BRF SA

The company has committed to a science-based target. However, the same has not been validated by the SBTi.

The company mentions that its net zero commitment includes actions to reduce 35% of Scope 1 and 2 emissions by 2030. It consists of a commitment to neutralise residual emissions by 2040. These reduction targets were established based on emissions inventories from 2019 and 2020, respectively. It has set a target to reduce its Scope 3 emissions by 12.3% until 2030 with a 2020 base year. However, it does not disclose what percentage of base year Scope 3 emissions are covered by this target. The target is currently being evaluated by SBTi.

The company is committed to net zero validated by SBTi and is also a member of the business ambition for the 1.5°C campaign. It has committed to near-term and net zero SBTI targets under review in light of the FLAG (Forest, Land and Agriculture) methodology updates.

The company discloses it has identified a set of initiatives to help achieve its net zero target in its value chain. It mentions two initiatives related to sustainable agriculture - the Sustainable Purchase of Grains and the Promotion of Low Carbon Agriculture.

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

The company has installed 350 new solar energy generation plants for its integrated producers. Around 1,500 of its integrated producers currently use photovoltaic power stations on their rural properties, which reduces 95% of the supply cost.

The company discloses that in 2022, its direct (Scope 1) GHG emissions were 299,853.23 tCO2e, whereas total gross emissions of CO2e - an approach based upon the location - were 159,488.08 tCO2e. The Scope 3 total gross emissions of CO2e were 733,159.47 tCO2e.

The company discloses biogenic emissions in Scope 1 and 3. It also discloses the emissions from agriculture-related manure management and enteric fermentation in Scope 1 in the CDP Climate Change 2022 disclosure. It tells land use change emissions from Scope 1 emissions in its CDP Climate 2022. Still, it does not report emissions from purchased goods and services in Scope 3 or feed-related emissions in its Scope 1 emission for integrated production.

The company responded to the CDP Climate Change questionnaire in 2022. The company's report and all disclosed information align with the GRI standards and have been audited by KPMG.

The company discloses a 23% reduction in Scope 1 and 2 emissions compared to 2021 and a 26% reduction in absolute GHG emissions compared to the baseline (2019). Further, it recorded a 5% increase in Scope 3 GHG emissions compared to the baseline (2020) and a 0.2% increase compared to 2021. It reports an overall decrease of 14.6% in absolute GHG emissions from the previous reporting year. The company also reports a reduction of 14% in Scope 1 biogenic emissions. However, whether emissions from feed/enteric fermentation/manure management are included is unclear. It is encouraged to provide further details about the gases included in its calculation of biogenic emissions, as it is unclear whether emissions from feed/enteric fermentation/manure management are included.

The company considers the potential effects of climate change on its operations and supply chain and recognises the vulnerabilities associated with natural resources and agricultural products essential to its activities. However, it anticipates using qualitative and/or quantitative analysis in the next two years to conduct a climate-related scenario analysis.

The company states that 80% of its revenue depends on soy and mentions that any extreme weather condition or natural disaster can impact crop yields and its financial results. It only discusses that potential climate change-related weather events can impact animal welfare in the future and does not discuss the specific impact on heat stress and animal mortality. It has started to invest in constructing clean energy plants to mitigate the effects of energy availability. It also discloses carbon taxes as a potential business risk and mentions increasing the usage of tax-deducted energy to mitigate the risk of carbon taxes.

The company discloses that its CAPEX is prioritised and directed based on its ESG commitments and has identified risks.

100% of the Company’s products are directly or indirectly dependent on soybean meals, including animal feed. The company purchases soy, soy meal and oils from various suppliers. In 2022 the company achieved 100% traceability of grains acquired from direct suppliers in the Amazon and Cerrado and 45% of the indirect suppliers from the same biomes. For the indirect suppliers, the company states that it made headway in developing a proprietary methodology based on the criteria of its Sustainable Grain Purchasing Policy. However, no information regarding sourcing soy from deforestation-free suppliers is mentioned by the company. BRF states that it undertakes forest-related risk assessments, including an assessment of soy. The assessment is carried out using an internal company method which is not disclosed. It states that it assesses the availability of forest-risk commodities, climate change, tariffs or price increases and brand damage related to forest-risk commodities. The company does not disclose locations where soy is sourced or the proportion of soy found to be at high risk from this assessment.

