Sustainable Finance_v0
Green Financing
Several eligibility criteria were met to issue Klabin’s green bonds, respecting the four pillars that comprise the Green Bond Principles of the International Capital Markets Association (ICMA), and were certified by Sustainalytics, acting as the Second Party Opinion (SPO).
The funds originating from the issuances must be allocated to the financing and/or refinancing, in whole or in part, of investments and/or costs related to eligible “Green Projects”, which in turn 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 had already issued a security, in the amount of US$ 500 million, with a term of ten years. Finally, in January 2020, a reopening (retap) of the issuance of Notes 2049 was carried out, for additional funding of US$ 200 million, totaling US$ 1.2 billion in debt of this type.
These issuances reinforce Klabin S.A.’s commitment and social and environmental performance in Brazil, demonstrating its pioneering sustainability practices.
| Fund allocation | USD MM | % |
|---|---|---|
| Issuance | 1,200.00 | 100 |
| Verified | 716.29 | 60 |
| Balance | 483.71 | 40 |
| ELIGIBILITY CRITERIA | Environmental benefits | Accumulated amounts (USD) | Units |
|---|---|---|---|
| Native Forest Restoration and Conservation of Biodiversity | Areas covered by exotic species control activities (hectares) | 28,774,39 | hectares |
| Renewable energy | Reduction of atmospheric emissions | 420,308 | tCO2 eq/ton |
| Waste Management | Waste avoided sending to landfill | 32,900 | ton |
| Clean transport | Total emissions avoided | 49,688 | 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 | 229,759.24 | 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 | 42 | % |
Klabin priced a USD 500 million issuance of senior unsecured notes, linked to sustainability performance targets 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 targets of Klabin’s Sustainable Development Goals (KODS) which, in turn, are linked to the Company’s growth plan. The bonds referring to this issuance are susceptible to coupon (interest) readjustments depending on whether the targets set by the Company are reached in 2025, as defined by the Sustainability Performance Trigger (SPT).
The goals selected by Klabin in this operation – in the areas of water, waste and biodiversity – identify the Company’s ambition to increase the resilience and rationality of its model of extraction, transformation, reuse, and regeneration of resources. Klabin’s influence on these three topics has a direct impact on its cost-efficiency, its ability to maintain constructive relationships with society, and, ultimately, the very capacity of the ecosystem where the Company operates to respond positively to the stimuli of greater productivity, both for forest and industrial operations.
Results in 2023
Goal 2030: 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 if the target is not met)
Rational – goal calculated according to consumptive use: difference between the volume of water withdrawn and the volume of water returned, divided by total production. Thus, the Company is able to evaluate, in m³/ton, the real water consumption in its plants and how to foresee actions for the impact on the quantity and quality of the resource. The Correia Pinto (SC), Otacilio Costa (SC), Monte Alegre (PR), Puma (PR), and Angatuba (SP) units represent 96% of this indicator and none is located in a water-stressed area.
- Puma Unit (PR): represents 47% of total consumption, up 2% from the previous cycle. The specific water consumption indicator continues to improve, even after the unit's expansion, mostly due to water efficiency initiatives and actions to reuse water and effluents.
- Engagement in hydrographic basin committees in regions of significant consumption (PR and SC), actively participating in water resource plans, including discussions on shared use and water usage pricing mechanisms; Participation in the Intermunicipal Consortium of the Piracicaba, Capivari, and Jundiaí River Basins (PCJ), comprised of municipalities and companies, with the goal of restoring the watersheds in its area of coverage.
- Participation in the Water Reduction Working Group, an internal forum made up of members from all of Klabin's businesses and responsible for the governance, planning and deployment of water reuse and effluent repurposing actions, especially in areas of water stress;
- Maintenance of the indicator in the variable compensation targets contracted by 100% of the executive directors.
- Execution of actions related to increasing water reuse and improving processes for water efficiency in all of Klabin’s plants, prioritizing initiatives in units located in areas of water stress and in plants with high water use;
- 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.
- Maintenance of water consumption optimization, considering the production increases expected with the Company’s expansion in the next few years.
Connection to other KSDGs: hydrosolidarity and water security goals
Goal 2030: Zero destination of industrial waste to landfills
Sustainability Performance Target Trigger: Reuse/recycle of solid waste of at least 97.5%
(6.25 bps increase if target is not met);
Rational – goal calculated based on the proportion of reused and recycled solid waste compared to the total solid waste generated in operations (in tons).
Klabin continues to make progress in industrial waste management and, in 2022, achieved 100% compliance with the Solid Waste Index across all its plants, with special mention for the Puma unit, which closed the year at 99.8%, 2.8 percentage points above the individual target (97%). The result was once again driven by the performance of the Waste Processing Center at the Puma Unit, where the unit's waste is reused. The recycling units in Paulínia (SP), Franco da Rocha (SP), Correia Pinto (SC) and Piracicaba (SP) now account for the majority of non-reusable waste, comprising 69% of the waste sent to landfills.
The paper units in Otacilio Costa and Correia Pinto (both in Santa Catarina), which drove the previous results, also progressed in 2022. In the case of Correia Pinto, there have been advances in the reuse of part of the waste, amounting to 0.7% in 2022, due to the destination of dregs and grits for co-processing. At the Otacílio Costa unit, reuse increased by 2.4% due to several initiatives taken, such as the reuse of waste from dregs and grits for agricultural purposes (accredited by the Ministry of Agriculture and Livestock – MAPA) and the disposal of slag from power boilers for composting/coprocessing.
