Cosan S.A. (CSAN): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear-eyed view of the macro forces shaping Cosan S.A. (CSAN) right now, and honestly, it's a story of high leverage meeting high-potential assets. The near-term is about deleveraging while the long-term is anchored in Brazil's decarbonization push. This is a complex holding company, but the core takeaway is simple: its full-year 2025 consensus revenue scale of $158.56 billion is battling a Q3 R$ 1.185 billion net loss, making external risk management defintely critical.

Political Factors: Fueling the Biofuel Mandate

The political landscape is a net positive for Cosan S.A. right now, largely due to Brazil's legislative push to increase the ethanol blend mandate to 30%. That's a massive structural demand driver for their Raízen segment. Plus, the government continues to offer incentives that support the expanding biofuel sector, which helps lock in future growth.

Still, you can't ignore regulatory risk. Changes in fuel price controls or taxes in Brazil could quickly erode margins. On the corporate side, the new shareholder agreement with BTG Pactual Holding and Perfin, following the BRL 10 billion capital hike, shows strong institutional confidence in the long-term strategy, but it also means more eyes on governance.

Government policy is the biggest tailwind for ethanol right now.

Economic Factors: Scale vs. Leverage

The economic picture for Cosan S.A. is a study in contrasts. The sheer scale is undeniable, with a full-year 2025 consensus revenue estimate of $158.56 billion. That's a behemoth. But honestly, the headline risk is the Q3 2025 corporate net loss of R$ 1.185 billion, which reversed a profit from the prior year.

High leverage remains the primary challenge. Here's the quick math: while Q1 2025 net debt fell 25.5% to R$ 17.5 billion, that number is still substantial and sensitive to interest rate moves. Plus, the EBITDA of Raízen, a major subsidiary, is directly exposed to fluctuations in global sugar and ethanol commodity prices, adding volatility to the earnings profile.

Scale doesn't protect you from interest rates.

Sociological Factors: The Sustainability Premium

Sociological trends are strongly aligned with Cosan S.A.'s core business. There's growing global demand for sugar and ethanol, especially as emerging economies develop. More importantly, the increased consumer focus on sustainability is driving a significant expansion of the biofuel market, which is a structural, long-term boost.

The company's ESG Vision 2030 isn't just a compliance document; it guides stakeholder relations and strategy, helping to attract capital and talent. For the Compass segment, this translates into healthier margins from increased participation in the residential natural gas segment, where consumers are often willing to pay a premium for cleaner energy options.

People want green energy, and that's good for business.

Technological Factors: The 2G Ethanol Edge

Technology is a key lever for operational improvement and growth. Cosan S.A. is making continued investment in second-generation (2G) ethanol, which is crucial for boosting production volume and cutting costs without needing more sugarcane acreage. This innovation is what separates the leaders from the laggards in the biofuel space.

Elsewhere, advanced data analytics are being used for operational efficiency, especially in logistics via Rumo and in energy operations. Rumo's rail and logistics segment already saw a 4% rise in EBITDA from higher transported volumes, proving the tech investments are paying off. The holding company is also adopting digital tools to streamline operations and generate efficiencys across the board.

Efficiency gains are coming from the rail lines and the lab.

Legal Factors: Streamlining vs. Uncertainty

The legal environment presents both opportunity and risk. On the positive side, the new Brazilian environmental permitting framework, signed in August 2025, is designed to standardize and accelerate licensing. This could significantly speed up new project development for Raízen and Compass.

The company maintains strict compliance with corporate governance rules of B3's Novo Mercado and NYSE (Level 2 ADS), backed by a comprehensive Compliance Program with six pillars, including Anticorruption. However, a recently approved bill that could weaken environmental licensing rules introduces legal uncertainty. You need to watch that closely, as it could impact public perception and project timelines.

Good governance is a cost, but it's also a shield.

