Sustainable Finance
Sustainable Finance
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 | % |
|---|---|---|
| Issuance | 1.200,000 | 100% |
| Verified | 492,769 | 41% |
| Balance | 707,231 | 59% |
Resource Distribution 2017-2021
| ELIGIBILITY CRITERIA | Environmental benefits | Accumulated amounts (USD) | Units |
|---|---|---|---|
| Native Forest Restoration and Conservation of Biodiversity | Areas covered by exotic species control activities (hectares) | 13.197,02 | hectares |
| Renewable energy | Reduction of atmospheric emissions | 56,220 | tCO2 eq/ton |
| Waste Management | Waste avoided sending to landfill | 32,900 | ton |
| Clean transport | Total emissions avoided | 49,687 | 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 | 113.693,2 | acre |
| Sustainable Water Management | Reduction in specific consumption of water | 0.11 | % |
| Products, technologies and processes that are eco-efficient and/or adapted to the circular economy | Reduction of energy consumption | 0.125 | % |
| Adaptation to Climate Change | Percentage of area conserved by management microplanning method | 0.42 | % |
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 (KSDGs) 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 2021
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 45% of total consumption. Even with the startup of its expansion, the specific water consumption indicator had significant improvement through water efficiency initiatives and actions to reuse water and effluents.
- Participation in hydrographic basin committees in regions of significant consumption (states of Paraná and Santa Catarina), with the periodic discussion of water resources plans, shared use and water use pricing mechanisms;
- Creation of a Water Reduction Working Group, with members from all businesses, responsible for the governance, planning and implementation of reduction, water and effluent reuse actions, especially in areas of water stress;
- In 2021, this indicator was included in the variable compensation targets contracted by 50% of executives and 56 local managers.
- Execution of actions related to increasing water reuse and improving processes for water efficiency, in all of Klabin’s plants, prioritizing those in units located in areas of water stress, such as Goiana (PE), and in plants with high water use, such as Puma (PR) and Monte Alegre (PR);
- In 2022, all the company’s executives will have a shared target for the topic.
- 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).
In the period from 2017 to 2021, the Waste Processing Center at the Puma Unit was mostly responsible for maintaining the results, and was instrumental during the startup of the new Puma Project machine. Currently, most of Puma’s waste is reused at this center, maintaining the goal status. In 2021, there was 100% compliance with the Solid Waste Index in the units, with a highlight for the Puma Unit, which had an individual goal of 94% and reached 98.8%, due to the relevance of its waste processing center.
Additionally, the paper units in Santa Catarina (Otacilio Costa and Correia Pinto) now account for most of waste generated that is not reused, along with the recycled paper units, after the acquisition of two more units in the state of São Paulo. Thus, these paper units together account for about 80% of the improvement to this indicator. They advanced in the reuse of waste by sending, respectively, significant amounts of dregs, grits, and sand from the boiler bed for co-processing and recycling, being reused mainly for the construction industry.
- This indicator was included in the variable compensation targets contracted by 50% of executives and 105 local managers;
- Study of the co-processing of waste from the Otacilio Costa and Correia Pinto Units (state of Santa Catarina): the dregs and grits are used as fuel in the cement kilns; and the burning residues are incorporated into the cement itself, reducing the addition of other inputs in its production. As a result of this evaluation, we had: at Correia Pinto, the technical approval of the grits for co-processing and the identification of necessary adjustments in the characteristics of the dregs so that they meet the technical requirements of the co-processing company. For Otacilio Costa, the definition of the substitution of sending to co-processing for the soil correction project.
- Correia Pinto Unit (SC): waste treatment (dregs and grits) to be used in the agricultural industry as a soil acidity corrector, resulting in a reduction in the amount of waste sent to landfills;
- 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 at the Goiana Unit (PE);
- Puma Unit (PR): Maintenance of the waste co-processing initiative and pilot of an alternative destination action with the objective of producing agricultural input from a mixture of dregs + grits + lime mud (residues from the industrial process);
- In 2022, all the company’s executives will have a shared target for the topic.
- Acquisition of five new units and increased production at the Puma Unit (PR), with the start-up of Paper Machine 27 (MP27), which consequently increased the generation of industrial waste;
- Maintenance and ongoing development of new business models that enable the absorption of the products generated by the waste reuse initiatives. As a result, all units must increase solid waste reuse/recycling by 0.2%.
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: 0 /2 species
Position of the goal in the mitigation hierarchy:
Avoid > Minimize > Restore > Offset
In 2021, actions to reintroduce piping guan (Aburria jacutinga) were postponed because of the Covid-19 pandemic. Among the necessary steps, the Company finished the renovation of the environmental enclosures and monitored the birth of two individuals in the Klabin Ecological Park and were released to the wild on 03/30/2022. The last stage, monitoring, starts in the sequence, continuously until the project is closed in 2030. Therefore, 83% of the stages of the first refaunation action were carried out until now.
