Climate change

KODS 2030

Reduce Scope 1 and 2 GHG emissions by 25% per ton of pulp, paper and packaging by 2025, and 49% per ton of pulp, paper and packaging by 2035.

Percentage reduction in emissions

In 2023, Klabin emitted 141.66 kgCO2eq per ton produced, a reduction of 4% compared to 2022. Between 2019 and 2023, the specific emissions reductions for scopes 1 and 2 reached 17.8%, representing 71.9% of the reduction target agreed with the SBTi, using 2019 as the base year. In 2023, the Company submitted two new targets to the SBTi, considering the more ambitious 1.5°C scenario, and a more robust target for absolute emissions, in addition to a net-zero goal. For more information, access to the Klabin's Climate Transition Plan.

The result is mainly due to decreased fossil fuel consumption in the pulp and paper units and in recycled operations. Unit Puma operated its biomass gasification plant in one of its furnaces throughout the year, reducing fuel oil consumption. Additionally, three industrial-scale tests were conducted using bio-oil in the lime kilns at Unit Monte Alegre, completely replacing fuel oil during equipment operation.

It is worth noting that 100% of the electricity consumed by the National Distribution System (scope 2) was certified through IREC (International REC Standard), reducing CO2eq emissions compared to the grid emission factor.

KODS 2030

Net capture of 45 million tons of CO₂eq from the atmosphere between 2020 and 2030.

Amount of CO₂eq tons captured from the atmosphere (In millions of tons of CO₂eq)

There was a 56% increase in net CO₂eq capture in 2023 (totaling 8.13 million net tons of CO₂eq captured for the year) compared to 2022. This result stems from the expansion of Klabin's forest base and improvements in data quality. Using proprietary data to calculate biomass expansion above and below ground ensures the accuracy of estimates, compared to generic factors from methodological publications and IPCC data. Klabin also started using the total stem volume, considering the removal of all CO₂ from produced biomass, standardizing the concept of material remaining in the field.

The calculation of net CO₂ capture uses the 2020 baseline, the year in which the goal was established. Therefore, scope 3 emissions only consider GHG emissions from upstream categories, excluding maritime emissions. The new scope 3 categories added in 2022 are not part of the net capture target until 2030.

Carbon Balance

Methodology: GHG Protocol Brasil, verified by third part

Since 2022, the broader study of the identification and accounting of relevant scope 3 categories carried out by Klabin has been taken into account for the calculation of scope 3.

Reduction of specific emissions (2003-2023)

Between 2003 and 2023, Klabin has already reduced GHG emissions (scopes 1 and 2) by more than 69% per ton of pulp, paper and packaging. 

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Gross and biogenic direct GHG emissions (Scope 1) – ton CO₂e

The 6.9% reduction in scope 1 emissions was mainly due to the decrease in fuel oil consumption at the pulp and paper plants, attributable to the full operation of the biomass gasification plant at the Ortigueira Unit, and the reduction in natural gas consumption at the recycled products plants. Three industrial-scale tests were also carried out to use bio-oil in the lime kilns at the Monte Alegre Unit, replacing 100% of the fuel oil used to operate the equipment. 

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Percentage of emissions covered by regulations

The São Paulo units in Angatuba, Piracicaba, Jundiaí, Franco da Rocha, Paulínia and all of the state of Paraná are covered by the state environmental agency’s regulatory system.

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Indirect (Scope 2) GHG emissions resulting from the purchase of energy (ton CO₂e)

As of 2020, Klabin is using purchasing choice as the main methodology for measuring indirect emissions (scope 2), unlike previous years, which prioritized the location method. In 2023, the Company showed proof of purchase of electricity from renewable sources through IRECS issued by AES, which allowed 100% purchase of renewable energy and the consequent reduction in scope 2 emissions. 

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Other indirect (Scope 3) GHG emissions (ton CO₂e)

In 2023, Klabin reduced scope 3 emissions by 12% compared to 2022. This result was made possible mainly by the decrease in GHG emissions from the processing categories of products sold (category 10) due to a 5% reduction in products sold and the updating of the secondary emission factor used for processing tissue pulp.   

In addition, there was a reduction in emissions from the categories of goods and services purchased (category 1), energy-related activities not included in scopes 1 and 2 (category 3), downstream transportation and distribution (category 9) and end-of-life treatment of products sold (category 12). It is worth noting that the Value Chain Engagement Program was launched to engage and develop relevant vendors and customers on GHG emissions. Despite the launch of this initiative, secondary data has not yet been updated to primary data for 2023. 

