... with sustainability...

Sustainable development is our value proposition to all customers and partners.

In 2020, the Paris Agreement, approved in 2015 by more than 190 nations, came into effect to establish initiatives to curb the increase in global average temperature to 1.5° Celsius above pre-industrial levels. Brazil participates in this agreement with the initial goal of reducing the emission of greenhouse gas (GHG) by 37% compared to 2005. Nationally Determined Contributions include, among other measures, an 18% increase in the share of sustainable bioenergy in the country's energy mix by 2030.

Biofuels have a strategic position within this context, since their carbon footprint is significantly smaller than that of fossil fuels. In 2017, in order to contribute to the commitments we assumed, the government created the National Biofuels Policy (RenovaBio), which came into effect in December 2019. The main purpose is to establish annual decarbonization goals for the Brazilian fuel distribution sector, broken down into specific targets for each distributor based on their performance in the previous year. The goals are achieved through the purchase of CBios, which are credits generated by biofuel producers according to the carbon intensity of their production processes.

We reinforce sustainability as a pillar of responsible business and an element that has always marked our trajectory. Since 2011, when we started our activities, we have quantified our GHG emissions (see here ). In 2015, we also started completing questionnaires from the Carbon Disclosure Project (CDP), an initiative of the financial sector that has become the main international database focusing on topics such as Climate Change, Water, and Forests, intended to seek an understanding of the advancement of companies and cities in these areas. In 2019, we reached level B and continue in pursuit of a Leadership status.

Our vision goes even further: we want guarantees of sustainable supply for our entire production chain. In our own sugarcane, we have the largest volume in the world certified by Bonsucro ⁵ —in more than 84.6% of our plants—and our goal is to extend this certification to the other plants by 2022. For the full list of certifications for our operations, click here .

Our certification strategy also covers our second generation ethanol (E2G), produced from sugarcane bagasse. Production, which started in 2014/2015, is integrated into the Costa Pinto unit in Piracicaba (SP) and reached a productivity index of 226 liters of E2G per ton of biomass, on a dry basis. The entire operation meets the most stringent sustainability standards set out by Bonsucro and ISCC, in addition to the criteria for accessing the North American and European Union markets.

In relation to cane purchased from third parties, we have developed a continuous improvement qualification program that covers more than 99% of the sugarcane suppliers ⁶ of the 2019/2020 harvest—less the sugarcane suppliers contracted in the spot market (see here ). We can ensure the sustainable origin of our raw material and that the sugarcane production processes are covered by programs that guarantee and/or contribute to the continuous improvement of social, environmental, ethical, and governance aspects.

5 Certification program for the transformation of the sugarcane industry by Bonsucro, an international association whose goal is to reduce the environmental and social impacts of sugarcane production through the development of a standard.
6 The percentage of suppliers served by the ELO Program and, consequently, the volume of sugarcane covered by the program varies along the crop year due to the entry of new suppliers and termination of contracts. At the close of the 2019/2020 harvest, the initiative covered 99.57% of the total number of suppliers.

Standards and certifications

Integrated renewable energy portfolio

We are an integrated energy company that leads the energy transition process in Brazil through its products and its technology platform for optimal use of biomass.

Our projects take into account this scenario and the concepts of circular economy and waste management to build a portfolio of sustainable products that add resilience and relevance to the business.

1st generation ethanol

From sugarcane, we extract first generation ethanol—as well as other types of ethanol used in different industries. This biofuel reduces air emissions. From 2003, when the flex-fuel car technology was introduced, until December 2019, ethanol consumption (anhydrous and hydrous) reduced GHG emissions by 600 million tons of CO ₂ eq ⁷ .

When assessing GHG emissions in the life cycle of fuels, ethanol provides very significant reductions compared to gasoline. Data from the National Agency of Petroleum, Natural Gas and Biofuels (ANP) also indicate that the emission of CO2eq from cultivation of sugarcane up to the effective burning of the fuel in vehicles reaches, in a typical Brazilian plant, 440 kg per m ³ (1,000 liters), while the equivalent emission volume for gasoline totals 2.8 tons per cubic meter.

