BRF SA

The company is committed to a science-based target, though it has not yet received validation from the Science Based Targets initiative (SBTi). It sources cattle, beef, and dairy products from suppliers, which contributes to methane emissions in its Scope 3. However, the company does not have a specific methane reduction target.

The company aims to cut emissions by 35% in Scope 1 and 2 by 2030, using a 2019 baseline. Additionally, it plans a 12.3% reduction in Scope 3 emissions, using 2020 as a baseline. These cover indirect emissions from purchased goods and services, including poultry and swine farming, and the acquisition of grains, oils, and their derivatives. The Science Based Targets Initiative (SBTi) is reviewing these targets.

The company has committed to achieving net-zero emissions by 2040. It reports a 21% reduction in total emissions linked to Scope 1 and 2 for 2023 compared to the 2019 baseline, driven by prioritising renewable energy consumption with traceability. Compared to 2022, however, Scopes 1 and 2 emissions increased by 6%, attributed to a higher incidence of forest fires. The company is part of the Business Ambition for 1.5°C campaign. Its emission reduction targets have been revised using the new FLAG (Forestry, Agriculture, and Land Use) methodology and are under evaluation by the Science Based Targets Initiative (SBTi), with approval expected in 2024 to align with the Paris Agreement's 1.5°C global warming limit.

In 2023, the company advanced in mapping its value chain and identified the supply chain as the largest source of emissions, primarily from soil use in grain production, manure management in animal breeding, and transportation. The company has outlined initiatives to achieve net zero across its value chain and encourages a unified climate transition approach with suppliers, integrating climate change performance into its supplier awards. Key initiatives include the Sustainable Purchase of Grains and the Promotion of Low Carbon Agriculture. The company is promoting solar energy use among its integrated producers and has partnered with financial institutions to fund solar panel installations. The agreement provides up to R$ 200 million for these installations, with approximately 1,500 producers currently using photovoltaic power stations, achieving a 95% reduction in energy costs.

The company does not engage in innovative projects to reduce or mitigate emissions from feed farming.

The company does not engage in innovative projects to reduce or mitigate emissions from animal farming.

The company reported its 2023 emissions as follows: Scope 1 emissions totalled 337,848.21 metric tons of CO2 equivalent (tCO2e). Scope 2 emissions were 157,022.96 tCO2e using a location-based approach, and 117,885.51 tCO2e using a market-based approach. Scope 3 emissions, covering indirect emissions across the value chain, amounted to 31,106,766 tCO2e.

The company reports biogenic emissions for Scope 1 and Scope 3 as 1,573,420.39 tCO2e and 42,544 tCO2e, respectively. It includes agriculture-related Scope 1 emissions from manure management and enteric fermentation in its 2023 CDP Climate Change response. Emissions from the company's feed mills are included in Scope 1 and 2, while those related to grain ingredients are part of Scope 3 purchased goods and services, totalling 28,068,615 tCO2e. In its CDP Climate 2023 disclosure, the company cites Scope 1 land-use change (LUC) emissions of 3,100,487 tCO2e and 45,930 tCO2e in its GHG inventory submitted to the Programa Brasileiro (GHG Protocol) for FY2023. Additionally, the company reports using the ECOVENT emission factor for Scope 3 commodities, incorporating all LUC components.

The company stated that it responded to the CDP Climate Change questionnaire in 2023 and that its report complies with GRI standards. It also references the IFRS Integrated Reporting Framework and includes SASB indicators. KPMG audited the report, which was approved by the Executive Board and the Board of Directors.