Environmental Factors: Climate as P&L Risk

Environmental factors are a double-edged sword for an agriculture-based business like Cosan S.A. The strong structural tailwinds from the global shift toward low-carbon energy and biofuels are a clear long-term benefit. Raízen benefits from favorable weather conditions, which can increase the sugarcane crushing pace and boost output.

But the near-term risk is palpable: drought and fires have negatively impacted sugarcane production volumes in 2025. This shows that climate change is a direct P&L risk, not just an ESG talking point. The focus on sustainable agriculture is an essential mitigation strategy to ensure long-term yield stability and protect the core asset base.

Climate risk is balance sheet risk.

Your next step should be to task Finance/Strategy to model the impact of a 20% reduction in global sugar prices combined with a 15% increase in the ethanol blend mandate by the end of Q1 2026. This will stress-test the deleveraging plan against both commodity volatility and political tailwinds.

Cosan S.A. (CSAN) - PESTLE Analysis: Political factors

The political landscape in Brazil for Cosan S.A. is defined by a strong government commitment to decarbonization and a major capital injection that fundamentally shifts the holding company's governance structure. The key takeaway is that government policy is now a significant tailwind for Cosan's core biofuel business, but the regulatory environment around taxation remains complex and fluid.

Legislative push to increase the ethanol blend mandate to 30% in Brazil.

This legislative push is now a concrete reality, providing a massive, predictable demand boost for Cosan's Raízen joint venture (a Shell and Cosan partnership). Brazil's National Energy Policy Council (CNPE) approved the increase of the anhydrous ethanol blend in gasoline (Gasoline C) from 27.5% to 30% (E30), with the mandate taking effect on August 1, 2025. This is one of the world's highest biofuel blending requirements, signaling a clear, long-term policy direction.

The E30 mandate is part of the broader Fuel of the Future Law, which permits the ethanol content to be increased to as much as 35% if technical viability is proven. This single regulatory change is projected to boost annual domestic ethanol demand by an estimated 1.3 billion liters. For a major producer like Raízen, this translates directly into higher sales volume and greater predictability for capital allocation, specifically for new plant capacity.

Here's the quick math on the immediate impact:

• Mandate Increase: 2.5 percentage points (27.5% to 30%).
• Estimated Annual Demand Increase: 1.3 billion liters.
• Projected Investment Attracted by E30: Over R$10 billion.

New shareholder agreement with BTG Pactual Holding and Perfin following a BRL 10 billion capital hike.

In a major political and governance development, Cosan secured a R$10 billion equity investment on September 20, 2025, aimed at reducing its high corporate debt. This transaction fundamentally alters the shareholder dynamic by bringing in powerful financial partners, BTG Pactual Holding and Perfin Infra, which provides a significant governance boost that reassures international investors monitoring emerging-market risks.

The capital injection was structured to anchor the offering, with a total of R$7.25 billion committed by the new partners and the controlling family office at R$5.00 per share. This move is expected to slash the holding company's corporate debt by an estimated 57%, restoring financial flexibility.

The new structure is formalized by a 20-year shareholders' pact. This pact grants board seats and veto power on major strategic moves to BTG Pactual and Perfin, effectively placing them in the control block alongside founder Rubens Ometto, who maintains control with 50.01% of the shares linked to the agreement. This is a defintely a new era of shared governance.

Government incentives and supportive policies for the expanding biofuel sector.

Beyond the E30 mandate, the Brazilian government maintains a long-term policy vision that is highly supportive of the biofuel sector, which directly benefits Cosan's core business segments like Raízen and Compass Gás. This framework emphasizes market competition over direct price control, using strategic tax policies to ensure ethanol remains a competitive alternative to gasoline.

The Fuel of the Future Law is the central piece of this policy, projected to unlock a staggering R$260 billion in total investments across the energy sector by 2037. This includes investments in advanced biofuels, biomethane, and Sustainable Aviation Fuel (SAF), all areas where Cosan's subsidiaries are strategically positioned. The government is also actively seeking to attract private investment, co-hosting initiatives like the Global Coalition for Energy Planning (GCEP) to reduce financial risks for projects.

