ESG Strategy

Aegea recognizes that climate-related challenges are among the greatest global risks for the future of sanitation and, at the same time, an opportunity to generate sustainable value. That is why, the company has structured its climate governance at the strategic and operational levels, ensuring that the management of risks and opportunities related to climate change is integrated into its business strategy. This framework strengthens organizational resilience, increases transparency in its relations with investors and stakeholders, and keeps it aligned with international best practices, such as the TCFD recommendations.

Climate Governance and Management of Climate Risks

The ESG Committee executes Aegea ‘s environmental, social, and governance agenda, defining the corporate priorities and goals based on a strategic ESG roadmap and a long-term work plan. Its responsibilities include coordinating ESG rating processes and obtaining independent certifications. The Committee, which has eight executive members including the CEO and CFO, works in synergy with the Board of Directors, which oversees the management of ESG impacts through periodic meetings and interactions with specialized committees, such as the Audit, Risks and Compliance Committee, as well as the Engineering and Sustainability departments, which are tasked with analyzing and reporting ESG-related risks and opportunities.

Climate issues are discussed by the Board in meetings that are held more than once a year. At the executive level, the Chief Sustainability Officer coordinates the management of climate initiatives, integrating them into the corporate strategy and operations to ensure their alignment with public commitments and regulatory requirements.

Electricity is one of the main resources used in water production and distribution and in sewage treatment, and hence the efficient use of energy resources is crucial. The Company offers incentives linked to climate management through variable compensation pegged to the achievement of targets.

Starting at the level of regional vice presidents, executives have a target linked to the expansion of sewage coverage at all Aegea units.

In the Engineering department, executives up to the executive officer level have targets linked to variable compensation related to energy efficiency. The KPI for this target is Specific Energy Consumption, which measures the amount of electricity consumed (in kWh) by the water production and distribution units, as well as sewage collection and treatment units in relation to the sum of the volume of water produced and sewage treated (in m³). This indicator is audited annually and publicly disclosed in the Sustainability Reports. In addition, the department has targets linked to compensation for reducing water losses, which cover all units of the Aegea Ecosystem.

Management of Risks and Opportunities

Aegea has a dedicated structure for managing climate risks, which is integrated into a centralized corporate risk management program that covers all areas of the company and addresses different sources and types of risk. The Audit, Risks and Internal Controls Department (DARC), which is responsible for mapping, evaluating and monitoring these risks, reports directly to the Statutory Audit, Risks and Integrity Committee, consisting of directors. Through this committee, DARC reports to the Board of Directors, which discusses the risks related to climate change at Board meetings and with said Committee.

This approach ensures that climate risks and opportunities are addressed in a multidisciplinary manner and in compliance with the corporate risk management policy.

The Company adopts a risk analysis methodology based on the ISO 31000 standard – Risk Management and the methodology established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as well as its own methodologies to identify, assess, and mitigate risks, besides constantly monitoring their impacts and taking preventive measures. Qualitative analyses of climate scenarios are carried out based on IPCC frameworks, including at least one scenario of warming of 2°C or less, in order to identify impacts and opportunities. These scenarios guide the definition of strategies and the prioritization of mitigation and adaptation measures.

Physical risks

Based on IPCC scenarios, Aegea primarily monitors heavy rainfall, droughts, floods, landslides, lightning strikes, and extreme events such as gales and cyclones. In the long term, the risks involve water availability and the replenishment of water sources. To mitigate these effects, the Company has a specific plan for adapting itself to physical climate risks in existing and/or new operations, maps and monitors events that could interfere in its operations, including in the long term, which include, but are not limited to, projections of rainfall, temperature, water recharge capacity in surface water sources, aquifers, and river basins compared to the projected patterns of consumption by the population. Based on this initiative, action and investment plans are drawn up, such as for drilling wells, increasing water storage capacity, interbasin water transfers, developing alternative energy sources, reinforcing buildings and other structures, and installing backup systems, among others. The Company also has projects dedicated to preserving watersheds, recovering riparian forests, as well as headwaters and mangroves in order to make habitats more resilient to climate change. The action plans that make up this adaptation plan are reported to the Board of Directors. From a financial planning perspective, the Company also holds insurance policies that cover climate risks.

