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BTG Pactual Timberland Investment GroupResponsible Investment & ESG
December 2017
For additional information, please read carefully the notice at the end of this presentation
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Responsible Investment: Mapping Internal ESG Stakeholders
Entity Responsible Group Group Leader(s)Primary Governance
DocumentsFocus Areas
Banco BTG Pactual
BTG Pactual Board of Directors
(Six members including two outside, independent
members)
Marcelo Kalim: Executive Chairman
Huw Jenkins: Vice Chairman of the Board
• BTG Pactual Global ESG Policy
• Global Code of Business Principles & Ethics
• ESG criteria
• ESG Global Policy approval process
BTG Pactual ESG Risk
Management
BTG Pactual Environmental, Social and
Governance Risk Management Group
Iuri Rapoport:Senior Partner
Beatriz Freitas:Head of Environmental, Social,
and Governance Risk Management
• BTG Pactual Global ESG Policy
• Global Code of Business Principles & Ethics
• ESG Policies and procedures
• Regulatory compliance
• Business opportunities
• Eco-efficiency
• Publlic Commitments & Transparency
Timberland Investment
Group (“TIG”)
TIG Investment Committee,
Asset Management, and Acquisitions Groups
Gerrity Lansing: Head of Timberland Investment
Group
Chris Lipton:Head of Asset Management and
Global Transactions
• TIG Responsible Investment Policy
• Third party certification policies
• Compliance with environmental standards• Environmental protection & enhanced biodiversity
conservation• Report ESG performance with clarity and transparency• Respect and uphold human rights in all operations and
contracts• Develop supply chain and prioritize local hiring• Strict compliance with anti-corruption and bribery
regulations• Establish an open dialogue with the community where
TIG manages timberlands• Promote ESG awareness among employees by
developing and providing specific training programs
TIG-related Entities /
Subcontractors
TIG Asset Management Group
Chris Lipton:Head of Asset Management and
Global Transactions
Steve Krietemeyer: Asset Manager, ESG Coordinator
• TIG Responsible Investment Policy
• Third party certification standards
• TIG property management contract
• TIG influences and encourages sub-contractors and others in the forest management supply chain to adopt and comply with ESG principles through contractual obligations
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BTG Pactual’s environmental, social, and governance structure
• BTG Pactual established the ESG Risk Management Group to ensure full integration into all business units
• ESG is integrated with BTG Pactual’s corporate structure and involves several facets
BTG Pactual ESG Risk Management Structure
• Highest level of ESG Risk Management
• Responsible for the strategic review of ESG criteria and
ESG Global Policy approval process
• Responsible for overseeing and managing the firm’s ESG
risk profile as well as implementing ESG into the Risk
Management & Control Framework
• Responsible for adhrence to the ESG Policy
• Specialized team that supports the development of
specific policies, procedures, and tools to implement ESG
strategies
• Responsible for technical support, coordination, and
independent oversight of ESG policy implementation
through all global business units
• Responsible for ESG risk identification
• Individual business units require ESG department approval
to implement new procedures
• Ensure necessary measures are being taken in order to
mitigate ESG risk exposure
Board of Directors ESG Committee
ESG Risk Management Department Business Units
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BTG Pactual ESG Pillars
1. Regulatory Compliance
2. Business Opportunities
3. Eco-Efficiency
4. Commitments and Transparency
• Identify and communicate regulations and laws concerning ESG and Responsible Investing
• Structure and implement measures necessary in order to comply with all regulations and laws
• Interface and influence business verticals to assimilate ESG and RI policies
• Identify business opportunities that reflect our long-term vision and unconditional commitment to Responsible Investing
• Foster sustainable business practices and enhance stakeholder value
• Develop and support programs in order to reduce materials consumption
• Disseminate these programs throughout all BTG Pactual offices
• Oversee primary ESG initiatives and evaluate BTG Pactual’s adherence to them
• Measure and disclose ESG progress and standardize communications
• Implement and enhance ESG website
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BTG Pactual ESG: Achievements
Regulatory compliance
• Regulatory references
− Brazil: Brazilian Central Bank Resolution Number 4,324/2014
− Peru: S.B.S. Resolution Number 1,928/2015
Achievements
• Verification of an ESG responsible director before Brazilian Central Bank
• Board of Directors approval of the ESG Global Policy
• Established ESG Analysis Procedures as mandatory for every new loan issued by the
commercial lending team
• Online platform created to register all assessments made
• Completed 145 Risk Analyses
• Developed a Contaminated Land questionnaire applicable for mortgage loans
• Mapped all ESG sources for onboarding team
• ESG team provides ongoing assistance in relevant legal matters
• Implemented company-wide eco-efficiency and best management practices to reduce
unnecessary waste
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UN PRI membership UNGC membership CDP membership