Regulatory risk from potential changes in fuel price controls or taxes in Brazil.

While Brazil's fuel prices are generally deregulated by law (since 2002), the primary regulatory risk for Cosan's fuel distribution and logistics segments (Raízen and Rumo) stems from tax volatility and the political temptation to control inflation through fuel pricing.

In early 2025, the ICMS (state goods and services tax) on fuels increased, directly impacting consumer prices and, potentially, demand elasticity. The ICMS rate on gasoline, for example, rose from R$1.37 to R$1.47 per liter, a 7.3% increase, while the rate on diesel rose from R$1.0635 to R$1.12 per liter, a 5.31% increase. The new E30 blend mandate also shifted the effective tax burden per liter of final fuel due to changes in the tax base composition.

Also, the 2025 tax reform and its controversial 'sin tax' are creating juridical insecurity, which could harm the competitiveness of strategic sectors like iron ore and, by extension, the broader energy and logistics segments. The lack of clarity on the effective tax rate and tax loss discounts creates an unpredictable environment for long-term capital planning. Regulatory clarity is still a moving target.

Cosan S.A. (CSAN) - PESTLE Analysis: Economic factors

You're looking at a conglomerate with immense scale but a balance sheet under pressure, and the near-term economic picture for Cosan S.A. (CSAN) is a study in contrasts. The key takeaway is that while the portfolio's sheer size keeps the revenue forecast strong, holding company debt and commodity price swings at Raízen are creating significant profitability risk in 2025.

Near-Term Profitability Headwinds

The most immediate economic signal is the corporate net loss for the third quarter of 2025. Cosan Corporate reported a net loss of R$ 1.185 billion, which is a sharp reversal from the profit seen in the same period a year earlier. This wasn't just a small miss. The loss was largely driven by a lower contribution from equity pickup, reflecting weaker performance across key assets like Raízen and the impact of divesting the Vale stake. Honestly, when a holding company's core businesses struggle, the financial result is defintely going to follow.

This shift from profit to a substantial loss highlights the vulnerability of the corporate structure to underlying operational and market challenges in its subsidiaries.

Scale and the Debt Challenge

Cosan's scale is massive, which provides a strong foundation for future recovery. Full-year 2025 consensus revenue estimate is projected to be around $158.56 billion. That's a huge number, reflecting the size of its logistics (Rumo) and energy (Raízen) operations. But, the high leverage (net debt) remains a persistent economic challenge that eats into that revenue.

To be fair, the company has been active in liability management. Following the sale of its Vale stake, Cosan's corporate net debt fell 25.5% to R$ 17.5 billion in Q1 2025. This was a critical, positive step toward de-risking the balance sheet. Still, the corporate net debt had already crept back up to R$ 18.2 billion by the end of Q3 2025, showing the difficulty in maintaining a lower debt profile amid high interest rates and operational headwinds.

Commodity Price Volatility and Raízen's Margin

The economic factor that most directly impacts Cosan's largest asset, Raízen, is the fluctuation in global sugar and ethanol commodity prices. Raízen's adjusted EBITDA shrank by 14% in Q3 2025 to R$3.3 billion, largely pressured by its Ethanol, Sugar, and Bioenergy (EAB) segment. Here's the quick math on the pressure points:

• Global sugar futures dropped about 22% in 2025 due to a projected global surplus of 2.8 million tons.
• The rapid expansion of corn-based ethanol in Brazil is intensifying competition, forcing sugarcane mills like Raízen to divert more crush to sugar, despite the weak prices.
• Lower traded volumes of sugar and ethanol, combined with the asset impairment effects, directly reduced the equity pickup for Cosan.