Transition risks

The company also anticipates regulatory, technological, and market risks related to the transition to a low-carbon economy, aligning itself with global trends and strengthening its competitive edge.

It has prepared a specific plan to adapt itself to physical climate risks, which applies to both existing operations and new ventures. The measures include:

• Strengthening the infrastructure to withstand extreme weather events;
• Optimizing the use and collection of water resources;
• Investing in technologies that increase operational efficiency and resilience;
• Preventive actions to ensure the continuity of essential services in critical scenarios.

The risks considered include regulatory, legal, technological, market, and reputational risks, which the company addresses through innovation and adherence to international trends, as shown below.

a. Regulatory

Impacts: Changes in climate regulations may generate extra costs and sanctions, increased operating costs due to minimum energy efficiency requirements at pumping and treatment systems, and the risk of delays in project approvals if stricter environmental regulations are implemented.

Mitigation actions: Alignment with voluntary frameworks (GRI, TCFD), constant monitoring of regulatory changes, defining specific targets for reducing energy consumption, active participation in public consultations and industry associations to anticipate regulations.

b. Legal

Impacts: Risk of fines, lawsuits, and breach of debt covenants.

Mitigation actions: Continuous monitoring of laws in the country of operation, monitoring of commitments in sustainability-linked bonds and loans (SLB and SLL).

c. Reputational

Impacts: Loss of credibility among clients, society, and investors in case of failure to meet climate targets.

Mitigation actions: Open dialogue with the population through structured programs for community leaders, communications, tariff exemption programs when service is interrupted due to climate issues, clear and transparent communication about commitments, active participation in forums such as COPs, investments in low-carbon technologies to reduce emissions.

d. Market

Impacts: Loss of contracts and competitiveness in public bids given the demand for sustainable services, increase in costs with carbon pricing, restricted or more expensive access to financing due to lack of climate alignment, costs of adapting to new environmental and efficiency standards required by regulatory authorities and clients.

Mitigation actions: Investments in water and energy efficiency, transparency in sustainability reports, including green certifications and ESG targets, increased use of renewable energy and implementation of operational efficiency projects, anticipation of regulatory trends, adoption of international standards (GRI, TCFD), and enhancing the environmental monitoring and management systems.

e. Technological

Impacts: High costs for deploying energy efficiency technologies.

Mitigation actions: Investment in solutions designed to reduce specific energy consumption, implementation of energy self-generation projects.

Opportunities

At the same time, the Company highlights the opportunities related to projects for transition to a low-carbon economy, such as reuse of sludge, recovery of energy from biogas, reduction of energy consumption and water losses, as well as expanding the supply of industrial reuse water. Long-term opportunities include exploring alternative water sources, such as desalination projects.

The short-, medium-, and long-term opportunities can help reduce costs and expenses and in transitioning to a low-carbon economy. Long-term opportunities can help increase water resilience.

Sludge Value Program

The Company has been making progress in waste management, with the focus on sludge generated during water and sewage treatment. In 2024, it partnered with Organics to transform sludge from the MS Pantanal unit into organic fertilizer, allocating 20% of the production to recovering degraded areas, family farming, and indigenous communities. This initiative reinforces the circular economy, avoids disposal in landfills, and helps reduce the carbon footprint. Moreover, the company is evaluating low-carbon projects, such as energy recovery from sludge and generation of biogas and biomethane.

Reused Water

In 2024, Aegea established Apura, a new business unit dedicated to developing sustainable solutions for industry. Notable projects include contracts for the supply of reused water to the industrial operations of Petrobras and Braskem in Rio de Janeiro.

