Climate change

Carbon Balance

Klabin has a positive carbon balance, which means the company captures more carbon dioxide from the amosphere than it emits in its operations.

Methodology: GHG Protocol Brasil, verified by third part

¹This column considers scope 3 according to the broader study of identification and accounting of relevant categories of scope 3, carried out by Klabin. The column on the side considers the values ​​of the Scope 3 categories before this expansion study.

Reduction of specific emissions (2003-2022)

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

The increase in gross emissions can be explained by the 11% increase in the consumption of non-renewable fuels due to the accounting of emissions from the five units acquired from International Paper in 2020, which use natural gas and fuel oil in their boilers, in addition to the startup of MP27 at the Puma unit. It is important to point out that despite this, there was also an 8% increase in the consumption of renewable fuels, especially biomass, tall oil, and tar. We will begin the biomass gasification operation at Puma II in 2022. In the target for the year, the increase in absolute emissions due to expanded operations is already considered.

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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)

(Base year 2004, the first year in which we quantified the CO2 emissions of Klabin S.A.) In the target for the year, the increase in absolute emissions due to expanded operations is already considered.

Starting in 2020, it was decided to use the market-based method to measure indirect emissions (scope 2), as opposed to previous years that prioritized the location-based method. In 2022, Klabin proved the acquisition of electricity from renewable sources through self-declarations and IRECs issued by Copel, which allowed the Company to achieve 100% purchase of this type of energy and the consequent reduction in scope 2 emissions.

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

In 2022, Klabin carried out a much broader study to identify and account for the relevant categories of Scope 3, seeking to define the most relevant ones for the company, based on the evolution of understandings and definitions regarding this scope.
The categories of purchased goods and services (category 1) and activities related to fuels and energy not included in scope 1 and 2 (category 3) were expanded considering at least 90% of relevant emissions from these categories. This study took into account the carbon footprint of studies already carried out by Klabin to identify more carbon-intensive inputs and raw materials.
Emissions from the transport and distribution category were segregated between category 4 (upstream) and category 9 (downstream), as was done until 2019.
In addition, Klabin has included two new categories in its scope 3, the sold products processing category (category 10) and the end-of-life treatment category (category 12). Category 10 emissions consider emissions from the processing of intermediate products sold by Klabin to customers, such as hardwood and hardwood pulp, and kraftliner and paperboard. This category considered 100% of intermediate products sold in the year and secondary emission factors available at EcoInvent. Category 12 emissions, on the other hand, consider 100% of the end-of-life treatment emissions of the final products sold by Klabin, such as packaging and industrial bags, and the paper packaging recycling rate of 86.3% (Ibá, 2022 ).
All emission factors considered in this scope 3 expansion study considered secondary sources (EcoInvent). As of 2023, Klabin will focus on the value chain engagement strategy and has started to approach, train and engage its suppliers and relevant customers.

*Transport and distribution of products sold are recorded in “Transport and distribution (upstream)”, according to the GHG Protocol methodology, as they are paid by Klabin.

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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 HCFCs 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 2004, the first in which we quantified the Company’s CO2 emissions. For eission 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 2022 there was a 1.5% reduction in scope 1 emissions. It is possible to relate the result to the 7% increase in the share of renewable fuels, in stationary combustion, in the reduction in the consumption of fossil fuels and nitrogenous compounds in the implementation of forests. There was a 7% increase in scope 1 biogenic emissions, due to the burning of biomass and black liquor in the boilers. Considering the intensity, the specific emissions reduced from 155 to 148 kgCO2e/t.

Scope 2: in the same period, emissions related to energy purchased in the approach by location fell by 13%, compared to 2021, due to the change in the SIN emission factor. If we consider the purchase choice approach, Scope 2 emissions amount to a 75% reduction. 100% of the energy purchased came from certified renewable sources.

Scope 3: there was a 3% increase in scope 3 emissions, mainly impacted by the acquisition of goods and services and the displacement of employees (home-work), whose accounting uses primary data.

Reductions in combined activities

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

Organization's internal carbon price

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Performance evolution*

*Compared to the previous year

Klabin applies federal legal requirements to all sources of emissions, except for units where there is specific state legislation and/or emission limits conditioned by environmental licenses. The selection of emission limits follows the legislation of the state where the unit is located. In 2022, the following relevant points stand out:

1- Increase in NOx emissions (+5%) in the Pulp and Paper segment.
2- Reduction of SOx emissions (-22%) in the Pulp and Paper segment.
3- Reduction of PM emissions (-59%) in the Pulp and Paper segment. During the year, the operation of the new electrostatic precipitator in the power boiler (CF8) in Otacílio Costa and in the recovery boiler (CR2) in Correia Pinto began. With the new equipment it was possible to reduce atmospheric emissions and improve air quality in the region.

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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 in relation to the year 2020 are attributed to specific variations of the process at the time of isokinetic monitoring.

According to this question check TCFD.

Climate change management is part of Klabin's strategy and is integrated into the risks and opportunities agenda for the businesses of the Company and its stakeholders. We follow the guidelines for climate change management – mitigation and adaptation. Among the main drivers is the Business Ambition for 1.5º C, a global campaign of the United Nations (UN), and the commitment to reduce emissions considering science and neutrality by 2050.

