FS

About FS

FS is the first Brazilian plant to produce ethanol exclusively from corn. In addition to ethanol, FS also uses cutting edge technology to manufacture animal nutrition, corn oil and electricity products. In May 2022, &Green and FS concluded an 8-year loan of USD 30 Million to support the company improve the traceability of its corn supply chain, mitigate deforestation risk, and intensify forest and degraded land restoration.

&Green will work together with FS to create a no-deforestation corn supply chain that sustainably produces biofuel, electric power, animal feed and corn oil. Through this transaction, FS underpins its public ambition statement of sourcing deforestation-free corn with a contractual No Deforestation, No Peat and No Exploitation ( NDPE ) commitment to &Green.

This transaction provides &Green and FS an opportunity to positively influence the corn, but also the soy supply chain in Mato Grosso (MT) which is significant for two reasons. First the soy supply chain is one of the main drivers of deforestation in Brazil. Second FS impacts around 15% of soy production areas in Mato Grosso where production grew fourfold in the past decade and is expected to grow further.

With &Green’s loan support, FS aims to transform land use practices of corn and soy producers in MT. This includes proactive engagement with suppliers to protect and restore forests and promote sustainable intensification of degraded lands.

Transaction Summary

NAME

Fueling Sustainability (FS)

Jurisdiction

Mato Grosso (Brazil)

Sector

Grains

&Green Investment

USD 30 Million

Investment Term

8 years

Financial Structure

&Green provided an 8-year senior unsecured loan

Impact Targets

224,000 hectares of protected forests

40,000 hectares of degraded lands being intensified

Up to 5,000 hectares of restored native forest

Small producer social inclusion, sector engagement

KEY PERFORMANCE INDICATORS

FOREST PROTECTED

847,779 ha

CLIMATE BENEFITS

2,775,969 tCO₂e

PEOPLE RESILENCE

2,097

ECOSYSTEM RESILIENCE

862,960 ha

PEOPLE BENEFITTING

2,097

CAPITAL MOBILIZED

USD 571.1 Million

INVESTMENT RATIONALE

Soy is one of the main drivers of deforestation in Mato Grosso (MT). In recent years, Brazilian corn has emerged as a secondary crop to soybeans with its production expanding due to intensified soy production areas in the region.

FS’s commitments will catalyse a transformative shift in sourcing practices among corn producers in MT, with the intended consequence of influencing the practices of other soy producers whose farms serve as the source for corn as a secondary crop. Commitments are set out in two documents developed with &Green: the Landscape Protection Plan ( LPP ) and the Environmental and Social Action Plan ( ESAP ).

In line with its sustainable sourcing strategy, FS will mandate forest conservation as a requirement for suppliers to be eligible for its production plants. This commitment necessitates deforestation-free practices in both corn and soy production, an endeavour that has posed challenges in securing from Brazilian soy producers in the past.

With this investment, &Green aims to showcase an integrated model that combines climate change mitigation, food production and forest protection. This will be achieved through sustainable intensification of land and the transformation of sourcing practices in the Amazon and Cerrado biomes, where FS operates.

The blueprint for sustainable deforestation-free corn ethanol production will exemplify how collaboration among diverse market players can expedite the implementation of the Brazilian Forest Code’s principles. This approach will focus on conserving and restoring native forests in the Amazon and Cerrado regions.

A YEAR IN REVIEW

HIGHLIGHTS

Social and Environmental Responsibility Policy in the Supply Chain and Sales Channels

FS has updated its Policy and underlying protocols to integrate new purchasing criteria developed as part of its commitment with &Green, which are related to more precise deforestation tracking, cut-off dates, criteria related to Indigenous Peoples and similar.

Indigenous Peoples Policy

The company formalized its Indigenous Peoples Policy which has been developed with support of external experts and includes the procedures of FPIC consultations (where applicable).

Deforestation Alerts Center

FS implemented an advanced tool that provides monthly updates on native vegetation cover and relies on public sources of information such as MapBiomas (best practice in Brazil), GLAD, DETER and SAD.

Program of Restoration of FS Landscapes

FS contracted AgroIcone, a leading Brazilian agricultural analysis firm that produces studies and economic assessments for the agribusiness sector, to review the company’s program of landscape restoration including the restoration techniques and monitoring.

Low LUC Risk¹ certification

FS is the first Brazilian corn ethanol industry to receive the ISCC international certification (International Sustainability & Carbon Certification), attesting that its production process meets international requirements for the production and supply of ethanol and corn oil to produce SAF (Sustainable Aviation Fuel). Furthermore, FS is the first ethanol producer in the world to obtain Low LUC Risk certification in collaboration with one of its second-crop corn suppliers, GGF Group.

Bamboo monitoring program

FS contracted a detailed study to assess the invasive potential of bamboo used by the company as renewable biomass to generate power and to establish a proper monitoring to assure preservation of local biodiversity.

Farmers engagement

FS comprehensively disseminated good agricultural practices to producers, promoting the adoption of sustainable methods.

The partnership with &Green has transcended a traditional lender-borrower relationship, positioning &Green as a key advisor in our sustainability journey. Their guidance on best global practices and nuanced sustainability issues has been invaluable. Additionally, securing a loan from &Green has bolstered our credibility, attracting further investment by showcasing FS as a model of environmental responsibility. This collaboration has significantly advanced our goal of establishing a zero-deforestation supply chain, benefiting both our business and broader environmental efforts in Brazil.

DANIEL COSTA LOPES

Here is a quote elaborated from a section of the video recording with FS’ Director of Sustainability and Business Development

LOOKING FORWARD TO 2024

CLIMATE ADAPTATION PLAN

FS updated its climate risk matrix which prioritizes physical and transition risks for FS business. FS expects to update its climate adaptation planning to ensure business resilience and sustainability in the long-term.

ECOSYSTEM SERVICES

FS is conducting a study of risks and impacts related to ecosystem services. The scope includes direct and indirect impacts, and significant residual impacts identified through an exploratory study. This process will take into account relevant threats to ecosystem services and consider the values attributed by the affected communities and, when pertinent, by other stakeholders in the surrounding areas of FS’s productive units in selected municipalities.

IMPACTS, ETHICS AND CONDUCT

FS is conducting a Socioeconomic and environmental impact assessment study to identify the causal effect of its operations on the municipal macroeconomic landscape, key economic sectors, and local economic diversification. This method compares FS-affected municipalities with similar ones without FS’s presence.

The Code of Ethics and Conduct will be updated to address issues addressed in recent assessments of human rights.

FARM STATION

Located in the Sorriso/MT unit, this small research station is dedicated to validating and disseminating good agricultural practices for sustainable management. The farm focuses on developing and testing innovative agricultural solutions. Experiments are currently being conducted on fertilizers, integrated systems, crop rotation, soybean and corn hybrids, biological products, and more.

FS