Governance

Material Topics

Compliance, conduct, ethics, integrity and transparency (GRI disclosures: 2-27, 205-1, 205 2, 205-3, 206-1)

Bracell’s strategic leadership comprises the following members:

Executive Vice President of Bracell – Per Lindblom¹

Senior Vice-President – Pedro Stefanini²

General Director Bracell Bahia – Guilherme Araújo

Chief Operating Officer (COO): Clinton Clive Van Vught

¹Bracell does not have the position of CEO. The senior executive leadership role is the Executive Vice President. All members of the leadership hold executive positions and none of them are independent. Remained in office until December 31, 2022.

² Remained in office until June 15, 2022.

GRI 2-10 Nomination and selection of the highest governance body

RGE has an Executive Board of Directors made up of key executives, while business groups have their own CEOs, management teams and boards of directors. Members of RGE’s Executive Board of Directors are assigned to specific businesses to provide oversight. Top executives meet quarterly with RGE’s Executive Board of Directors to report on business performance and other corporate matters.

As an RGE group company, the holding company of which Bracell is a subsidiary, it has access to strategic consulting and comprehensive business process outsourcing (BPO) services. These corporate services include strategic planning, HR, procurement and corporate finance. Each company in the RGE group is managed, owns its assets and manages its finances autonomously, and is responsible for its own budget. RGE is remunerated by business groups for the management services it provides, playing the role of ensuring that the interests of all stakeholders are protected. As a result, it is strategically positioned to promote greater harmonization of the values of the group’s founder and best corporate practices for the various businesses in its value chain. The operations of the group’s companies are aligned with RGE’s Sustainability Framework and the 5Cs business philosophy: Do what is good for the Community, good for the Country, good for the Climate, and good for the Customer, and only then will it be good for the Company.

Each business group is independently constituted, has its own management and control and corporate governance. At Bracell, executives are chosen for their knowledge and experience in the pulp market and businesses and meet the specific skills and competencies of each function. Bracell has an HR procedure describing all the company’s positions, which details a comprehensive overview of each position, including responsibilities, assignments and activities, the formal education and experience required, technical, operational knowledge and skills, and criteria for performance evaluation.

GRI 2-11 Chair of the highest governance body

Executive Vice President of Bracell – Per Lindblom.

Remained in office until December 31, 2022.

GRI 2-12 Role of the highest governance body in overseeing the management of impacts

Bracell’s top leadership (GRI 2-9) monitors the impact management of the operations and makes strategic decisions to address each case when necessary.

GRI 2-13 Delegation of responsibility for managing impacts

Bracell’s operations are certified by Cerflor/PEFC, ISO 9001:2015 (for industrial areas in Bahia and São Paulo) and ISO 14001:2015 (for industrial areas in São Paulo and Bahia, and forestry area in Bahia). The processes have management guidelines, including mapping of risks and opportunities, and addressing measures to mitigate socio-environmental impacts, which are part of the scope and attributions of Bracell’s leaders.  The identification and monitoring of impacts is also a topic addressed in Bracell’s Sustainability Policy, available at https://www.bracell.com/wp-content/uploads/2021/02/Bracells-Sustainability-Policy_June_2020.pdf. (read more in the GRI disclosure 2-16)

GRI 2-14 Role of the highest governance body in sustainability reporting

Bracell’s strategic leaders meet every four months to report on the company’s performance and participate in the development of the Sustainability Report and its approval.

GRI 2-15 Conflicts of interest

Bracell addresses the issue of conflict of interest in the Code of Conduct, with the aim of preventing it occurring. The company also provides the Annual Declaration of Conflict of Interest to all employees to complete, a process that complies with the RGE Group’s Code of Conduct. The document is available at https://www.bracell.com/en/institutional/governance-and-certification/.

GRI 2-16 Communication of Critical Concerns

The Sustainability Committees (São Paulo and Bahia), made up of members from strategic areas of the company’s business and operations, provide recommendations to senior leadership on how environmental, social and governance topics defined in Bracell’s Sustainability Strategy can be addressed at an operational level.

