BTG Pactual Timberland Investment Group Responsible Investment & ESG

Transcription

1 BTG Pactual Timberland Investment Group Responsible Investment & ESG June 2017 For additional information, please read carefully the notice at the end of this presentation

2 Responsible Investment: Mapping Internal ESG Stakeholders Entity Responsible Group Group Leader(s) Banco BTG Pactual BTG Pactual ESG Risk Management Timberland Investment Group ( TIG ) BTG Pactual Board of Directors (Six members including two outside, independent members) BTG Pactual Environmental, Social and Governance Risk Management Group TIG Investment Committee, Asset Management, and Acquisitions Groups Marcelo Kalim: Executive Chairman Huw Jenkins: Vice Chairman of the Board Iuri Rapoport: Senior Partner Beatriz Freitas: Head of Environmental, Social, and Governance Risk Management Gerrity Lansing: Head of Timberland Investment Group Chris Lipton: Head of Asset Management and Global Transactions Primary Governance Documents BTG Pactual Global ESG Policy Global Code of Business Principles & Ethics BTG Pactual Global ESG Policy Global Code of Business Principles & Ethics TIG Responsible Investment Policy Third party certification policies Focus Areas ESG criteria ESG Global Policy approval process ESG Policies and procedures Regulatory compliance Business opportunities Eco-efficiency Publlic Commitments & Transparency 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 2

3 BTG Pactual ESG Risk Management Structure 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 Board of Directors Highest level of ESG Risk Management Responsible for the strategic review of ESG criteria and ESG Global Policy approval process ESG Committee 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 ESG Risk Management Department 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 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 3

4 BTG Pactual ESG Pillars 1. Regulatory Compliance 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 2. Business Opportunities Identify business opportunities that reflect our long-term vision and unconditional commitment to Responsible Investing Foster sustainable business practices and enhance stakeholder value 3. Eco-Efficiency Develop and support programs in order to reduce materials consumption Disseminate these programs throughout all BTG Pactual offices 4. Commitments and Transparency 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 4

5 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 5

6 BTG Pactual ESG: Achievements Commitments to transparency through participation in global initiatives UN PRI membership UNGC membership CDP membership Signatory to United Nations Principles for Responsible Investments Developed by large institutional investors and other financial market participants in favor of Responsible Investment Based on six principles that value social, environmental, and corporate governance aspects when conducting investments Signatory to United Nations Global Compact Developed by Kofi Annan with the aim of engaging the business community in the adoption of values linked to human rights, environment, labor relations, and anti-corruption Based on 10 Principles, seeks to promote sustainable growth and citizenship via committed and innovative corporate leaderships Member of Carbon Disclosure Program An international initiative represented by institutional investors engaged in transforming the way the world does business to prevent climate change and protect natural resources Looks for company disclosures on carbon management and associated risks 6

7 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 InvestmentPolicy 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 Image Source: BTG Pactual Timberland Investment Group 7

8 Responsible Investment & ESG is part of TIG s Core Mission Statement Mission Statement 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, providingour clients with globally diversifiedtimberlandinvestment portfolios Operational Vision TIG is return-driven in its structure, management, and decision making TIG maintains a long-term view, considering the strategic impact of business decisions, as well as their impact on the communities and landscapes in which we invest TIG applies consistent investment discipline by utilizing industry leading analytics to improve the management of clients investments and of our own business TIG provides the highest quality, most cost-efficient asset management in the U.S., and closely managed / tightly integrated asset management overseas, allowing TIG to manage and mitigate the risks of investing in complex geographies TIG takes a practical, impartial approach to investment management, evaluating all options to reduce risk and maximize investment returns TIG recognizes that every basis point earned or saved is accretive to returns 8

9 Responsible Investment & Governance Notes: Sources: BTG Pactual & TIG Responsible Investment Policy and BTG Pactual & TIG Environmental, Social, and Governance Policy. 9