The mixture of up to 27% ethanol in gasoline (E27) provides a 15% reduction in emissions of CO2eq per kilometer traveled compared to pure gasoline. If E27 were to be used in a hybrid vehicle, this reduction reaches 35% ⁸ .

In the last 20 years, the use of hydrous ethanol in Brazil has replaced gasoline consumption by more than 100 billion liters, preventing the import of fossil fuel, which would have cost US$ 50 billion. Demand is expected to grow, driven by the National Biofuels Policy (RenovaBio) (see more here ).

7 The methodology used for this calculation takes into account, among other factors, the life cycle of ethanol, the size and replacement of the light vehicle fleet (ANFAVEA), and the share of ethanol (anhydrous and hydrous) in the transport energy mix.
8 Source: UNICA 2019.

Energy Cogeneration

Regarding cogeneration from biomass, we have 26 production units that are self-sufficient in energy and 13 plants that export energy to the grid, positioning us as the largest company in Brazil in the sector. In October 2019, we celebrated a victory in one of the new energy auctions (A-6) with an expansion project, and in 2020 we expect to further expand our bioenergy generation, given the greater availability of sugarcane.

Biogas

At the Bonfim Unit, in Guariba (SP), we continue to work, in partnership with Geo Energética and Sebigás, on the construction of our biogas plant. The operations, scheduled to commence in early 2021, will increase the unit's electricity generation by approximately 40%. The goal is to reach a total generation capacity of 21 MW by 2023.

The investment will total R$ 153 million, and the technology used is based on the conversion of filter cake and vinasse—two byproducts of the production process—into biogas. The vinasse will be supplied during the harvest, while the filter cake, one of the plant’s great innovations of, will be supplied throughout the year. This is because filter cakes can be stored, which provides stability in the biological process of biogas production and great synergy in working with vinasse.

With a production capacity of nearly 138,000 MWh per year, of which 96,000 MWh will be sold through an auction with supply starting in January 2021, the surplus value of energy may be traded on the free market or through other bilateral agreements. We believe that this project may be a milestone for the expansion of this energy source, mainly in upstate São Paulo, Minas Gerais, and in Brazil's Midwest region, given the availability of feedstock in these locations.

Second-Generation Ethanol (E2G)

Second-Generation Ethanol (E2G) differs from ordinary ethanol only in the feedstock used, which consists of byproducts from the production process (bagasse and straw). This technology provides the optimal use of raw materials as it increases ethanol production capacity by as much as 50% for the same planted area.

Currently, there is a large market for this type of fuel in California (United States), where we export almost all of our production, and increasing demand in the European market. In the domestic market, we supply the product to different types of industries, such as Grupo Boticário, which started using E2G in the production of some of its perfumes. We are pioneers in offering this solution to the cosmetics industry in Brazil! See more here .

Pellets

In October 2019, the Administrative Council for Economic Defense (CADE) approved our acquisition of 81.5% of Cosan Biomassa, which produces and markets pellets made of bagasse and sugarcane straw, serving customers abroad who utilize our products. The operation is a partnership with Sumitomo and its production is concentrated in the Diamante Unit.

As a product that can be used to replace coal in thermal power plants, the pellets indicate a promising international market, with demand expected to grow even more over the next 20 years.

Energy Solutions

We have actively participated in discussions to modernize the sector, and we are preparing for the transformations to come. We have expanded our presence in the free energy market and worked to develop distributed generation projects for our partners.

In addition, through the joint venture we entered into with WX Energy, we created integrated and customized solutions for different customer profiles, allowing us to generate a flow of contracts while diversifying the supply of products and services in our portfolio.