BTG Pactual ESG: Achievements
Commitments to transparency through participation in global initiatives
• Signatory to United NationsPrinciples for ResponsibleInvestments
• Developed by large institutionalinvestors and other financialmarket participants in favor ofResponsible Investment
• Based on six principles that valuesocial, environmental, andcorporate governance aspectswhen conducting investments
• Signatory to United Nations GlobalCompact
• Developed by Kofi Annan with theaim of engaging the businesscommunity in the adoption ofvalues linked to human rights,environment, labor relations, andanti-corruption
• Based on 10 Principles, seeks topromote sustainable growth andcitizenship via committed andinnovative corporate leaderships
• Member of Carbon DisclosureProgram
• An international initiativerepresented by institutionalinvestors engaged in transformingthe way the world does business toprevent climate change andprotect natural resources
• Looks for company disclosures oncarbon management andassociated risks
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BTG Pactual ESG: Achievements
Business opportunities
• Promoted Green Bond discussions by coordinating sustainable projects in Brazil
• Assisted BTG in structuring sustainable credit lines at the World Bank, IFC, and IDB
• Supported an ESG Management System on one of the largest farms in Brazil
− Assistance with matters regarding environmental licensing, regulatory compliance, environmental litigation among agencies, and community engagement
• BTG Pactual Commodities
− Supported Coffee Certification: 4C Program
− Supported certifying the renewable energy sold by BTG Pactual’s Energy Desk
− Developed ESG analyses for all commodities suppliers
ESG Support to Timberland Investments
• Provides support on initial due dilligence for aquisitions:
− ESG analyses and reviews
− ESG clauses in contracts: counterparties must comply with environmental law, human rights, and labor regulations
• Provides support to our legal department in judicial and administrative
liabilities
• Supported TIG Responsible Investment Policy development
• Works together with TIG team to execute various ESG initiatives
• Visits timberland and supports environmental and social programs
• TIG’s primary goal: report our ESG performance annually alongside TIG
Responsible Investment practices and achievements
Notes: Image Source: BTG Pactual Timberland Investment Group.
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Responsible Investment & ESG is part of TIG’s Core Mission Statement
MissionStatement
TIG is committed to delivering superior, risk-adjusted returns to our clients through disciplined research and construction of
timberland portfolios, the application of industry-leading analytics to investment management, and best-in-class sustainable
forestry practices that support the environmental and social integrity of the geographies and communities within which
we invest
We accomplish our mission by leveraging the extensive global resources of the BTG Pactual platform and the deep, local
expertise of our regional forestry staff, providing our clients with globally diversified timberland investment portfolios
• Long-term view
• Support the environment and local
communities in which we invest
• Retain both local and global talent
• Leverage global resources of BTG Pactual
Principled Investing Disciplined Management Client Focused
Best-in-class sustainable practices Focused asset and portfolio management Strive for maximizing returns
• Broad strategic analysis of business impacts
• Aggressive & disciplined risk mitigation
• Recognize that every basis point earned or
saved is accretive to our clients
• Risk/Return driven structure
• Tightly aligned interests
• Full transparency
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Responsible Investment & Governance
Notes: Sources: BTG Pactual & TIG Responsible Investment Policy and BTG Pactual & TIG Environmental, Social, and Governance Policy.
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TIG’s Nine Responsible Investment Principles
The principles below provide the framework for TIG’s Responsible Investment strategy and guide our daily routine to maximize investor returns in a responsible manner
Notes: Image Source: BTG Pactual Timberland Investment Group.
1. Strictly Comply With All Environmental, Social, Health andSafety Laws, Regulations, and Standards
2. Foster Environmental Protection and Enhance BiodiversityConservation
3. Respect and Uphold Human Rights In All Operations andContracts
4. Develop Supply Chains and Prioritize Local Hiring
5. Strictly Comply with Anti-corruption and Bribery Regulations
6. Establish an Open Dialogue with the Communities WhereTIG Manages Timberlands
7. Promote ESG Awareness Among Employees by Developingand Providing Specific Training Programs
8. Report ESG Performance with Clarity and Transparency
9. Commit Publicly to Global Initiatives that Strengthen OurValues
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Forest Carbon Cycle
Notes: Sources: National Alliance of Forest Owners (NAFO); www.biomass1.org; www.stateconservation.org.
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Social Aspects of Timberland Management
Notes: Sources: American Tree Farm System (ATFS); National Alliance of Forest Owners publication – Economic Impact of Privately Owned Forests; “Working Forest Easements” presentation made by the Conservation Fund.
