Social and Environmental Report

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Social and Environmental Report Capa BSESP+INGOK12/6/0612:20pmPage1 www.petrobras.com.br “The best of Brazil is the brazilian people”, according Câmara Cascudo | 5 0 0 2 t r o p e R l a t n e m n o r i v n E d n a l a i c o S social and environmental report social andenvironmental 2005 2005 SUMMARYSUMMARY PETROBRAS 6 The Petrobras System and Vision for 2015 9 The 2005 Performance and Indicator Table SOCIAL AND ENVIRONMENTAL REPORT 18 Methodology, criteria and references 20 Petrobras and the Global Compact in 2005 HUMAN RIGHTS 26 PRINCIPLE 1 | Companies should support and respect the protection of internationally proclaimed human rights 49 PRINCIPLE 2 | Companies should ensure that they are not complicit in human rights abuses. L ABOR 54 Human Resources Policy 68 PRINCIPLE 3 | Companies should uphold the freedom of association and the effective recognition of the right to collective bargaining 71 PRINCIPLE 4 | Companies should support the elimination of all forms of forced and compulsory labor 72 PRINCIPLE 5 | Companies should support the effective abolition of child labor 75 PRINCIPLE 6 | Companies must eliminate all discrimination in respect of employment and occupation ENVIRONMENT 82 PRINCIPLE 7 | Companies should support a precautionary approach to environmental challenges 87 PRINCIPLE 8 | Companies should undertake initiatives to promote greater environmental responsibility 105 PRINCIPLE 9 | Companies must encourage the development and diffusion of environmentally friendly technologies TRANSPARENCY 110 PRINCIPLE 10 | Companies should work against all forms of corruption, including extortion and bribery. 124 Social Report –Ibase Model 126 Awards 130 Indicator Matrix 154 The Petrobras System MESSAGE FROM THE PRESIDENT MESSAGE FROM THE PRESIDENT MESSAGEMESSAGE FROM FROM THE PRESIDENT THE PRESIDENT Self-sufficiency, development and citizenship It is a pleasure to present Petrobras Social and Environmental Report for 2005 at this special conjuncture for the budgets for the Petrobras Environmental Program and Brazilian people, namely the attainment of self-sufficiency in oil. This historic milestone has been accompanied by the Petrobras Cultural Program were also increased. the intensification of our initiatives in the area of Social and Environmental Responsibility, both in Brazil and in the In 2005, the Company signed a commitment with other countries in which we operate. Unicef (United Nations Children’s Fund) to develop In Brazil, we have worked hard to ensure an increase in the production of oil and gas, so as to reach the initiatives that promote the ensuring of rights for levels needed to achieve sustainable growth in the economy. In this way we have contributed to increasing children and adolescents, in countries in which productivity and improving the quality of life for the Brazilian people. At all times we have taken care to Petrobras operates in Latin America. maintain our commitment to the health and safety of our employees, the community and our customers, all It was a challenging year on the international front, the while zealously striving to preserve the environment. We believe that self-sufficiency is a step towards particularly in the sense of working towards making this promoting the development of Brazil with citizenship. process of socially responsible management – already In the wider picture of our global activities, what motivates us is the ongoing quest to improve the quality well advanced in Brazil – become increasingly present of life in the communities in which we operate. Our initiatives are in areas such as jobs creation, income in other countries where the Company operates. One of generation, combating poverty and hunger, guaranteeing the rights of children and adolescents, the the most significant challenges was in Ecuador, where promotion of citizenship and equality in terms of race and gender, as well as preservation of the environment. Petrobras was called in to arbitrate in the face of protests made by various social movements about plans Our Social and Environmental Responsibility initiatives are part of Petrobras' business management and an to begin activities in Block 31, part of which is located in the Yasuni National Park, considered to be one uppermost concern in the Company’s relationship with all its stakeholders. In 2005, we consolidated the of the largest biomasses of biodiversity on the planet. As always in such situations, the Company worked operations of the Management Committee for Social and Environmental Responsibility, a decisive step in aligning to overcome this challenge, together with the Ecuadorian authorities and all the stakeholders involved, Petrobras with the principles of the UN Global Compact. Based on the responses to these questions, it is possible