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The methodology used to calculate GHG emissions, including emission factors and global warming potential (GWP) adopted was that of the Brazilian GHG Protocol Program.

The information consolidation approach used was operational control, and CO2, N2O, CH4 and HCFC gases were included in the calculation of direct (Scope 1) and indirect (Scope 2 and 3) emissions. The other greenhouse gases that are mandatory to report are not generated in our operations.

The base year chosen was 2003, the first in which we quantified the Company’s CO2 emissions. For emission targets, the increase in absolute emissions due to expanded operations is already considered.

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GHG emission reduction targets

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Comments on overall performance

Scope 1: in 2023, there was a 6.9% reduction in scope 1 emissions, mainly due to the reduction in fuel oil consumption at the pulp and paper plants. The result is due to the full operation of the biomass gasification plant at the Ortigueira Unit and the reduction in natural gas consumption at the recycled products plants. 

Three industrial-scale tests were also carried out for the use of bio-oil in the lime kilns of the Monte Alegre Unit, with 100% substitution of the use of fuel oil in the operation of the equipment. Considering the intensity of scopes 1 and 2, Klabin's specific emissions fell from 148 to 142 kgCO2e/t. 

Scope 2: there was an 11% reduction in the Company's emissions relating to energy purchased under the choice of purchase approach, due to the purchase of 100% renewable energy certificates. 

Scope 3: Klabin's scope 3 emissions fell by 12% compared to 2022. This reduction is mainly related to the decrease in GHG emissions from the processing categories of products sold (category 10) caused by the 5% drop in products sold and the updating of the secondary emission factor used for processing tissue pulp. In addition, there was a reduction in emissions from the categories of goods and services purchased (category 1), energy-related activities not included in scopes 1 and 2 (category 3), downstream transportation and distribution (category 9) and end-of-life treatment of products sold (category 12).  

Of particular note is the launch of the Value Chain Engagement Program, aimed at engaging and developing vendors and clients with significant GHG emissions. To date, no secondary data has been updated to primary data. 

Reductions in combined activities

The combined activities deal with the targets adopted by Klabin to reduce emissions from its activities (scope 1) and specific emissions (scope 1 and 2). In 2022, the investment considered was the biomass gasification project with an expected reduction of more than 50,000 tCO2e, considering the CAPEX, NPV and payback of the project, information from Klabin's Marginal Abatement Cost Curve (MACC). For 2023, emissions reductions were estimated with the biomass gasification project with 100% plant operation. 

Emissions from products classified as low carbon or that allow third parties to avoid GHG emissions

Low-carbon product initiatives are adopted to reduce the emissions derived from the Company's activities, either directly through its products or by supplying products or services to third parties to reduce their emissions. In 2023, forest removals from planted areas that impact the carbon footprint of Klabin's products were accounted for, as well as avoided emissions for third parties, accounted for from the sale of energy from the Ortigueira Unit

Organization's internal carbon price

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Performance evolution*

*Compared to the previous year

1. Increase in NOx emissions (+15%), related to the start-up of the PUMA II project.

2. Reduction in SOx emissions (-9%) in the Pulp and Paper segment.

3. Reduction in PM emissions (-27%), due to the installation of an electrostatic precipitator at the Correia Pinto unit.

Klabin applies federal legal requirements to all sources of emissions, except in units where there is specific state legislation and/or emission limits conditioned by environmental licenses. The selection of emission limits complies with the legislation of the state where the unit is located. It is important to note that the 2022 data has been updated due to the use of a new management tool methodology, which impacted previously disclosed results.

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Air emissions of NOx, SOx and other significant emissions*

Emission factors, standards, methodologies, and assumptions

The source of the emission factors used is the sum of the results of the air emissions monitoring campaigns for Klabin emission sources, performed via isokinetic monitoring. This information was obtained in sampling reports produced by laboratories outsourced and accredited to perform this service. For these gases, direct measurements are performed in the chimneys, obtaining gas concentrations and flow rates. The emission rate is thus calculated and extrapolated for the entire year to obtain the absolute value.

The samplings performed follow the standards of the Brazilian Association of Technical Standards (ABNT) and use the isokinetic monitoring methodology and other CETESB references.

Persistent organic pollutants (POP) and Hazardous air pollutants (HAP) have not been determined as legal constraints to the business.

The changes about the year 2020 are attributed to specific variations of the process at the time of isokinetic monitoring.

ISO 14001 Certification

A table listing the employees by certified units can be found at the end of the chapter in the following link: Certificação ISO 14001

To address this matter, refer to the Climate Transition Plan.