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Timberland Offers Biodiversity Benefits
Notes: Sources: Forestfact.org; The Food and Agriculture Organization of the United Nations; National Alliance of Forest Owners publication – Economic Impact of Privately Owned Forests.
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Certification: Sustainable Forestry Initiative (SFI)(1)
• SFI Inc. is an independent, nonprofit organization that is solely responsible for maintaining,overseeing and improving the internationally recognized Sustainable Forestry Initiative (SFI)program
• Across Canada and the United States, 280 million acres are certified to the SFI forestmanagement standard, the largest single forest standard in the world(1)
• The SFI program was launched in 1994 as one of the U.S. forest sector’s contributions to thevision of sustainable development established by the 1992 United Nations Conference onEnvironment and Development
• SFI program participants must invest in forestry research, science, and technology; researchfunding from SFI program participants has resulted in US$ 1.4 billion invested since 1995(1)
• SFI has 15 requirements its members must abide by:1. Forest Management Planning2. Forest Health and Productivity3. Protection and Maintenance of Water Resources4. Conservation of Biological Diversity5. Management of Visual Quality and Recreational Benefits6. Protection of Special Sites7. Efficient Use of Fiber Resources8. Recognize and Respect Indigenous People’s Rights9. Legal and Regulatory Compliance10. Forestry Research, Science, and Technology11. Training and Education12. Community Involvement and Landowner Outreach13. Public Land Management Responsibilities14. Communications and Public Reporting15. Managements Review and Continual Improvement
Notes: (1) Source: Sustainable Forestry Initiative (SFI). Image Source: BTG Pactual Timberland Investment Group.
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Certification: American Tree Farm System (ATFS)(1)
• The American Tree Farm System (ATFS) is a network of 82,000 family forest ownerssustainably managing 24 million acres of forestland
• ATFS is the largest and oldest sustainable woodland system in the United States,internationally recognized, meeting strict third-party certification standards
• Recruited over 3,500 woodland owners since 2013, for a combined total of over one millionnew acres of forest management
• Provided over US$ 1 million in grants and other funds to help our local partners deliver ATFSacross the U.S.
• ATFS has eight requirements its members must abide by:
1. Commitment to Practicing Sustainable Forestry
2. Compliance with Laws
3. Reforestation and Afforestation
4. Air, Water, and Soil Protection
5. Fish, Wildlife, Biodiversity, and Forest Health
6. Forest Aesthetics
7. Protect Special Sites
8. Forest Product Harvest and Other Activities
Notes: (1) Source: American Tree Farm System (ATFS). Image Source: BTG Pactual Timberland Investment Group.
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Certification: Forest Stewardship Council (FSC)(1)
• FSC operates in more than 81 countries, wherever forests are present
• 187,026,156 acres certified in the U.S. and Canada as of April 2016
• 5,225 companies Chain-of-Custody certified in the U.S. and Canada
• More than 40,000 American family forest owners are FSC certified
• FSC has 10 requirements its members must abide by:
1. Compliance with Laws and FSC Principles
2. Tenure and Use Rights and Responsibilities
3. Indigenous Peoples’ Rights
4. Community Relations and Worker's Rights
5. Benefits from the Forest
6. Environmental Impact
7. Management Plan
8. Monitoring and Assessment
9. Maintenance of High Conservation Value Forests
10. Plantations
Notes: (1) Source: Forest Stewardship Council (FSC). Image Source: BTG Pactual Timberland Investment Group.
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Certification: CERFLOR(1)
• CERFLOR was founded by the Brazilian Society for Silviculture (SBS)
• CERFLOR currently certifies over 2.9 million hectares of Forest Management area in Brazil
• Voluntary forestry certification process created and controled by Inmetro (National Instituteof Metrology, Standadization, and Quality) with two main areas of focus:
− Certification of Forestry Management
− Certification of Chain of Custody
• CERFLOR is based on five guiding principles:
1. Compliance with the Law
2. Rational Use of the Forest Resources in the Short,Medium and Long-Term
3. Protection of Biological Diversity
4. Respect for the Water, Soil, and Air
5. Environmental, Economic, and Social Development
Notes: (1) Source: INMETRO, Cerflor, PEFC. Image Source: BTG Pactual Timberland Investment Group.
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Certification: Programme for the Endorsement of Forest Certification (PEFC)(1)
• 35 worldwide independent national forest certification systemsrepresenting more than 593 million acres of certified forests, making it thelargest forest certification system in the world(1)
− This is an area almost equivalent to the size of Argentina; or Finland,France, Germany, Italy, Poland, Spain, and Sweden combined
• More than 17,000 companies have obtained PEFC Chain of Custodycertification, demonstrating their commitment to responsible sourcing ofcertified products
• Two-thirds of all certified forests globally are certified to PEFC
• 41 national members and 37 endorsed national certification systems havejoined forces under the PEFC umbrella to collaboratively promotesustainable forest management
Notes: (1) Source: Programme for the Endorsement of Forest Certification (PEFC). www.pefc.org. Image Source: BTG Pactual Timberland Investment Group.
