Sustainability Report 2013/2014
5 Message from management
6 BIOSEV 12 Awards 15 About this report 16 Engagement and materiality 19 Strategy and vision for the future 22 Competitive advantages
24 CORPORATE 27 Ethical behavior GOVERNANCE 30 Risk management
31 ECONOMIC 32 Operating performance PERFORMANCE 35 Financial performance 38 Capital market
39 SOCIAL 40 Relations with suppliers PERFORMANCE 43 Relations with the community 47 Clients and consumers
50 PERSONNEL 51 The workforce MANAGEMENT 53 Employee health 56 Compensation and benefits 57 Training and education
59 ENVIRONMENTAL 62 Resource consumption MANAGEMENT 65 Biodiversity 67 Emissions 68 Effluents and waste 71 GRI CONTEN INDEX
75 CORPORATE INFORMATION CONTENTS
3
BIOSEV SUSTAINABILITY REPORT 2013/2014
entrepreneurship within a changing structure that has decentralized operational MESSAGE FROM decision-making and made the organization more versatile, with fewer levels of hierarchy MANAGEMENT and optimized logistics. We have decided
GRI 1.1, 1.2 to maintain our investments in planting, treatments and industrial maintenance at the same levels as earlier crop years, which Evolution and sustainability sum up RUI CHAMMAS CEO will enable us to maintain projected targets. Biosev’s performance during the 2013/2014 crop year. We are a company anchored in Water is a strategic input in our operation. the concept of sustainability based on an In the crop year, we invested in water economic-social-environmental tripod, and recirculation technology, with a consequent we comprise part of an industry built on reduction of consumption. Projects for technology that is authentically national, maximum water exploitation are under sustainable and highly inclusive. In Brazil we have way, aiming to optimize volume intake, reduce processing losses and improve our Our raw material is sugarcane, which an established environmental indicators. consumes nothing other than carbon, and competitive oxygen and hydrogen and, in its productive platform, and After analysis of the outlook for our process, it is transformed into food, fuel we are going industry and assessing the economic and energy. It is a highly labor-intensive viability of our mills, we decided to put industry, which in recent years has been to prioritize the Jardest facility at Jardinópolis (SP) offering accelerated training for the increasing into hibernation, whose biological assets operation of sophisticated sowing and the yields have begun to be used by other units in reaping equipment equipped with GPS and the Ribeirão Preto region. To soften the autopilot systems. and operating social impact of this decision, we carried efficiency of this out the entire process carefully, engaging in Building on the inherent features of the dialogue with the municipal government business, we are moving forward in all structure, which and reabsorbing most of the employees at dimensions. This is Biosev’s first year is anchored in the other units. as a public company listed on the Stock economic-social- Exchange, in a process that has enabled This attitude reflects our belief that ours is us to raise R$ 700 million. Despite a very environmental an inclusive company. We have invested challenging cycle for the industry, we have tripod.” in training our employees and worked to developed significantly in economic terms. raise the sugarcane industry to another We reached our goal and crushed 30 million level. We are also providing more technical tons of sugarcane, the highest volume in knowledge for our suppliers through the the last three years, achieving revenues Mais Cana (More Cane) program. We of R$ 4.3 billion, 3% above the previous endeavor to maintain a relationship of open harvest. Cogeneration of energy for sale was dialogue with communities, and pay special 15% higher, exhibiting 28% growth in net attention to the Liga pela Paz (Promoting revenues for this product. For the next crop Peace) program, dedicated to stimulating year, our goal is to crush between 29 and non-violence, respect for differences and 31.5 million metric tons. solidarity among children and young people. We have set ourselves the challenge to We know that many challenges still lie achieve efficiency gains. We have drawn up ahead: we must enhance the full use of our a Business Plan for the 2014-2018 period assets, whether biological or industrial, and and making it our key objective to establish we are well aware our industry is in the a positive cash flow on a sustainable basis, midst of a process of transformation. And starting with the 2014/2015 crop year. To so it is that we remain committed to the do this, we have reorganized our operations sustainable development of our business into four agro-industrial clusters, seeking to and the creation of value for all of our develop a sense of ownership, of complete stakeholders.