The country’s largest water reuse project will be implemented at Petrobras’ Boaventura Energies Complex, saving enough water that can supply up to 600,000 people and bringing forward sewage coverage in São Gonçalo and Itaboraí. Meanwhile, the partnership with Braskem will ensure that 100% of the water needs of its Duque de Caxias unit are met with reused water, for which Aegea, through Águas do Rio, will bring forward by three years, investments in collection networks and a treatment plant, benefiting more than 260,000 people with early access to sanitation.

Strategic Commitment

By integrating climate governance into its corporate risk management program, establishing incentives linked to environmental results, and implementing robust adaptation plans, Aegea bolsters its ability to anticipate impacts, mitigate risks, and seize opportunities related to the transition to a low-carbon economy. These practices keep the company aligned with the best international benchmarks, such as the TCFD recommendations.

Risk management is an essential part of Aegea’s governance and underpins its ability to provide sanitation services with quality, efficiency, and socio-environmental responsibility. By implementing risk monitoring and mitigation practices in all spheres of its operation, the company underlines its commitment to transparency, organizational resilience, and the creation of sustainable value for society and its shareholders.

Aegea adopts a robust risk management system backed by a Risk Management Policy approved by the Board and aligned with the ISO 31000 standard. Its governance follows the “three lines of defense” model: Ownership of Operational Risk (1^st line), Risk Management and Compliance Oversight (2^nd line), and the Internal Audit Unit (3^rd line). This framework is complemented by a dedicated Audit, Risks and Integrity Committee, as well as specialized functions that support all stages of the management cycle.

The risk management process covers the identification, analysis, assessment, and treatment of risks based on a corporate catalog that compiles the 10 main categories and 40 types of risks, which include:

• Compliance (fraud, corruption, image and internal governance);
• Political/Regulatory (political uncertainties, contractual and legislative changes);
• Legal (lawsuits and concession agreements);
• People (training, succession, recruitment and retention);
• Operating (management of assets, raw materials, processes and services);
• Clients (quality of customer care and services);
• Financial, Accounting and Tax (revenue, credit, unforeseen expenses);
• Technology and Systems (including information security and privacy risks, system downtime, and technological obsolescence);
• Environmental, Health and Safety (environmental damage, occupational health and climate impacts);
• Strategic Planning/Growth (new contracts, competition and due diligence).

Besides defining the risk appetite, the process establishes preventive and protective controls, as well as action and contingency plans. It also describes the exposure and mitigating measures for specific risks, such as:

• Material damage to operational assets, mitigated by preventive maintenance programs and continuous monitoring;
• Regulatory risk, mitigated by closely following legislation and through proactive interaction with regulatory agencies.

Exposure to risks is reviewed at least once a year based on operational and strategic information, as well as inputs from action plans from units and consolidated indicators. The entire process is audited periodically to ensure compliance with the policy and the effectiveness of controls.

To strengthen the risk culture, Aegea conducts training on risk management principles for the entire organization, integrates risk criteria into the development of products and services, and offers financial incentives linked to risk management metrics, all in alignment with the strategic targets for senior leadership.

Aegea’s central commitment is to combine universal access to sanitation with the preservation of natural resources as it recognizes that environmental management is essential for long-term sustainability and generating shared value. With the focus on responsible and innovative practices, the Company implements policies, guidelines, and programs that ensure compliance with legislation, mitigation of impacts, efficient use of resources, and the strengthening of the circular economy, in line with Brazilian and international best practices.

Aegea has a comprehensive public commitment to environmental management, formalized by its Sustainability Policy, its Environmental, Health and Safety (EHS) Policy and Manual, and Environmental Guidelines applicable to all companies and units of the Group. This commitment is overseen by the Board of Directors to ensure sound governance and strategic alignment.

The policies establish clear responsibilities for implementing the guidelines, encourage continuous improvement in environmental performance, define targets for reducing impacts, and envisage consultation with external stakeholders to plan and roll out actions. These also include environmental education campaigns and training to make sure that everyone understands the impacts of their activities and acts responsibly.

