Green Financing

To support Klabin’s growth plan, the financial strategy includes an approach to debt linked to favorable market conditions integrated with performance and social and environmental commitments. In this regard, issuances of related financial instruments have increased progressively, reflected in the 34% of current debt linked to sustainability, as shown in the chart below. Access Klabin's first Sustainable Finance report.

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Sustainable Finance report
Company's total gross debt
 

Klabin's issuance of green bonds adhered to several eligibility criteria, aligning with the four pillars outlined in the Green Bond Principles by the International Capital Markets Association (ICMA). This adherence was verified by Sustainalytics, which provided a Second Party Opinion (SPO).
The proceeds from these bond issuances are earmarked specifically for financing and/or refinancing, in whole or in part, investments and/or costs associated with eligible "Green Projects". These projects are evaluated by Klabin's sustainability governance bodies.
In 2019, Klabin became the first Brazilian company to issue securities in this category with a 30-year maturity (Notes 2049). In September 2017, the Company issued a USD 500 million bond with a ten-year term. Finally, in January 2020, the Notes 2049 issue was retapped to raise an additional USD 200 million, bringing the total debt of this type to US$ 1.2 billion.
These issuances underscore Klabin S.A.'s commitment to social and environmental responsibility in Brazil, showcasing its pioneering financial strategy rooted in sustainability.
In 2023, Klabin fully repaid its first green bond, issued in 2017 with a ten-year maturity, valued at USD 500 million. As of now, only USD 272 million of the total US$ 1.2 billion issued remains to be allocated

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Report Green Bond 2022
(tax year 2022)
Report Green Bond 2021
(tax year 2021)
Report Green Bond 2021
(jul/20 to jun/21)
Report Green Bond 2020
(jul/19 to jun/20)
Report Green Bond 2019
(jul/18 to jun/19)
Fund allocation USD MM %
Issuance 1,200.00 100
Verified 928 77
Balance 272 23

ELIGIBILITY CRITERIA Environmental benefits Accumulated amounts (USD) Units
Native Forest Restoration and Conservation of Biodiversity Areas covered by exotic species control activities (hectares) 41,868.98 hectares
Renewable energy Reduction of atmospheric emissions 728,281 tCO2 eq/ton
Waste Management Waste avoided sending to landfill 32,900 ton
Clean transport Total emissions avoided 67,813 tCO2 eq/ton
Energy Efficiency Total emissions avoided 13,438 ton
Sustainable Forest Management Total areas owned by certified small and medium-sized rural producers 254,576 acre
Sustainable Water Management Reduction in specific consumption of water 11 %
Products, technologies and processes that are eco-efficient and/or adapted to the circular economy Reduction of energy consumption 12.5 %
Adaptation to Climate Change Percentage of area conserved by management microplanning method 100 %

A estratégia de finanças sustentáveis da Klabin tem se fortalecido não apenas por meio das emissões de títulos no formato use of proceeds, mas também mediante emissões de dívidas cujos benefícios financeiros estão associados ao desempenho de metas de sustentabilidade. Essas metas derivam dos compromissos da empresa delineados em sua Agenda 2030, a qual compreende 23 metas distribuídas em 23 temas materiais, abrangendo áreas como a construção de um futuro renovável, contribuição para uma economia sustentável, prosperidade para pessoas, e tecnologia e de segurança da informação.

Instrumento financeiro Valor emitido (US$) Validade Mecanismo Meta atrelada Resultado 2023
Sustainability-Linked Bond 500 milhões 2030 penalidade de 12,5 bps em caso de não atingimento em 2025 Água - Reduzir em 3.68 m³ por tonelada de produção 3,10 m³/ton
penalidade de 6,25 bps em caso de não atingimento em 2025 Resíduos - Reaproveitar/reciclar no mínimo 97,5% de resíduos sólidos 99,3%
penalidade de 6,25 bps em caso de não atingimento em 2025 Biodiversidade - Promover a reintrodução ou reforço populacional de, no mínimo, duas espécies nativas ao ecossistema 1 espécie
Sustainability-Linked Loan 800 milhões 2027 penalidade de 6,25 bps (3,125 bps por meta) em caso de não atingimento em 2025 e 2027 Biodiversidade - Reintroduzir ou promover o aumento populacional no ecossistema de 2 espécies extintas ou ameaçadas até dezembro de 2025 e 3 espécies até dezembro de 2027 1 espécie
Revolving Credit Facility 500 milhões 2026 desconto de 2,5bps na taxa de juros em caso de atingimento da meta  Resíduos - Reaproveitar/reciclar no mínimo 97,5% de resíduos sólidos 99,3%
Antecipação de Recebíveis Não aplicável - desconto de 5bps na taxa de juros em caso de atingimento da meta.  Resíduos - Reaproveitar/reciclar no mínimo 97,5% de resíduos sólidos 99,3%

A seguir, são apresentados os resultados anuais para cada instrumento financeiro atrelado à performance de sustentabilidade, já emitido e ainda válido para a Companhia.