- Otacílio Costa (SC) and Correia Pinto (SC) units: advances in the study of waste co-processing (grits and dregs) for use as fuel in cement kilns and burning waste incorporated into the cement itself, reducing the need for other inputs during this production process. At Correia Pinto, the grits were technically approved. The dregs, on the other hand, will need to be adjusted to meet certain criteria in order to be validated for use. At Otacílio Costa, the substitution of sending for co-processing was defined for the soil correction project.
- Correia Pinto Unit (SC): treatment of waste (dregs and grits) for its use in the agricultural industry as a soil acidity corrector, resulting in a reduction in the amount of waste sent to landfills;
- Monte Alegre (PR), PUMA (PR) and Rio Negro (PR) Units: use of dregs (MA and PUMA) and sludge (Rio Negro) for ceramic production;
- Conducting critical analyses to track the indicator and establishing actions to improve results in the industrial units.
- Maintenance of the indicator in the variable compensation targets contracted by 100% of the executive directors.
- Otacílio Costa (SC) and Correia Pinto (SC) Units: Construction waste began to be sent for recycling.
- Otacílio Costa (SC) and Correia Pinto (SC) Units: Advancing waste sorting to promote the recycling of materials, thereby reducing non-recyclable waste.
- 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 (PR) and Puma (PR) units: drying of biological (MA and Puma) and tertiary (Puma) sludge for energy use. Goiana Unit (PE): 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 (MG): Study for reuse of biological sludge in ceramics in the region.
- Goiana KR (PE), Paulínia (SP) and Piracicaba (SP) Units: evaluation of disposal alternatives for braid depuration.
- Otacílio Costa (SC) and Correia Pinto (SC) Units: Development of partnerships with companies to blend non-recyclable class I waste to enable its co-processing.
- Reuse of braid depuration waste in recycling plants: assessments of the use of this material in recycling/reuse processes. In 2022, this waste comprised 36% of the total volume of unused materials.
- Maintenance and continuous development of new business models that allow the absorption of products generated by waste reuse initiatives.
Connections to other KSDGs: zero waste to landfill targets; Target of ten benchmarking cases of circular economy in partnership with customers; Goal of having 100% of priority municipalities with participatory management encouraged.
Goal 2030: 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 if target is not met)
Progress on the Goal: 1/2 species
Position of the goal in the mitigation hierarchy:
Avoid > Minimize > Restore > Offset
In 2022, the stages of reintroducing the piping guan (Aburria jacutinga) were successfully completed, divided into two batches – the first, consisting of 10 individuals, released in March 2022, and the second with the remaining individuals (20 animals), released in December.
Through regular fauna monitoring, camera trapping, and citizen science, the groups continue to be followed, with special attention to some individuals that continue to use the physical structures of the release site. The goal is to intensify observation by installing equipment for a remote GPS monitoring system.
The species was selected to aid in regional restoration, taking into account its home range of 13.17 ha to 981.92 hectares, and for its ability to disperse seeds by consuming at least 46 types of fruits and vegetables.
Importance of actions to conserve biodiversity
A survey conducted by the National Biodiversity Commission (Conabio), showed that the number of endangered species in Brazil doubled in eight years (from 698 to 1,399 species), which reinforces the urgency of positive measures to reinforce the protection of species that are becoming extinct at the fastest pace in 10 million years.
To that end, the Klabin Ecological Park, which has more than 30 professionals dedicated to nature conservation, underscores the unique role of the company in enhancing the positive impact by reintroducing this native species. The black-fronted piping guan, proven extinct in the region*, provides the service of being a great seed disperser, contributing to forest restoration.
*Criteria for proving local extinction: no observation of the animal in monitoring cycles in the last 3 decades, presence in the National Action Plan for Threatened Species, developed by the Chico Mendes Institute for Biodiversity Conservation (ICMBio), and the ecological importance for the region in which the Company is located.
- Receipt of two batches of black-fronted piping guan totaling 30 animals, adaptation of the animals to the release site, release, and the first stages of monitoring and follow-up of the animals in the environment where they were reintroduced;
- Construction of new quarantine and rehabilitation and release enclosures, necropsy room, and updating of veterinary equipment for receiving vinaceous-breasted parrots. The Klabin Ecological Park is ready to receive the animals to start the actions, only awaiting the state environmental agencies to send the animals to start the work.
Related to the black-fronted piping guan species:
⦁ 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 purple-breasted parrot species:
⦁ Receiving individuals from state/federal agencies for the rehabilitation and release process, comprising population reinforcement.
⦁ In 2022, all the company’s executives continued to have a shared target for the topic.
⦁ Evaluation of the success of the black-fronted piping guan reintroduction, which can vary according to the response of the ecosystem and includes factors such as non-adaptation of the animals and the risk of being killed by hunting and being run over. The results will be analyzed by monitoring area used by the species and further analysis of this data.
Connection to other KSDGs: Other targets on the Biodiversity theme: (i) Donate 1 million seedlings of native trees to recover areas. (ii) 100% of the fauna hit points with initiatives to reduce accidents; (iii) Maintain or enhance the number of bird species dependent on high quality forests; (iv) six partnerships/surveys per year in studies of nature conservation and biodiversity.
The achievement of the targets was audited and assured by the Bureau Veritas Assurance Statement.
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 2024, Klabin brought together the audit of all financial instruments linked to sustainability in a single publication. Click here to access the Assurance statement.
Updated and verified on: 03/28/2024