What is the TCFD? 
The Task-force on Climate-related Financial Disclosures (TCFD) offers a set of voluntary recommendations for reporting climate change-related risks and opportunities. The task force, created by the Financial Stability Board (FSB) along with representatives from different economic sectors, both public and private, published its guidelines in 2017, structured into four reporting dimensions: governance, strategy, risk management, and metrics and targets. As of November 2022, the TCFD had over 4,000 supporters from over 100 countries, with a combined market capitalization of USD 27 trillion¹.

For more information go to: https://www.fsb-tcfd.org/

Suzano's Track Record

Suzano formally supports the TCFD and adopts its recommendations as a reference for reporting potential climate-related financial impacts.

Since 2019, the company has implemented actions to improve climate change management, in line with corporate best practices.

This effort involved mapping and formalizing climate risk and opportunity management processes in several areas. Suzano began to perform yearly assessments of compliance with the TCFD recommendations, based on the criteria defined by the TCFD Maturity Map of Accounting for Sustainability. This diagnosis shows that the maturity level of Suzano's compliance with the TCFD criteria has increased over time, reaching 79% in 2022, as shown in the table following the indicator.

In 2022, Suzano hired a specialized external consulting service with the aim of expanding internal capacity to assess and manage physical and transition risks under different climate scenarios, covering forestry, industrial and logistics operations, as well as a number of critical suppliers, totaling 50 locations. The ongoing work should also promote advances in the financial quantification process of mapped risks and in climate governance. This combined with the expanded use of internal carbon pricing to measure projects and manage transition risk for a future carbon market has increased our score in the Strategy and Management of Risks and Opportunities field.

Considering the ongoing development of a strategic approach to managing climate-related risks and opportunities, as well as studies conducted in 2022, these practices will be incorporated into Suzano's business practices by 2023.

Governance

The Board of Directors is responsible for overseeing sustainability strategy, including aspects of climate change, supported by the Sustainability Committee, a collegiate advisory and instruction body, which is responsible for setting the management strategy on climate change, assessing and monitoring implementation of defined goals, indicators, and targets three times a year.

In 2022, part of the variable remuneration for executive directors was tied to sustainability targets, with the CEO and five directors committed to climate-related targets.

Climate change and its potential effects are considered one of the priority risks for Suzano at a corporate level. In this regard, it has its own structured system for assessment, treatment (i.e., risk response), monitoring and reporting. The Risk Management area monitors the progress and mitigation of priority risks by establishing action plans and controls, with reports to the Board of Directors being issued at least once a year.

In 2022, the Investment Committee began to include sustainability criteria, including climate change, in the assessment of industrial modernization projects.

Considering it is a material topic for the company, several Executive Committee and departments have direct responsibility for climate change. This includes Sustainability and Communication, Forestry, Industrial and Logistics Operations, New Business, Research and Development, Strategic Planning, Recovery and Utilities, and Risk Management, among others.

In addition, in 2022, we launched a Corporate Climate Change Policy to steer our employees on business values and align attitudes toward a common goal. The climate change principles described in the Policy aim to ensure mitigation actions to reduce and remove GHG from the atmosphere and maximize the company's positive impacts, in addition to developing adaptation actions to the effects of climate change. The Policy's goal is to ratify the company's commitment to combat climate change as it progresses towards a low-carbon economy and to contribute to a resilient future for society.

Engagement and awareness

Externally, the company fosters debate and partnership with governments, companies, non- governmental organizations, associations and academia through active participation in forums and working groups. In 2022, it outlined a vast engagement strategy for COP27, the United Nations Climate Conference. Our primary goal was to engage the business sector and exert influence on positive climate policies, such as carbon markets and pushing the carbon neutral and even carbon positive agenda.

Internally, Suzano created multidisciplinary Working Groups (WG). The WG Climate Engagement and Influence is responsible for monitoring regulations and agreements, as well as methodologies for accounting for emissions and removals. The ESG WG strives to bring about sustainability debates which require financial department involvement, such as the implementation of the TCFD Guidelines.