The Company has a history of investments and the adoption of low-carbon technologies that has resulted in an over 68% drop in recent years (2003-2022) in CO2 equivalent emissions per ton of product generated. It is worth emphasizing that the Klabin Sustainable Development Goals (KSDGs) include the commitment to develop science-based carbon reduction targets. This means that Klabin adopts challenging targets that have been approved by the Science Based Target initiative (SBTi), in line with the global challenge of limiting the average temperature increase to 1.5°C.

In 2021, the company launched the Impacto NetZero campaign, with the Global Compact Network Brazil. Its intention is to engage the private sector and civil society in the urgency to develop concrete actions focused on combating climate change, reducing GHG emissions as much as possible and neutralizing the balance, completely zeroing its balance by 2050.

With respect to climate risks/opportunities or adaptation, the Company follows the recommendations of the Task Force on Climate-Related Financial Disclosure. In 2020, Klabin became a TCFD Supporter, implementing and improving actions in the pillars of governance, strategy, risk management and targets/metrics.

*Since 2019, Klabin began to consider Scope 2 emissions using the methodology based on the choice of purchase.

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Mechanisms and actions adopted

Klabin's MACC curve allows the medium and long term evaluation of other technologies to reduce carbon emissions. It enables the prioritization of climate mitigation and resilience measures organized by a single, understandable metric: the economic cost of emissions reduction. It is possible to evaluate/compare: (i) the cost of regulation; and (ii) the cost of investment 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, Klabin adopted internal carbon pricing from the establishment of a shadow price in order 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.

In 2020, Klabin became a TCFD Supporter, proving its engagement in actions that denote transparency, responsibility with sustainability, and business orientation related to the planet's climate changes. The Task Force on Climate-Related Financial Disclosures (TCFD) is a set of recommendations developed by the Financial Stability Board (FSB) for companies to incorporate climate-related risks and opportunities into their financial strategies and disclosures. For Klabin, supporting the TCFD and improving the adoption of its recommendations will help in transparency and communication with its stakeholders, especially investors. The Company 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 valorization of renewable energy is important to generate returns on the company's investments, since the Puma Unit provides the Brazilian electrical system with an important surplus of renewable energy production. The Company also monetizes this clean energy by generating and trading renewable energy certificates – IRECs.

Furthermore, Klabin had its targets for the reduction of GHG emissions approved by the Science Based Targets initiative (SBTi) in 2021. This initiative establishes methods and tools for companies to institute science-based emission reduction targets. The Company's commitment, released today by the SBTi, establishes a 25% reduction of GHG emissions (scope 1 – own emissions and scope 2 – emissions in purchased energy) per ton of pulp, paper and packaging by 2025, and 49% by 2035, with 2019 as the base year.

The SBTi initiative is a partnership between the Carbon Disclosure Project (CDP), the United Nations Global Compact, the World Resources Institute (WRI) and WWF, and seeks to drive climate action in the private sector through science. The commitment to the design of emission reduction targets contributed to Klabin being the only Brazilian company to be invited to join the COP-26 Business Leaders, a group responsible for disseminating and engaging the private sector on the topic of climate change. Back in 2019, the company committed to the Business Ambition for 1.5° C - Our only future campaign, led by the UN's agencies and SBTi, and more recently joined the Race to Zero movement.

It is also worth mentioning that, in 2022, Klabin won CDP's Triple A rating for the second year in a row, attesting to its leadership in issues related to water security, forests and climate change. 

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Risks related to the targets

The risk of inconsistent results on the climate agenda can impact the Company's image and business, even causing a loss in investments. This is one of the items integrated in the risk management assessment and is constantly updated in meetings with members of the Sustainability Committee, the Risks and Internal Controls Committee, and the Board of Directors, which discuss changes and adjustments to this topic. Another element that is part of this management is reputation, so Klabin constantly monitors its image in the various means of communication. The company has an excellent perception of its socio-environmental and climate image in the market, a fact directly related to the maintenance of certifications such as the FSC and ISO 14.001. Also influencing this perception is the Company's inclusion in CDP's Triple A List for the second consecutive year, making it the first Latin American company to join this select group. In addition, the company has undertaken relevant public climate commitments, such as meeting the TCFD guidelines, commitment to the Business Ambition for 1.5C global campaign and the Global Compact; in addition to the approved climate targets: (i) meeting the targets agreed with the Science-Based Targets Initiative; (ii) 100% purchase of certified energy from renewable sources; (iii) reducing fossil fuel use to have an energy matrix that is 92% renewable. In addition, the company has participated in the Corporate Sustainability Index of the Brazilian Stock Exchange (B3) since 2013.

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Climate-related risks and opportunities for forest management and wood production

"Climate risks and opportunities are part of the Company’s management and decision-making processes, especially those related to forest management, due to their relevance to the business.

Klabin’s forest research area – Department of efficiency and ecophysiology – monitors possible future climate scenarios, developing data modeling related to climate parameters and assessing the impacts on planted forests. It then recommends necessary measures in case of adverse effects. Potential risks mapped include, for example, the increase in temperature in the Paraná region, where Klabin’s main forest areas are located.

This increase in temperature can have negative impacts, such as accelerating the growth rate of forest pests and the need for greater irrigation of the plantations, among others. To mitigate these potential risks, the Company invests in a series of actions in the areas of plant health, biotechnology, and genetic improvement, with practical results, such as the genetic improvement of pine trees to adapt to these circumstances and considering the projected increase in temperature for the Southern region of Brazil.

Learn more about the climate risks identified in the TCFD topic."                                                            

Materiality