Climate change management is part of Klabin's strategy, integrated into the agenda of risks and opportunities for the Company's business and its stakeholders, based on the Guidelines for Climate Change Management – Mitigation and Adaptation. Among the main guiding principles is Business Ambition for 1.5ºC, a global campaign by the UN, and the commitment to reduce emissions considering science and neutralization by 2050.

The Company has a history of investments and adoption of low-carbon technologies, which allowed for a reduction of more than 70% in the intensity of GHG emissions (scopes 1 and 2) between 2003 and 2023. It is emphasized that among Klabin's Sustainable Development Goals (KODS) is the commitment to develop science-based carbon reduction targets. Approved by the Science Based Target initiative (SBTi), the targets are challenging and aligned with the global challenge of limiting the average temperature increase to well below 2ºC.

In January 2024, Klabin submitted new targets to SBTi, including updating the short-term target, which considered scope 3 emissions and the more ambitious scenario aligned with the 1.5ºC temperature increase limit, and a long-term target (net-zero) considering scopes 1, 2, and 3 emissions by 2050.

In 2021, the Company launched the Impacto NetZero campaign, with the Brazil Network of the UN Global Compact. The goal is to engage the private sector and civil society in the urgency to develop concrete actions to combat climate change, minimize GHG emissions, and neutralize the balance, completely zeroing it by 2050.

In the realm of climate adaptation or risks/opportunities, the Company adheres to the recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD). In 2020, Klabin became a TCFD Supporter, implementing actions in governance, strategy, risk management, and goals/metrics. Supporting TCFD and enhancing the adoption of its recommendations will enhance transparency and communication with Klabin's stakeholders, particularly those in the capital markets.

Since 2020, Klabin has begun considering Scope 2 emissions using a methodology based on purchasing choices.

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Mechanisms and actions adopted

Klabin's MACC curve allows the medium and long term evaluation of technologies to reduce carbon emissions. It supports the prioritization of climate mitigation and resilience measures organized around a single, understandable metric: the economic cost of reducing emissions. Through this, it is possible to evaluate/compare the (i) cost of regulation vs. (ii) the cost of investing in low-carbon technology. From this analysis, it is understood that, for Klabin, it is more economically attractive to invest in low-carbon technologies than to pay a carbon tax or buy a permit to emit. 

In 2019, the Company adopted internal carbon pricing by establishing a shadow price to prepare for and reduce the possible impacts of carbon regulation in Brazil. In addition to analyzing the financial impact of a possible cap-and-trade or carbon taxation system in Brazil, the Company is evaluating a number of low-carbon technologies in the medium and long term. 

Klabin also adopts measures to identify and mitigate climate risks, as well as to exploit opportunities. The Forestry Research, Development and Innovation area, for example, invests in biotechnology to develop and test pine and eucalyptus clones that are more resistant to climate change. 

On the opportunity side, the Ortigueira Unit provides the Brazilian electricity system with a considerable surplus of renewable energy. The Company also monetizes this clean energy by generating and trading renewable energy certificates – iRECs. 

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Risks related to the targets

The risk of inconsistent management of the climate agenda can impact Klabin's image and business, potentially leading to loss of investments. Therefore, the company conducts a risk management assessment, continuously updated in meetings with members of the Sustainability Committee, the Risks and Internal Controls Committee, and the Board of Directors, entities responsible for adjustments and contributions on the subject.

Reputation is one of the elements of Klabin's risk management assessment, which constantly monitors its image in various media outlets. The market holds an excellent perception of Klabin's socio-environmental and climate image, directly linked to maintaining certifications such as FSC and ISO 14.001. This has resulted in Klabin being included in the CDP Triple A List for three consecutive years, making it the first Latin American company to join this prestigious group.

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Risks and Opportunities for Climate-Related Forest Management and Wood Production

Climate risks and opportunities are integrated into the Company's management and decision-making processes, particularly those related to forest management, given their significance to the business.

Klabin's forest research area – the Department of Efficiency and Ecophysiology – monitors potential future climate scenarios, develops data modeling related to climate parameters, and assesses their impact on planted forests. The Department recommends necessary measures in case of adverse effects.

Among the identified potential risks is that of forest fires, which could have significant financial impacts on the Company. To reduce the likelihood of these occurrences, Klabin invests in a series of climate mitigation and adaptation measures.

One outcome of this effort is the installation of monitoring towers throughout forest areas, enabling the identification of fire outbreaks, along with the provision of a dedicated response infrastructure including trucks, cars, and even helicopters.

Materiality