Below, we provide more information on Suzano's eight material issues, which are the highest priorities for the company's performance.

CLIMATE TRANSITION AND PHYSICAL RISKS

Climate change poses direct risks to Suzano's business, reinforcing the company's need to strengthen its resilience and adaptive capacity. Some of these risks are: 

• Interruption to industrial operations due to lack of water availability; 
• Loss of forest assets due to forest fires (all forest units are exposed to this risk); 
• Loss of forest assets due to physiological disturbances, enhanced by climatic events such as La Niña and El Niño. There was an increase in the presence and resistance of forest pests and diseases in Suzano's forest areas, favored by the rise in average temperatures.

BUSINESS STRATEGIES

In line with our strategic vision, we integrate the issue of climate change into the company's policies, governance, management, and planning, working to build knowledge and capacity to face climate challenges.

In terms of business strategies, we have: 

• Climate risks incorporated into the company's risk management as one of our priority risks;
• Internal working groups focused on methodologies and opportunities;
• Participation in associative working groups, with an active voice favoring the carbon transition.

Mitigation actions: 

• Switching from fossil fuel consumption to renewable energies and efficiency projects;
• Research and adaptive and resilience actions: analysis of climate scenarios, planning of future operations, and improvement programs to develop adapted clones and obtain better performance in the limiting conditions of each unit;
• Increasing the forest's revenue streams with renewable products in the portfolio, replacing fossil products;
• Costs are reduced, and dependence on Suzano's energy and water resources operations is reduced.

GOALS/METRICS LINKED TO THE MATERIAL THEME

To find out more about the targets and their progress, visit the Commitments to Renew Life page ("Remove 40 million tons of carbon from the atmosphere by 2025" and "Reduce the intensity of Scope 1 and 2 greenhouse gas emissions by 15% per ton of production").

RELEVANCE TO EXTERNAL STAKEHOLDERS

Native forests and eucalyptus plantations directly remove and store carbon dioxide from the air, preserve biodiversity and regulate the hydrological cycle, among other benefits. Suzano's industrial and logistics activities are characterized by a high intensity of greenhouse gas (GHG) emissions. This places great responsibility on its role in mitigating and adapting to climate change, contributing with suppliers, customers, governments, civil society, and other private sector entities to meet this challenge. 

BIODIVERSITY AND LAND USE

As a nature-based company, our eucalyptus trees depend on natural resources such as water and soil to grow continuously, cycle after cycle, in the same areas. Biodiversity is essential for supplying, regulating, and supporting these resources, strengthening our productivity and long-term capacity. Protecting and enhancing ecosystem services - including biodiversity conservation - in our managed forests mitigates operational and reputational risks.

On the other hand, in addition to timber production, natural forests provide valuable ecosystem services, including carbon sequestration, wildlife habitat, water purification and storage, soil formation, and recreational opportunities.

BUSINESS STRATEGIES

Suzano bases its biodiversity strategy on three premises: 

• Zero deforestation: not planting or buying eucalyptus trees planted in areas that were previously occupied by native vegetation and which have been legally or illegally deforested;
• Sustainable forest management: the forest management model adopted by the company favors plantation productivity, disease and pest control, the maintenance of biodiversity, and environmental preservation in areas that go beyond legal requirements;
• Regeneration: Suzano works to reduce the negative impact of forestry operations on biodiversity and maximize the positive impact through conservation practices, resulting in a positive total impact on biodiversity. It actively participates in the regeneration of landscapes in the territories where it operates.

GOALS/METRICS LINKED TO THE MATERIAL THEME

To learn more about the target and its progress, visit the Commitments to Renew Life page ("Connect half a million hectares of priority areas for biodiversity conservation in the Cerrado, Atlantic Forest and Amazon").

RELEVANCE TO EXTERNAL STAKEHOLDERS

Eucalyptus plantations have driven deforestation and pose risks to other biomes, although most companies no longer work in deforested areas. Habitat loss and fragmentation caused by human activity and other factors can negatively impact biodiversity. However, managed forests provide ecosystem services such as carbon sequestration and wildlife habitats. Protecting these services can mitigate the environmental risks associated with forestry and potentially improve reputation, demand, and operations. 

COMMUNITY IMPACT AND DEVELOPMENT

Suzano's operations are present in several Brazilian municipalities where extreme poverty and income inequality are real challenges. As such, the company's territorial development strategy focuses on income generation and education to increase institutional capital in local communities and reduce conflicts.

Employment, income generation, and quality education promote well-being in local communities and support productive activities that contribute to their development, implement social protection systems, and reduce poverty. This involvement with local communities improves the relationship and perception of Suzano by the local public, reduces conflicts (such as wood theft and roadblocks), and makes the coexistence between the communities and the company's activities thrive.

BUSINESS STRATEGIES

In 2009, a large quantity of eucalyptus, worth around 20 million dollars, was stolen from Suzano's land. Community turmoil sometimes led to arson and roadblocks. The company spent millions of dollars to protect its forests and operations. The situation only changed when the social strategy was altered. By working in partnership and generating alternatives, illicit activities were discouraged, and relationships improved.

Our process of generating qualified income has gone from strength to strength. The company has set a new level of social performance in its long-term goals, requiring gains in scale and scope. Income generation and education are the structural aspects we focus on, seeking to build solutions that promote well-being and mitigate potential risks of social conflict. The company currently works on a model based on a systemic approach, which connects the relevant social actors in the region, harnessing its potential and creating an environment of mutual cooperation.

GOALS/METRICS LINKED TO THE MATERIAL THEME

To find out more about the goals related to this topic and their progress, visit the Commitments to Renew Life page ["Lifting 200,000 people out of poverty in our areas of operation" and "Increasing the Basic Education Development Index (IDEB) by 40% in all priority municipalities by 2030"].