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• Percentage of assets acquired thatunderwent environmental due diligence byan independent third-party prior toacquisition.
DescriptionKPI
Pre-acquisition Environmental
Integrity
Forest Certification
Status
Chemical & Production
Inputs
Protection of Special Sites &
Biodiversity
Tracking & Resolution of
Environmental Non-Compliance
• Percentage of assets that are certified underan audited and well-recognized forestmanagement certification program
• Percentage of fertilizer and pesticideprescriptions tailored to address site specificlevels of vegetative competition, nutrientdeficiency or insect/disease infestation
• Percentage of sites having residentpopulations of endangered species or sites ofhigh biodiversity, which are protected andthe health of the populations monitored
• Percentage of managed timberlands that aresubject to tracking of non-compliances andresolution review on a quarterly basis
%
Environmental sustainability KPIs(1)
100%
88%
96%
100%
100%
Rating
Benchmarking and Key Performance Indicators: Global
Notes: (1) As of December 31, 2016.(2) Primary reasons for non-certification are: recently acquired assets are scheduled for certification in the near
future; client not pursuing certification due to cost control.
Green: Satisfactory (95%+)Yellow: Opportunities for Improvement (80 – 94%)Red: Improvements Needed (<80%)
(2)
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• Verification of property managers and sub-contractors agreeing to comply with stateand federal labor laws
DescriptionKPI
Labor Compliance
Benchmarking and Key Performance Indicators: Global (Cont.)
Community Involvement &
Landowner Outreach
Indigenous Rights
• Percentage of assets engaged in activecommunity outreach programs
• Percentage of assets examined to identifyany known rights related to land claims oraccess of indigenous people on the asset
%
Social sustainability KPIs(1)
100%
97%
100%
Rating
Notes: (1) As of December 31, 2016.Green: Satisfactory (95%+)Yellow: Opportunities for Improvement (80 – 94%)Red: Improvements Needed (<80%)
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• Percentage of assets with formal title searchand review completed to verify chain oftitle/ownership
DescriptionKPI
Ownership & Local Land
Rights
Benchmarking and Key Performance Indicators: Global (Cont.)
Corporate Commitment & Responsibility
Dedicated ESG Resources
Annual Executive
Review
• Percentage of property managersparticipating in national associations focusingon ESG improvements
• Percentage of timberlands managed thathave dedicated ESG resources at theproperty management level
• Percentage of timberlands managed that aresubject to an annual Executive Committeereview
%
Corporate governance KPIs(1)
100%
98%
90%
100%
Rating
Notes: (1) As of December 31, 2016.(2) Some external property managers do not have the ability to dedicate resources towards ESG efforts. However,
TIG is constantly helping property managers with the resources and guidance necessary to meet our ESG goals. If TIG finds that its ESG goals are not being met, a new property manager will be retained.
Green: Satisfactory (95%+)Yellow: Opportunities for Improvement (80 – 94%)Red: Improvements Needed (<80%)
(2)
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Responsible Investment & ESG Implementation: Investment Committee Example
• During the Menasha Forest Products acquisition due diligenceearlier this year, TIG considered the following items relating toResponsible Investment and ESG:
• Environmental:
− Pre-acquisition Environmental Integrity
− Forest Certification Status
− Chemical & Production Inputs
− Forest Productivity & Soil Health
− Protection of Special Sites & Biodiversity
• Social Sustainability:
− Labor Compliance
− Worker Health & Safety
− Ownership & Local Land Rights
− Indigenous Rights
− Community Involvement & Landowner Outreach
ESG is considered in every Investment Committee decision, example:
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Notice to Recipients
This material has been prepared by BTG Pactual Asset Management US, LLC and BTG Pactual Timberland Investment Group, LLC (collectively, “BTG Pactual”) for the exclusive use of the party to whom BTG
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of its affiliates makes any representation or warranty, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions. BTG Pactual
has no obligation to update, modify or amend this material and communication or to otherwise notify a recipient in the event that any matter stated herein, or any opinion, projection, forecast or estimate
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events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the best judgment of BTG Pactual from the information provided by the
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Additional information relating to the financial instruments, models, projections and scenarios discussed in this material are available upon request. There is no guarantee that any of these estimates or
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Notice to Recipients (Cont.)
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