Bracell systematically identifies and classifies climate -related risks and opportunities. These are categorized as physical or regulatory, and their financial implications for the business are determined. We also detail the methods used to manage each risk.

Source of Risk	Risk	Scope
Physical Risks and Opportunities	Extreme weather events (floods, windstorms, and forest fires)	These may result in significant losses of forest assets, production disruptions, raw material supply disruptions, increased insurance costs, and additional operational risks. Our approach to managing these risks includes weather-resistant building and industrial facility designs, effective industrial fire suppression systems, forest fire response plans, and insurance coverage for facilities and equipment.
Physical Risks and Opportunities	Changes in rainfall patterns	These may lead to reduced water availability, increased costs for sourcing and treatment, and limitations on production capacity. Our approach to managing these risks includes strict monitoring of water consumption in line with water permits, setting reduction targets and performance indicators, and implementing water recycling projects and renewable energy solutions to improve operational efficiency.
Physical Risks and Opportunities	Water shortage	This poses both physical and regulatory risks, directly affecting groundwater usage permits and potentially limiting production and future expansion. Our approach to managing these risks includes continuous monitoring of water consumption and setting clear performance indicators and targets for consumption reduction, aiming to optimize processes and reduce losses.
Physical Risks and Opportunities	Strong winds and heavy rainfall	These events can cause serious damage to assets, limiting or halting production operations. We manage these risks by designing structures to withstand severe weather and maintaining emergency and business continuity plans.
Regulatory Risk and Opportunity	More stringent legal and regulatory climate-related requirements	These requirements could result in additional compliance costs. Our approach to managing these risks involves close monitoring and control of water consumption and permits, carrying out research and projects around water reduction and reuse in industrial processes, and expanding renewable energy and use of electric equipment (such as electric forklifts) to significantly reduce fossil fuel consumption.

Risk management process

Our Corporate Risk Management and Business Continuity Policy provides guidelines on identifying, assessing, addressing, and monitoring corporate risks through a structured Enterprise Risk Management (ERM) process. This process follows international standards such as ISO 31000, BSI 31100, and COSO ERM, covering operational, social, environmental, governance, technological, strategic, political, and financial risks.

Climate-related risks with financial impacts are categorized and classified in accordance with Bracell’s Risk Classification Matrix. A clear implementation schedule has been established for deploying ERM across departments by 2025, supported by strategic indicators to ensure identified risks are reduced to acceptable levels.

In 2025, we will complete (100%) ERM implementation across all 18 departments listed in the plan, including manufacturing, forestry, logistics, and corporate. We plan to implement all proposed actions to reduce identified risks, with a goal to bring at least seven of the major risks to acceptable criticality levels by year-end.

Methods Used to Manage Climate Change Risks or Opportunities

In our operations, we adopt management practices and invest in technologies aimed at preventing and mitigating climate change impacts, such as carbon capture and storage, fossil fuel replacement, the use of renewable and low-carbon energy, energy efficiency improvements, renewable energy certificates, among other methods (see more in GRI 3-3 Management of the material topic: Climate Change).

  

Climate Action

Fossil fuel replacement with renewable energy – in the two flexible lines at the Lençóis Paulista (SP) site, we produce synthesis gas (Syngas) from eucalyptus biomass in our biomass gasifiers to power the lime kilns.

Replacement of 1B oil with natural gas in the lime kiln – using advanced engineering technologies and solutions, we have launched a project to replace 1B oil (a petroleum-derived fuel oil) with natural gas in the lime kiln of the site’s older production line in Lençóis Paulista (SP).

Electric forklifts and trucks – our operations are deploying electric forklifts running on renewable electricity produced on-site in Lençóis Paulista. We also plan to expand our fleet of electric trucks for logistics operations—the first electric heavy-haul vehicles (40+ tons) to be deployed in this type of operation. The aim is to reduce GHG emissions.

Ongoing climate-focused improvements – our dedicated continuous improvement team employs agile methodologies (Kaizen) to drive climate-related projects. Reducing greenhouse gas emissions is a key focus of our current Kaizen initiatives. We also participate in decarbonization forums to explore and deploy new technologies and best practices across the company.

Research on carbon and water flux in eucalyptus plantations – as part of the Eucflux-IPEF Cooperative Program, we conduct research on carbon and water flux in eucalyptus plantations in Brazil. This research is enhancing our understanding of these processes in a Bracell-managed eucalyptus plantation in Itatinga, São Paulo, where we have set up a flux tower equipped with advanced monitoring technology.

Investment in carbon and water flux towers – in line with our Bracell 2030 commitments, we are installing five additional monitoring towers in both eucalyptus plantations and native forests across São Paulo, Mato Grosso do Sul, and Bahia. In 2024, we installed two towers—one in a native forest area in São Paulo and another in a eucalyptus area in Bahia. Two more towers will be installed in Mato Grosso do Sul—one in each type of forested area—and another tower in a native forest in Bahia.

GHG Protocol – our greenhouse gas emissions inventories are published on the Brazilian GHG Protocol Public Emissions Registry platform.

CDP – In 2024, we responded for the first time to CDP questionnaires and received a B rating across all three evaluated topics: Climate Change; Forests and Water Security. A B rating is strong for companies in their first year of reporting and demonstrates our commitment to transparency and responsible environmental management.

GHG Inventory Assurance Statement – our GHG inventory—covering Scopes 1, 2, and 3—and our tCO2e removals are externally audited and assured.