seeking to propose social initiatives, combined with improvements to the original exploration project for to map out an analysis of the gaps and opportunities for improvement of the Company's social initiatives. the area. Petrobras strives to make this stance its trademark in negotiations in all its areas of activity. The Thus, the Management Commitee for Social and Environmental Responsability has the important Company always seeks to align its Social and Environmental Responsibility policy with the public policy attribution of consolidating Petrobras’ positive results, identifying and indicating possibilities for advances at of the countries in which it is operating. It is in this way that Petrobras contributes to the development of the social and environmental field. In addition, the actions of this Management Committee are fundamental societies around the world. for imbuing these social values throughout the workforce, in a process that has been gradually built up Providing the energy sources that are indispensable for self-sufficiency and development available to the through a continous learning process. Brazilian people, Petrobras is proud to be participating in a new stage of the Country's history. Having I should also stress that we have maintained a strategy of growing investment. Approximately R$ 518 million reached this target, the next challenge is to consolidate the operations of the Company internationally, while was earmarked for social, environmental, cultural and sports sponsorship in 2005. Petrobras' Zero Hunger at the same time ensuring the preservation of our environmental heritage – which is one of our greatest Program was launched in 2003 and will have invested R$ 303 million by the end of 2006 in projects focused assets – as well as contributing to the inclusion of the less privileged into society, reducing social inequality on the education and professional training of youth and adults, on income generation, job creation and on and building an equitable global society that is fully aware of its rights. guaranteeing the rights of children and adolescents. In 2005, the Program sponsored 755 initiatives, which JOSÉ SERGIO GABRIELLI DE AZEVEDO included the passing on of approximately R$ 42 million to the Fund for Infants and Adolescents, the FIA. The President 2 P ETRO BRA S Social and Environmental Report 2005 P ETRO BRA S Social and Environmental Report 2005 3 petrobraspetrobras petrobras TODAY PETROBRAS IS THE 14TH LARGEST OIL COMPANY IN THE WORLD, ACCORDING TO THE RANKING OF P ETROLEUM INTELLIGENCE WEEKLY. FOUNDED IN OCTOBER 1953, THE COMPANY IS LEADER IN THE OIL, GAS AND ENERGY FI ELDS IN BRAZIL AND HAS A REMARKABLE POSITION IN SOUTH AMERICA. IT HAD IN 2005 AN HISTORICAL PERFORMANCE: A NET CONSOLIDATED PROFIT REACHING R$ 23.725 BILLION, A 13% GROWTH IN THE ANNUAL PRODUCTION OF OIL AND A RESERVOIR REPOSITION RATE OF 131%. THE STRATEGIC ACTIONS THAT WERE PUT INTO MOTION IN 2005 STRENGTHENED COMPANY TRUSTWORTHINESS AMONG SHAREHOLDERS AND INVESTORS – TOPPED WITH MOODY’S INVESTOR SERVICE RATING FOR THE COMPANY’S DEBT IN LOCAL CURRENCY, WHICH ALLOWED THE COMPANY TO ATTRACT NEW I NVESTORS. NOTABLY, AMONG OTHER IMPORTANT ACHIEVEMENTS WERE THE ACQUISITION OF ASSETS IN C OLOMB IA, PARAGUAY AND URUGUAY; ENTRANCE ONTO THE NORTH AMERICAN REFINERY MARKET; THE P URCHASE OF 96 NEW EXPLORATORY BLOCKS IN BRAZIL; AND THE SHARE SPLIT OPERATION. AS A RESULT P E TROBR AS PAPERS WERE THE MOST NEGOTIATED ON THE SAO PAULO STOCK MARKET IN 2005. P ETRO BRA S Social and Environmental Report 2005 5 Developed by Petrobras, petrobras DieselS500, with 75% less Petrobras System and Vision for 2015 sulfur content, already technological competence; the excellence and leadership in health, safety and supplies fleets conservation of the environment and an on-going quest for business leadership. Guided by these values, Petrobras conducts its daily routine with an emphasis of buses and on business ethics; leadership by example; an emphasis on integration and trucks in the large development of teamwork; focus on development and sustainability of competitive advantages; strict follow-up of results, with recognition and accountability for Brazilian metropolises. performance; and transparency in its relations to shareholders, employees, communities and other stakeholders. This corporate philosophy has contributed to the planned expansion of the Petrobras System. In 2005, production, profitability and investments hit historic records, as detailed in the Activities Report for the fiscal year. The consolidated net profit reached R$ 23.725 billion (B) (US$ 11.862 B) and oil production grew 13% in the year, an increase that did not compromise the reserves, since the Company has as reposition rate of 131%. That is to say that for each barrel produced, Petrobras adds
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