Klabin priced a USD 500 million issuance of Senior Unsecured Notes, linked to sustainability performance goals with a final maturity of 2030, with 2025 as the trigger for the pricing of the next interest rate.
The Key Performance Indicators (KPIs) are aligned with three of the Klabin Sustainable Development Goals (KSDG), which are integrated with the company's growth plan. The bonds referring to this issuance are susceptible to coupon (interest) readjustments depending on whether the goals set by the Company are reached in 2025, as defined by the Sustainability Performance Trigger (SPT).
The goals selected by Klabin in this operation – focusing on water, waste, and biodiversity – align with the Company's ambition to enhance the resilience and efficiency of its resource extraction, transformation, reuse, and regeneration model. Klabin's influence on these three topics directly impacts cost-efficiency, its ability to maintain constructive relations with society and, lately, the very capacity of the ecosystem where the company operates to respond positively to stimuli for greater productivity, both for forestry and industrial operations.

It should be noted that one year after the deadline for meeting the triggers set for 2025 and the subsequent reassessment of the interest rate, the Company successfully achieved or surpassed the goals agreed upon with the market during the bond issuance.
The early achievement of objectives, however, does not mean the end of efforts towards the goals. The Company's ongoing challenge persists over time, encompassing the execution of its growth plan and its commitment to sustaining profitability.

Sustainability Performance Triggers (2025)

  • Water: rreduction to a value equal to or below 3.68 m³ per ton of production (16.7% reduction compared to 2018). 2023 result: reduction to 3.10 m³/ton.
  • Waste: a minimum of 97.5% reuse/recycling of solid waste. 2023 result: 99.3% reused.
  •  Biodiversity:promote the reintroduction or population reinforcement of at least two species native to the ecosystem. 2023 result: 1 species reintroduced.

In 2022, Klabin made an amendment to the financing agreement linked to the execution of the Puma II Project, totaling USD 800 million. This financing consists of A-Loans and Co-Loans with IDB Invest, IFC, and JICA, as well as B-Loans with commercial banks ("Financing"). The amendment extended the average maturity from 3.1 years to 6.9 years while maintaining the original financing cost. Notably, the cost of the financing is now contingent upon the Company's achievement of sustainability goals. 

Linked biodiversity goal: reintroduce or promote the population increase of 2 extinct or threatened species by December 2025, and 3 species by December 2027, within the ecosystem. 2023 result: 1 species reintroduced.

If Klabin fails to meet these goals, there will be a potential increase in the financing rate of up to 6.25 basis points (bps), with 3,125 bps applied if the first goal is not met and an additional 3,125 bps if the second goal is not met.

Klabin has contracted a revolving credit line linked to sustainability (RCF) of US$ 500 million with nine financial institutions, maturing in October 2026. This line is linked to the sustainability indicator below, which is part of the company’s sustainable goals until 2030 in line with the UN Sustainable Development Goals (SDGs).

Waste: Minimum of 97.5% reuse/recycling of solid waste;

To learn more details about the evolution of this goal, access Sustainability-Linked Bond

In 2023, Klabin started a Sustainability-Linked prepaid receivables program. This will enable the cost of the program to be reduced by 5 bps. The annual measurements of the waste goal will be integrated into the receivables program, mirroring the measurements already established for the RCF.

Linked waste goal (annual): minimum of 97.5% reuse/recycling of solid waste. 2023 result: 99.3% reused.

2030 Goal: reduce specific industrial water consumption by 20%.

Sustainability Performance Target Trigger: water consumption equal to or below 3.68 m³ per ton of production (reduction of 16.7% over 2018)

(12.5 bps increase in SLB interest rate if goal is not met)

 

Rational:The calculation for specific water consumption is done by the difference between water withdrawn and water returned to the environment, divided by the Company's total production.