Distributed Generation (DG)

In June 2019, we inaugurated our first solar power plant. The project is still in its pilot phase and is located in Piracicaba (SP). There are a total of 3,800 solar panels in a 40,000 sqm area, the equivalent of two football fields, which is the largest area for distributed solar energy in the State of São Paulo. This initial phase benefits 18 Shell service stations and two B2B customers. These partners will have an estimated energy savings of between R$ 5,000 and R$ 10,000 per month. Including this project, we now have approximately 1.01 GW of installed capacity across our energy portfolio, enough to supply a city the size of Rio de Janeiro (RJ) for one year.

The plant marks our entry into the Distributed Generation (DG) market, in which plants are directly connected to the distribution network. In line with our need to diversify the energy mix and our search for greater consumer independence, technological advances, and efforts to minimize environmental impacts, this market is being consolidated worldwide as one of the most efficient alternatives to supply increased electricity consumption.

Sustainability in the strategy |GRI 102-43, 102-44, 102-46|

Sustainability is a vector of our business.

We want to be seen as the standard in sustainability in the sectors where we operate by incorporating best environmental, social, and governance practices and promoting and sharing value across our chain. We incorporated this as a central element in our strategy, and throughout the 2019/2020 harvest we went beyond. We began to put together a strategic plan to address actions and define goals based on priority topics for the continuity of our business.

The work started by analyzing relevant topics and sustainability trends among more than 30 customers and financial institutions, in addition to experts from the sugar and energy sectors and the internal audience.

As a result, we prioritized some topics that will be integrated into the Strategic Sustainability Plan, after an in-depth study and definition of aims, action plans, and goals to be strategically structured as of the next harvests.

Topics such as energy, climate changes, water and effluents, land use, solid waste, relationship with the surroundings, diversity and human rights, and sustainable procurement occupy a relevant space in our agenda and are detailed in our Indicator's Handbook. . |GRI 102-47|

In order to improve the governance of sustainability, we have a Sustainability Committee in place, with representatives from senior leadership, such as the CEO and Vice Presidents, who strategically discuss our agenda for this topic. |GRI 102-18|

The Corporate Social Responsibility Committee is also part of this governance structure. Within this committee, representatives of our two shareholders (Shell and Cosan) discuss issues that are later escalated to our Board of Directors. | GRI 102-18|

Commitment to sustainable development

We work in line with our shareholders in establishing commitments to sustainable development, associated with goals established through strategically structured plans, in accordance with global agendas, such as the United Nations 2030 Agenda for Sustainable Development. Therefore, we are increasingly driven to lead the necessary transformations for the future of a more equal society, fueled by different forms of energy that are increasingly clean and efficient.

Click here to learn about Shell's sustainability approach and the stance of Cosan. Let's go there together!

... with best practices...

... safe...

Life comes first.

Safety is a defining element of our culture (see Our RAIZ ) and, to this end, we continuously invest in programs and actions that involve training and educational initiatives.

Our leadership has a management system in place — the Integrated Operations Management System (SIGO)—which directs daily operations and provides tools that aid in accident prevention. The guidelines related to this topic are documented in our Health, Safety, Environment, and Sustainability Policy (HSE) and are disseminated by a corporate committee specializing in this topic.

In offices, production units, and distribution terminals at all employee levels, our goal is to develop all workers into agents of awareness. Therefore, throughout the crop year, several actions were taken to reinforce the Zero Accident goal.

One of the highlights is Safety Day, an event designed to value life and motivate all employees to adopt safe behaviors. For the logistics and distribution teams, we also conduct training programs such as the Dono da Área (Area Owner), which trained 95 supervisors to become multipliers (train the trainers) of best practices; and the Desafio de Brigadas (Brigade Challenge), which improved the technical knowledge of 752 brigadiers in responding to emergencies and encouraged the sharing of experiences among these professionals.

