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 will impact 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.
KEY PERFORMANCE INDICATORS
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 expedit 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.
FS’s Landscape Protection Plan targets, developed with &Green:
Forest Conservation: FS will annually source from a diverse group of suppliers who collectively possess 196,000 hectares of Legal Reserve areas covered with forest. These suppliers have an additional 28,000 hectares of conserved land beyond the required Legal Reserve.
Forest Restoration: FS will promote forest restoration efforts, focusing on social inclusion of suppliers facing deforestation liabilities. FS will further assist those with degraded APPs (permanent protection areas) to anticipate their compliance with the Forest Code, thereby simplifying and/or avoiding future regulation procedures. This effort will result in approximately 5,000 hectares of restored native forests.
Sector Engagement: FS will increase the share of farm-level traceable corn origination from cooperatives and resellers. It will also prioritize sourcing from traders with the best available traceability and MRV approach, both for Amazon and Cerrado biomes.
Emissions Removal and Avoidance: achieved through securing the biomass demand for power generation from renewable traceable sources, produced on intensified degraded land (approximately 40,000 hectares).
LOOKING FORWARD TO 2023
ENHANCED MONITORING SYSTEM
FS intends to fully operationalize its Geographic Information System (GIS) monitoring system, established with enhanced environmental and social criteria developed to enable the NDPE commitments.
FS established a sophisticated project management tool for IFC Performance Standards compliance management, monitoring and continuous improvement. 2023 will be the first cycle of its usage for internal targets of the company.
FS expects to have the first cases of restoration and small holders social inclusion. As per its Landscape Protection Plan (LPP), FS will promote forest restoration, aiming at social inclusion of suppliers with deforestation liabilities as well as assisting those with degraded APPs (Areas of Permanent Protection designated at each farm). These measures anticipate compliance with Forest Code, simplifying and/or avoiding future procedure related to PRADA (Recomposition Project for Degraded or Areas). The expected program outcomes are the inclusion of least 15 small suppliers with embargoes related to deforestation or Terms of Adjustment of Conduct (TAC). In Brazil, the small rural property is defined as one sized up to 4 “fiscal modules”. The fiscal models differ from municipality to municipality. In Mato Grosso, the average fiscal module is around 90 ha. FS is committed to achieve an ambitious figure of 5,000 ha.
INDIGENOUS PEOPLE POLICY
FS developed the Indigenous People policy and will fully integrate its operation into the supply chain management.