the IFC Good Practice Handbook on the Use of Security Forces (https://www.ifc.org/en/insights-reports/2017/publications-handbook-securityforces) that outlines principles of proportionality and good international practices, including security forces vetting, equipping, monitoring, and training on Human Rights and SEAH.
PS6-Biodiversity Conservation and Sustainable Management of Living Natural Resources
The Project is located in the Alto Parana Atlantic Forest ecoregion, within the industrial district of Tres Coracoes, Minas Gerais, in a landscape characterized by a mosaic of industrial facilities and warehouses, agricultural areas and secondary forest remnants. The brownfield site contains built-up areas, Modified and Natural Habitats. There has been no apparent, recent land-use change, and no footprint expansion is entailed. The Project does not overlap with any legally protected or internationally recognized areas.
Supply Chain. The risk of natural habitat conversion associated with the Project relates primarily to the sourcing of soy, corn, sorghum and other feedstocks of animal origin for the manufacture of animal feed, as well as wood biomass for dryers and boilers. Agronorte plans to prioritize procurement from regional suppliers in Minas Gerais, Sao Paulo, and Goias, including agricultural cooperatives, global trading companies, and medium- to large-scale rural producers within a 200 km radius. While suppliers in Agronorte’s northern supply chain are traceable and subject to basic verification under the Green Grains Protocol, the Company currently lacks a formal sustainable sourcing policy and a systematic risk-screening process to identify and manage natural habitat conversion risks. To address these gaps, and as set out under PS1, Agronorte will implement a Supply Chain Management System aligned with PS6 requirements, including a conversion-free sourcing commitment, geospatially supported supplier mapping and risk assessment, and verification of high-risk suppliers (ref. ESAP # 3).
