Corporate Governance

The main governance bodies are the General Shareholders' Meeting, Board of Directors, Advisory Committees to the Board, Fiscal Council, and the Executive Board. These bodies work in complete synergy, aiming at maximizing the creation of value for the Company and its shareholders.

Disclosure of information consistently and transparently is the Company's priority. Performance is presented through the disclosure of quarterly results annual financial statements and the Sustainability Report.

See details of the governance structure in Administration.

* The average tenure of directors on the Board of Directors is 10.93 years.
** More information on the director's experience can be found at  Administração.

Average participation in Board of Directors meetings:

In 2023, the full members of the Board of Directors recorded an average participation of 98% in meetings.

Minimum required participation in meetings of the Board of Directors:

According to Article 16 of the body's Internal Regulations (link), members must attend at least 75% of the meetings of the Board and/or Committees in which they are members, examining the documents made available, to participate actively and diligently.

Non-Executive President/Chief Director

According to Klabin's Bylaws (Article 17, paragraph 1), the chairman of the Board of Directors is appointed by the Board itself, from among the board members elected by the controlling shareholder, and the choice of chairman must respect the principle of rotation, except re-election, if there is a favorable vote of all elected directors, by proposal of the controlling shareholder. The current Chairman of the Board of Directors is Horácio Lafer Piva, who does not exercise an executive role at the Company.

Independence from the Board

The Board is made up of 15 effective members and 15 substitutes, elected at the General Meeting, seven of whom are independent. The Board of Directors is responsible for defining and guiding the long-term strategy and making decisions. Independent directors are defined according to B3's Level 2 Listing Regulations.

Information was used following the reference form dated 05/29/24

Board Election and Nomination Process

The election of the members of the Company's Board of Directors will take place through the slate system. In the election by slate, each shareholder may only vote for one slate, with the candidates from the slate receiving the highest number of votes being declared elected. Alternatively, the election may take place through the multiple vote procedure, if shareholders representing together 5% (five percent) of the Company's voting capital, at least, request its adoption, according to article 141 of Law 6,404/76 and CVM Resolution No. 70/22. In this case, the election will be carried out by a candidate and each share will be assigned as many votes as there are seats to be filled on the Board of Directors through the multiple-vote procedure, each shareholder being able to freely allocate their votes among the candidates, being elected the candidates who receive the highest number of votes.

Board Performance Review

In the 2023 fiscal year, the Board of Directors conducted a self-assessment process, and in the 2021 fiscal year, it conducted an external evaluation, carried out by an independent consulting firm specialized in the subject. The self-assessment and external evaluation process included checks on the structure in which the Board of Directors operates, the dynamics of meetings and interaction among directors, strategy, duty of care, human capital, monitoring of Financial Statements, and risks and compliance.

Furthermore, the methodology adopted for the external consulting work consisted of document analysis, questionnaires, and interviews with all members of the Board of Directors and key personnel from other governance and management bodies, consolidating the information obtained to identify strengths and opportunities for improvement.

Additionally, the self-assessment of advisory committees takes into account various dimensions, including the dynamics of meetings, member development, environment, posture, and attendance at meetings.

The results of the external evaluations are examined in light of statutory, regulatory, and internal rules, best practices, and benchmarks, as well as the Company's strategic objectives and business. Based on the improvement opportunities identified throughout the evaluation process and the recommendations of the external consultancy, the evaluated bodies develop and implement action plans, within their respective competencies, with the support of the various bodies and managers of the Company.

Information was used following the reference form dated 05/29/24.

Compensation Policy and compensation-setting process

The purpose of the Company’s compensation policies includes: 

• Aligning the interests of employees with the Company’s and the shareholders’ strategy; 
• Enabling our employees’ compensation to remain competitive and attractive compared to the market at large;
• Recognizing high-performing Klabin employees, fostering a meritocratic culture, and attracting and retaining talent for the Company;
• Causing executive compensation to reflect our short- and long-term results, in addition to their individual performance.

The Company’s fixed and variable compensation policies make no distinction in terms of gender, race, religion, or any other aspects not associated with individual or corporate performance. In addition, executives operate under goals associated with KODS (Klabin Sustainable Development Goals), that is, relative to one of the four proposed theme axes (renewable future, sustainable economy, prosperity for people, and technology & innovation). 

