CASE STUDY
Field due diligence helped to identify risks and opportunities along biochar production value chain
Objectives
Conduct preliminary due diligence on biomass sourcing and forest management practices.
Identify risks and opportunities along the biochar production value chain.
Evaluate social and environmental safeguards.
Advise on establishing a robust chain of custody system for sustainable biochar certification.
Results
Identified major traceability and sustainability gaps in the biomass supply chain.
Found that environmental and social risks are insufficiently integrated into the project expansion model.
Revealed the absence of monitoring mechanisms for measuring the long-term benefits and potential risks of biochar application.
Delivered actionable insights to enhance project design and strengthen risk mitigation measures for investors and stakeholders.
THE CASE
Client B was a multinational with a net zero target considering financing a biochar project in South America.
The project, a pioneering biochar initiative driven by a for-profit timber enterprise, has established two operational production facilities, with more in planning. The project addresses a critical environmental and health issue: sawmill waste traditionally incinerated, contributing to air pollution and community health hazards. The innovative conversion of this waste into biochar—distributed free to local communities—adds environmental and social value, while also creating employment.
The client approached Xilva to perform preliminary field due diligence on the biomass supply chain of the biochar project, to enable an off-take agreement and unlock future financing.
WHAT XILVA GRADE UNCOVERED
Despite initial sustainability claims, Xilva’s GRADE framework identified several critical gaps:
Traceability Failure: No auditable system exists to confirm that biomass used in biochar production is sustainably sourced—creating a disconnect between forest management certification and the final product.
Expansion Risks: The project lacks adequate consideration of environmental and social impacts associated with scaling—particularly around feedstock supply sustainability and land use conflict.
Unmonitored Benefits: No protocols were in place to measure co-benefits or ensure long-term impact, posing a risk to project credibility and community engagement.
HOW WE DID IT
Using Xilva GRADE’s comprehensive due diligence approach:
Supply Chain Mapping: Traced the journey of biomass from forest units to biochar factories, involving site visits and interviews with key stakeholders (communities, sawmills, foresters, authorities).
Data Triangulation: Cross-checked biochar production needs with regional forest capacity and sawmill outputs via reports, field visits, and literature.
Stakeholder Engagement: Assessed local awareness and perceived benefits through community discussions and off-taker interviews.
Impact Review: Investigated experimental fields and examined the lack of monitoring protocols to evaluate biochar's agricultural benefits.
WHY IT IS IMPORTANT
For the client, the absence of a robust custody system poses reputational and compliance risks. Without proof of sustainable sourcing, the project could be linked to illegal practices or unsustainable harvesting—undermining credibility and derailing potential offtake agreements.
For the project, the findings represent an opportunity—to build a stronger, more resilient design. By identifying weaknesses early, the client can implement safeguards that not only mitigate risk but also enhance attractiveness to investors through greater transparency and impact assurance.
NEXT STEPS: STRENTHENING IMPACT THROUGH DUE DILIGENCE
Xilva doesn’t stop at identifying issues. We provide development-focused recommendations to address each risk. Our ongoing role includes:
Providing guidance on the creation of a traceable chain of custody for sustainable biomass.
Helping embed environmental and social safeguards into project expansion plans.
Advising on co-benefit measurement protocols to ensure lasting community and environmental impact.
Translating risk mitigation strategies into contractual milestones, aligning stakeholders around delivery and accountability.
By transforming red flags into actionable steps, Xilva enables our clients to evolve promising concepts into credible, investable, and high-impact nature-based solutions.
Learn more about Xilva GRADE, the framework and methodology. Contact us for a free consultation today.