The company has committed to ensuring the traceability of 100% of grains acquired from the Amazon and Cerrado biomes by 2025. The company has a Zero Deforestation commitment for the Amazon biome and an illegal deforestation commitment for the Cerrado biome. It discloses a 2025 target date for this commitment. It also reports a 2008 cut-off date for zero deforestation in the Amazon and the same cut-off date for illegal deforestation in the Cerrado.

The company has a Zero Deforestation commitment for the Amazon biome and an illegal deforestation commitment for the Cerrado biome, but it does not have commitments for other sourcing regions.

The company responded to the CDP Forests questionnaire in 2022.

The company discloses that it has a deforestation monitoring programme for its suppliers. It also discusses the BRF Supplier Code of Conduct, which is distributed to all commodities suppliers and contains guidelines on environmental management, specifically referencing deforestation. The company states that it supports suppliers to remediate non-compliance if they were unaware that non-compliance was occurring. However, it is unclear what direct support the company provides in this case or if support is provided to suppliers before non-compliance occurs.

BRF has established a Supply Chain Monitoring Program. It states that it monitors all partners to guarantee ethical, sustainable and transparent conduct. The company states that if non-compliance is detected, purchases from those suppliers are suspended immediately. Through this process, the supplier is notified, and a committee evaluates the subsequent decisions. BRF reports that in 2022, it achieved 100% traceability and monitoring of its direct suppliers and 45% traceability of indirect suppliers from the Amazon and Cerrado biomes down to the farm level. As such, it has achieved 61% of its traceability commitment in the second year of its implementation.

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

The company has conducted a water risk assessment using the WRI Aqueduct Tool and identified operational sites in medium to extremely high water risk areas. This allows BRF to understand the specific impacts of its business in high-risk regions and consequently reduce its water consumption and exposure to risks of water shortages. It discloses that one of its facilities is exposed to water risk, located in Rio dos Queimados and most of its operations in southern Brazil. BRF states that it has developed several procedures to reduce its water consumption and increase its reuse to minimise the impact on the environment and communities. The company has also been working towards better water management at all of its production units through the 'Water Management' element contained in its risk management system.

The company is committed to reducing water consumption by 13% (m3/ ton) by 2025. However, in 2022 the company disclosed an of increase 10.7% in water consumption from 2021. Overall, the company discloses that it has reduced water consumption per ton of product by 4.29% in relation to the 2020 baseline.

The company discloses its water withdrawals for 2022 and disaggregates this by source. BRF also reports the volume of water sourced from high-risk areas, the majority of which is located in the southern region of Brazil. The company discloses a 6.7% decrease in water withdrawals since last year. However, it also reports that water consumption increased by 10.7% between 2021 and 2022. It discloses its water-related CAPEX and reports that this equated to a 19.77% reduction compared to last year. BRF discloses that its Integrated Report has been audited by KPMG, in accordance with the GRI Standards. The company also responded to the CDP Water questionnaire in 2022.

The company discloses that all of its partners need to comply with the environmental legislation applicable to the areas in which they operate. It states that it provides guidance to its integrated suppliers relating to water use. However, it is unclear what guidance is provided or if this relates to feed farming and production.

The company states that none of the soy it sources originates from water-stressed areas and is mainly sourced from Brazil. However, it also states in its Integrated Report that 24.16% of its animal feed was sourced from regions with 'High' or 'Extremely High' Baseline Water Stress.

The company supports its integrated producers by encouraging them to obtain grants for their water requirements to reduce exposure to water scarcity risks. BRF discloses that it also engages with its business partners to address the issue of water use through assessments against set indicators and monitors 100% of farmers in Brazil annually through a sustainability checklist. It also helps to plan preventive and corrective measures associated with water availability and supports suppliers who are interested in adopting new technologies to optimise resource efficiency. For poultry and pork producers, BRF’s team technicians visit 100% of its out-grower properties to assist and advise them on business management and animal raising. However, it does not specify what support technicians provide on water usage specifically.

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

The company reports no incidents of non-compliance with water quality permits, standards and regulations during the last reporting period. It states that it monitors the quality of water used in the production processes (potable water) as well as the quality of the discharged effluents. BRF also discloses that it has undertaken water quality assessments at a basin/catchment level using the WRI Aqueduct tool alongside its own internal methodology. However, it does not disclose the locations of operations located in areas of high and medium water stress from a quality perspective.