For the CEO’s compensation, the Company sets relative financial metrics and financial return, as shown below: 

Financial return: comparison of the Company’s annual average ROIC (Return on Invested Capital) and WACC (Weighted Average Cost of Capital). 

Relative financial metric: aligns compensation with the market performance of shares. Until 2022, this took place using TSR (Total Shareholder Return) and Ke (Cost of equity). The 2023 plan adopted the relative position between the Company’s TSR (Total Shareholder Return) and the TSR for the Peer Group of companies. 

Deferral of the CEO’s Short-Term Compensation Bonus

Concerning the breakdown of the CEO’s variable compensation, the following applies: : 

• The CEO has the option to defer up to 50% of their short-term compensation into share purchases. 
• The longest performance period that the executive compensation plan covers is five years, and the vesting period for variable compensation is five years as well.  

Required shareholdings:

Starting in 2022, a Minimum Stock Ownership requirement was established for Statutory Executive Directors and Non-Statutory Executives. To comply with the program, the CEO must allocate 30 monthly fees (based on their earnings at the end of each fiscal year) for the purchase of the Company's shares and keep them in their possession (at a ratio of 2.50 concerning the annual salary). For Statutory and Non-Statutory Executive Directors, the amount to be allocated and kept in their possession is 18 monthly fees/salaries (at a ratio of 1.50 about the annual salary), as applicable.

Highest paid individual's total annual compensation to the mean total annual compensation of all employees ratio

Information in line with the Reference Form of 05/29/24

Sustainability Governance Structure

Klabin Sustainable Development Goals 

In 2019, Klabin conducted a founding materiality process for its 2030 Agenda, which involved consultations with different stakeholders to identify the impacts to be minimized and the opportunities to be maximized, based on the global sustainable development agenda. Thus, it was possible to establish Klabin's Agenda 2030, which created the Klabin Sustainable Development Goals. 

Since 2020, with the intensification of discussions on climate, especially since the company became a TCFD Supporter, Klabin has adopted the concept of double materiality, which assesses not only the impact of sustainability on the company's long-term financial performance, but also its effects on society and the environment. Over the following years, the process was also internalized for other relevant topics, such as Water and Biodiversity. In 2024, discussions will progress to the remaining themes, in order to define the materiality analysis in a matrix. This process continues to consider the interests of several stakeholders, helping to define the company's approach and strategy for the short, medium and long term.

Reviews and reassessments

During these years, the teams responsible for the long-term goals have reassessed, at least once a year, the adherence of the commitments to the global and cultural challenges, forwarding, whenever necessary, the need to revise ambitions or metrics to the Fixed Sustainability Commission. Some significant advances could be observed, such as:  

• The mandatory linkage of the individual goals of all managers and executives to the KODS agenda; 
• The recurrence of meetings of the Fixed Sustainability Commission, which regularly monitors and deliberates on recalibrations and challenges linked to the agenda, supported by an internal dashboard on the progress of targets; 
• The review of a Sustainability Index, previously linked only to the variable remuneration of executives, into a short- and long-term financial incentive linked to the KODS Agenda for all Klabin employees; 
• Specific revisions in terms of targets and timelines (e.g. Climate and net-zero target); 
• The publishing of specific thematic guidelines for resilience strategies based on the risk identification, such as the Climate Transition Plan and the Biodiversity Conservation and Ecosystem Services Plan. 
   

Materiality

The ongoing process considers some founding bases, but the process is in transition, in order to comply with recent regulations, such as the European Sustainability Reporting Standards (CSRD - ESRS) and the General Requirements for Disclosure of Sustainability-related Financial Information (ISSB - IFRS). This process should reflect a reordering of the company's priority topics, including the review of the company's positioning on each theme.  

1. Identification of potentially material topics

In 2019, the Company identified topics considered potentially materials, engaging in consultations with more than 30 corporate and business unit managers, and more than 1,700 stakeholders, in person and online. This process allowed a reading of the risks and opportunities associated with the activities carried out in Klabin's four business units (forestry, paper, pulp and packaging). During this stage, internal and external risk and impact matrices were consulted, as well as the processes used to engage with stakeholders (e.g. grievance mechanisms , public consultations, engagements carried out by operational units, social acceptance surveys) and external (secondary) references of impacts associated with the company's sector (benchmarking with other companies, ratings, indexes, etc.).   