 

Actions Taken
  • Creation of a Water Management Working Group, an internal forum made up of members from all of Klabin's businesses and responsible for governance, planning and implementation of actions to reduce/reuse water and reuse effluents, especially in areas of water stress. The efforts of this group enable the leveraging of small-scale initiatives to decrease water withdrawal in the Company's operations and monitor their implementation effectively.
  • Engagement in river basin committees in the regions of significant consumption (Paraná and Santa Catarina), with active participation in water resource plans, including discussions on shared use and mechanisms for charging for water use. Participation in the Intermunicipal Consortium of the Piracicaba, Capivari and Jundiaí (PCJ) River Basins, composed of local governments and companies, which aims to recover the water sources in its area of coverage (in the state of São Paulo). Participation in the committee and consortium helps promote interaction with other companies, through benchmarking, and the search for new solutions for industrial operations with the aim of reducing water consumption.
Future Actions
  • Execution of actions related to increasing water reuse and improving processes for water efficiency in all of Klabin’s plants, prioritizing initiatives at sites located in areas of water stress and in plants with high water use.
  • Continuing to hold bimonthly meetings with the Water Reduction Working Group for advances in managing the resource, in addition to critical analyses to monitor the indicator and define actions to improve results in the industrial units.
  • Development of the Klabin Water Resources Management Plan, with the participation of the sectors involved and internal (forestry and industrial units) and external (supply chain, community and public management) coverage.
Challenges
  • Maintenance of water consumption optimization, considering the production increases expected with the Company’s expansion in the next few years
Connections with other KODS 2030 targets

2030 Goal: Zero destination of industrial waste to landfills.

Sustainability Performance Target Trigger: reuse/recycling of solid waste of at least 97.5%

(6.25 bps increase in SLB interest rate if goal is not met)

Rational: goal calculated based on the proportion of solid waste reused, recycled and co-processed compared to the total solid waste generated in operations (in tons). 

By 2023, the Company had raised the percentage of solid waste reused to 99.35%, reflecting the reduction in the production of recycled products and, therefore, in the disposal of industrial waste to landfills, mainly waste from the trimming process and residual waste (dirt from post-consumer cardboard that cannot be used, such as adhesive tape and staples).
The Company continues to make progress in industrial waste management and, in 2023, it maintained 100% of the solid waste indicator in the environmental index of its industrial units, with highlights going to Otacílio Costa (SC) and Monte Alegre (PR), which ended the year with more than 99.9% reuse of industrial waste.
Also noteworthy were the positive results achieved at the Puma Unit (Paraná), with 99.83% recycling and reuse of industrial waste over the course of the year. The result was once again driven by the performance of the Waste Processing Center at the Puma Unit (Paraná).
 

 

Actions Taken
  • Otacílio Costa Unit (Santa Catarina): 0.55% increase in reuse due to non-recyclable waste being sent for co-processing. Destination of construction waste for reuse processes. Educational activities have contributed to the progress of waste sorting with a focus on recycling materials.
  • Correia Pinto Unit (Santa Catarina): progress in reusing part of the waste (0.8%) and progress in studies on the destination of dregs for co-processing and agricultural use. Destination of construction waste for reuse.
  • Monte Alegre (Paraná), Puma (Paraná) and Rio Negro (Paraná) units: use of dreg waste (Monte Alegre and Puma) and sludge (Rio Negro) to produce ceramics.
  • Rio Verde Unit (GO): since February 2023, the plant has been reusing, recycling and/or co-processing 100% of its industrial solid waste.
  • Lages Unit (Santa Catarina): disposal of sludge waste for composting and Class I waste for co-processing. This action raised the percentage of reuse to 86.37% in 2023.
  • Conducting critical analyses to track the indicator and establishing actions to improve results in the industrial units.
Future Actions
  • Puma Unit (PR): maintenance of the waste co-processing initiative and a pilot for an alternative disposal action, which seeks to produce agricultural input from a mixture of dregs, grits, and lime mud (industrial process residues).
  • Monte Alegre (Paraná) and Puma (Paraná) units: commissioning of the biological sludge (Monte Alegre and Puma) and tertiary sludge (Puma) drying system for energy use.
  • Goiana Unit (Pernambuco): test phase of the incorporation of the sludge generated in the Effluent Treatment Plant in the production of ecological bricks by the region’s ceramic industry.
  • Betim Unit (Minas Gerais): study for the reuse of biological sludge in ceramics in the region.
  • Goiana Recicles (Pernambuco), Paulínia (São Paulo) and Piracicaba (São Paulo) units: evaluation of alternatives for disposing of the scrubbing of residual waste (dirt from post-consumer cardboard that cannot be used, such as adhesive tape and staples).
  • Correia Pinto Unit (Santa Catarina): development of partnerships with companies for blending Class I non-recyclable waste to enable its co-processing, as well as the conclusion of studies for agricultural use of dregs.
Challenges
  • Reuse of waste from purifying residual waste in recycling plants: evaluations of the use of this material in reuse/repurposing processes. In 2023, this waste represented approximately 27% of the total volume of unused materials.
  • Maintenance and ongoing development of new business models that enable the absorption of the products generated by the waste reuse initiatives.
Connections with other KODS 2030 targets