The company does not disclose information on the quality of wastewater discharged but it discloses the volume of water discharged in 2022. The information in the company's Integrated Report has been audited by KPMG, in accordance with GRI Standards. BRF also reports water discharge by destination and it responded to the CDP Water questionnaire in 2022.

The company discloses that the amount of water discharged decreased in 2022.

The company encourages its producers to use the manure as an organic fertiliser whilst taking into consideration the characteristics of the waste, soil and crop being grown. It also requests information from its suppliers such as monitoring and control of soil fertility and the application of pesticides.

BRF discloses that 100% of its manure is 100% applied in accordance with a nutrient management plan. However, it is unclear if manure is applied to feed crops or if the company favours feed crops grown in this way.

The company states that it converts animal litter, pig manure and poultry bedding into organic fertilisers. BRF mentions that it generally treats pig manure in anaerobic pools, followed by fertigation on farmlands, in line with a fertilisation plan guided by an expert technician. The company also states that sludge generated in the treatment of effluents is used as a fuel mixture for its boilers. It assesses the water quality risk of its operations and also discloses that the majority of its integrated producers are concentrated in the Southern region of Brazil which is exposed to the greatest water risk of any of BRF’s operations in Brazil.

The company discloses the use of nutrient management plans in compliance with environmental licensing processes. However, it is unclear whether the company verifies farmer compliance with these plans. However, it does provide annual support and guidance for all its integrated producers regarding the correct management of waste they generate.

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

The company aligns with the World Health Organisation's guidelines on antibiotic use, restricting harmful antibiotics in poultry and reducing them in the pig chain, only using them for confirmed illnesses or injuries under veterinary supervision, with detailed records kept. It explores antibiotic alternatives and employs artificial intelligence alongside continuous staff training to bolster animal welfare. However, it lacks explicit details on critical antibiotic reduction timelines and metrics and a clear stance on the routine and growth-promoting use of antibiotics across operations. Specific animal welfare measures such as reduced stocking density and routine mutilation are not addressed.

The company discloses a 78% increase in antibiotic use in broiler chickens and a 2.38% increase in pig production for 2022. Furthermore, the company's integrated report is audited by KPMG in accordance with GRI Standards.

The company supports the Five Freedoms and commits to employee training on animal welfare, delivering over 1,000 hours of training through animal welfare professionals. It also has a humane slaughter programme and collaborates with international NGOs and universities, highlighted by its ongoing partnership with World Animal Protection since 2015. However, it does not disclose the specifics of corrective actions taken for non-conformity with animal welfare guidelines.

The company commits to avoiding close confinement, already achieving 53.4% of its goal for collective gestation pens for breeding sows by 2026. It refrains from beak trimming for broiler chickens and surgical castration for swine and commits to limiting animal transport to a maximum of 8 hours. Furthermore, humane slaughter methods are employed for swine and turkeys. Conversely, the company performs beak trimming on 100% of breeding stock hens and broiler turkeys and tail docking on 100% of swine. While environmental enrichment is prioritised in 90% of pork farms, no such information is available for poultry, and humane slaughter methods for broiler chickens are not disclosed.

The company holds Antibiotic, Livestock, and Organic Free (ALO Free) certification from the Animal Welfare Approved (AWA) programme. Additionally, it holds Global Good Agricultural Practices (GAP) and Certified Humane certifications for broiler chickens. However, the specific percentage of certified operations remains undisclosed. The company's operations are certified by a farm assurance programme and align with GLOBAL G.A.P., Certified Humane standards, and ALO Free protocols, which also audit its broiler farming chain. Moreover, 56% of the eggs used for industrial products are Certified Humane, with 69 certified integrated producers.

The company reports a 53.4% implementation rate of its collective gestation system for breeding sows, with a target of 56.3% for 2023 and 100% by 2026. It also monitors field mortality, animal transportation duration, and transport mortality as animal welfare indicators.