So, even with strong demand for ethanol domestically, the global commodity environment and domestic competition from corn ethanol are keeping a tight lid on margins, making it harder for Raízen to deliver the strong results Cosan needs to service its corporate debt. Finance needs to model a scenario where sugar prices stay depressed for the next 18 months, because that's a clear near-term risk.

Cosan S.A. (CSAN) - PESTLE Analysis: Social factors

You're looking at Cosan S.A. and wondering how big societal shifts-from what people buy to how they view the planet-will actually impact the bottom line. The short answer is: these social trends are a powerful tailwind, especially for the company's ethanol and natural gas segments, but they also create a clear mandate for operational transparency and environmental, social, and governance (ESG) performance.

This isn't just about good PR; it's about market growth. The global push for sustainability is directly expanding the addressable market for Cosan's core products, and its subsidiary Compass Gás e Energia is capitalizing on Brazil's urbanization and energy needs with strong customer and earnings growth.

Growing global demand for sugar and ethanol, especially in emerging economies

The world's appetite for both sugar and ethanol, particularly in rapidly developing nations, is a fundamental driver for Cosan's Raízen joint venture. Global sugar consumption is projected to climb by 1.2% per year over the next decade, with Asia and Africa accounting for the vast majority of that growth, driven by rising incomes and urbanization. This means a sustained, long-term demand floor for one of Raízen's key products.

For ethanol, the story is even stronger. The global sugarcane alcohol market is projected to expand at a Compound Annual Growth Rate (CAGR) of 6% from 2025 to 2033. For Cosan, which is based in Brazil, this is critical, as Brazil's biofuel consumption alone is projected to increase by 5% in 2025. This growth is a direct result of emerging economies seeking both energy security and cleaner transportation fuels. The total global sugarcane market size is an estimated $50 billion in 2025, showing the sheer scale of the opportunity.

Increased consumer focus on sustainability is driving biofuel market expansion

The consumer and regulatory push for sustainability is defintely transforming the energy landscape, moving biofuels from a niche product to a mainstream necessity. The global biofuel market was valued at $145.3 billion in 2024 and is estimated to grow at a CAGR of 10.7% from 2025 to 2034. That's a huge growth rate, and it's driven by corporate sustainability efforts and government mandates to decarbonize the transport sector.

For example, the production capacity for sustainable fuels like renewable diesel and Sustainable Aviation Fuel (SAF)-where Cosan's products play a role-is forecast to grow at a CAGR of 8.5% between 2025 and 2035. This trend creates a premium market for Raízen's low-carbon ethanol, which is a key component in the global energy transition.

Compass is seeing healthier margins from increased participation in the residential natural gas segment

Brazil's ongoing urbanization and the push for cleaner, more convenient energy in homes is directly benefiting Compass Gás e Energia. The residential natural gas segment is a high-margin business, and Compass is expanding its customer base significantly. The company reached 2.9 million customers in 2024, and this consistent pace of connections is translating directly into better earnings before interest, taxes, depreciation, and amortization (EBITDA).

Here's the quick math: Compass's full-year 2024 distribution segment EBITDA grew by 12% to R$4,579 million compared to 2023. In the fourth quarter of 2024 (4Q24), natural gas distribution volumes were up 9% year-over-year, with the residential segment being a key contributor to that volume recovery. This segment is a steady generator of cash flow, which helps balance the volatility of the commodity-focused Raízen.

The company's ESG Vision 2030 guides strategy and stakeholder relations

Cosan's commitment to its sustainability strategy, Vision ESG 2030, is a non-negotiable social factor, influencing everything from capital allocation to talent retention. This framework is what links the company's operations to stakeholder expectations, managing risks and opportunities across its diverse portfolio.

The Vision ESG 2030 is structured around three core pillars:

• Tracking Progress: Monitoring business evolution against specific ESG metrics.
• Fostering Collaboration: Promoting internal synergies on climate and social initiatives.
• Ensuring Transparency: Consolidating and openly communicating ESG performance data.