Awareness-raising initiatives, such as Segurança na palma das mãos (Safety in the Palm of Your Hands), contributed to a 42% reduction in accidents involving the upper limbs of workers at the plants. In addition, the TRANSMOV program rewarded the 10 best drivers in our sugar field operations, reinforcing the idea that accidents can be avoided when working with care, attention, and safety.

At the production units, we continue to communicate the Five Rules that Save Lives, intended to focus everyone's attention on behaviors in five main groups with the potential to generate more severe accidents.

In the same vein, we disseminate the Five Safe Driving Habits , dedicated specifically to drivers in our fleet or those who work in transporting our products in rural areas or in the cities. We also monitor vehicles via telemetry, carry out employee training, and promote actions to keep these workers engaged.

Presence in the fields is critical for the formation of a safety culture. The example set by company leadership during routine operations and work meetings encourages the team to achieve excellence in this area. Tools such as Safety Dialogues, Safety Tour, and Safety Moment reinforce this daily commitment.

Presence in the fields is critical for the formation of a safety culture. The example set by company leadership during routine operations and work meetings encourages the team to achieve excellence in this area. Tools such as Safety Dialogues, Safety Tour, and Safety Moment reinforce this daily commitment.

The 2019/2020 harvest was a challenging period in which serious accidents were recorded. The incidents were reported within 24 hours to senior management and were followed by board members and directors during the regular meetings of the Corporate Social Responsibility Committee, where details were discussed and corrective actions were defined to avoid possible recurrences.

Daily commitment to Zero Accidents

More information on occupational health and safety can be found in the full version of this report, available here . |GRI 403-1, 403-2, 403-4|

...ethical.. |GRI 102-12, 102-16, 103-2, 103-3|

Ethics at the root of everything.

With greater competition in the sectors where we operate, we compete without forsaking ethics and transparency in our operations and in established relationships, from the beginning to the end of the chain.

We have a robust compliance framework in place containing policies and procedures relating to critical integrity issues: Ethics Channel; Ethics, Compliance and Audit Committee; tools to report gifts and conflicts of interest; and process controls that cover and mitigate risks related to the conduct of employees, business partners, and customers. These are guidelines and processes associated with corruption, competitive compliance, dialogue with public administration, social performance (donations, sponsoring of social investments), relationships with associations and trade unions, and intellectual property (see here ). Issues involving ethics and conduct are led by the Compliance area, together with Internal Controls and Audits (internal and external), which assess adherence of policies and procedures to business risks.

In the 2019/2020 harvest, we reissued our Code of Conduct (see here ). The objective was to reinforce the duty of each employee to know, defend, and disseminate the Code and internal policies; to highlight the fundamental role of leaders in providing an environment of ethics and respect through example; and to demonstrate everyone’s duty in reporting inappropriate behavior—all communicated in clarified language and relevant to everyday practices. The document guides employees and partners in making the right decisions, ensuring adherence to the values and principles that govern our business. Anyone who chooses not to follow the guidelines set out in the document will, therefore, be choosing not to work with us.

Online training courses were re-launched with new content and made available by Raízen University throughout the year in order to reinforce the engagement of employees and partners on this topic. In addition, on-site training agendas for the audience mapped as “at risk” were expanded. Alignment with the expected conduct of business partners was further reinforced through communications, in addition to the contractual clauses, according to the operation in which they are involved.

If there are questions regarding the established documents, the audiences are advised to seek guidance from their immediate supervisors (in the case of employees) or with a representative from the Legal and Compliance Departments. The most frequent or most critical topics were shared for consultation in the Ethics Space, available here .

Violations of the Code of Conduct, internal policies, and applicable laws can be reported through the Ethics Channel, accessible through a toll-free number in Brazil (0800-772-4936) and Argentina (0800-345-4327) or using the link canalconfidencial.com.br/raizen . In line with best market practices, reports are registered by an independent company, which guarantees the whistleblower's anonymity.