Since then, the same consultation inputs have been considered and internalized by the appropriate topic sponsors. In 2025, the partial results of additional consultations are expected to be released, such as the technical consultation conducted with internal and external experts for the Biodiversity, Water and Soil issues. By the first quarter of 2026, the company should have its complete matrix defined and prioritized. 

2. Evaluation of impact relevance

The risks and opportunities identified in the previous stage were grouped according to the convergence of subjects and were analyzed from the perspective of probability of occurrence and severity of the impact generated, financially for the company and for stakeholders. During the impact assessment, consultations were conducted with the company's stakeholder groups, in particular employees, customers and suppliers (in person) and communities (based on the consultation materials obtained annually). This process supported the definition of the topics to be prioritized. 

Aligned with the principles of double materiality, the impacts were analyzed considering the influence on the company's value generation, convergence with the corporate risk matrix and including the groups to be affected by the financial losses.   

From 2020 to 2021, the Climate topic was the first to have its financial impact on Klabin calculated and disclosed. In 2024, the process will proceed to Water, Biodiversity and Soil, including consultation with specialists. In parallel, other topics where the impact is difficult to identify more clearly for society will be consulted through technical partners between 2024 and 2025.

3. Analysis of results and prioritization of topics

Based on meetings with technical and executive sponsors, 23 material topics related to sustainable development and the company's future challenges were defined.  
These topics were grouped according to the interests and impacts generated, 11 of them were considered priorities to meet internal and external demands and included the definition of 23 short-, medium- and long-term targets.  
 
List of topics prioritized with the adoption of public targets:  

• Energy use
• Water use 
• Waste management 
• Climate change
• Local development and impact on communities 
• Diversity 
• Occupational health and safety 
• Cyber security 
• Supplier social and environmental performance
• Products and partnerships with the value chain and circularity 
• Biodiversity 

Other topics considered relevant when addressing internal demands: 

• Wood availability 
• Forest yields 
• Production and logistics 
• Forest certification 
• Ethical conduct and integrity 
• Risk management 
• Human capital development 
• Management and engagement of professionals 
• Klabin's culture 
• Multiple uses of wood 
• Innovation management 
• Economic performance 

4. Governance of Klabin's material topics (KODS)   

Klabin's 2030 Agenda is revalidated annually by Klabin's Fixed Sustainability Committee, the Executive Board and the Board of Directors. The meeting agendas of both the Committee and the Fixed Sustainability Commission are defined according to the risk and urgency of the topic and the progress of the commitments. Meetings are held at least bimonthly.  
   
The suitability of all the company's new projects is systematically analyzed in the light of Klabin's sustainable development objectives, as well as the internal audit control processes and the periodic updating of the company's Risk Matrix considering material topics, both with the technical sponsors and with the corporate Sustainability area. With the inclusion of the performance of some of the company's debt targets, the process of verifying compliance with part of the agenda is now audited by a third party. In addition to the topics of the 2030 Agenda, all the risks and appropriate recommendations resulting from the Human Rights Due Diligence conducted by Klabin are also internalized by Klabin's official Risk monitoring.  

5. Verification 

The process is reviewed annually using primary and/or secondary information and is part of the scope of the ESG Panel's limited external assurance. In addition, as there are targets linked to debts, the process is also analyzed by a third party in light of its ambition and relevance (see Sustainable Finance). 

Materiality Issues and Metrics for Enterprise Value Creation

Material Issues and Metrics for External Stakeholders

Certifications 

In 2022, Klabin's Sustainability Policy was updated and, therefore, training was conducted at the units and also through Klabin's Business School. The Sustainability Policy training covers all new employees (during the onboarding process) and direct and indirect training through the headquarters of each industrial unit.

Klabin makes external voluntary commitments that reinforce its commitment aligned with sustainable development. Learn more at commitments page.

The industrial mills in Pilar (Argentina), Rio Negro (state of Paraná) and Horizonte (state of Ceará) are not yet ISO 14.001 certified due to internal and external reasons - and as previously mentioned in the last year, have been preparing to do so, to get certified in 2025. Although 22% of the industrial units’ operations are not certified by a third-party, all of them undergo an internal audit by a specialised Klabin team, which holds the ISO 14001 standard auditor certificate. Those that are certified carry out internal audits of the management system. In this way, units that do not yet have formal certification prepare for the certification audit, re-scheduled for the second half of 2025.