To learn more about Suzano's involvement in initiatives, see the indicator "Participation in Associations".

Strategy

It is evident that natural resources are increasingly scarce. The future depends on our ability to innovate and our responsibility to optimize the use of the available resources. For Suzano, this scenario represents opportunities, which led us to define our long-term strategic vision:

1. To continue to be an industry benchmark in efficiency, profitability and sustainability from the forest to the customers,
2. To be a transforming agent in the expansion of our biomass into new markets,
3. To be a benchmark in sustainable and innovative solutions for bio-economy and environmental services, based on cultivated trees.

At Suzano, innovation and sustainability go hand in hand transforming renewable raw material from trees into bioproducts for billions of consumers in over 100 countries. With over 90 years of experience, we mainly operate in the pulp (grade and fluff papers) and paper (paperboard, printing and writing, and tissue) segments, and Suzano's bioeconomy strategy is fully aligned with global trends and demands for renewable solutions for a low carbon economy in priority areas:

• Lignin;
• Bio-petroleum;
• Nanocellulose;
• Biocomposites.

These areas represent opportunities to replace fossil-based products, which require greater energy and water consumption.

In our ambition to "boldly expand into new segments" (with a timeframe ranging from 5 to 10 years), partnerships to substitute single-use plastic and a partnership with Spinnova to produce micro fibrillated cellulose (MFC), which is obtained from eucalyptus planted in Brazil, are some significant examples of opportunities being seized for Suzano.

Having one of the largest forest areas in the world, Suzano understands its role in combating climate change. Together, native forests and eucalyptus plantations contribute directly to the removal and storage of CO2 from the atmosphere. Therefore, we are committed to doing more than neutralizing direct and indirect emissions from our value chain. We aim to remove significant additional amounts of carbon from the atmosphere, thereby mitigating the effects of the global climate crisis.

Risks and Opportunities Management

Climate change and its potential effects are considered one of the priority risks for Suzano at a corporate level. In this regard, it has its own structured system for assessment, treatment (i.e., risk response), monitoring and reporting.

The Company is equipped with a structure dedicated to corporate risk management, including risks related to climate change, with its own methodologies, tools and processes that aim to ensure the identification, assessment and treatment of its main short, medium and long-term risks. Such structure, through its management system, allows for the continuous monitoring of risks and potential impacts, control of variables involved and definition and implementation of mitigating measures, aimed at reducing identified exposures. The company's assessment of potential physical impacts from climate change, as well as from the transition to a low carbon economy, is continuously conducted and will continue to evolve.

Climate-related risks are incorporated throughout the Company's Enterprise Risk Management (ERM) process. As part of the continuous monitoring process of climate risks, we set up action plans focused on mitigating the medium- and long-term impacts of Climate Change, while critical actions are regularly reported to the Executive Committee and the Board of Directors.

Risk management process also encompasses specific approaches at operational level. One such example is climate change scenario modeling and monitoring indicators for technical research and development staff. This data is used to calibrate the crop and planting planning models and to review the assessment of associated climate risks in order to establish new specific action plans where necessary.

Climate Scenario Analysis

Physical Risks: can influence wood supply planning, silviculture operations, as well as strategic directions of innovation projects. Risk mapping considers four global warming scenarios from the Intergovernmental Panel on Climate Change - IPCC (SSP1-2.6; SSP2- 4.5; SSP3 - 7.0 and SSP5 - 8.5) as well as four future periods (2021-2040, 2041 - 2060, 2061 - 2080, 2081 - 2100), considering nine global climate models.

The climate risk analysis is performed using statistical models. In forest productivity we use the 3-PG model (Physiological Processes Predicting Growth), a scientifically recognized tool calibrated to our environmental conditions. Through this modeling, estimates of impacts are made considering climate change scenarios and analyses arising from El Niño and La Niña events over the last 102 years.