The company also has a Crisis Committee, constituted in view of the need for emergency action to mitigate operational, reputational and socio-environmental impacts on the business. For operations in Bahia, the Committee has two levels of management, depending on the escalation of the crisis, defined in the Crisis Prevention and Management Manual. In the São Paulo operation, it is made up of strategic leaders related to the situation to be addressed.

In 2021, a crucial issue was brought to the attention of Bracell’s senior management regarding a service provider acting in the expansion project of the São Paulo plant, which had not submitted payment of labor obligations to its employees who were assigned in the construction site.

In order to solve this issue, in the absence of an agreement between the company and its employees, Bracell submitted payments due to the personnel by the hired company. The contract with the supplier was terminated, and it was excluded from the company’s supply chain.

Bracell monitors its suppliers through its Contract Management System, a platform for registering contractual documents, verifying documents required by law and documents that prove compliance with labor, environmental and occupational health and safety obligations. Read more in GRI disclosure 3-3(414).

GRI 2-17 Collective knowledge of the highest governance body

Members of the sustainability committee and Bracell executives participate in decision-making and risk and opportunity assessment processes, which include social and environmental agendas and issues. To this end, Bracell hires specialized consultants to address strategic sustainability projects. Examples are the analysis of socio-environmental operational risks, carried out for the operations in Bahia and São Paulo, in the last two years, the materiality study, which updated Bracell’s material themes in 2022, and the process of developing Bracell’s Sustainability Strategy, which was launched in 2021.

Another practice is the sharing of technical knowledge with Bracell’s executives and leaders on these topics, a process that precedes internal meetings held to present the results and diagnoses of the projects. Bracell executives and leaders also receive specific updates on sustainability, such as the report for leaders, a publication developed by the sustainability team that, in 2021, included a summary of the highlights of COP 26 – the Climate Conference – which addressed the main issues impacting climate change.

Bracell’s leaders also play the role of ambassadors for the Sustainability Strategy. To support them in this role, knowledge and technical information are by working groups or committees of organizations of which Bracell is a member, such as CEBDS, Ibá and Global Compact. They present updates on specific topics such as energy (focusing on energy efficiency and renewable energy), climate change, biodiversity, water and diversity (read more in the GRI disclosure 2-28).

GRI 2-18 Evaluation of the performance of the highest governance body

The executives of Bracell’s highest governance body are evaluated individually, in relation to organizational values, leadership competencies and the fulfillment of the year’s planning for each position. The process is carried out annually, follows Bracell’s performance assessment guidelines, and is conducted by the company and RGE Group. It is also part of the process to provide feedback to senior management, with a focus on continuous improvement.

GRI 2-19 Remuneration Policies

For strategic reasons, Bracell does not disclose compensation information.

GRI 2-20 Process to determine remuneration

For strategic reasons, Bracell does not disclose compensation information.

GRI 2-21 Annual total compensation ratio

For strategic reasons, Bracell does not disclose compensation information.

GRI 2-27 Compliance with laws and regulations

Bracell seeks to increase the positive effects of its operations and activities while mitigating or minimizing any negative impact. Specifically:

• Maintains an updated survey of socio-environmental aspects and impacts, involving all operational areas to identify, prevent and correct any problems;
• Identifies and assesses socio-environmental impacts before the start of operations;
• Conducts impact monitoring frequently to measure the evolution of the process and assess the need for strategic actions.

Bracell is committed to adopting the best environmental practices throughout its production cycle. From the production of eucalyptus seedlings to the delivery of the final product by the factory, all processes are mapped and their aspects and potential impacts are identified, so that the necessary arrangements can be made.

It is through a Matrix of Environmental Aspects and Impacts that this data are identified. For the negative impacts considered significant, mitigation and minimization actions, controls and monitoring are defined. For significant positive impacts, such as job creation, independent generation of energy, soil conservation, among others, actions are determined to maximise their impact.

Bracell’s operations are certified with the best practices, which cover the whole production chain. The company’s forestry area has Cerflor/PEFC certification, as well as ISO 14001:2015 certification for the industrial areas in São Paulo and Bahia, and the forestry area in Bahia.

In seeking practices to continuously improve sustainability in the forestry process, Bracell publishes in its management plan’s public release the management procedures and practices to comply with guidelines and principles, criteria and indicators for forest plantation, such as Cerflor standard ABNT NBR 14.789 and ISO 14001.

