Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental and social development
• Sustainable forest management
• Carbon capture

Environmental Achievements

• Annual FSC Eucalyptus and Teak Forest Management and Chain of Custody audit concluded with positive results.
• Sale of 143,480 tCO2e corresponding to the period from 2015 to 2019 of the Fresh Breeze Afforestation project (5,344 hectares of Teak plantations).

Social Achievements

• Support for 12 nearby communities (approx. 9,500 inhabitants).
• 38 students benefited from community engagement efforts.
• Strengthening sustainability model and developing programs to contribute to economic growth and empower communities.

Governance Achievements

• Annual reports presented to the United Nations Global Compact and the International Finance Corporation (IFC) and FINNFUND.
• Board of Directors comprised of 9 directors, 8 of whom are independent.

Climate Goals & Targets

Environmental Challenges

• Contraction observed in the MDF market.
• Downward pressure on international Teak prices.
• Plagues and diseases affecting biological assets.
• Extreme weather events.
• Market changes and potential for substitute products.
• New competitors.
• Risks related to Mexico's economic and political performance.
• Liquidity risk due to long-term investment nature.
• Exchange rate volatility.
• Changes in agricultural and environmental regulations.

Mitigation Strategies

• Maintaining marketing and sales base for MDF.
• Constant production of MDF.
• Strengthening alliances with customers.
• Implementing pest management with biological controllers.
• Diversification of business portfolio (Teak and Eucalyptus).
• Investment in road construction and repair.
• Land purchase protocols considering rainfall.
• Preventive measures against forest fires.
• Development of specialized, value-added MDF products.
• Continuous monitoring of cash flow and liquidity.
• Credit insurance for 90% of estimated sales.
• Compliance with environmental and social sustainability standards.

Supply Chain Management

Responsible Procurement

• Sustainable sourcing of seeds and clones.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (hurricanes, droughts).
• Forest fires.

Opportunities

• Carbon capture and sale of carbon credits.

Reporting Standards

Frameworks Used: IFRS, FSC, VCS, UN Global Compact

Certifications: FSC®

Third-party Assurance: Ernst & Young

Sustainable Products & Innovation

• Good Wood MDF (100% sustainable certified wood).

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Successfully completed annual FSC® audits for Forest Management and Chain of Custody for Eucalyptus and Teak plantations with no non-conformities.
• More than 2,100 hectares designated as High Conservation Value Forests (HCVF).
• 55,301 tCO2e captured by plantations in 2021-2022 (verification for sale in 2024).

Social Achievements

• Designed first sustainability and social responsibility strategy.
• Social satisfaction survey in communities near operations showed broad support for company activities and satisfaction with job creation, pollutant management, and water source protection. 82% of respondents believe Proteak generates positive change, 92% considered job creation, and 67% considered Proteak takes responsibility for its impacts.
• Annual reports submitted to UN Global Compact demonstrating compliance with principles on human rights, labor standards, environment, and anti-corruption.
• Annual report submitted to IFC and Finnfund monitoring environmental and social sustainability performance standards.
• Launched the fourth edition of the Vértice program and created the "Tecnomaster" program to train stakeholders in the carpentry industry.

Governance Achievements

• Formalized Diversity and Inclusion Policy, including generating employment opportunities for women, increasing the percentage of women in the organization, establishing a Diversity and Inclusion Committee, defining senior management responsibility in promoting diversity and inclusion actions, and ensuring salary equity.
• Board of Directors comprised of 89% independent members (exceeding the 25% required by law).
• Established Audit, Corporate Practices, Compensation, and Forestry Committees.

Climate Goals & Targets

Environmental Challenges

• Loss of key personnel could adversely affect the company's performance.
• Future growth depends on acquiring additional land for planting.
• Disruption of operations due to internal or external factors (strikes, technical stoppages, natural threats).
• Pests and diseases affecting biological assets.
• Long life cycle of Teak and seasonal risk in wood extraction.
• Extreme weather events (hurricanes, droughts).
• Illegal logging and fire risks.
• Lack of insurance coverage for mature biological assets.
• Risk of expropriation or circumstances affecting property ownership.
• Potential for biological assets to not meet quality expectations.
• Risk that expected volume for biological assets may not match projections.
• Market changes (price volatility, consumer preferences, substitute products, oversupply).
• Entry of new competitors.
• Economic and political risks in Mexico.
• Losses or minimal profits in previous years.
• Volatility of the securities market.
• Liquidity risk of the company.
• Capital risk.
• Uncertainty in fair value estimates.
• Credit risk and company liabilities.
• Potential for future CPO issuances or sales to lower market value.
• Foreigners may not hold more than 49% of Series T Shares.
• Foreign holders of Proteak's CPOs have limited voting rights.
• Actual results could be lower than estimated results and projections.
• Interest rate fluctuations.
• Exchange rate fluctuations.
• Changes in agricultural and environmental regulations.
• Risks related to operations abroad.
• Contraction of the wood industry in major importing countries.

Mitigation Strategies

• Years of experience in land acquisition and planting.
• Implementation of new participation schemes for plantation development.
• Corporate bylaws establishing approval for acquisitions of 10% or more of shares.
• Preventive measures against pests and diseases (buffer zones, geographic diversification, biological control).
• Diversification of business portfolio (Teak and Eucalyptus).
• Investment in road construction and repair.
• Land purchase protocols stipulating minimum rainfall.
• Preventive and reactive measures against fire (firebreaks, plantation location, cleaning, communication systems, patrolling).
• Strict internal policies to comply with environmental and legal origin certifications.
• Continuous monitoring of cash flow projections and liquidity requirements.
• Regular monitoring of capital structure.
• Appropriate valuation techniques maximizing observable inputs.
• Credit insurance.
• No significant concentrations of credit risk.
• Trust mechanism for foreign investment in Series T shares.
• Financial planning considering various scenarios.
• Projections considering operational cash flow, agreements with financial institutions, and sources of financing.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (hurricanes, droughts)
• Fire

Transition Risks

• Changes in agricultural and environmental regulations

Opportunities

• Carbon capture

Reporting Standards

Frameworks Used: IFRS, FSC®

Certifications: FSC® Forest Management and Chain of Custody, TSCA

Third-party Assurance: EY Ernst & Young (Mancera, S.C.)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• MDF boards using 100% sustainable certified wood

Awards & Recognition

• Top Companies distinction, companies for women