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 demonstrates the urgency of positive measures to reinforce the protection of species that are becoming extinct at the fastest pace in 10 million years.
In this sense, the Klabin Ecological Park, which has more than 30 professionals dedicated to nature conservation, reinforces 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 three 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.
- Historical survey of occurrence and distribution of endangered species, of successional stages and states of conservation, analysis of existing fauna monitoring data on Klabin farms and listing of species likely to be subjected to refaunation for the states of PR, SC and SP;
- Definition of the National Action Plan for Threatened Species (PAN) by ICMBio of interest based on the occurrence of the species in Klabin’s areas;
- Definition of priority species for refaunation;
- Pairing of guans from the flock;
- Birth of two guans in the Klabin Ecological Park;
- Completion of enclosures for adaptation;
- Arrival of a new group of individuals from other partner establishments;
- In 2021, this indicator was included in the variable compensation targets contracted by nine local managers.
Related to the guan species:
- Release;
- Monitoring (intense for one year, distributed throughout the four seasons; after that, the reintroduced species will be included in the Monitoring Program to identify the expansion of the species in the forest).
- Completion of analysis to identify next species for reintroduction or population reinforcement.
Actions related to the purple-breasted parrot species:
- Renovation and construction of the new structures to make the enclosure suitable for rehabilitation and release activities;
- Receiving individuals from state/federal agencies for the rehabilitation and release process, comprising population reinforcement.
- In 2022, all the company’s executives will have a shared target for the topic.
- Evaluation of the success of the 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.
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
Klabin priced the first emission in Latin America of a Super Bond (SLB and Green Bond) of US$ XXX million in bonds linked to the performance target in reducing greenhouse gas (GHG) emissions with a deadline of 2030.
The Key Performance Indicators (KPIs) are aligned with the goals of the Klabin Sustainable Development Goals (KODS) which, in turn, are linked to the Company's growth plan. The bonds referring to this issue are susceptible to readjustments in the coupon (interest) in case of reaching or not the targets established by the Company in 2030, as defined by the Sustainability Performance Trigger (SPT).
The target selected by Klabin in this operation – in the area of GHG emissions – reflects its ambition, proactivity and leadership in increasing the resilience and rationality of its business model, closely linked to the use of natural resources and their transformation. It should be noted that through the search for innovative solutions, the Company aims to improve issues that directly impact its cost-efficiency, its ability to maintain constructive relationships with society and, ultimately, the very capacity of the ecosystem where Klabin operates in responding positively to higher productivity stimulus, both for forestry and industrial operations.
Goal 2030: Reduce Absolute GHG Emissions (Scope 1, 2 and 3) to be equal to or lower than the lesser of [2,660] kilotonnes of CO₂e or the SBTI-validated target, as of December 31, 2024.
Sustainability Performance Target Trigger: Reduction of at least 42% of Klabin’s total emissions from the 2022 baseline or the SBTI -validated target, as of December 31, 2024, by year-end 2030.
(X bps increase if the target is not met)
Rational – Target calculated by the sum of 100% of Klabin’s Scopes 1+2+3 GHG emissions, in kilotonnes CO2 Equivalent (KtCO2e), in compliance and verified by the Brazilian GHG Protocol.
Klabin has a current SBTI target covering only scopes 1 and 2 and following the “Well below 2°C” scenario. The company is expanding the analysis of its Scope 3 emissions, mapping all relevant categories to have a more precise target in line with the 1.5°C scenario, and will be submitted for SBTi approval by the end of 2024.
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Klabin has a current SBTI target covering scopes 1 and 2 only and following the “Well below 2°C” scenario.
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The company is expanding the analysis of its scope 3 emissions, mapping all the relevant categories to have a more accurate target aligned with the 1.5°C scenario, and it will be submitted to SBTi approval by the end of 2024.
- • Klabin intends to publicly report on its new target’s progress including Scope 1, 2 and 3 emissions reduction in its annual reports, including its CDP submissions.
- Klabin will make the long-term strategic investments and customer and supply chain engagement that will be necessary to achieve our science-based target for Scope 1+2+3 emissions reduction.
- Decrease in production and extreme events, such as pandemics
- Market constraints in availability and pricing of energy efficient equipment and renewable energy
- Regulatory uncertainty, for example, related to the procurement of renewable energy through PPAs
Connection to other KODS goals: climate change goals
Updated and verified on: 06/25/2022