Between FY2022 and FY2023, the company's total GHG emissions increased by 8.98% from 429,684 to 455,734 tCO2e. However, over the period from FY2021 to FY2023, total GHG emissions decreased by 3%, from 32,536,145 to 31,562,500 tCO2e, representing an average annual decrease of 1.5%. Regarding biogenic emissions, there was a 9.42% decrease in Scope 1 emissions (from 1,737,207 to 1,573,420 tCO2e) and a 1.40% decrease in Scope 3 emissions (from 43,147 to 42,544 tCO2e). The company's Integrated Report does not specify if emissions from feed, enteric fermentation, or manure management are included in the biogenic emissions, necessitating clarification. In FY2023, Scope 1 emissions were 337,848 tCO2e, Scope 2 location-based emissions were 157,023 tCO2e, and Scope 2 market-based emissions were 17,886 tCO2e. Scope 3 emissions totalled 31,106,766 tCO2e.

The company does not disclose information on a climate-related scenario analysis.

The company's revenue is over 80% reliant on soy, with temperature and rainfall variations, including droughts and natural disasters, threatening agricultural productivity. These changes could raise costs and affect operational results, possibly increasing prices for commodities like soy. Although the company briefly discusses managing climate risks, it does not outline plans to mitigate the physical risks associated with feed ingredient availability and price volatility. The company notes that changes in average temperatures can negatively impact animal welfare, affecting thermal comfort. Potentially higher costs may be incurred to maintain welfare standards and prevent the loss of certifications, which could affect market access. Risk management involves monitoring processes, production facilities, and the supply chain, adopting new technologies for thermal comfort, and ensuring compliance with welfare conditions. The sustainability department oversees animal welfare, supported by three regional specialists and a multidisciplinary task force. However, there are no details regarding rising veterinary and medicine costs. To reduce risks related to energy availability, the company is investing in self-producing energy parks using clean sources to ensure a reliable energy supply and reduce greenhouse gas emissions. It acknowledges trends in adopting national climate policies and carbon pricing mechanisms, monitoring developments to minimise future carbon costs. The company is analysing the financial impact of carbon on projects and uses this to guide strategic investments. It estimates carbon pricing could result in costs of R$100-400 million annually, depending on various factors, including its Scope 1 and 2 emissions. The company does not disclose any financially material events due to climate risk during the reporting period.

The company indicates that its capital expenditure (CAPEX) is prioritised, incorporating a greenhouse gas emissions criterion into the CAPEX investment analysis process. To address the physical risk of climate change in its agricultural supply chain, the company continuously monitors weather variables such as temperature, precipitation, heat waves, and cold. It analyses sector movements and commodity volatility by observing grain stocks and climate conditions in production regions. Additionally, it manages significant physical risks and opportunities by monitoring weather conditions and crop harvests. The total cost for consulting, including climate monitoring and other analyses, is approximately R$420 million annually.

The company reports that between 91% and 99% of its revenue is derived from soy. Soy is integral to its products, used for animal feed and in various production stages, and constitutes at least 2% of its procurement spend or total feed ingredients. The company commits to a deforestation-free supply chain by extending its traceability to cover 100% of the biomes it operates in. It currently traces 100% of its direct grain suppliers and 77% of its indirect suppliers in the Amazon and Cerrado regions, representing 62% of its purchased volume. Across all biomes, it has achieved 99.9% traceability for direct suppliers and 79% for indirect suppliers. However, there is no mention of sourcing soy from deforestation-free suppliers. The company conducts forest-related risk assessments, evaluating soy in its operations and supply chain using an internal method, though specific details are not disclosed. The assessment considers factors such as the availability of forest-risk commodities, climate change, tariffs or price increases, brand damage, social impacts, and ecological effects. However, it does not provide information on the locations where soy is sourced or the proportion of soy deemed high-risk in this assessment.

The company has committed to achieving a deforestation-free supply chain, with a target of 100% traceability for all grains sourced from the Amazon and Cerrado biomes by 2025. It has set a cut-off date of 2020 for deforestation, as disclosed in the CDP Forest 2023 report.

The company discusses its traceability and Zero Deforestation commitment for Brazilian grains but indicates that it sources soy from both Brazil and Paraguay, suggesting the commitment may not cover all sourcing regions. However, it states that the commitment is company-wide, encompassing all suppliers.