Notable among the strategic goals are universal access to basic sanitation in all concession contracts—which will directly contribute to mitigating environmental impacts—and publicly audited goals to reduce specific energy consumption. The Normative Instruction of the Solid Waste Management Program (PGRS) lays down the procedures to minimize waste generation, promote reduction, reuse, and recycling, in addition to implementing the 5Rs (Rethink, Reduce, Refuse, Reuse, and Recycle) program.

The INTERAGE EHS Management Program is Aegea’s flagship platform for integrating and standardizing Environmental, Health and Safety practices across all business units. One of its pillars is the Environmental Management System (EMS), which establishes guidelines and tools aligned with IFC’s International Performance Standards, Brazil’s National Environmental Policy, CONAMA resolutions, the Equator Principles, and other applicable standards.

This system guides environmental management in a structured manner and includes:

• Identification, assessment and monitoring of environmental aspects and impacts;
• Communication and investigation of environmental accidents and incidents;
• Control and management of environmental documents, licenses and permits;
• Guidelines for water collection, treatment and distribution;
• Guidelines for wastewater treatment and disposal;
• Inventory and management of solid waste;
• Inventory of greenhouse gas emissions;
• Protection of biodiversity and mapping of sensitive areas;
• Action plans for environmental recuperation and land use change;
• Education and awareness programs, such as Ambiente-se.

INTERAGE also incorporates continuous monitoring mechanisms, key performance indicators (KPIs), and internal audits to assess compliance with the standards defined.

Regarding the verification of management systems, Aegea has 56 Business Units, including 10 certified ISO 9001:2015 (18% coverage) and 7 certified ISO 14001:2015 (13% coverage). It also conducts annual internal audits to ensure compliance and promote continuous improvement.

Waste Management

Waste management in our operations is a meticulously structured  process that begins with identifying the sources of waste generation and mapping the main types of waste produced. Next, we define the appropriate storage locations with adequate conditions for storage that minimize environmental risks. The final stage involves the transportation and final disposal of waste in strict compliance with environmental standards and regulations.

The impacts we seek to mitigate are directly related to the waste generated in our processes and operations. By implementing effective management practices, we ensure that disposal is carried out in a responsible manner to minimize the negative impacts on the environment and public health.

The Company also has a Solid Waste Management Program (PGRS) that guides the Management of Solid Waste through the identification, quantification, and monitoring of waste generated by its operations, encourages the implementation of waste reduction programs through the 5Rs (Rethink, Reduce, Refuse, Reuse, and Recycle (when possible)) program in order to reduce waste at the source, includes investments in innovation and R&D aimed at reducing environmental impact and training for employees, encouraging the adoption of waste reduction practices and integrating recycling programs such as the Sludge Value program, which enables the circularity of nutrients and prevents sludge from being sent to landfills. Another recycling program is “De Olho no Óleo”, which raises public awareness about the correct disposal of cooking oil, while highlighting the damage that improper disposal causes to the sewage system. In 13 years, with support and in partnership with other companies, the Company has already collected 47,820 liters of oil. Other results of this program can be found here.

To promote environmental education and awareness, the Company launched the new Corporate Environmental Guideline called the “Ambiente-se” Program” in 2024. This program establishes the guidelines for adopting, implementing, and incorporating good environmental practices, besides promoting education about preserving the environment. The initiative also provides guidance on the proper management of administrative solid waste, besides encouraging segregation and reduction in waste generation in line with the principles of sustainability and corporate responsibility.

Regenera Cariri, a solid waste management concession, is our first project in this segment, whose operations will benefit more than 350,000 people. Nine open dumps will be decommissioned and replaced by a sanitary landfill. This new system will serve the nine municipalities in the Cariri metropolitan region of Ceará covered in the bidding process: Altaneira, Barbalha, Crato, Caririaçu, Farias Brito, Jardim, Missão Velha, Nova Olinda, and Santana do Cariri. Regenera Cariri, which operates on a 30-year agreement, will foster regional development and bring significant social and environmental benefits. With the focus on waste management, encouraging recycling, reuse, and proper disposal of discarded materials, it entails the establishment of nine Municipal Recycling Centers, three waste transfer units, and waste treatment equipment, including composting, a sanitary landfill, and an Environmental Education Center. These actions underscore the Company’s commitment to sustainability and improving the quality of life of the local population by promoting a more efficient and responsible environmental management model.