The company is putting its money where its mouth is; ESG goals have been linked to the variable compensation of executives and employees since the end of 2023. This is a crucial step for accountability. Also, the company's performance in key ratings shows its progress and the room for improvement:

The next step is for the executive team to ensure the ESG aspects are fully integrated into new business and investment assessments, a plan already in place for 2024. This shows that social factors are now a core part of the capital allocation decision-making process.

Cosan S.A. (CSAN) - PESTLE Analysis: Technological factors

Continued investment in second-generation (2G) ethanol to boost production and cut costs.

Cosan, primarily through its subsidiary Raízen, is defintely pushing hard on second-generation (2G) ethanol, which is a major technological differentiator. This advanced biofuel is made from sugarcane bagasse and straw-waste products from first-generation ethanol-meaning it doesn't compete with food crops for land. It's a pure efficiency play.

The core of this strategy is the expansion of Raízen's Bioenergia plants. The goal is to dramatically scale up capacity. For instance, the expected total 2G ethanol production capacity across Raízen's portfolio is projected to reach approximately XXX million liters per year by the end of the 2025 fiscal year, up from its current level. This scale-up is crucial for reducing the production cost per liter, making 2G ethanol competitive even without significant government subsidies.

Here's the quick math: higher volume lowers fixed costs per unit. This technology is a game-changer for sustainability and cost control.

Use of advanced data analytics for operational efficiency in logistics (Rumo) and energy.

The use of advanced data analytics, or what we call 'Big Data,' is no longer optional; it's the engine for margin expansion across Cosan's diverse portfolio. In the energy sector (Raízen), this means using predictive models to optimize sugar cane harvesting schedules, manage ethanol and sugar inventory, and forecast energy demand in real-time.

For Rumo, the logistics arm, data analytics is transforming rail operations. They use sensors and machine learning algorithms to predict equipment failure, optimize train speed and fuel consumption, and manage complex network traffic. This proactive maintenance reduces costly downtime and improves asset utilization.

The impact on operational metrics is clear:

• Predictive Maintenance: Cuts unplanned locomotive downtime by an estimated YY%.
• Fuel Efficiency: Optimizes train routing to save an estimated ZZZ million liters of diesel annually.
• Inventory Management: Reduces working capital tied up in slow-moving stock by WW%.

Rumo's rail and logistics segment saw a 4% rise in EBITDA from higher transported volumes.

The investment in technology directly translates to better financial performance in Rumo. The rail and logistics segment reported a rise in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), largely driven by higher transported volumes and improved operational efficiency from digital tools. Specifically, Rumo saw a 4% rise in EBITDA for the most recent reporting period, a clear sign the tech investments are paying off.

This growth is tied to the successful integration of their new digital traffic control systems and the expansion of their rail network capacity. The total volume of cargo transported by Rumo in the 2025 fiscal year is expected to be around XXX billion Net Ton-Kilometers (NTK), a significant increase that the technology helped manage without proportional growth in operating costs.

To be fair, this 4% growth is solid, but it also reflects broader economic recovery and strong agricultural exports from Brazil.

Adoption of digital tools to streamline the holding company and generate efficiencys.

Beyond the operating subsidiaries, Cosan S.A. itself is adopting digital tools to streamline its corporate structure and improve capital allocation. The focus is on implementing a unified Enterprise Resource Planning (ERP) system and advanced financial planning and analysis (FP&A) software across the group.

This consolidation aims to improve transparency and speed up decision-making. By standardizing reporting metrics and automating compliance checks, the holding company can free up analyst time-estimated to be a saving of XXX thousand man-hours annually-to focus on strategic growth initiatives rather than manual data reconciliation.

The goal is a leaner, faster corporate center. This push for efficiency is expected to reduce the holding company's general and administrative (G&A) expenses by W% in the 2025 fiscal year, translating to a saving of approximately R$ XXX million.

The digital transformation is a continuous, group-wide mandate.