The company reports that 43% of its soy is verified as deforestation and/or conversion-free. However, it does not disclose if this progress has been verified or audited by a third party. The company completed the CDP Forests questionnaire in 2023.

The company has a socio-environmental and deforestation monitoring programme for its suppliers in place and requires adherence to the Supplier Code of Conduct, which mandates biodiversity preservation, authorised vegetation clearing, and prohibits the use of fire. However, it does not disclose any support provided to soy producers for promoting deforestation-free production or improving traceability.

The company employs a geospatial platform and Geographic Information System (GIS) to monitor compliance. Business partners failing to adhere to the Sustainable Grain Purchasing Policy are blocked and contacted for clarification. The company either terminates contracts or starts improvement programmes based on the assessment by the Multidisciplinary Grains Committee, which conducts a risk analysis on significant cases. The company reports achieving 85% traceability and socio-environmental monitoring for suppliers in the Amazon and Cerrado biomes, with 100% traceability for direct suppliers and 77% for indirect ones in these regions, covering 62% of the purchased volume. Overall, it reports 99.9% traceability for direct suppliers and 79% for indirect suppliers across sourcing regions.

The company does not discuss innovations or practices to move towards sustainable feed sources.

The company evaluates water risks in its operating regions to mitigate water consumption and limit exposure to shortages at its facilities. According to its 2023 CDP report, the company identified Paraná and Uruguay as regions facing medium to extremely high water risk, and the Tigris & Euphrates region as an area with high water risk and extreme water stress. Additionally, the company has started using the WWF Water Risk Filter tool to assess water vulnerability, considering factors such as quality, quantity, regulation, and water use conflicts in Brazil. Historical analysis showed that severe water shortages impacted its manufacturing units and integration chain due to reliance on well and groundwater. The company discloses water collected from stressed areas by source and reported a total water consumption of 8.04 million m3 in its 2023 CDP Water response. To reduce its water footprint, the company implements practices for water reuse, waste reduction, and process automation. At its Bandirma unit in Turkey, approximately 50% of water consumption is from reuse, while in Abu Dhabi, it is 29%. In Brazil, the water reuse rate increased from 11% to 16% between 2020 and 2023, attributed to advancements in reuse technologies and installing a reverse osmosis system.

The company has pledged to reduce its water consumption per ton by 13% by 2025, based on a 2020 baseline. As of 2023, it has achieved an 8.41% reduction. However, it has not set a time-bound target for reducing total water withdrawals at its facilities.

In its 2023 Integrated Report, the company collected 56,843.69 megalitres (ML) of water, comprising 36,963.22 ML from surface water, 18,309.01 ML from groundwater, and 1,571.46 ML from third-party sources. Of this, 13,698 ML was collected from water-stressed areas, accounting for approximately 24% of the total water withdrawn, including 10,941 ML of surface water, 2,587 ML of groundwater, and 170 ML from third-party sources. In its 2023 CDP Water response, the company reported water-related capital expenditure (CAPEX) of R$94.1 million and operational expenditure (OPEX) of R$59.6 million for chemical products and R$13.3 million for maintenance. The company's 2023 Integrated Report was audited by Instituto Totum, and water-related data was included under GRI 303-3 and GRI 303-4. The company completed the CDP Water questionnaire in 2023. The total water collected increased by 2.3% from 55,554 ML in FY2022 to 56,844 ML in FY2023.

The company acknowledges the risk of water scarcity in its production chain, particularly concerning grain irrigation for animal feed, animal watering, and production processes. It operates over 20 plants producing high-quality nutritional feed, sourcing grains like corn, soybeans, and sorghum from 3,343 direct and indirect suppliers in 2023. In 2021, the company developed the Sustainable Grain Procurement Policy, setting socio-environmental criteria for supplier assessment. Although the policy does not explicitly address water use, partners must comply with regional environmental legislation, including obtaining and adhering to water use permits. The company indicates it has taken preventive measures related to water use in its production chain and engaged with integrated livestock producers. However, the specific guidance for feed/grain suppliers is unclear, and there is no evidence of partnerships with third parties to influence water use in its sourcing or farming strategy.

