Green Finance Framework

Enviva produces wood pellets using responsible sourcing practices that keep our forests thriving, healthy, and growing. We provide an essential market for low value wood that would otherwise be left as waste or burned by the landowner or that landowners have no other means to monetize. Tree-tops, limbs, crooked trees, diseased trees, understory, and byproducts of manufacturing are types of low-value wood that are transported to Enviva’s production facilities. Harvesting of forest-based wood is driven by adjacent industries who intend to use high-value wood in production. Enviva utilizes the harvested remnants, low-value wood, in biofuel production. In general, biomass is a low-value commodity that does not drive harvest decisions for landowners; however, it does create a profitable forestry market that financially incentivizes forest landowners to continue to grow more trees while deterring landowners from converting their property to non-forest use.

Enviva’s production facilities are solely based in the U.S. Southeast. The U.S. Southeast prides itself on being one of the largest and most sustainably-managed forest regions globally — providing roughly 20% of the world’s certified wood products. For every ton of wood harvested from the working forests of the U.S. Southeast, approximately 2 tons grow back each year.

Forests in the U.S. Southeast are mostly working forests and have been healthily managed to provide wood for construction, furniture and many other uses for centuries. Enviva augments the productivity of these working forests by taking the waste wood and turning it into a renewable energy product that is a drop-in solution to replace fossil fuels in electricity and heat generation.

The sustainable biomass industry joined this well-established forestry sector and stewardship culture in the U.S. Southeast a little more than a decade ago. Amongst the thousands of wood processing and manufacturing mills across the region, Enviva owns and operates 10 facilities that produce and export wood pellets. On average, less than 3% of the working forests in the U.S. Southeast are harvested each year, and of that sustainable biomass accounts for less than 3% of all wood fiber harvested; thus, less than 1% of annual harvests are converted into wood pellets used in renewable energy generation.

Enviva’s wood pellet plants, like all other wood manufacturing facilities, are purposefully located close to a stable supply of forest resources and adequate transportation infrastructure. Processing and manufacturing plants are also located in close proximity to each other due to the highly-integrated, and interdependent nature of wood fiber supply chains.

For biomass to be accepted by the UK and EU Member States, it must adhere to strict sustainability criteria that guarantees compliance with an extensive list of laws and best management practices (e.g. legality, regeneration, maintaining forest carbon stocks, protection of sensitive areas, minimization of biodiversity impacts; and ensuring long-term forest productivity) and that the carbon impacts of bioenergy are properly accounted for under the Land Use, Land Use-Change and Forestry (LULUCF) sector.

Compliance is independently verified during multiple checkpoints in the supply chain including by internationally recognized forestry certification programs that are independently audited.

For power generators to qualify for state subsidies for biomass, each shipment they accept must meet strict sustainability, efficiency and emissions criteria that are established by UK, EU and Member State laws. These shipments must arrive with this information verified by the producer and generator, which is also checked by the Member State regulators. In the U.S., producers must source wood in accordance with the U.S. federal environmental laws including the Clean Water Act and Endangered Species Act, which are considered some of the strongest in the world. Federal laws are also implemented at the state level by assisting forest owners with the use of Best Management Practices, which are enforced by state departments of forestry and apply across both public and private land.

We source our wood pursuant to our Responsible Sourcing Policy (RSP) – strict sourcing guidelines that hold Enviva to the highest standards of sustainability, integrity, forest stewardship, and continuous improvement. Our RSP framework highlights our commitment to forest stewardship at three scales of operation:

• First, at the tract level, we have strict standards for sustainable forest sourcing. These standards refer to the requirements for every tract from which we purchase wood.
• Second, throughout our supply chain, we make commitments to transparency, reporting, and verification.
• Third, through our “Pledges in Conservation Leadership” we work toward improving forest conditions and overcoming landscape-level challenges with help from our partners and stakeholders.

Providing transparent information about our wood supply is fundamental to our values of openness and integrity. Developed in 2016 and deployed in 2017, our industry-leading Track & Trace® (T&T®) technology has been our flagship platform for open communication and has proven mission critical in monitoring, tracking, and reporting exactly where all our wood is sourced. The Track & Trace program enables us to monitor and report our supply chain as wood travels by the truckload from the forest to the wood pellet production plant. This proprietary system equips our network with detailed insights into the origin of our feedstocks, which we routinely update and make available to the public on our website.