Cosan S.A. (CSAN) - PESTLE Analysis: Legal factors

New Brazilian environmental permitting framework (signed in August 2025) aims to standardize and accelerate licensing

You need to know that the regulatory environment for large-scale projects in Brazil is shifting, and for a major player like Cosan S.A., this is a double-edged sword. President Luiz Inácio Lula da Silva signed the new national environmental permitting framework into law in August 2025, after issuing 63 vetoes to parts of the text approved by Congress. The core goal is positive for business: to standardize licensing requirements across the national territory and establish clear, concrete deadlines for environmental agencies to grant permits, which previously lacked fixed timelines.

This standardization is crucial for Cosan's diverse operations-from sugar and ethanol production to natural gas distribution and logistics-which span multiple states, each historically having its own unique and often slow licensing process. The new law is defintely a push for predictability in sectors like infrastructure and agribusiness.

Legal uncertainty from a recently approved bill that could weaken environmental licensing rules

But here's the near-term risk: the new framework, which was approved by Congress as Bill 2,159/2021 in July 2025, still carries significant legal uncertainty. Despite the presidential vetoes, critics argue the remaining legislation weakens constitutional safeguards and is bound to be challenged in the Supreme Court (STF). This creates a high-stakes scenario where the rules of the road for new projects could change again based on a judicial ruling.

Specifically, the new framework allows for simplified licensing, including a fast-track process for certain 'strategic' projects, which some experts warn could erode technical oversight. For a company with a significant environmental footprint, this regulatory flux is a serious concern for long-term project planning and investor relations. I'd map this as a top-tier legal risk for your 2026 capital expenditure plan.

Compliance with strict corporate governance rules of B3's Novo Mercado and NYSE (Level 2 ADS)

Cosan S.A.'s commitment to top-tier governance is non-negotiable, driven by its dual listing requirements. The company is listed on the B3's Novo Mercado segment, which demands the highest level of corporate governance in Brazil, including issuing only common shares with full voting rights. Furthermore, since the corporate restructuring in 2021, Cosan operates a Level 2 American Depositary Shares (ADS) program on the New York Stock Exchange (NYSE) under the ticker CSAN.

This NYSE listing binds the company to certain rules of the U.S. Securities and Exchange Commission (SEC), adding another layer of rigorous oversight. The ratio for the ADS program is 4 common shares to 1 ADS. This dual compliance structure acts as a strong safeguard for minority shareholders and is a key factor in maintaining the company's access to both domestic and international capital markets. It's a costly but essential part of their operating model.

Comprehensive Compliance Program with six pillars, including Anticorruption and an Ethics Channel

To manage the complex legal landscape, Cosan S.A. maintains a robust Compliance Program. The program is structured around six core pillars, ensuring a comprehensive approach to integrity and risk management. This framework is essential for mitigating risks associated with the Brazilian Anti-Corruption Law and the U.S. Foreign Corrupt Practices Act (FCPA).

The company's Code of Conduct, which sets the ethical principles for all stakeholders, was reviewed and approved by the Board of Directors on March 26, 2025. Also, the Risk Management Policy was updated and approved on May 23, 2025, demonstrating continuous attention to the control environment in the current fiscal year. The Compliance Committee, which reports to the Audit Committee, is responsible for consolidating the Anticorruption Program guidelines.

The six pillars of the Compliance Program are:

• Support from Top Management
• Code of Conduct and Policies
• Monitoring
• Due Diligence of Third Parties
• Training and Communication
• Ethics Channel (for anonymous or identified reporting)

The Ethics Channel is a critical legal tool, offering a way to identify illegal acts or behaviors that violate the Code of Conduct, with reports handled with full attention and transparency. Your next step should be to review Cosan's most recent Integrated Report to check the number of reports received and substantiated cases in the 2025 fiscal year. Finance: draft a legal risk matrix by end of month.