The company commits to addressing welfare risks in both pork and poultry production. In pork, it pledges to implement collective gestation pens for 100% of breeding sows by 2026 and has ceased surgical castration without anaesthetic as of December 2022. Immunocastration is used for 99% of castrations, and environmental enrichment is present in 90% of its pig farms. It discloses a maximum stocking density of 39kg/m² in poultry, with 52% of broilers slaughtered at densities below 30kg/m². However, it continues to practice tail docking for all piglets without a disclosed plan for elimination. Additionally, there is a lack of information on using higher welfare poultry breeds, air quality, and access to perches. Furthermore, electric water bath stunning is still in use.

The company commits in writing to respect, comply with, and work in defence of internationally recognised human rights, including those stipulated by the Universal Declaration of Human Rights and the Guiding Principles on Business and Human Rights.

The company conducts a human rights due diligence process with its potential and current business partners before signing and/or renewing contracts, business agreements, donations and sponsorships. Furthermore, its business partners are regularly assessed on their reputation and histories relating to the use of child or slave labour, moral or sexual harassment and discrimination. However, the company does not identify the following action steps upon identifying risks in its suppliers. Furthermore, the company does not sufficiently explain how it monitors and reviews respect for human rights and identifies the following action steps in its operations. In addition, while the company conducts training throughout its operations to raise awareness of its human rights policies, it does not explain how it mitigates and provides remediation for any risks identified through its internal assessments or supplier due diligence.

The company states that the most significant risks it found were related to the use of child and/or forced labour in its grain supply chain and suppliers' impact on indigenous communities. However, the company does not provide detailed information regarding the regions these risks were located in or if any other type of human rights risks were found.

The company commits in writing to prohibiting harassment, discrimination, child labour and forced labour in its own operations and suppliers but does not mention conducting audits covering these policies. In addition, the company does not mention providing sick pay or a fair wage to all its employees.

The company has an anonymous whistleblowing hotline, managed by a third party, for receiving internal and external reports on any violations of its Code of Conduct, other Company policies and applicable laws and regulations. The company has also established an anonymous BRF Transparency Channel open to business partners for reporting potential violations of the Supplier Code of Conduct. However, whether these grievance channels were designed in consultation with relevant stakeholders is unclear. In 2022, the total number of complaints reported through the company's transparency channel was 3,338. The company has categorised cases into harassment, fraud involving suppliers, robbery, theft or embezzlement, discrimination, fraud involving clients and others. However, it does not include a category for health and safety. Furthermore, the "others" category makes up a significant majority of case types, and it is unclear what is included in this category.

The company states that employee safety is an uncompromising commitment, and its approach to protecting health and safety is based on guidelines outlined in the BRF Health & Safety Management System, which is focused on eliminating and preventing occupational injuries, illnesses and fatalities. However, it does not disclose any certification in the current reporting period. The company also has a health and safety committee but does not reveal the number of facilities with their own site-level health and safety committee with worker representatives.

The company discloses an injury rate of 6.67 per million work hours for company employees and that its employees' recordable work-related injuries (including fatalities) improved from 6.71 in 2021 to 6.00 in 2022. However, it should be noted that the rate of recorded injuries for workers not directly employed by the company but working at company-owned facilities increased from 3.4 to 3.55. The company reported four fatalities due to work-related injuries for its employees and indirect workers in 2022, an increase of four deaths compared to the previous year. The company also discloses a turnover rate of 27% but does not disaggregate turnover rates by seniority level.

The company commits in writing to recognise and fully uphold the right to freedom of association and collective bargaining, provided these rights are exercised within legal and ethical bounds. The company discloses that 100% of Brazil, Austria, Chile and Oman employees are covered by collective bargaining agreements and represented by workers' unions. The company also states in its Code of Conduct for Business Partners that all business partners must guarantee the rights of employees to associate with trade associations and trade unions. However, the company does not state what alternative mechanisms are available for worker representation in its operations in Saudi Arabia and Abu Dhabi, where labour unions are legal but not culturally accepted.

The company discloses that the collective bargaining agreements cover 100% of Brazil, Austria, Chile and Oman employees. It states that in the other countries where it operates, the collective bargaining agreements follow the local legislation. In addition, the company gives a breakdown of the workforce across existing contractual arrangements.

The company discloses that its facilities have FSSC2200, IFS and BRC certifications. These are GFSI-recognised certifications. Seven plants are certified by BRC, eleven by IFS, five by FSSC22000 and one by ISO22000. In total, 24 unique plants out of 51 are accredited by a GFSI-recognised scheme, constituting approximately 47% of total plants. Further, it has a certification program for its suppliers based on international certification requirements by the Global Markets program established by the GFSI. However, the company does not explicitly state if this is a requirement. It discloses that 95% of suppliers were GFSI-certified in 2022.