10 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 1. STRICTLY COMPLY WITH ALL ENVIRONMENTAL, SOCIAL, HEALTH AND SAFETY LAWS, REGULATIONS, AND STANDARDS 2. FOSTER ENVIRONMENTAL PROTECTION AND ENHANCE BIODIVERSITY CONSERVATION 3. RESPECT AND UPHOLD HUMAN RIGHTS IN ALL OPERATIONS AND CONTRACTS 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 WHERE TIG MANAGES TIMBERLANDS 7. PROMOTE ESG AWARENESS AMONG EMPLOYEES BY DEVELOPING AND PROVIDING SPECIFIC TRAINING PROGRAMS 8. REPORT ESG PERFORMANCE WITH CLARITY AND TRANSPARENCY 9. COMMIT PUBLICLY TO GLOBAL INITIATIVES THAT STRENGTHEN OUR VALUES Image Source: BTG Pactual Timberland Investment Group 10

11 Forest Carbon Cycle Notes: Sources: National Alliance of Forest Owners (NAFO);

12 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. 12

13 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. 13

14 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 forest management 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 the vision of sustainable development established by the 1992 United Nations Conference on Environment and Development SFI program participants must invest in forestry research, science, and technology; research funding 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 Planning 2. Forest Health and Productivity 3. Protection and Maintenance of Water Resources 4. Conservation of Biological Diversity 5. Management of Visual Quality and Recreational Benefits 6. Protection of Special Sites 7. Efficient Use of Fiber Resources 8. Recognize and Respect Indigenous People srights 9. Legal and Regulatory Compliance 10. Forestry Research, Science, and Technology 11. Training and Education 12. Community Involvement and Landowner Outreach 13. Public Land Management Responsibilities 14. Communications and Public Reporting 15. Managements Review and Continual Improvement Notes: (1) Source: Sustainable Forestry Initiative (SFI). Image Source: BTG Pactual Timberland Investment Group 14

15 Certification: American Tree Farm System ( ATFS ) (1) The American Tree Farm System (ATFS) is a network of 82,000 family forest owners sustainably 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 million new acres of forest management Provided over US$ 1 million in grants and other funds to help our local partners deliver ATFS across 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 15

16 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 ,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 16

17 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 Institute of 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 17

18 Certification: Programme for the Endorsement of Forest Certification ( PEFC ) (1) 35 worldwide independent national forest certification systems represent more than 593 million acres of certified forests, making it the largest 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 Custody certification, demonstrating their commitment to responsible sourcing of certified products Two-thirds of all certified forests globally are certified to PEFC 41 national members and 37 endorsed national certification systems have joined forces under the PEFC umbrella to collaboratively promote sustainable forest management Notes: (1) Source: Programme for the Endorsement of Forest Certification (PEFC). Image Source: BTG Pactual Timberland Investment Group 18

19 Benchmarking and Key Performance Indicators: U.S. Environmental sustainability KPI s (1) KPI % Rating Description Pre-acquisition Environmental Integrity 100% Review and confirmation of forest certification, title of ownership, Phase 1 environmental report Forest Certification Status 100% Percentage of asset that is certified under an audited forest management certification program Chemical & Production Inputs 100% Percentage of asset that uses Variable Rate or equivalent farming practices to efficiently apply fertilizer and/or pesticides Forest Productivity & Soil Health 95% Percentage of asset that grows trees under a third party certification program that monitors and verifies best practices for Forest Productivity and Soil Health Protection of Special Sites & Biodiversity 90% Notes: (1) Source: BTG Pactual IC Memo Example. Identification and verification of all recorded special sites, endangered species located on the property (with maps), and indicator ecosystems Green: Satisfactory (95%+) Yellow: Opportunities for Improvement (80 94%) Red: Improvements Needed (<80%) 19