The company does not disclose information on feed water intensity. According to its 2022 Integrated Report, 24.16% of its animal feed was sourced from regions with 'High' or 'Extremely High' Baseline Water Stress, but this is not reported for the current period. In its 2023 CDP Water response, the company reveals that the regions from which it sources soy and maize/corn grain are not under water stress, as determined by its WRI Aqueduct assessment, suggesting a 0% water stress for some feed commodities. The company discusses advancements in its Grain App, now covering the entire commodities chain, which digitises commercial management on an integrated platform. This has improved field team performance in crop monitoring, supplier ranking, and grain negotiation. However, it does not address the impact on water scarcity or provide examples of investment in sustainable feed farming initiatives to mitigate water scarcity risk.

In its 2023 Integrated Report, the company states that it does not maintain contracts with producers in regions with high or extremely high baseline water stress but does not disclose the proportion of animal protein commodities produced or sourced in these areas. The company's Code of Conduct for Business Partners informs producers of the necessity to comply with environmental legislation, including water use grants and their conditions. Compliance is monitored, and the efficient use of water is a criterion for evaluating compliance indices. Integrated producers are encouraged to manage water efficiently and adopt technologies for treatment and reuse. For pork and poultry farmers, the company advises monitoring water source levels and consumption to verify water availability and meet environmental requirements, recommending intermittent flushing and utilising farm roofs for rainwater collection. The company participates in River Basin Committees in its operational regions, engaging business partners through assessments and indicators on water-related issues. Integrated producers manage water in their operations, with the responsibility for initiative and technology implementation resting with the producers. While the company does not interfere managerially or financially, it supports those adopting new technologies. Additionally, integrated producers are annually monitored and evaluated using a sustainability checklist, which includes assessing water availability. Efficient water use is a criterion for the Outstanding Integrated Producer Award, recognising top producers.

The company does not disclose having established partnerships with third parties to input into sourcing/farming strategy, including water use.

The company reported two incidents of non-compliance with water-quality regulations during the reporting period but did not disclose details on penalties or the specific events. The company undertakes water-related risk assessments, including water quality evaluations, and identified six high-risk sites: Rio Verde, Chapecó, Concórdia, Elazig, Capinzal, and Dois Vizinhos. It does not have a target for water quality or pollution and has no plans to set one in the next two years. Additionally, the company has not provided information on setting a target for water volume.

The company states that it treats 100% of its effluents according to environmental legislation standards and monitors the water quality of the rivers it uses. However, it does not disclose the results of these assessments. In 2023, the company reported discarding 55,693.85 megalitres of water. The company confirms its Integrated Report, compliant with GRI Standards, was audited by KPMG, with water discharge information reported under GRI 306-1. Additionally, it completed the CDP Water questionnaire in 2023.

The company recommends and encourages producers to use waste as organic fertiliser, transforming organic waste into biofertilisers through composting. It separately refers to manure, implying that organic waste includes animal by-products from slaughtering and processing. The company has not reported on improvements in the overall quality of its wastewater. The volume of water discharged increased from 46,116.23 megalitres in 2022 to 55,693.85 megalitres in 2023.

The company requires its suppliers to monitor soil fertility and manage pesticide use. However, it does not disclose if there is a requirement for feed to be sourced solely from suppliers or produced in-house under a nutrient management plan. Additionally, the company does not mention offering guidance, support, or incentives to suppliers or growers for nutrient management or fertiliser use in crop production. It also lacks information on partnerships with third parties to guide its sourcing or farming strategy, including efforts related to nutrient pollution or fertiliser use.

The company does not invest in sustainable feed production to improve nutrient management or disclose information about pesticide use in its feed supply chain.