The company conducts internal and external food safety audits. The annual internal audits evaluate the adherence of the internal procedures to legal requirements and client and certification standards, whilst the external audits consider the internationally recognised GFSI standards. It reports that 301 corrective actions were performed and concluded, with 293 relating to lesser cases of non-compliance and 8 of them to more relevant cases of non-compliance. The company's brand, Sadia Bio, has a traceability of origin system, allowing consumers to know precisely where the farm is and which family raised the chicken.

The company acknowledges food safety as a material business issue, including the risk of product recalls. It discloses two product recalls in 2022 involving the withdrawal from circulation of products being sold by BRF PET but which had been manufactured by third parties. Conclusions from the recalls are expected in 2023. No further information on preventative or corrective actions is provided.

The company did not disclose information on market bans during the reporting period; none were detected in the media.

The company discloses that it has a Sustainability Committee composed of three board members who monitor progress on the ESG Strategy. In addition, the company has conducted a materiality assessment. It discloses material topics that include food safety, human rights, water and climate change, energy, animal welfare, innovation and technology. The company admits that the Executive Sustainability Committee conducted the validation process, the Executive Committee and the Sustainability Committee of the Board of Directors. However, the company must discuss whether board members have expertise in sustainability, food safety, or innovation.

The company states that to determine the values ‚Äã‚Äãof the variable compensation, the performance of the executives is considered through the prior establishment of global goals and areas, including ESG indicators. However, it does not disclose the percentage of variable compensation linked to the metric. The company joined the Brazil Climate, Forestry, and Agriculture Coalition, whose goal is to drive the agenda for the protection, conservation and sustainable use of forests as a significant Brazilian contribution to mitigating climate change. It also works with international animal protection NGOs and leading universities to improve animal welfare in the production chain. Further, the company joined the Emerging Markets Investors Alliance, a non-profit organisation that aims to educate global sustainability investors on environmental, social and governance (ESG) topics. In addition, it engages with Instituto Ethos and the UN Global Compact, which both seek to promote good practices regarding human rights. The company also lists its trade association memberships and states that it conducts its policy engagement activities in line with the Paris Agreement.

The company has innovative projects focused on animal welfare, control over the origins of grains and the quality of foods, and the development of new products and businesses. Furthermore, through the company's innovation centre, it collaborates with startups and academic researchers to help tackle its strategic challenges and drive innovation, such as becoming the first Brazilian company to enter the cultured meats market. In addition, the company discloses that it uses tools such as the Corporate Sustainability Index of the Brazilian stock exchange and the Dow Jones Sustainability Index to understand industry trends and positive experiences to inform its business practices.

With its venture investment in Aleph Farms and partnership with PlantPlus Foods, the company aims to advance in its plan to meet the growing consumer demand for new and alternative protein sources, in line with its commitments to sustainability, innovation and food safety. However, it does not discuss protein diversification as a material business issue. It reports its sales represented 0.01% of the vegan nuggets sales in Brazil in 2021, but it does not disclose revenues linked to alternative proteins. Further, it does not disclose a timebound target to diversify protein sources.

In 2020, the company launched Sadia Veg&Tal, its vegan and vegetarian frozen food brand. In 2021, the brand introduced a 100% Vegetable Chicken line comprising 3 SKUs (sliced, cubed and shredded chicken). It is officially the first plant-based chicken product on the Brazilian market that is also carbon-neutral. The production chain emissions are neutralised by purchasing carbon credits from forest conservation projects. Further, it invested US$ 2.5 million in Aleph Farms as venture capital to manufacture cultured meat Sadia Veg&Tal. The first investment was made in 2021, and the second in 2022. This venture investment is reported to be the first one made by the company. Further, during the reporting period, it announced a partnership with PlantPlus Foods, a joint venture between ADM and Marfrig, to increase the commercialisation of plant-based products in Brazil. BRF will promote a readjustment in its Sadia Veg&Tal portfolio to include three new zero-carbon items: a Hot Pocket veggie burger, vegetable protein nuggets, and breaded cauliflower wings.