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.

Costs associated with climate change, including adaptation and mitigation initiatives, are evaluated internally as part of our enterprise risk management and strategic planning processes. While exact figures are not disclosed due to strategic confidentiality, these initiatives are prioritized within our budget and monitored through established risk and performance management frameworks, including ERM and the Bracell 2030 roadmap.

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.

The ERM framework was fully implemented across the 18 departments reported in the previous reporting cycle. In 2025, the scope was expanded to include 27 additional departments, covering the Bracell São Paulo, Bracell Bahia, and our Southeast and Northeast Paper operations. This expansion included pulp and tissue operations, as well as forestry, logistics and corporate functions. During the reporting period, implementation was completed in the pulp, forestry and logistics operations of Bracell Bahia, and in the pulp operations of Bracell São Paulo. Implementation remains ongoing in corporate functions, forestry and logistics operations at Bracell São Paulo, and the tissue operations of paper business units.

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 GRI 3-3 Management of Material Topics  – Climate Resilience).

Below are some of the key initiatives in Bracell’s Climate Action agenda, spanning mitigation, energy efficiency, technological innovation, and building internal capabilities.

Energy self-sufficiency – We generate our own renewable electricity at Lençóis Paulista (São Paulo State), with 150 to 180 MW of surplus power supplied to Brazil’s national grid.

Solar energy – A 7.21 MW solar array (10,836 panels) at our Tissue plant supplies approximately 20% of the site’s electricity requirement.

Fuel transition – Replacing fossil fuels with renewable alternatives, including the use of eucalyptus biomass-derived syngas and the replacement of fuel oil with natural gas in lime kilns.

Replacement of fuel 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).

Electrification of material handling and logistics – Electric forklifts and trucks powered by our own renewable energy are now in operation. In 2025, this initiative avoided 16 tCO₂e in emissions.

Carbon and water flux research – Bracell is participating in the Eucflux-IPEF program, and has installed flux towers in eucalyptus plantations and native vegetation areas to monitor carbon and water dynamics.

GHG Inventory and GHG Protocol – Scope 1, 2 and 3 emissions are audited and publicly reported via the Brazilian GHG Protocol Program.