Bracell’s sustainability policy also presents guidelines on the following topics:

• Compliance with laws and regulations;
• Responsible work practices;
• Community development;
• Protection and conservation of the environment;
• Transparency and accountability;
• Identification and monitoring of impacts;
• Continuous improvement and customer focus.

To ensure compliance with laws, rules and good practices of a socio-economic nature in the relationship with its suppliers, Bracell provides, in all its contracts, the mandatory verification of compliance with regard to tax, social security and labor issues. The occurrence of any irregularities may result in the blocking of payments until they are settled.

The company also works on risk prevention, by mapping the process portfolio, identifying the root cause of the risks already implemented. One of the phases of this process is the “legal chat”, which consists of a discussion with the areas involved, the results of which are action plans for adjustments in the procedures. In 2021, one of the “legal chats” was aimed at raising awareness of leadership about practices to identify moral and sexual harassment situations prohibited by the Global Code of Conduct.

Bracell was not subject to legal or administrative actions for unfair competition, corruption, trust or monopoly practices in 2021. It also did not receive significant fines for non-compliance with laws and regulations in the social and economic spheres.

In its Bahia operations, Bracell received Notices of Infraction in 2021, but none resulted in significant fines or any other types of sanction. Correspondence concerns registration adjustments.

Bracell for environmental non-compliance in its São Paulo operations, amounting to R$11.536.831,53. The company currently has lawsuits filed for arbitration but none of these are related to environmental issues and/or problems.

In 2021, Bracell received TAC and fines for non-compliance with working hours in relation to its São Paulo operations.

Read more in the public summary of the Bahia and São Paulo management plan at https://www.bracell.com/wp-content/uploads/2022/03/Plano-de-Manejo-2022_25-Marco2022.pdf and https://www.bracell.com/wp-content/uploads/2021/11/resumo-publico-2021-casado_4MB.pdf.

NB: In its 2021 version, GRI Standards 2-27 content started including information regarding 307-1 and 419-1 contents.

GRI 307-1 Non-compliance with environmental laws and regulations

Bracell seeks to increase the positive effects of its operations and activities while mitigating or minimizing any negative impact. Specifically:

• Maintains an updated survey of socio-environmental aspects and impacts, involving all operational areas to identify, prevent and correct any problems;
• Identifies and assesses socio-environmental impacts before the start of operations;
• Conducts impact monitoring frequently to measure the evolution of the process and assess the need for strategic actions.

Bracell is committed to adopting the best environmental practices throughout its production cycle. From the production of eucalyptus seedlings to the delivery of the final product by the factory, all processes are mapped and their aspects and potential impacts are identified, so that the necessary arrangements can be made.

It is through a Matrix of Environmental Aspects and Impacts that this data are identified. For the negative impacts considered significant, mitigation and minimization actions, controls and monitoring are defined. For significant positive impacts, such as job creation, independent generation of energy, soil conservation, among others, actions are determined to maximise their impact.

Bracell’s operations are certified with the best practices, which cover the whole production chain. The company’s forestry area has Cerflor/PEFC certification, as well as ISO 14001:2015 certification for the industrial areas in São Paulo and Bahia, and the forestry area in Bahia.

In seeking practices to continuously improve sustainability in the forestry process, Bracell publishes in its management plan’s public release the management procedures and practices to comply with guidelines and principles, criteria and indicators for forest plantation, such as Cerflor standard ABNT NBR 14.789 and ISO 14001.

Bracell’s sustainability policy also presents guidelines on the following topics:

• Compliance with laws and regulations;
• Responsible work practices;
• Community development;
• Protection and conservation of the environment;
• Transparency and accountability;
• Identification and monitoring of impacts;
• Continuous improvement and customer focus.

To ensure compliance with laws, rules and good practices of a socio-economic nature in the relationship with its suppliers, Bracell provides, in all its contracts, the mandatory verification of compliance with regard to tax, social security and labor issues. The occurrence of any irregularities may result in the blocking of payments until they are settled.