20 Benchmarking and Key Performance Indicators: U.S. (Cont.) Social sustainability and compliance KPI s (1) KPI % Rating Description Labor Compliance 100% Verification of property managers and subcontractors agreeing to comply with state and federal labor laws Worker Health & Safety 100% Percentage of asset that grows trees under an audited third party forest management certification program that verifies worker health and safety issues Ownership & Local Land Rights 100% Percentage of asset with formal title search and review completed to verify chain of title/ownership Indigenous Rights 100% Identify any known rights related to land claims or access of indigenous people on the asset Community Involvement & Landowner Outreach 85% Notes: (1) Source: BTG Pactual IC Memo Example. Identification and verification of current initiatives supporting this KPI along with confirmation that current activities are supported in future management Green: Satisfactory (95%+) Yellow: Opportunities for Improvement (80 94%) Red: Improvements Needed (<80%) 20

21 Benchmarking and Key Performance Indicators: U.S. (Cont.) Corporate governance KPI s KPI % Rating Description Corporate Commitment & Responsibility 100% Corporate level participation in official Federal and International ESG programs and initiatives Commitment to Continuous Improvement 85% Percentage of timberlands managed under a third party forest certification program where objectives are reviewed and revised as appropriate Tracking & Resolution of Environmental Non-Compliance 95% Percentage of timberlands managed that are subject to a formal tracker and resolution review on a quarterly basis Appropriate ESG Resources 100% Percentage of timberlands managed that have dedicated ESG resources at the corporate, asset manager, and property manager level Annual Executive Review 100% Percentage of timberlands managed that are subject to and annual Executive Committee review Green: Satisfactory (95%+) Yellow: Opportunities for Improvement (80 94%) Red: Improvements Needed (<80%) 21

22 Responsible Investment & ESG Implementation: Investment Committee Example ESG is considered in every Investment Committee decision, example: During the Menasha Forest Products acquisition due diligence in 2016, TIG considered the following items relating to Responsible 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 & LandownerOutreach 22

23 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 Pactual delivers this material (together with its subsidiaries and affiliates, the Company ) using information provided by the Company and other publicly available information. Although the information herein is believed to be reliable and has been obtained from sources believed to be reliable, as of the date on which this material was issued and obtained from public sources, neither BTG Pactual nor any 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 set forth herein, changes or subsequently becomes inaccurate. All and any information, opinions and amount indicated are subject to change, without prior warning. Any estimates or projections as to 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 Company and other publicly available information as of the date of this material. 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Any opinion and/or projection in this document is related to the Timber Investment Group within BTG Pactual area opinions; and do not represent the BTG Pactual institutional opinion. This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Any such offer or solicitation may only be made by means of delivery of an approved offering memorandum and only in those jurisdictions where permitted by law. The Company should not construe the contents of this materials as legal, tax, accounting or investment advice or a recommendation. Before making an investment decision, investors are advised to (i) obtain independent financial advice on their own particular circumstances; (ii) thoroughly and carefully review the offering memorandum with their financial, legal and tax advisers to determine whether an investment such as this is suitable for them. This material does not purport to be all-inclusive or to contain all of the information that the Company may require. This material should not be the only source of information in any investor s decision-making process. In all cases, investors should conduct their own investigation and analysis of such information before taking or omitting to take any action in relation to securities or markets that are analyzed in this report. The material should not be regarded by recipients as a substitute for the exercise of their own judgment. Investors are advised to carefully analyze all information and its risks vis-à-vis their personal objectives and its risk profile ( Suitability ). Nothing in this material constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient s individual circumstances or otherwise constitutes a personal recommendation. An investment in the products described is not suitable for all investors. 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24 Notice to Recipients (Cont.) The physical assets are subject to nature events, weather damage, fire or market changes that can impact the property and fund returns. BTG Pactual, its subsidiaries and/or employees may hold long or short positions, trade on their own behalf, coordinate or manage transactions or offerings involving issuers discussed herein or make any other relevant investment. BTG Pactual and its affiliates have in place arrangements to manage conflicts of interest that may arise between them and their respective clients and among their different clients. Business areas within BTG Pactual and among its affiliates operate independently of each other and restrict access by the particular individual(s) responsible for handling client affairs to certain areas of information where this is necessary in order to manage conflicts of interest or material interests. 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