Determining these potential impacts is crucial for business and has been done for years. For instance, in 2006, we measured the increase in CO₂ in most genotypes planted, by means of various physiological variables in trees. In 2009, Suzano updated its database using three global models (HAD, CSIRO and PCM), according to IPCC scenarios (A1, B1, A2 and B2). This study was revisited in 2015, when researchers assessed and identified risks under both scenarios (RCP 2.6 and RCP 8.5).

We invest in research and development to drive innovation along the value chain, targeting adaptation and mitigation to current and future climate effects. Ongoing projects seek to increase forest clone resilience to climate adversities, as well as tolerance to pests and diseases; Additionally to developing tools for early diagnosis of these impacts. We conduct increasingly sophisticated assessments by means of artificial intelligence, big data & analytics to attain even more sustainable forest stewardship within the context of climate change.

Climate indicators are used to calibrate harvest and planting planning models, to mitigate possible productivity losses, optimize forest productivity and assist in investments and other strategic decisions. For instance, Suzano has the largest private genetic base of eucalyptus worldwide and an extensive climatic monitoring base to mitigate and monitor climate effects.

Transition risks: Suzano continually assesses possible climate transition risks that might impact its operations, such as political, legal, market and reputational risks.

Despite being one of the best performers in the industry regarding carbon intensity per product manufactured as well as one of the best performers projected for 2030, we understand that global competitiveness will also depend on greater ambitions and efforts to reduce greenhouse gas (GHG) emissions. To this effect, in addition to committing to develop an SBTi goal aligned to a 1.5°C scenario, we have assessed our GHG emissions projections for the remainder of this decade under different decarbonization scenarios and by means of different areas:

• 1.5°C, developed by SBTi (Science-Based Target Initiative) using the IPCC Special Report on Global Warming of 1.5°;
• TPI tool (Transition Pathway Initiative), which utilizes the 2DS and B2DS scenarios developed by the International Energy Agency (IEA);
• Assessing Low Carbon Transition (ACT) methodology, which draws on the IEA's B2DS and NZE 2050 scenarios.

In the latter, we assess not only carbon intensity across our operations and emissions trajectory by type of product produced, but also heat, steam and electricity generation through low carbon aligned technologies in our industries, as well as our material and intangible investments in low carbon mitigation, low carbon technologies and products in the coming years.

Regarding negative impact, we use carbon pricing (shadow pricing) both in new project approval processes and to quantify the risk of a future carbon tax or regulated market mechanism on our total emissions.

We use different data sources in our pricing scenario modeling to set internal carbon prices for different areas that in turn have different contexts, such as industrial (Scope 1 and 2), road and maritime logistics (Scope 3), and forest planting (Scope 1 removals). The modeling considers carbon tax prices practiced in Latin America, current prices from international regulated and voluntary carbon markets, as well as price projections for the next decades estimated by different institutions such as the Partnership for Market Readiness of the World Bank (PMR Brazil), International Energy Agency (IEA), International Renewable Energy Agency (IRENA), United Kingdom.

Regarding political and legal risks, we have followed up on the debate over establishing a regulated carbon market in Brazil, as well as public consultations of new international schemes, such as the Carbon Border Adjustment Mechanism (CBAM), part of the Europe Union Green Deal.

Mapped Risks

The Company's assets, notably biological assets, which are measured at fair value, property, plant and equipment and intangible assets, may be impacted by climate change.

Management considered the main data and risk assumptions highlighted below:

1. Possible impacts on fair value determination in biological assets due to: effects of climate changes, such as temperature rise, water shortage, may impact some assumptions used in accounting estimates related to the Company's biological assets, as follows:
   1.  Losses of biological assets due to fires and impacts arising from increased presence and resistance of pests and other forest diseases favored by the gradual increase in temperature;
   2. Reduction of productivity and expected growth (IMA) due to reduced availability of water resources in watersheds and other atypical weather events such as droughts, frosts and torrential rains;
   3. Production chain interruption due to adverse climatic events.
    