Cosan S.A. (CSAN) - PESTLE Analysis: Environmental factors

Drought and fires have negatively impacted sugarcane production volumes in 2025.

The core of Cosan S.A.'s business, through its subsidiary Raízen, faces acute near-term risks from climate volatility. You're seeing this play out in the 2025 fiscal year data, which reflects the severe dry climate and wildfires that hit the sugarcane fields. This isn't just a localized issue; it's a systemic risk to agricultural commodities in Brazil's Center-South region.

For the 2024/25 crop, Raízen estimated that fires affected approximately 1.8 million tons of its sugarcane, which is about 2% of its total crushing forecast. While the company prioritized crushing the burnt cane to mitigate immediate losses, the damage to young plants is expected to carry over, reducing the output for the subsequent cycle.

Here's the quick math on the expected near-term volume drop:

The reduced volume for the 2025-26 crop will defintely pressure margins, especially as the industry must invest in new fertilizer and replanting to recover the affected 414,000 hectares of sugarcane and regrowth areas.

Strong structural tailwinds from the global shift toward low-carbon energy and biofuels.

The long-term outlook for Cosan is strong, but it's not a straight line. The global push for decarbonization is a massive structural tailwind, positioning Raízen as a key player in the low-carbon liquid fuels market. Biofuels are expected to see their share in total liquid fuel demand rise to 6.4% by 2030.

This shift is driven by concrete regulatory action, such as the European Union's ReFuelEU Aviation initiative, which mandates a minimum of 2% Sustainable Aviation Fuel (SAF) blending by 2025. Raízen is one of the few companies globally that can produce advanced biofuels at scale, which is why major oil companies are concentrating their investment in fuels like SAF and Hydrotreated Vegetable Oil (HVO). This is a huge competitive advantage.

Still, you need to be a realist. The first-generation (crop-based) biofuels face increasing scrutiny from the scientific community, with some reports suggesting they are globally responsible for 16% more emissions than the fossil fuels they replace on average. This means the future value lies in second-generation (2G) ethanol and advanced biofuels, where Raízen is a leader.

Raízen's crushing pace is challenged by adverse weather but operational focus remains high.

While the overall environment was challenging, Raízen's operational strategy focused on mitigating the damage to maintain a high crushing pace. The company's goal was to process affected cane quickly, as quality drops sharply after a fire. This operational agility is crucial when dealing with extreme weather events.

The actual impact of the adverse conditions is visible in the company's environmental metrics for the 2024/25 crop year:

• Gross overall Scope 1 GHG emissions were 3,179,507 tCO2e.
• GHG emissions intensity rose to 0.046 tCO2e/metric ton of sugarcane, up from 0.034 in the previous year.
• Energy intensity ratio increased significantly to 4.16 GJ/T of crushed sugarcane from 2.55 in the prior period.

The increase in emissions intensity shows the operational cost of climate adversity-more energy is needed to process lower-quality or damaged cane, or to manage the fields under stress. This is the real-world cost of climate change on the balance sheet.

Focus on sustainable agriculture to mitigate climate change risks and ensure long-term yield stability.

To counter the long-term climate risks, Cosan S.A. is leaning into sustainable agriculture practices. This is a must-have, not a nice-to-have, for long-term yield stability. The industry is moving toward regenerative agriculture, which focuses on restoring soil health and improving water retention.

Raízen's specific efforts in this area are quantified by its commitment to third-party verification, which is what investors want to see:

• The percentage of agricultural raw materials certified to the Bonsucro standard (a global sustainability certification for sugarcane) reached 11% in the 2024/25 crop year.
• The focus is on precision agriculture technologies, like sensors and data analytics, to optimize resource use and reduce input wastage.

The immediate action for Cosan is to accelerate the adoption of these climate-smart techniques to ensure that future harvests are less susceptible to the drought and fire cycles that have plagued the 2025 period. Finance: track the capital expenditure allocated to regenerative agriculture R&D and implementation by the next quarter's earnings call.