Green Financing
Green Financing
To support Klabin's growth plan, the Company's financial strategy integrates debt management with favorable market conditions alongside performance, social, and environmental commitments. As part of this approach, Klabin has steadily increased the issuance of associated financial instruments. Currently, 34% of its total debt is allocated to sustainability initiatives, distributed as follows. Access Klabin's first Sustainable Finance report.
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
Fund allocation | USD MM | % |
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Emission | 1,200 | 100 |
Verified | 928 | 77 |
Balance | 272 | 23 |
Distribution of funds 2017-2023 (USD MM)
Native Forest Restoration and Conservation of Biodiversity | Renewable Energy | Waste Management | Clean Transport | Energy Efficiency | Sustainable Forest Management | Sustainable Water Management | Products, technologies and processes that are eco-efficient and/or adapted to the circular economy | Adaptation to Climate Change |
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17 | 46 | 12 | 24 | 7 | 741 | 8 | 60 | 13 |
ELIGIBILITY CRITERIA | Environmental benefits | Accumulated amounts | Units |
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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 | hectares |
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 | % |
Klabin's sustainable finance strategy has been fortified not only through the issuance of bonds in the use of proceeds format, but also by issuing debt instruments whose financial benefits are tied to the achievement of sustainability goals. These align with the Company's 2030 Agenda, which encompasses 23 material topics and corresponding goals. These objectives span diverse areas, including fostering a renewable future, contributing to a sustainable economy, promoting prosperity for all, and prioritizing technology and information security.
Financial instrument | Issued amount (USD) | Maturity | Mechanism | Linked goal | 2023 result |
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Sustainability-Linked Bond | 500 million | 2030 | penalty of 12.5 bps if not reached by 2025 | Water - Reduce by 3.68 m³ per ton of production | 3.10 m³/ton |
penalty of 6.25 bps if not reached by 2025 | Waste - Reuse/recycle at least 97.5% of solid waste | 99.3% | |||
penalty of 6.25 bps if not reached by 2025 | Biodiversity - Promoting the reintroduction or reinforcement of the population of at least two native species within the ecosystem. | 1 species | |||
Sustainability-Linked Loan | 800 million | 2027 | penalty of 6.25 bps (3.125 bps per goal) in the event of non-achievement in 2025 and 2027 | Biodiversity - Reintroduce or promote the population of 2 extinct or threatened species within the ecosystem by December 2025, and expand this effort to include 3 species by December 2027. | 1 species |
Revolving Credit Facility | 500 million | 2026 | 2.5bps discount on the interest rate if the goal is reached | Waste - Reuse/recycle at least 97.5% of solid waste | 99.3% |
Prepaid receivables | Not applicable | - | 5bps discount on the interest rate if the goal is reached. | Waste - Reuse/recycle at least 97.5% of solid waste | 99.3% |
Below are the annual results for each financial instrument linked to sustainability performance that have been issued and are currently valid for the Company.
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. Sustainability Performance Triggers (2025)
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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.
In 2022, Klabin secured a sustainability-linked revolving credit facility (RCF) totaling USD 500 million with nine financial institutions, maturing in October 2026. This facility is linked to the waste sustainability indicator, which is part of the Company's sustainability goals until 2030 in line with the UN's Sustainable Development Goals (SDGs).
Linked waste goal (annual): minimum of 97.5% reuse/recycling of solid waste. 2023 result: 99.3% reused.
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 |
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Future Actions |
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Challenges |
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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 |
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Future Actions |
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Challenges |
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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 ▼ |
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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 |
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Future Actions |
Related to the jacutinga black-fronted piping-guan:
Actions related to the vinaceous-breasted amazonspecies:
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Challenges |
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Connections with other KODS 2030 targets |
Other goals regarding the Biodiversity topic:
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Updated and verified on: 07/04/2024