Portfolio 21 recognizes the high positive net energy of sugarcane ethanol, partly due to companies using waste biomass to produce electricity to operate mills. Indeed, Sao Martinho produces electricity from sugarcane waste at several mills and recently added a new cogeneration unit at its largest mill that is forecasted to produce over 200,000 megawatt hours of surplus electricity annually. Beyond using waste biomass to power its operations, Sao Martinho also uses agricultural practices across its plantations that minimize the company’s environmental impacts. Specifically, the company practices crop rotation, uses compost on fields, uses integrated pest management (IPM) and does not conduct field burning. In Sao Martinho’s laboratories, it cultivates wasps and fungus that combat pests. The use of IPM is group-wide and has allowed the company to completely eliminate the use of pesticides it once used to control two main pests in sugarcane production. As a result of Sao Martinho’s practices, it has earned various certifications that meet strict standards such as the United Kingdom’s Renewable Transport Fuel Obligation. The company has also improved its own transportation footprint by investing in a new road/rail terminal and logistics complex that increased rail service and removed more than 50,000 truck trips annually.
While Sao Martinho provides some environmental accounting, we have asked the company to provide group-wide data and establish reduction goals across its key performance indicators.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 3/31/14 and may not reflect current opinions or subsequent events.