Suzano S A : 08/13/2020 - Derivatives Management Policy

Code			Revision	Date	Issued by	Approved by
POL.09.00002	08/13/2020	05/03/2017	GEFIN	DFBG
Title:
Derivatives Management Policy
Summary
1.	OBJECTIVE......................................................................................................................			1
	1.1.	SCOPE ....................................................................................................................			2
2.	REFERENCE DOCUMENTS ............................................................................................			2
3.	TERMS, DEFINITIONS AND ABBREVIATIONS...........................................................		2
	3.1.	FOREIGN EXCHANGE EXPOSURE.......................................................................		2
4.	GUIDELINES ...................................................................................................................			4
	4.1.	PERMITTED PRODUCTS.......................................................................................			4
	4.2.	LIMITS AND TERMS .............................................................................................			5
	4.2.1.	CASH FLOW HEDGE........................................................................................			5
	4.2.2.	DEBT HEDGE....................................................................................................			6
	4.2.3. OTHER TYPES OF HEDGE...............................................................................		6
5.	RESPONSIBILITIES .......................................................................................................			6
	5.1.	MONITORING AND COMPLIANCE ......................................................................		6
6.	POLICY APPROVALS ......................................................................................................			7
7.	POLICY BREACH.............................................................................................................			7
8.	FINAL CONSIDERATIONS.............................................................................................			7
9.	ANNEXES ........................................................................................................................			7

1. OBJECTIVE

The objective of this policy is to set the guideline, rules and procedures for:

• Defining the parameters for trading derivative instruments to hedge exposures that pose market risks to the Company;
• Defining delegation of powers for contracting derivatives and their respective limits.

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Derivative Management Policy

08/13/2020

No amendment to such policy may be made without the affirmative vote of at least sixty per cent (60%) of the members of the Company's Board, and at least one (1) affirmative vote by an independent member of the Board.

1.1. SCOPE

This Policy is part of the internal controls and corporate governance of Suzano S.A. ("Suzano") and applies to Suzano, its subsidiaries and all controlled companies.

2. REFERENCE DOCUMENTS

Financial Risks Management Policy.

3. TERMS, DEFINITIONS AND ABBREVIATIONS

3.1. FOREIGN EXCHANGE EXPOSURE

Foreign exchange exposure means Suzano's exposure to fluctuations in currency parities that exist in its commercial, operational, and financial relationships, and which may affect the Company's cash flow in BRL.

Suzano defines foreign currency exposure, calculated for the months following a reference date, as the sum obtained as described below: receiving flows as positive

1. and payment flows as negative (-).
2. • The forecast of monthly net sales of products linked to risk factor M (in this case, currency) is (VM );
   • The forecast of monthly operating expenses linked to risk factor M (in this case, currency) is (C M );

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Derivative Management Policy

08/13/2020

• Thus, for each month "i", the Operational Cash Flow (FO), from the main activities of the Company, linked to the risk factor M is: (, = , +
  ,);
• The forecast of monthly debt service linked to risk factor M (in this case, currency) is (DM );
• The forecast of monthly derivatives cash flow - used for hedging purposes - linked to risk factor M (in this case, currency) is (DerM );
• The forecast of monthly financial investments linked to risk factor M (in this case, currency) is (Caixa M );
• The forecast of monthly CAPEX linked to risk factor M (in this case, currency) is (CapexM);
• The forecast of other monthly payments or receipts linked to risk factor M (in this case, currency) is (Outros M );
• The net exposure (FX GAP) inked to risk factor M (EXPM ) for each month

"i" is defined by: , = , + , + , + , + , + ,.

In regard to BNDES currency basket exposure(UMBND), it will be considered as the currency exposure with the highest correlation index to that currency basket, as long as it does not represent less than 90% of the basket.

3.2. OTHER DEFINITIONS

CGD: General Derivatives Contract, which sets the rules, limits, and procedures between Suzano and banks for transactions in Derivatives in the Brazilian capital markets.