The company also works on risk prevention, by mapping the process portfolio, identifying the root cause of the risks already implemented. One of the phases of this process is the “legal chat”, which consists of a discussion with the areas involved, the results of which are action plans for adjustments in the procedures. In 2021, one of the “legal chats” was aimed at raising awareness of leadership about practices to identify moral and sexual harassment situations prohibited by the Global Code of Conduct.

Bracell was not subject to legal or administrative actions for unfair competition, corruption, trust or monopoly practices in 2021. It also did not receive significant fines for non-compliance with laws and regulations in the social and economic spheres.

In its Bahia operations, Bracell received Notices of Infraction in 2021, but none resulted in significant fines or any other types of sanction. Correspondence concerns registration adjustments.

Bracell for environmental non-compliance in its São Paulo operations, amounting to R$11.536.831,53. The company currently has lawsuits filed for arbitration but none of these are related to environmental issues and/or problems.

In 2021, Bracell received TAC and fines for non-compliance with working hours in relation to its São Paulo operations.

Read more in the public summary of the Bahia and São Paulo management plan at https://www.bracell.com/wp-content/uploads/2022/03/Plano-de-Manejo-2022_25-Marco2022.pdf and https://www.bracell.com/wp-content/uploads/2021/11/resumo-publico-2021-casado_4MB.pdf.

NB: In its 2021 version, GRI Standards 2-27 content started including information regarding 307-1 and 419-1 contents.

GRI 419-1 Non-compliance with laws and regulations in the socialand economic area

Bracell seeks to increase the positive effects of its operations and activities while mitigating or minimizing any negative impact. Specifically:

• Maintains an updated survey of socio-environmental aspects and impacts, involving all operational areas to identify, prevent and correct any problems;
• Identifies and assesses socio-environmental impacts before the start of operations;
• Conducts impact monitoring frequently to measure the evolution of the process and assess the need for strategic actions.

Bracell is committed to adopting the best environmental practices throughout its production cycle. From the production of eucalyptus seedlings to the delivery of the final product by the factory, all processes are mapped and their aspects and potential impacts are identified, so that the necessary arrangements can be made.

It is through a Matrix of Environmental Aspects and Impacts that this data are identified. For the negative impacts considered significant, mitigation and minimization actions, controls and monitoring are defined. For significant positive impacts, such as job creation, independent generation of energy, soil conservation, among others, actions are determined to maximise their impact.

Bracell’s operations are certified with the best practices, which cover the whole production chain. The company’s forestry area has Cerflor/PEFC certification, as well as ISO 14001:2015 certification for the industrial areas in São Paulo and Bahia, and the forestry area in Bahia.

In seeking practices to continuously improve sustainability in the forestry process, Bracell publishes in its management plan’s public release the management procedures and practices to comply with guidelines and principles, criteria and indicators for forest plantation, such as Cerflor standard ABNT NBR 14.789 and ISO 14001.

Bracell’s sustainability policy also presents guidelines on the following topics:

• Compliance with laws and regulations;
• Responsible work practices;
• Community development;
• Protection and conservation of the environment;
• Transparency and accountability;
• Identification and monitoring of impacts;
• Continuous improvement and customer focus.

To ensure compliance with laws, rules and good practices of a socio-economic nature in the relationship with its suppliers, Bracell provides, in all its contracts, the mandatory verification of compliance with regard to tax, social security and labor issues. The occurrence of any irregularities may result in the blocking of payments until they are settled.

The company also works on risk prevention, by mapping the process portfolio, identifying the root cause of the risks already implemented. One of the phases of this process is the “legal chat”, which consists of a discussion with the areas involved, the results of which are action plans for adjustments in the procedures. In 2021, one of the “legal chats” was aimed at raising awareness of leadership about practices to identify moral and sexual harassment situations prohibited by the Global Code of Conduct.

Bracell was not subject to legal or administrative actions for unfair competition, corruption, trust or monopoly practices in 2021. It also did not receive significant fines for non-compliance with laws and regulations in the social and economic spheres.

In its Bahia operations, Bracell received Notices of Infraction in 2021, but none resulted in significant fines or any other types of sanction. Correspondence concerns registration adjustments.

Bracell for environmental non-compliance in its São Paulo operations, amounting to R$11.536.831,53. The company currently has lawsuits filed for arbitration but none of these are related to environmental issues and/or problems.