2. Water shortage in the industry: although our units are water-efficient, there are contingency plans for all units affected by possible water shortages and action plans to address the water crisis in critical regions.
3. Structural changes in society and their impacts on business, such as:
   1. Regulatory and legal: resulting from changes in Brazilian and/or international scope that demand capital investment in new technologies and/or operation costs. Among anticipated issues are carbon pricing, carbon customs taxation, trade barriers and/or restrictions related to the supposed contribution, even if indirect, to the intensification of climate change, increasing the litigation risk;
   2. Technological: resulting from the emergence of improvements and innovations towards a more energy efficient and low carbon economy;
   3. Market: resulting from changes in supply and demand for certain products and services as climate-related issues are considered in decision-making;
   4. Reputational: related to customer and society's perception of an organization's positive or negative contribution to a low carbon economy.

Compliance with contractual clauses related to sustainability in debt securities and sustainable loans (Sustainability Linked Bonds - "SLB" and Sustainability Linked Loans - "SLL ")

The Company issued debt securities and loans linked to Sustainability Performance Targets - SPT concerning GHG emissions intensity, water capture intensity for use in industrial processes and percentage of women in leadership positions. Non-attainment of these targets may result in a future increase in the cost of said debts, as established in the corresponding contracts.

Suzano is one of the world's largest issuers of Sustainability Linked Bonds (SLB) - a financial tool that links the cost of funds raised with investors to the fulfillment of sustainability commitments. In 2020, the company issued its first bond based on the SLB Principles, becoming the second company in the world and the first in the Americas to make an issue of this kind. In 2021, Suzano issued two new bonds under the SLB Principles and, for the very first time, connected, alongside an environmental goal, a social goal - namely, a diversity, equity and inclusion goal. Its first Sustainability Linked Loan (SLL) was issued in 2021, and in 2022 the company contracted a new loan with the International Finance Corporation (IFC) following the guidelines of the SLL Principles.

Opportunities

Due to the large removal volume of CO₂ by eucalyptus and native forest, Suzano sees a potential supply of carbon credits for commercialization to companies and institutions that wish to offset their emissions and meet their climate targets. The Carbon Business and Corporate Venture and New Business teams are responsible for developing these opportunities internally.

A further opportunity identified in our business is the reuse of biomass and wood waste from the production process to yield a significant portion of our energy needs. Approximately 88.1% of the entire operation and energy matrix (which embraces forestry, industry, logistics, etc.) comes from renewable fuels (such as black liquor and biomass), and the remaining 11.9% from non-renewable resources (such as natural gas and fuel oil). We are self-sufficient in the Aracruz, Mucuri, Imperatriz, and Três Lagoas units in terms of energy needs, and sell surplus energy to the grid. By 2022, 1,509,949.59 MWh (1500 GWh) of renewable electricity was supplied to the public grid from these units. This surplus energy sold can be subject to international renewable energy certification, the so-called "I-REC (Renewable Energy Certificate)", in 2022, sales of I-RECs totaled BRL 411,776.54.

We operate throughout our chain to ensure resource efficiency as well as waste and environmental impact reduction - from eucalyptus seedlings to the final product. However, we take this a step further: we strive for an ongoing debate and sustainability outlook in our relationships with employees and customers, partnerships with suppliers and financial processes. To strengthen the relationship between Suzano and its suppliers and encourage them to undertake joint emission reduction commitments, in 2021 Suzano initiated the CDP Supply Chain program. The 100 most critical suppliers mapped in the Socioenvironmental Risk Matrix were invited to join the program. During the first cycle in 2021 we obtained 78% engagement, a significantly higher result than the average of 67% of other CDP Supply Chain participants. For the second cycle, in 2022, we had 91% adhesion, representing 31% improvement over the first cycle, and surpassing the global engagement of 280 member companies. In addition to the continuity of the program, we held engagement sessions with our suppliers in order to assist them in taking further steps in their climate change strategy and in establishing targets and actions to reduce GHG emissions.

