Investor Presentaiton

SLC Agrícola Risk management Integrated Report 2019 Message Who we are Strategy Innovation management People Planet Prosperity The management of risks associated to our business model was improved and reinforced in 2019 with the approval of the Risk Management Policy by the Administrative Council. This instrument establishes principles and guidelines, and also defines corporate responsibilities for identification, assessment and mitigation of factors that can negatively impact the company. Moreover, our management is supported by the Market Risk Management Policy, which set forth guidelines to protect the company's operational margin in face of exchange rate variations and commodities' prices. This governance guideline, applied since 2008, is periodically reviewed to adapt structures to the changes in the context where we operate. Among the main risk factors we manage is the exposure of the company to dollar variation and the impact of obligations in foreign currency on the company's cash flow, since large part of inputs have their price tied to the North-American currency and the products' destination is the foreign market. To face this exposure, we count on a patrimonial protection strategy (hedge) and use different instrument to keep exposure within acceptable risk limits. The processes that we adopt to manage risks in an integrated way are aligned to the best practices and methodologies and allow that, with the involvement of all areas; the main externalities are identified and categorized in a Matrix that will assess probability of occurrence and impact on the organization. Risks perceived are divided in six different categories and prioritized according to limit criteria as established by existing mitigation policies and actions. Treatment of residual risks is made through action plans defined by the Board and implemented by leaders of areas impacted by these factors. The policy provides for the installation of an internal audit area, directly linked to the Administrative Council, to continuously assess the efficacy of the processes developed for this management. ESG (Environmental, Social and Governance) risk management is grounded on the Integrated Management System (IMS) and its certifications associated to environment (ISO 14001), occupational safety (OHSAS 18001), social responsibility (NBR 16001) and quality (ISO 9001). These norms have specific requirements to survey critical aspects and impacts in each of these themes, ensuring the identification of hazards and risks and the definition of respective applicable control measures. The IMS also includes periodic internal audits and external verifications to expand the number of certified farms (learn more on page 26). Associated to this management, we monitor with a specialized team and periodic inspections two water dams in Pamplona Farm, thus ensuring compliance of preventive maintenances and the safety of these facilities. The farms also count on a trained team to respond to emergency situations associated to accidents and other events that may put at risk the patrimony or the physical integrity of employees. In the context of climate changes, we count on business differentials that contribute to our adaptation capacity. Besides the 99% of areas cultivated in dry farming, we distribute our farms geographically across six states of the Brazilian Cerrado, biome characterized by higher stability of rainfall regime. Aiming at mitigating our impacts to global warming, we defined, in 2019, a plan for reduction of greenhouse gas emissions, in order to reduce them by 25% in the coming decade. 25% reduction in GHG emissions is one of our goals for the next decade CO₂ Annexes GRI 102-15 | 201-2 ← → 12

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