ISDA: (International Swap Dealers Association) is the General Derivatives Contract that sets the rules, limits and

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Derivative Management Policy

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procedures between Suzano and banks for transactions in Derivatives in the international capital markets.

Long Form Confirmation: is the trading note for one-off transactions in derivatives with financial institutions that do not have yet derivatives contracts such as GDC or ISDA.

Dodd-Frank: is the contract that regulates derivatives required by the U.S. Securities and Exchange Commission (SEC), especially for U.S. institutions.

4. GUIDELINES

To avoid market fluctuation in prices and rates, Suzano may choose to carry out transactions to mitigate such variations. For this, it may contract derivative transactions linked to the following risk factors:

1. Currency;
2. Interest rate;
3. Pulp price;
4. Prices of freight fuel and other production inputs.

4.1. PERMITTED PRODUCTS

Derivatives should be used exclusively to hedge either already contracted financial transactions or the Company cash flow and should not imply in leveraging the Company's underlying position.

The following types of derivative "plain vanilla" instruments may be contracted:

• Swaps;
• Non-deliverableforwards (NDF);
• Plain vanilla options.

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Derivative Management Policy

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The sale of options will only be permitted in collar structures in order to exclude any leverage risks.

4.2. LIMITS AND TERMS

For each exposureC, there is a methodology for defining protection parameters using derivative products. These parameters would be previously agreed between the departments involved with the origin and mitigation of these market risks.

4.2.1. CASH FLOW HEDGE

Cash Flow Hedge is defined by the financial protection instruments contracted to mitigate the foreign currency risks related to the Company's main activities (as defined above).

There is a specific limit approved to each type of exposure, as follows:

• Foreign exchange risk (USD): cash flow hedging is limited to a maximum of 75% of the net exposure (FX GAP) and a maximum maturity of 18 months. For temporary changes of these parameters, it will be necessary the approval of the Management and Finance Committee as well as the Board of Directors,
• Foreign Exchange Risk (other currencies): to avoid exposure to the volatility of currencies other than USD, derivatives instruments may be traded up to 100% of the total exposure to swap this risk for USD.

Minimum hedge: the cash flow hedging transactions are limited to a minimum of 40% of the net exposure (FX GAP). This limit was set to cover 75% of the BRL obligations forecasted over the next 18 months. The minimum hedge limit will be periodically reported to the Management and Finance Committee meetings together with the monitoring of the Cash Flow Hedge strategy and submitted again for approvals if any significant market change occurs.

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Derivative Management Policy

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The CFO has a temporary limit of 5 percentage points below the minimum threshold or above the maximum threshold that can be used in exceptional cases. Compliance with policy limits must be made within 5 business days.

4.2.2. DEBT HEDGE

For debt hedging, the maximum terms and limits are the same as the original debt.

4.2.3. OTHER TYPES OF HEDGE

Pulp Price: to reduce Suzano's exposure to the volatility in pulp prices, 10% of the exposure over the next 12 months may be hedged by derivatives;

Prices of freight fuel and other production inputs: up to 50% of the exposure for the next 12 months for each input since these are secondary commodities to the Company.

5. RESPONSIBILITIES

5.1. MONITORING AND COMPLIANCE

The Risks and Compliance department is responsible for monitoring the compliance of this Policy, giving monthly disclosure. They will follow Financial Risks Management Policy for all the parameters and information needed for the control of the established limits, possible non-compliance events and risks implied in case of these situations.

The roles and responsibilities of each department are described in item 5 of Financial Risks Management Policy.

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Derivative Management Policy

08/13/2020

6. POLICY APPROVALS

The approval or changes in this Policy are the responsibility of the Board of Directors, as described in item 5.1. of Financial Risks Management Policy.

7. POLICY BREACH

Procedures applicable in case of violation of any item of this Policy are described in item 4.4.1. of Financial Risks Management Policy.

8. FINAL CONSIDERATIONS

This Policy must be published on the Company's official channels of communication.

9. ANNEXES N/A.

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