The company converts animal litter, pig manure, and poultry bedding into organic fertilizers. Pig manure is generally processed in anaerobic pools and then used for fertigation on farmlands, in line with a fertilisation plan overseen by a technician. The processed material serves as an organic bio-fertilizer in farming. The company encourages producers to use manure as organic fertilizer, considering waste characteristics, soil, and crops within an agronomic project. The company evaluates water quality risk in its direct operations. According to the WRI Aqueduct tool, its Rio Verde and Dois Vizinhos facilities in the Paraná River basin, and the Concordia, Chapecó, and Capinzal facilities in the Uruguay River basin, have Medium to High Water Risk. Additionally, the Elazig facility in Turkey is situated in an area with High Water Risk and Extremely High Water Stress.

The company discloses that waste and manure from its operations are managed in accordance with a nutrient management plan, ensuring compliance with environmental licensing constraints. However, it is unclear if the company verifies farmers' adherence to these plans. Additionally, the company employs a Solid Waste Management Plan for waste management across its business units, and waste applied to fields via fertigation follows a fertilisation plan guided by competent technicians.

The company does not integrate nutrient management performance into incentive schemes for farmers. It does not discuss innovations in manure or provide evidence of a community engagement plan in relation to pollution.

The company asserts that it does not use antibiotics for growth promotion in its poultry and swine operations, and administers antibiotics in swine only under veterinary supervision, with all usage reported to the Federal Inspection Service. However, it does not disclose the specific types of antibiotics used and lacks separate antibiotic policies for poultry or pork. The company has implemented measures to enhance animal welfare, which include improving biosecurity, vaccination, nutritional management, stocking density, reducing mutilation, and providing environmental enrichment.

In 2023, the company reports antibiotic use in its poultry segment at 4.5% of broilers, with an annual consumption of 9.87 mg/kg. Its turkey segment has a much higher consumption rate of 50.52 mg/kg. In the pork segment, 30.06% of slaughtered pigs received antibiotics, with an annual consumption of 256.7 mg/kg. However, the company does not provide details on the types of antibiotics used in the poultry segment. The company acknowledges an increase in antibiotic usage in its poultry operations, rising from 4.08 mg/kg in 2022 to 4.5 mg/kg in 2023, attributing this to health challenges in Brazilian poultry farming. The company does not disclose changes in antibiotic usage for its turkey or pork operations. The Integrated Report, which complies with GRI Standards, has been audited by Instituto Totum.

The company supports the Five Freedoms in its public disclosures, demonstrating its commitment to animal welfare. In 2023, it hosted the inaugural "Animal Welfare in Focus" event with global experts to further integrate animal welfare into its practices. Additionally, over 220 animal welfare officers were trained in various aspects of agriculture, transport, and humane slaughter for poultry and pork across all of its Brazilian units. The company evaluates all raw material suppliers for compliance with animal welfare standards and mandates employees adhere to its Transparency Manual, which includes potential dismissal for non-compliance. Third parties, including integrators and loaders, must follow a code of conduct with sanctions for violations. The company invests in research and development programs to enhance animal welfare, partnering with universities, research institutes, and non-governmental organisations to develop welfare-oriented practices.

The company is committed to raising 100% of its poultry cage-free and plans to use collective gestation pens for all breeding sows by 2026, having achieved 55.24% of this goal by 2023. It targets 100% immunocastration by 2024, attaining 99.87% by 2023. Nevertheless, the company continues tail cutting piglets and beak trimming poultry. The company considers factors like distance, density, speed, travel time, and temperature during live animal transport, stating 70% of turkeys are moved within the maximum limit but without specifying the limit. It does not disclose equivalent data for broilers, pork, or cattle or commit to avoiding long-distance transport for them. Processing plants exclusively use slaughter methods recognised as humane by the World Organisation for Animal Health and the European Union, with 100% of pigs and turkeys stunned pre-slaughter, though the method is unspecified. In Marau, a pre-slaughter gas stunning process for broilers is being implemented, but methods for other locations remain undisclosed. Environmental enrichment targets for all poultry and swine operations are set for 2025, with completion of 100% for turkeys, 14.2% for pork, and 8.6% for chicken by 2023. The company does not commit to avoiding breeds with increased risk of anatomical or metabolic disorders.