Public commitments reaffirm our position. We are signatories to Ethos Institute's Business Pact for Integrity and Against Corruption, and through the Sugarcane Industry Union (UNICA - União da Indústria de Cana-de-Açúcar), of which we are members, we support the Movimento Combustível Legal (Legal Fuel Movement), an initiative created by Plural (former Sindicom) that aims to point out the importance of an ethical and loyal environment, where everyone pays their taxes correctly, thereby encouraging fair competition.

In order to provide society with transparency in accountability, our Financial Statements are audited externally and follow international accounting standards. We voluntarily adhere to the Sarbanes-Oxley Act, which advocates the adoption of mechanisms for easily verifiable financial reports with traceable data sources.

In 2019/2020, our Legal and Information Technology teams, in addition to a cross-functional team that is part of the project to adapt to the new General Data Protection Law (GDPL), worked in integration to study the necessary adaptations to said legislation. We have always ensured security of information for our partners and customers, and the construction of new processes, as well as the updating of existing processes, further reinforces this commitment.

The first phase of the project started in April 2019, with a message to the entire team from our Vice President of the Legal Department and Chief Compliance Officer, Antonio Martins. The main objective was to inform people about the new law and highlight the need for the engagement of all employees. This phase also included a sequencing of actions: hiring of specialized consultancy, engagement sessions with areas identified as responsible for processing personal data, interviews in São Paulo (SP) and Piracicaba (SP), mapping personal data and identifying 327 different activities of data processing, assigning the appropriate legal framework to justify such activities, recommendations on data storage time, and indication of protective organizational measures for each processing activity.

The second phase, which is still ongoing, covers activities aimed at adopting the necessary measures for adjustment and actions required for the implementation and management of our Personal Data Protection and Privacy Program, seeking the greatest possible compliance of operations to the GDPL terms.

More information on ethics and integrity within our operations can be found in the Indicators Handbook of this report, available here . |GRI 205-1, 205-2, 205-3, 206-1, 307-1, 419-1|

Governance structure |GRI 102-18|

Our corporate governance structure ensures strict procedures for establishing, approving, and communicating business objectives.

Shareholding Structure |GRI 102-5|

We are a joint venture established between Royal Dutch Shell and Cosan, each with a 50% stake. The shareholders jointly define the business strategy and decide on the allocation of net income and distribution of dividends, among other matters covered by Brazilian Corporation Law and our bylaws.

Board of Directors

• Formed by three representatives of each shareholder.
• Three-year terms, with reelection permitted.
• Proposes the global strategy and strategic priorities to shareholders, approves significant investments, and elects and replaces members of the Executive Board, among other duties described in our Reference Form.

Advisory Committees

The Board of Directors relies on the support of the following committees to deepen their analysis of relevant issues:

• Finance Committee
• Audit Committee
• Remuneration Committee
• Corporate Social Responsibility Committee

Executive Board

• Composed of at least four (a Chief Executive Officer, a Chief Operations Officer, a Chief Financial Officer and an Executive Director) and at most eight members.
• Three-year terms—with the exception of the CEO, who has a two-year term—re-election is permitted.
• Responsible for directly managing the business, including the implementation of policies and guidelines established by the Board of Directors.

Modifications to the Executive Board

In line with transparency, on January 21, 2020, we announced to the market in general that Ricardo Dell Aquila Mussa would assume the Chair of the Executive Board as of April 1, 2020, replacing Luis Henrique Guimarães, who will join the Board of Directors as of April 2020, where he will contribute with his experience, drive, and capacity. This shift was in accordance with our succession planning, which identifies and prepares internal leaders in a structured and continuous manner in order to improve the team for business growth.

Executive committees

Employees from different areas and hierarchical levels (including senior management) convene to discuss topics relevant to the improvement of corporate practices through the following committees:

• Ethics Committee
• Compliance Committee
• Diversity Committee
• Sustainability and Health, Safety and Environment Committee (HSE);
• Market Risk Committee
• Investment Committee

...efficient...