Enviva holds several independent forestry certifications to ensure we meet industry leading sustainability requirements across our sourcing regions. We maintain independent forestry certifications including the Sustainable Forestry Initiative® (SFI®) Fiber Sourcing Standard as well as the Forest Stewardship Council® (FSC®) Chain of Custody Standard, the Programme for the Endorsement of Forest Certification (PEFC) Chain of Custody Standard, and the SFI Chain of Custody Standard. Additionally, Enviva’s operations are fully certified by the Sustainable Biomass Program (SBP) Standard, which is a risk-based certification process designed to ensure that woody biomass used in industrial energy production is responsibly and sustainably sourced.

To help maintain a critically diverse forest landscape, we invest in conservation programs that make it possible for landowners to set aside their sensitive land rather than harvest. And by sourcing low-value wood, our operations actively enable landowners to maintain – even increase – landscape diversity by assisting with forest restoration. Our sourcing procedures include provisions for locating and avoiding potentially high conservation value (HCV) areas. We work collaboratively with local conservation partners to ensure that we understand and reflect their preferences – and the latest science – as we develop our sourcing procedures.

In addition, Enviva sponsors the Enviva Forest Conservation Fund (EFCF), launched in 2015, which is a $5 million, 10-year program co-sponsored by the U.S. Endowment for Forestry & Communities. The fund was designed to protect 35,000 acres, which equates to 14,164 hectares of sensitive bottomland forests in Southeast Virginia and North Carolina’s coastal plain. Each year, the Enviva Forest Conservation Fund awards matching-fund grants to nonprofit organizations to permanently protect ecologically sensitive areas and preserve working forests.

As recognized by groups like the UN Intergovernmental Panel on Climate Change (IPCC), sustainable biomass energy is part of an all-in solution to address global climate change by providing a low-carbon, renewable, cost-effective, dispatchable alternative to fossil fuel energy generation. When wood pellets are sourced from forests whose carbon stocks are stable or increasing, emissions at the point of combustion are completely offset by forest growth, qualifying wood pellets as a carbon-neutral energy resource. What remains are supply chain emissions from harvesting, processing, and transportation that characterize the lifecycle carbon footprint.

The fossil emissions along the wood pellet supply chain include feedstock harvest, feedstock transport, pellet processing, and pellet transport. The greenhouse gas emissions from shipping pellets across the ocean comprise only about a third of the supply chain emissions, because bulk shipping greatly enhances the efficiency of the trans-Atlantic journey. The emissions from electricity used in our manufacturing process – in the U.S. Southeast where the electric grid is especially coal-heavy – are the largest portion of our total supply chain emissions, at just over half of the total supply chain emissions. In total, the embodied emissions in wood pellets per unit of energy output are up to 94% lower than the embodied emissions from coal and up to 82% lower than from natural gas.

On February 17, 2021, we announced our goal of achieving net-zero greenhouse gas emissions from our operations by 2030. This commitment to climate action reinforces our core purpose to displace coal, grow more trees, and fight climate change. We set forth an ambitious plan for eliminating greenhouse gas emissions from our operations in keeping with international climate goals, including the Paris Agreement’s goal to limit global temperature rise to 1.5°C. In addition to reducing, eliminating or offsetting all of our direct emissions and sourcing entirely renewable energy by 2030, Enviva will continuously seek to optimize the environmental efficiency across our entire value chain, partnering with stakeholders both upstream and downstream. We will transparently report our progress on an annual basis.

Enviva is a values-driven company. We hold ourselves accountable to keeping promises, determination to make a difference, acting with integrity, and the qualities of openness, humility and respect. As a values-driven company, we care about people first, from our associates and partners to communities we live and operate in. Since our founding, Enviva has been unrelenting in our commitment to the health and safety of our teams; recruiting and nurturing top talent; working to build diversity and inclusion among our associates, partners, and stakeholders; and making a long-lasting, positive impact in the communities we call home.