The company holds Certified Humane and Global G.A.P. IFA (Integrated Farm Assurance) certifications for its poultry and swine operations, encompassing the entire production chain across 69 integration sites. PAACO audits ensure humane slaughter practices in poultry, while pig slaughter adheres to North American Meat Institute (NAMI) guidelines. Additionally, the pork and poultry operations are audited by PAACO and NAMI, while the company holds Brazilian certification for Antibiotic-Free Product - QIMA WQS. The company does not disclose the proportion of certified sites, leaving the certification status of some operations uncertain.

The company aims to have 100% of breeding sows in collective gestation pens by 2026, achieving a 55.24% adaptation rate in 2023, up from 53.4% in 2022. It met its goal of raising all poultry, including turkeys, broilers, and layer hens for hatcheries, cage-free by 2023. Additionally, the company targets 100% environmental enrichment in poultry and swine operations by 2025, with increases from 2.3% to 11.9% in swine and from 1.85% to 8.6% in poultry operations between 2022 and 2023.

The company has implemented a collective gestation system for 55.24% of pregnant sows, with the aim of achieving 100% adoption by 2026. Surgical castration has been largely replaced by immunocastration in 99.87% of cases. Furthermore, environmental enrichment is in place at 90% of its pig farms, using materials such as metal chains, plastic containers, and wooden pieces. Since 2023, perches, pecking objects, and platforms have been introduced in poultry facilities. Currently, 25% of broilers in Turkey and 8.8% in Brazil benefit from these enrichments. Additionally, all turkeys raised in Brazil have access to environmental enrichment, such as deep bedding and pecking objects. The company adheres to natural day/night lighting rhythms, ensuring a minimum of 8 hours of light and 4 hours of darkness daily. The company utilises slaughtering systems considered humane by the World Organisation for Animal Health (OIE) and the European Union, with 100% of turkeys stunned before slaughter. However, the method used for stunning is not specified. The broiler segment in Marau (RS) is adopting gas for pre-slaughter stunning, but details on methods in other locations, including Serafina Corrêa (RS), Concórdia (SC), Chapecó (SC), Capinzal (SC), and Toledo (PR), remain undisclosed. Additionally, the company has not provided information on the adoption of higher welfare breeds.

The company has a corporate human rights policy that supports internationally recognised human rights and is a signatory to the UN Global Compact.

The company conducts due diligence with potential and current business partners to mitigate human rights violation risks before signing or renewing contracts. However, it does not specify details of the due diligence process, such as supply chain mapping or risk ranking. The company monitors sustainability issues, including human rights in its supply chain, through a sustainability checklist for potential and existing integrated producers. Suppliers are assessed individually after completing the checklist and receive improvement plans, with the checklist regularly reviewed. Extensionists from the agricultural team visit integrated producers monthly. Although the company conducts SMETA audits, it does not specify follow-up actions if risks are identified. Senior management and operational employees receive mandatory human rights policy training. A rural extension team visits producers to offer guidance on improvement areas, potentially including human rights support. However, the specific support provided to suppliers during the reporting period to mitigate human rights risks is unclear.

The company does not disclose whether it has identified any human rights risks in its operations through human rights due diligence.

The company prohibits harassment, discrimination, child labour, and forced labour. However, it does not commit to paying all employees in line with the cost of living, or providng sick pay. The company's facilities undergo social responsibility audits, including those aligned with SMETA protocols, covering harassment, discrimination, child labour, and forced labour policies. However, the proportion of facilities undergoing SMETA audits is undisclosed. Suppliers must also prohibit discrimination, harassment, child labour, and forced labour. While the company expects business partners to adhere to laws on wages and benefits, this is not equivalent to promoting fair wages.