The logistics area has also been working to find low carbon technological alternatives for transportation and distribution of our products, which is the biggest challenge in reducing emissions from our value chain.

And, associated with Suzano's Strategy, the expansion of current and new low carbon intensity products that can substitute other products of fossil origin is expanding in a scenario where our customers are striving to find solutions for their decarbonization strategies.

Metrics and Targets

Suzano discloses over one hundred indicators used for climate risk and opportunity assessment, including GHG emissions and removals in scopes 1, 2 and 3, which are calculated in line with the GHG Protocol methodology. Part of these metrics is also incorporated into operational performance indicators, with specific targets to be achieved.

Among the 15 long-term commitments, two comprise the climate change front:

• Remove 40 million tonnes of CO₂ equivalent from 2020 to 2025; and
• Reduce the intensity of carbon emissions (Scopes 1 and 2) per ton of product produced (tCO₂e/t) by 15%
  by 2030.

Meanwhile, other targets contribute to the climate agenda by potentially contributing to the substitution of fossil products:

• Offer 10 million tonnes of renewable products that can replace plastics and petroleum products by 2030;
• Increase exports of renewable energy by 50% by 2030;
  By 2022, part of the executive directors' variable compensation was tied to sustainability targets, with the CEO and five directors committed to climate-related targets.

Since joining the Science Based Target Initiative (SBTi) in 2021, Suzano has been working to establish a GHG emission reduction target aligned with the 1.5°C scenario. This effort should include direct emissions and emissions from the value chain (scope 3).

It is worth mentioning that the current target (15% reduction in emissions intensity) is adherent to science and in accordance with the Paris Agreement according to three methodologies: Transition Pathway Initiative (TPI), Baringa and Truecost.

Regarding metrics, Suzano's environmental management system includes a series of metrics related to the emission and capture of GHGs, forest restoration, water capture and consumption, energy consumption and self-generation, and waste generation and disposal.

Listed below are the metrics monitored by topic.

Biodiversity

1. Forest area in endangered species habitat;

2. Owned, leased, or managed area within, or adjacent to, protected areas, and areas of high biodiversity value outside protected areas;
3. Commitment to Biodiversity Conservation;
4. Zero Deforestation Commitment;
5. Commitments and Partnerships;
6. Species included in the IUCN Red List and in national conservation lists with habitats located in areas
   affected by the organization's operations, by biome;
7. IUCN Red List species and national conservation list species with habitats in areas affected by
   organization's operations, by level of risk and extinction;
8. Biodiversity management in forestry operations;
9. Protected habitats by type;
10. Protected habitats by habitat type;
11. Significant impacts of activities, products, and services on biodiversity;
12. Location and size of land owned, leased or managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas;
13. Monitoring of Fauna and Flora (Casa da Floresta);
14. Total number of owned, leased or managed areas within, or adjacent to, protected areas, and areas of high biodiversity value outside protected areas
15. Total number of species found in monitoring;
16. Total number of species found in monitoring, by type;
17. Total size of High Conservation Value Areas (HCVA);
18. Total size of areas in restoration process;
19. Total areas maintained by Suzano by type of land use;
20. Total areas for development by type of land use.
21. Restoration and firefighting
22. Number of fire outbreaks in Suzano's areas;
23. Total conservation areas affected by fires, in hectares;
24. Total of plantation areas affected by fires, in hectares;
25. Total number of areas in restoration process;
26. Total number of seedlings planted for restoration;
27. Percentage of the area verified by third parties as being in legal compliance;
28. Ecological Restoration Program
29. Nascentes do Mucuri Program
30. Size of areas with initiated restoration process.