Compiling, evaluating, and reporting on diversity and inclusion statistics is a critical component of a company’s corporate culture and identity. In the past, the manufacturing and timber industries in the U.S. Southeast have not been very diversified. Our own data guides us to the need to do more and to do better at inclusion and diversity within our company. With knowledge and understanding of the opportunities around diversity, Enviva has made a renewed commitment to enhancing equal opportunity and representation within the industry. We are listening, we are learning, and we are committed to continuous improvement. We will continue to develop plans that both increase the diversity of our workforce and leverage those differences to make Enviva a better company.

As we evolve, we will continue to work closely with our local communities and scientific experts, private forest landowners, conservation organizations, and a broad set of stakeholders to ensure our operations and wood sourcing have a positive impact on the local environment and surrounding communities. If we do everything right by our communities, our forests, our customers, and society, we believe we can generate long-term and dependable financial value for our communities and partners.

As manufacturing jobs in some industries have shifted overseas, Enviva brings high- paying, renewable energy jobs into rural markets that may not have seen positive economic development in decades. The forest products industry today is one of the largest economic engines in the rural U.S. South and is currently the primary source of economic development and job creation for the region. An impact analysis from the National Alliance of Forest Owners (NAFO) found that, including direct and indirect employment, forestry-related businesses support over 1.3 million jobs, $55 billion in payroll, and about $50 billion in GDP in the U.S. South.

The Board has three standing committees: an audit committee, a compensation committee, and a health, safety, sustainability and environmental committee (“HSSE committee”), each of which is chaired by an independent director. The HSSE committee assists the Board in fulfilling its oversight responsibilities with respect to the Board’s and EVA’s continuing commitment to (1) ensuring the safety of our employees and the public and assuring that our businesses and facilities are operated and maintained in a safe and environmentally sound manner, (2) sustainability, including sustainable forestry practices, (3) delivering environmental benefits to our customers, the forests from which we source our wood fiber, and the communities in which we operate, and (4) minimizing the impact of our operations on the environment. The HSSE committee reviews and oversees our health, safety, sustainability, and environmental policies, programs, issues, and initiatives, reviews associated risks that affect or could affect EVA, its employees, and the public, and ensures proper management of those risks and reports to the Board on health, safety, sustainability, and environmental matters affecting EVA, its employees, and the public.

Upon Enviva’s conversion to a corporation, from a master limited partnership, on December 31, 2021, we added a fourth standing committee: The Nominating and Corporate Governance Committee.

1. Enviva Rationale for Issuance

The Green Finance Framework connects Enviva’s renewable energy focused development plans with its funding and financial strategy. Instruments aligned with Enviva’s Green Finance Framework help fight climate change while funding job-creating initiatives that have meaningful economic impacts on local communities.

2. Enviva Green Finance Framework

Enviva’s Green Finance Framework will guide future issuances of Green Finance Instruments including green bonds, convertible bonds, and term loans by Enviva and its subsidiaries. Our Framework was developed in alignment with the Green Bond Principles (2021) as published by the International Capital Markets Association (“ICMA”) and the Green Loan Principles (2021) published by the Loan Market Association (LMA) and the Loan Syndications and Trading Association (LSTA). Should Enviva issue a green convertible bond, the Green Finance Framework is only valid for the instrument until the time of conversion from the bond to common stock. It uses the core components of the principles and key recommendations:

• Use of Proceeds
• Process for Project Evaluation and Selection
• Management of Proceeds
• Reporting
• External Review

4.1      Use of Proceeds

An amount equivalent to the net proceeds raised from the sale of any Green Finance Instrument aligned with this Framework will be utilized to finance and/or refinance, in whole or in part, one or more Eligible Projects across the Eligibility Criteria that follows. Enviva intends to allocate the net proceeds from any Green Finance Instrument toward Eligible Projects made between the 36 months prior to or 24 months after any such issuance. Enviva intends to disclose amounts refinanced vs. financed as part of its ongoing Reporting commitments. Eligible Projects may include research, development, acquisitions, and capital expenditures in initiatives aligned with the Eligibility Criteria.