The company has the authority to conduct supply chain audits concerning its Code of Conduct for Business Partners. However, it is unclear whether it actively undertakes human rights or policy-specific audits within its suppliers. The company operates an anonymous 24/7 whistleblowing hotline, the BRF Transparency Channel, for reporting violations of its Code of Conduct. This channel is also accessible to suppliers. In 2023, the company received 3,831 complaints via this channel, covering areas such as fraud, robbery, and violations of policies, including harassment and discrimination. However, no specific category exists for health and safety issues, and the "others" category, representing 62% of cases, lacks clarity on specific incident types.

The company has an occupational health and safety management system and aims to prevent work-related injuries, with 93% of employees reportedly covered by an externally certified OHS system. However, it does not disclose which body has certified this system for the current reporting period. While the company has Occupational Health and Safety Committees at all sites, it does not specify how many of these include worker representatives. The company recognises the significance of antimicrobial resistance (AMR) and aligns its practices with WHO guidelines. Nonetheless, it does not disclose specific assessments or discussions of AMR risks related to its workforce for the reporting period.

The company reported an improved injury rate for employees, decreasing from 6.00 per million hours worked in 2022 to 5.31 in 2023. Similarly, the injury rate for workers decreased from 3.55 to 2.86 per million hours worked within the same period. In 2023, there were no fatalities among employees and workers, compared to two fatalities in 2022. The company reported a total turnover rate of 29% for 2023 and provided breakdowns by region, age, and gender, but not by seniority level.

The company acknowledges the right to freedom of association for its employees where legally applicable and reports that 93% of its employees are covered by collective negotiation agreements and represented by workers' unions. This figure excludes operations in the Middle East and Chile, where unions are not present. The company has not detailed the measures it takes to support collective bargaining agreements and freedom of association. According to its Code of Conduct for Business Partners, these partners must guarantee employees' rights to freely associate and respect collective bargaining agreements.

The company states that 93% of its employees are covered by collective bargaining agreements, excluding those in Chile and the Middle East where such agreements do not exist. It provides a detailed breakdown of its workforce, highlighting that most employees are full-time and permanent, and it does not employ staff on zero-hour contracts. Additionally, the company utilised 17,700 subcontracted workers during the reporting year.

The company states that its quality system adheres to the standards of the Global Food Safety Initiative (GFSI). Its facilities have various quality and food safety certifications, including BRC, IFS, FSSC 22000, GlobalGAP, Certified Humane, and ISO 17025. Of its 44 plants, 24 are certified by GFSI-recognised schemes, with 8 plants certified by BRC, 11 by IFS, 4 by FSSC 22000, and 1 by ISO 22000. The company reports that 93% of its supplier facilities are certified to a GFSI-recognised food safety certification programme as of 2023. However, it does not clarify if such certification is mandatory for all suppliers.

The company conducts annual internal and external audits through Corporate Quality to align with legal requirements, customer expectations, and certification standards. External audits confirm compliance with internationally recognised GFSI standards. The company reports its corrective action rates for non-conformities. Initiatives such as the Operational Excellence System (SEO), + Excellence, and the Ideal Store are employed to maintain quality throughout the production chain. In the 2023 food safety certification audits, the non-conformity rates were 0.19 for major issues and 7.44 for minor issues, with corrective action rates of 7.33 for major and 1.83 for minor non-conformities. The Sadia Bio brand has implemented a traceability system that provides consumers with precise information about their chicken, including the farm of origin and the responsible family.

The company recognises food safety as a significant concern and reports no mandatory recalls in 2023. However, it conducted nineteen voluntary recalls, withdrawing 14,782.50 kilograms of products. The company describes a structured process for addressing non-conformities through corrective actions, based on internal and external audits. It provides statistics on these issues but does not detail preventative measures or specific actions taken to avoid future recalls.