We continuously invest in diagnoses, technologies, and programs that reduce the environmental impacts of our processes.

Each crop year, we improve a circular business model with maximum utilization of the raw material per planted hectare. The result is our pioneering spirit in the production of Second Generation Ethanol (E2G), Biogas, and other products in our portfolio (see here ).

Close to 75% of our feedstock is water, which can be evaporated after crushing and condensed for industrial use. The more water is recovered, the less abstraction is required from external sources. This was the starting point for ReduZa, a robust program created in the 2015/2016 harvest and reformulated in 2019/2020.

Over the past seven years, the initiative recorded impressive figures in reducing water abstraction from external sources. This trend continued in the last harvest when we reached an average volume of 0.76 m3 of water abstracted per ton of sugarcane crushed across our production units. Eight years ago, this volume was practically twice as large. Some units registered abstraction below 0.40 m3 per ton of sugarcane. In aggregate, in 2019/2020, total abstraction dropped by 4.5 billion liters compared with the previous harvest, a volume equivalent to the annual consumption of a city with a population of 113,000, according to the recommendation of the United Nations of 110 liters per day per person.

With the reuse of hot water in the production process, we were also able to generate additional sustainable electric energy by burning the sugarcane bagasse, totaling 307,000 MWh, corresponding to the annual consumption of a city of 120,000 at a consumption rate of 2,553 kWh per person.

Responsible use of the land also underscores our care for the environment. Using satellite imagery, we monitor the regions where we plant sugarcane in order to ensure that native vegetation is not being converted. In addition, 100% of the harvest is mechanized.

In relation to climate change, one of the pillars of our Strategic Plan (see here ), we are in line with international agreements dedicated to reducing global Greenhouse Gas (GHG) Emissions and with the UN's 13th Sustainable Development Goal (Action Against Global Climate Change).

Since the beginning of our activities, we have quantified GHG emissions based on the guidelines of The Greenhouse Gas Protocol and its domestic version, the Brazilian GHG Protocol Program. Most of the data is collected automatically in order to avoid handling information and to mitigate calculation errors. The results are submitted for independent auditing, which results in an analytical report for each of our emission sources. We understand that strict management of our emissions allows us to be prepared for the risks and opportunities stemming from the transition to a low-carbon economy.

GHG emissions by scope (in tCO ₂ eq )* |GRI 305-1, 305-2, 305-3|

* Given the recent acquisition, the inventory of emissions does not yet include operations in Argentina, as well as those announced during the crop year. In 2019, we recorded a significant increase, especially in scope 3 emissions, due to the inclusion of new categories in our inventory.

... and attentive to risks

We always look to improve and expand our business. To this end, we have a robust structure of internal controls and results monitoring. All areas are challenged to identify factors, both internal and external, capable of impacting our results and/or achieving the objectives defined in our strategic planning.

This assessment forms the Risk Matrix, which is revised annually and aligned with our five-year business plan. With this definition, action plans are prepared and resources are allocated for control and mitigation.

REGULAR PROCESS TO REVIEW THE RISK MATRIX

Our Market Risk Committee convenes weekly to analyze the behavior of the commodities markets and foreign exchange and to decide on hedging positions and pricing strategies for exported or imported products. A group also analyzes monthly risks related to the trading of ethanol and oil products and assesses the adequacy to the boundaries defined in the risk policies in place.

With regard to the operation itself, downtime risks in case of contingencies are minimized through the Continuity Plan for Critical Business Processes. This document, which is reviewed annually by managers, sets out the actions that must be taken in the event of any unforeseen events that significantly affect our operation. The Contingency Plan is tested regularly and the results are reported to senior management.

At the end of the 2019/2020 harvest, some of our systems suffered a momentary disruption due to a criminal act by hackers. The operations, however, were fully normalized a few days after the attack, with limited impact on results. The actions were guided by contingency plans, which allowed us to continue our activities, even if partially, on the day of the attack.