In 2021, Bracell received TAC and fines for non-compliance with working hours in relation to its São Paulo operations.

Read more in the public summary of the Bahia and São Paulo management plan at https://www.bracell.com/wp-content/uploads/2022/03/Plano-de-Manejo-2022_25-Marco2022.pdf and https://www.bracell.com/wp-content/uploads/2021/11/resumo-publico-2021-casado_4MB.pdf.

NB: In its 2021 version, GRI Standards 2-27 content started including information regarding 307-1 and 419-1 contents.

GRI 3-3(205) Management of material topic: Anti-corruption

Bracell works in full compliance with the RGE Group’s Global Anti-Corruption Policy, which establishes the principles and main steps to ensure compliance with applicable anti-corruption laws and with Brazilian legislation on the subject.

The company’s compliance culture is focused on, among other messages, reinforcing to employees that non-compliance with these laws can lead to civil and criminal penalties, both for RGE Group and for the individual, as well as significant damage to the image and reputation of RGE and Bracell.

The Bracell Code of Conduct complies with the T.O.P.I.C.C. Mission, Vision and Core Values of RGE. This reflects the commitment to guarantee global ethical standards in processes and practices, as well as the ethical attitudes of employees and suppliers, in relation to dealings with customers and with all other stakeholders.

The Code of Conduct also addresses ethical conduct in matters such as conflicts of interest, competition, purchasing ethics, confidentiality and virtual security, bullying, harassment and violence, personal information, privacy and security, sustainability, among others.

Read the Code of Conduct in full at https://www.bracell.com/en/institutional/governance-and-certification/.

GRI 205-1 Operations assessed for risks related to corruption

All Bracell operations are evaluated for corruption risks, a process carried out in accordance with RGE Group’s Anti-Corruption Policy. These are risks mapped and identified in internal regulations that formalize the organization’s procedures in regard to actions to identify potential risks related to corruption and measures to prevent and mitigate impacts. On the Bracell website, the regulations and policies that govern ethical practices and behaviours with external and internal stakeholders are highlighted. These include the Complaints Policy, the Code of Conduct, the Code of Conduct for Purchasing and the Sustainability Policy. This encourages compliance with legislation and regulatory standards is guaranteed.

Bracell’s regulations are available for access on the company’s website at https://www.bracell.com/en/institutional/governance-and-certification/.

GRI 205-2 Communication and training about anti-corruption policies and procedures

Every year, training programs that reinforce the company’s anti-corruption guidelines are part of Bracell’s training agenda, in compliance with the company’s Code of Conduct.

At Bracell, 100% of employees receive the Code of Conduct at the time of their integration process, right after admission. They are also trained in integrity, anti-bribery and anti-corruption.

Employees who hold senior positions, or who are responsible for performing Business Partner due diligence measures, receive additional personalized training on the RGE Business Partner due diligence process.

Bracell’s senior leadership takes part in periodic training on ethics and integrity, including training focused on the Code of Conduct. In 2021, RGE published an internal policy on anti-corruption and leadership training on this policy which will is scheduled to be carried out in 2022.

Additionally, all Bracell Business Partners receive the Code of Ethics in Purchasing (COPE).

Employees who receive the Code of Conduct and training on integrity in 2021:

Operations in Bahia: 1,596 employees (100%)

Operations in São Paulo: 3,130 employees (100%)

GRI 205-3 Confirmed incidents of corruption and actions taken

GRI 3-3(206) Management of material topic: Unfair competition

Bracell promotes fair competition in contracting services and purchasing products from suppliers. The company makes the same information available to all suppliers so that none has an advantage over another. It also maintains confidentiality of prices and information presented by suppliers.

All employees in the purchasing area are committed to compliance with the RGE Global Code of Conduct and the Purchasing Code of Ethics (COPE) to prevent situations in which conflicts of interest may arise between their private financial activities and their role at Bracell.

GRI 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

In 2021, the company was not the target of legal or administrative actions, nationally or internationally, for unfair competition, corruption, trust or monopoly practices.

GRI 415-1 Political contributions

Bracell does not make political contributions.