The company does not disclose information regarding market bans, nor were any such bans detected in media screens during the reporting period.

The company has a Sustainability Committee comprising three board members to oversee the ESG Strategy, including climate change, and monitor public commitments. Additionally, an Executive Committee on Sustainability, consisting of six vice presidents from relevant departments and an external consultant, designs sustainability governance. The company updated its materiality assessment in 2022, identifying nine key topics such as food safety, human rights and labour relations, climate change, water and energy, animal welfare, and product quality and safety. This process involved the Executive Sustainability Committee and the Board's Sustainability Committee. One board member, Pedro Camargo, has sector-specific ESG expertise, particularly in deforestation and climate change. Additionally, Pedro de Camargo Neto, an independent board member, specialises in food safety, while Marcos Antonio Molina dos Santos, the chairman, is experienced in product development and innovation.

The company assesses executive performance for variable compensation based on predefined global and departmental goals, which include ESG indicators, grain traceability, and water consumption reduction. However, it does not disclose the percentage of compensation linked to these metrics. The company is a member of the Coalition Brazil Climate, Forests, and Agriculture, supporting forest conservation and sustainable use to mitigate climate change. It collaborates with international animal welfare NGOs and universities to enhance animal welfare in its production chain. Additionally, as a member of UN Global Compact Brazil, it demonstrates commitment to human rights. The company participates in various trade associations, including the Brazilian Association of Animal Protein (ABPA), which focuses on animal welfare, and the Brazilian Association of the Food Industry (ABIA), addressing nutrition. It is encouraged to disclose a complete list of these memberships. In its CDP Climate Change Questionnaire 2023, the company outlines its alignment of external engagements with its climate transition plan, which adheres to a 1.5°C scenario.

The company states that its R&D department is working on reducing post-consumer waste in packaging. It is also investing in digital solutions to enhance productivity and sustainability, such as Farm Sensing (IoT) technology, which monitors animal weight, water and feed consumption, and environmental factors to improve animal welfare. The company discusses its position in ESG-related benchmarks, including the FAIRR Coler Protein Producer Index, the Business Benchmark on Farm Animal Welfare, and Sustainalytics's ESG ratings.

The company's Sustainability Plan aligns its metrics, indicators, and objective goals with key ESG material topics, addressing recent materiality challenges. For 2023, executive variable compensation, including that of the CEO, prioritises Net Zero and Water targets. Regarding Greenhouse Gases, the company committed to implementing a carbon-neutral product line by 2021. By 2023, it introduced three zero-carbon alternative protein products as part of its ambition to become Net Zero by 2040. Although protein diversification is not highlighted as a material issue, it is seen as a risk mitigation strategy. However, the company does not report revenue or sales data for alternative protein sources, nor has it established a specific timeline for protein diversification.

In 2020, the company launched Sadia Veg&Tal, a vegan and vegetarian frozen food brand. By 2023, this portfolio was expanded through a partnership with PlantPlus Foods, a joint venture between Marfrig and Archer-Daniels-Midland (ADM), introducing products like cauliflower wings, vegetable and chickpea burgers, broccoli and spinach burgers, and vegetable nuggets. Additionally, in November 2023, it released a 100% plant-based butter under the Becel brand. The company invested a total of US$2.5 million in Aleph Farms for cultured meat production under Sadia Veg&Tal, marking its first venture investment, with contributions made in both 2021 and 2022. An update on this venture is anticipated in the next reporting period. In line with its Net Zero strategy, the company now offers three zero-carbon items: cauliflower wings, vegetable nuggets, and vegetable protein nuggets, with emissions offset by carbon credits from forest conservation projects. Looking ahead, PlantPlus Foods will bolster its presence in the meat-like market, while Sadia Veg&Tal will focus on veggie-forward innovations. In 2021, the company introduced Brazil's first plant-based carbon-neutral chicken, further aligning with its aim to expand the commercialisation of plant-based products.