Eligibility Criteria is defined by any of the following:

Enviva’s operations are focused on sustainable biofuel production, and so our products displace fossil fuels in energy generation processes.  As such, Green Eligible Projects exclude fossil fuel related expenditures.

4.2      Process for Project Evaluation and Selection

An ESG Committee that includes members of Enviva’s Executive, Business Development, Sustainability, and Finance teams will work closely with other strategic decision makers to assess and select Eligible Projects that are aligned with Enviva’s Green Finance Framework and its broader commitment to expanding biofuel renewable energy generation. Business Development will bring a prospective project to the attention of the ESG Committee, and the Sustainability and Finance teams will gather additional information to assess if projects align with the Eligibility Criteria outlined in the Use of Proceeds section, and finally the ESG Committee will evaluate the project’s alignment with the Eligibility Criteria and approve projects for inclusion.

Enviva has policies in place to monitor and manage environmental and social risks in its operations – all major investment decisions reflect these policies, and the ESG Committee will confirm alignment when identifying and approving Green Eligible Projects.

4.3      Management of Proceeds

The ESG Committee will track net proceeds from any Green Financing that are allocated toward Eligible Projects. The Finance team will be responsible for keeping an up-to-date account of issued net proceeds, eligible allocations, and unallocated proceeds, providing updates to the broader ESG Committee. Pending allocation, proceeds will be managed in-line with Enviva’s existing liquidity practices, which may include general corporate purposes, investment in cash or other liquid securities, or repayment of outstanding indebtedness. Payment of principal and interest on Enviva’s Green Financings will be made from the Company’s general account and not tied to the performance of any specific Eligible Project. In the unlikely case of divestment or if a project no longer meets the eligibility criteria listed above, Enviva will use reasonable efforts to reallocate the funds to other Eligible Projects during the term of the relevant instrument.

4.4      Reporting

Annually until full allocation of the net proceeds from any Green Finance Instrument, Enviva expects to publish information on our website that includes information on allocations and, where feasible, associated impacts.

The Green Finance Report is expected to include information on (i) amounts allocated to Eligible Green Projects broken out by refinanced and new projects (including specific developments where confidentiality permits), (ii) the amount of net proceeds pending allocation, and, where feasible, (iii) case studies with additional information on highlighted projects, and (iv) impact reporting as described below. The report will be accompanied by management attestation regarding the amount of net proceeds from any Green Financing that have been allocated toward Eligible Projects.

Impact reporting will focus on quantitative and / or qualitative assessments of the sustainability impacts of Enviva’s Green Eligible Projects, such as the amount of increased biofuel renewable energy production capacity, the amount of greenhouse gas emissions avoided as a result of Enviva facilities, and the amount of displaced coal (and / or other fossil fuels). Impact reporting will largely be based on expected impacts until new facilities become operational. Once operational, actual impacts will be reported. Enviva publicly shares information about the methodologies used to calculate environmental impacts, and Green Finance Reports will include relevant links to studies and calculations.

In addition to the identified positive environmental impacts, Enviva’s Green Eligible Projects create social benefits as well, and where feasible, Enviva may also include social impact reporting, such as the number of jobs created in rural communities.

4.5      External Review

Second Party Opinion

Enviva commissioned S&P Global to conduct an external review of its Green Finance Framework and to issue a Second Party Opinion (SPO) on the Framework’s alignment with the International Capital Market’s Association’s Green Bond Principles (2021). The SPO is now publicly available.

Verification

Upon full allocation of an amount equal to the net proceeds of each Green Financing, Enviva will obtain an assurance report reviewing and confirming the allocation of the offering to eligible expenditures from a qualified independent external reviewer.

5. Disclaimers

Industry and Market Data

This document has been prepared by Enviva and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although Enviva believes these third-party sources are reliable as of their respective dates, Enviva has not independently verified the accuracy or completeness of this information. Some data is also based on Enviva’s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above.

Cautionary Note Concerning Forward-Looking Statements

The information included herein and in any oral statements made in connection herewith include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included herein, regarding Enviva’s future financial performance, as well as Enviva’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used herein, including any oral statements made in connection herewith, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms, and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Enviva disclaims any duty to revise or update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date hereof. Enviva cautions you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Enviva.