Stakeholder Engagement

In this context, Aegea adopts the Normative Instruction on Procedures fr Stakeholder Engagement, which establishes the system for identifying, consulting, engaging, and monitoring stakeholders at all of the Group’s business units. This guideline, an integral part of the INTERAGE Program, is aligned with the Sustainability Policy, the company’s internal social responsibility standards, as well as international socio-environmental performance standards.

The procedure includes identifying the communities affected and all local stakeholder groups, including vulnerable segments, as part of the mapping process. The engagement strategy necessarily includes local stakeholders, with a special focus on diversity and equal participation, and includes a formal mechanism for receiving and responding to complaints and grievances from communities, in accordance with corporate guidelines.

The scope of the guideline covers all of the company’s operations, with responsibilities defined for managers of each unit and for the corporate Social Responsibility team. Executive management of the policy is conducted by a dedicated, which is tasked with allocating resources, standardizing and recording interactions, as well as regularly preparing reports for the affected communities.

Engagement activities are free of manipulation, coercion, or intimidation, and use the language and format that are appropriate to the social and economic profile of the public. In cases involving traditional communities or indigenous peoples, there are specific protocols for consultation and communication, which ensure respect for laws and the rights of these peoples.

Moreover, since 2020, the company has been conducting annual customer satisfaction surveys to assess public perception of the services provided by its business units. The findings are fed into a database that enables the monitoring of deliveries and drives the continuous improvement of services. The survey also serves as a monitoring tool for the Social License to Operate by gathering feedback from citizens on water supply, sewage collection and treatment, as well as the quality of service. In 2024, more than 25,000 interviews were conducted, covering a representative sample of the population served.

This integrated environmental management and engagement framework strengthens transparency, trust, and continuous dialogue with stakeholders, reinforce Aegea’s commitment to sustainability, the preservation of natural resources, and the promotion of a circular economy, all in line with international best practices.

Aegea understands that efficient water management is one of the pillars to ensure the sustainability of sanitation and the preservation of natural resources. In light of the challenges related to water scarcity and climate change, the company has rolled out innovative and well-structured initiatives to reduce losses, expand reuse, and promote the rational use of water across all of its operations. This commitment reinforces Aegea’s responsibility in protecting water sources, ensuring water security for communities, and remaining aligned with global best practices in the sector.

The Company develops consistent water efficiency management programs in alignment with its commitment to sustainability and the preservation of natural resources. These initiatives involve the systematic evaluation of water use to identify opportunities for improvement and the implementation of concrete actions aimed at reducing losses (total consumption) and optimizing operational processes.

The key action fronts include measures to improve the quality of wastewater, the establishment of specific targets for reducing losses, and the adoption of recycling and reuse solutions. These measures help relieve the pressure on water sources and bolster water security in the regions where the company operates.

The programs also include improvements in collection and distribution, initiatives to reduce losses, and expansion of the supply of reused water — a strategic component, considering that basic sanitation is an essential service provided by Aegea. Projects such as Gaslub and other industrial initiatives demonstrate the company’s capacity to supply reused water on a large scale, thereby freeing up potable water for human consumption and avoiding competition with supplying water to the population.

Another priority is constant investments in training and development. The Aegea Academy offers specialized courses in Management of Losses in Sanitation aimed at promoting awareness and engagement among employees.

Through this approach, Aegea consolidates its role as an active agent in promoting water efficiency by combining technological innovation, strategic management, and socio-environmental responsibility to ensure the availability of water for future generations.