2030 Goal: reintroduce two species that are proven to be extinct and promote the population reinforcement of four more threatened species.

Sustainability Performance Target Trigger: reintroduction or population reinforcement of at least two species native to the ecosystem.

(6.25 bps increase in SLB interest rate if goal is not met)

 

                                                        Progress for the goal: 1/2 species.

 

Position of the goal in the mitigation hierarchy:

 

1. Avoid 2. Minimize 3. Restore 4. Offset
▼

 

Reintroduction of fauna

In 2023, two monitoring campaigns were conducted for the black-fronted piping-guan (Aburria jacutinga), assessing their survival, dispersal, and ability to form reproductive pairs. The initiative follows the reintroduction of the species in 2022, when 30 individuals were released. To identify dispersal in the forest and the species' adaptation, the technical team monitors these specimens using a VHF antenna, camera traps and citizen science.
The species was selected for its ability to help forest restoration, taking into account its home range, which can reach up to 1,000 hectares, and because it is a great seed disperser, feeding on at least 46 types of native fruit.

Population reinforcement

In 2023, five individuals of the vinaceous-breasted amazon (Amazona vinacea) were introduced to bolster the population in Paraná. Health checks were carried out and pre-release training began. Two individuals were rejected, one for health reasons and the other for lack of behavioral aptitude. The remaining three are in the final rehabilitation stage of the pre-release training project and could be released in the first half of 2024. The project's completion hinges on the renewal of the Threatened Species Release Authorization from the Instituto Água e Terra (IAT).
The purple-breasted parrot was chosen for the population reinforcement project because it was on the IAT's list of threatened species in the region during the Cumulative Impact Study (a condition of the Puma II Project). This species holds significant ecological importance due to its role in forest restoration by aiding in seed dispersal, particularly of Araucaria trees, which are also threatened.

Actions Taken
  • Receipt of the two batches of black-fronted piping-guan, totaling 30 animals; introduction of the animals to the release site; release of the animals and the first stages of monitoring and follow-up.
  • Construction of new quarantine and rehabilitation and release enclosures, necropsy room, and updating of veterinary equipment for receiving vinaceous-breasted amazon. The Klabin Ecological Park is fully prepared to receive the animals, and we await the allocation of the animals by the responsible environmental agencies to commence the work.
  • Participation in the National Action Plans for the Conservation of Endangered Species (PANS) on birds of the Atlantic Forest, psittaciformes (ended December 2023).
Future Actions

Related to the jacutinga black-fronted piping-guan:

  • Inclusion of the species in the Monitoring Program to track its expansion in the forest.
  • Analysis and negotiations to obtain new batches of animals to continue the project, reinforcing the population of the reintroduced species when necessary.

Actions related to the vinaceous-breasted amazonspecies:

  • Release of the three individuals suitable for population reinforcement in the region.
Challenges
  • Evaluating the success of the reintroduction of the black-fronted piping-guan, receiving new individuals of the vinaceous-breasted amazon, as well as their rehabilitation or release, which can vary according to the response of the ecosystem and includes factors such as the animals' failure to adapt and the risk of being killed by hunting or being run over. The results will be analyzed by monitoring area use by the species and further analysis of this data.
Connections with other KODS 2030 targets

Other goals regarding the Biodiversity topic:

  • Donate 1 million seedlings of native trees for the recovery of areas.

  • 100% of wildlife roadkill points with initiatives to reduce accidents.

  • Maintain or increase the number of bird species dependent on high-quality forests; and establish six partnerships or research collaborations annually in the fields of nature conservation and biodiversity studies.

Updated and verified on: 03/28/2024