Water

1. Water consumption in industrial operations;
2. Percentage of water withdrawn in forest operations in water-stressed areas;
3. Percentage of water withdrawn from industrial operations in water-stressed areas;
4. Percentage of water consumption from alternative water sources (rainwater, sewage, graywater, among
   others);
5. Specific water consumption in industrial operations;
6. Water withdrawal by source in forestry operations;
7. Water withdrawal by source in industrial operations;
8. Percentage of water recycled or reused in industrial operations;
9. Water consumption in industrial operations in water-stressed areas;
10. Water withdrawal by source in forestry operations in water-stressed areas;
11. Water withdrawal by source in industrial operations in water-stressed areas;
12. Percentage of water consumed in industrial operations in water-stressed areas.

GHG emissions and sequestration

1. Biogenic CO₂ emissions (scope 1);
2. Biogenic CO₂ emissions (scope 3);
3. Greenhouse gas emissions (GHGs) and methodology;
4. Direct greenhouse gas emissions (scope 1);
5. Direct greenhouse gas emissions (scope 1) by category;
6. Direct greenhouse gas emissions (scope 1) by type;
7. Indirect greenhouse gas emissions (scope 2);
8. Management of GHG emissions in forestry, industrial and logistical operations;
9. GHG emissions intensity (scopes 1 and 2), by ton of product
10. Greenhouse gas emissions intensity (scopes 1, 2 and 3), by net revenue;
11. Greenhouse gas emissions intensity (scopes 1, 2 and 3), by ton of product
12. Other indirect greenhouse gas emissions (scope 3);
13. Other indirect greenhouse gas emissions (scope 3) by category;
14. Other indirect greenhouse gas emissions (scope 3) by category - segregation of transport and distribution
    category;
15. Practices and initiatives to reduce the intensity of emissions.

Energy

1. Consumption of fuels from non-renewable sources;
2. Consumption of fuels from renewable sources;
3. Energy consumed outside the organization;
4. Energy consumed by type;
5. Energy sold (exported) by type;
6. Energy management;
7. Degree of renewability of the energy matrix;
8. Energy intensity;
9. Percentage of electricity from the grid, biomass and other renewables;
10. Reductions in energy consumption from conservation and efficiency improvements;
11. Total energy consumed;

Waste Management

1. Generation of non-hazardous waste in industrial operations;
2. Generation of hazardous waste in industrial operations;
3. Solid waste management in forestry operations;
4. Solid waste management in industrial operations;
5. Waste sent to landfill cell in industrial operations;
6. Waste sent for disposal in forestry operations;
7. Waste destined for disposal in industrial operations;
8. Waste generated in forestry operations;
9. Waste generated in industrial operations;
10. Waste not destined for disposal in forest operations;
11. Waste not destined for disposal in industrial operations;
12. Non-hazardous waste destined for disposal by disposal operation in forestry operations;
13. Non-hazardous waste destined for disposal by disposal operation in industrial operations;
14. Non-hazardous waste recovered by recovery operation in forestry operations;
15. Non-hazardous waste recovered by recovery operation in industrial operations;
16. Hazardous waste destined for disposal by disposal operation in forestry operations;
17. Hazardous waste destined for disposal by disposal operation in industrial operations;
18. Hazardous waste recovered by recovery operation in forestry operations;
19. Hazardous waste recovered by recovery operation in industrial operations;
20. Total waste generated at Suzano.

Carbon Credit

1. Carbon market;
2. Guidelines for generating a credit;
3. Carbon credits at Suzano;
4. Suzano's credit generation projects;
5. KPIs related to carbon credits.

Circular Economy

1. Strategies to reduce the environmental impact of packaging throughout its life cycle;
2. Percentage of recycled fiber purchased and used in products;
3. Revenue from reusable, recyclable and/or biodegradable products;
4. Volume of recycled fiber purchased, by product segment;
5. Volume of recycled and/or recovered fiber, by product segment;
6. Volume of recovered fiber, by product segment;
7. Total volume of recycled and/or recovered fiber, by business unit;

1. https://www.fsb-tcfd.org/about/
2. https://www.accountingforsustainability.org/content/dam/a4s/corporate/home/KnowledgeHub/Guide-pdf/TCFD%20Recommendations%20Maturity%20Map.pdf.downloadasset.pdf