 

Aegea recognizes that people are its greatest asset and, hence, formulates policies and programs aimed at valuing, developing, and promoting the wellness of its employees. The Company adopts management practices that ensure fair, inclusive, and safe working conditions, besides offering professional growth opportunities aligned with its purpose of transforming people’s lives through sanitation. This approach strengthens organizational culture, encourages responsible leadership, and ensures that Aegea’s values are reflected throughout its value chain.

Aegea’s People Management Policy defines guidelines to ensure fair and transparent labor practices that are aligned with the company’s values and purpose. These principles include the payment of competitive and market-compatible salaries, the prevention of excessive working hours, respect for maximum working hours, guaranteed paid annual leave, and payment for overtime worked.

The policy also establishes the commitment to preventing forced labor, child labor, and any form of discrimination, reinforcing the promotion of an ethical, inclusive, and respectful work environment. It also ensures equal pay for men and women by constantly monitoring the gender pay gap and expands social protection coverage that goes beyond that offered by public programs. It also establishes minimum consultation or notice periods in cases of collective terminations in its operations.

People management involves controlling the hours worked and overtime pay, maintaining constant dialogue with employee representatives about working conditions, and undertaking to ensure that 100% of the employees are represented by independent unions or covered by collective bargaining agreements.

Through its programs, Aegea reaffirms its commitment to respecting labor rights, providing decent working conditions, opportunities for professional development, and a safe and inclusive organizational environment.

This commitment also extends to contractors and service providers, who must follow the clear requirements defined in the Normative Instruction “Safety, Occupational Health and Environment Premises for Service Contractors,” and its annexes, which are part of the Company’s INTERAGE EHS Management Program. These requirements include compliance with Brazilian and international Safety, Occupational Health and Environment standards, adequate working and housing conditions, prevention of human rights violations, and periodic training. Aegea conducts proactive assessments of human rights risks and ensures that the criteria for respecting human rights are incorporated into contracts, ensuring that the entire value chain acts responsibly and in line with its principles.

Individual Development Plan

The People Management Cycle evaluates managers’ compliance with the Company’s desired culture behaviors. Individual performance evaluations consider different dimensions, such as management by objectives, multidimensional evaluation (180° and 360° feedback), and team evaluations, and are conducted at least once a year. Employees receive feedback and design learning paths with their own goals in order to hone new skills. In 2024, more than a thousand Individual Development Plans (IDPs) were created.

The Evoluir Program aims to train new leaders to lead the cultural evolution in team development, and strengthen business strategy with the focus on desired behaviors. In 2024, more than 1,400 leaders – from supervisors to executive officers – participated in the initiative.

Aegea recognizes the growing importance of data protection in the sanitation sector in a scenario of automation of processes and the increased use of technologies for managing and running its services. Information security is treated as a strategic pillar for the company, which ensures the confidentiality, integrity, and availability of data, besides reinforcing the trust held by clients, partners, investors, and society in its operations.

Aegea maintains consistent and well-structured practices to ensure information security, protect sensitive data and guarantee the reliable continuity of its operations. Governance of information security involves oversight at the Board level, which is assisted by a committee linked to management and at least one director with proven experience in the field. At the executive level, responsibility rests with the Chief Technology Officer, who ensures the integration between strategic guidelines and technical solutions.

The Information Security Policy formalizes the company’s commitment to constantly enhancing its protection mechanisms, encompassing data integrity and confidentiality, active monitoring and response to threats, clear assignment of responsibilities to all employees, and definition of security criteria applicable to suppliers and partners.

The Information Security Management Program includes actions such as:

• Periodic analysis of vulnerabilities;
• Internal audits of IT infrastructure and information security management systems;
• Independent external audits in Information Technology and Cybersecurity;
• Formal escalation procedures for registering incidents, identifying vulnerabilities, or reporting suspicious activity;
• Awareness training for all employees;
• Public disclosure of all security breaches registered in the most recent fiscal year.

With this integrated approach, information security is an essential part of corporate governance, sustained by policies, procedures, and controls that protect strategic assets, minimize risks, and strengthen the company’s credibility among clients, partners, and other stakeholders.