5 BIOSEV SUSTAINABILITY REPORT 2013/2014
The company is the second largest processor of sugarcane in the world, and operates 11 industrial units located in the Southeast, Center-West and Northeast Regions of Brazil BIOSEV
6 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
MAIN PRODUCTS GRI 2.2
he second largest sugarcane processor in the world, Biosev’s origin dates from 2000 when the TLouis Dreyfus Commodities Group, the company’s controlling shareholder, acquired Usina Cresciumal. It operates with a main office in the city of São Paulo, 11 agro-industrial • Granulated sugar units distributed among four clusters • Refined sugar located in the Southeast, Center West • Liquid sugar (liquid sucrose and Northeast regions of Brazil, and a Sugar solution of high purity) terminal at the Port of Santos (SP). • Inverted sugar syrup (sucrose, GRI 2.1, 2.6 glucose and fructose solution) Managing 340,000 hectares of land • VHP sugar and with the capacity to crush • CG Sugar (controlled granulometry 36.4 million metric tons per year sucrose crystals) while generating 1,346 GWh of cogen from biomass, Biosev has a diversified portfolio of products • Hydrous alcohol (fuel with 94.5% purity) commercialized throughout • Anhydrous alcohol (fuel with 99.3% purity) Brazil and in 40 other countries. • Neutral or industrial alcohol It produces a variety of different Ethanol lines of sugar and ethanol, as well as powdered molasses, yeast and animal feed, which are sold to food, fuel distribution and commercial companies. In the domestic market, it sells sugar under the Estrela and Dumel brand names, with Estrela the market leader for granulated sugar • Generated from sugarcane bagasse in the Northeast Region, according to Nielsen data. All units are energy self-sufficient, and nine of them Energy produce cogeneration surplus that is sold. GRI 2.2, 2.3, 2.5, 2.7 The company closed the 2013/2014 crop year with 16,124 employees. For this period, net revenues totaled R$ 4.3 billion, cash flow in terms of EBITDA stood at R$ 1.1 billion • Dry yeast and gross profit came to R$ 560.4 • Molasses powder (energy supplement) GRI 2.8 million. • Molasses powder (MBS) Other products • Animal feed
7 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
PRESENCE OF BIOSEV GRI 2.3, 2.5
Biosev has annual Cresciumal – Leme (SP) processing capacity of Continental – Colômbia (SP) Vale do Rosário – Morro Agudo (SP) MB – Morro Agudo (SP) Santa Elisa – Sertãozinho (SP)
36.4 Jardest – Jardinópolis (SP) (in hibernation)
million Lagoa da Prata – Lagoa da Prata (MG) 1 tons of sugarcane Passa Tempo – Rio Brilhante (MS) Rio Brilhante – Rio Brilhante (MS) Maracaju – Maracaju (MS)
Estivas – Arez (RN)
Giasa – Pedra do Fogo (PB)
11
12
7 2 3 4 The company operates 5 6 8 9 10 1 11 agroindustrial units in three regions
of Brazil 1 Does not include the capacity of the Jardest unit, which was placed in hibernation during the 2013/2014 crop year
8
www.biosev.com 08009409199 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
PROFILE OF OPERATING UNITS 1
Capacity Processing Tankage Maximum of sugarcane Storage (‘000 cubic Energy Flexibility Unity (tons) (‘000 tons) meters) (MW) 2013/2014 Products
RIBEIRÃO PRETO AGRO-INDUSTRIAL CLUSTER
Santa Elisa (SEL) 6.1 million 90 126 58 55.6% ethanol Granulated sugar, liquid sugar, VHP SERTÃOZINHO (SP) and 53.9% sugar sugar, anhydrous alcohol, hydrous alcohol, neutral alcohol, energy, powdered molasses (MBS and energy supplement), animal supplement
Vale do Rosário (VRO) 6.5 million 80 120 97 46.3% ethanol VHP sugar, anhydrous alcohol, MORRO AGUDO (SP) and 57.8% sugar hydrous alcohol, energy
MB (UMB) 2.8 million 73 80 16 62.3% ethanol Granulated sugar, VHP sugar, anhydrous MORRO AGUDO (SP) and 51.2% sugar alcohol, hydrous alcohol, energy
Continental (CTN) 2.6 million 32 39 8 52.7% ethanol VHP sugar, hydrous alcohol COLÔMBIA (SP) and 59.3% sugar
Jaboticabal - 47 21 - - -
Jardest (JDT) - 22 40 - 60.9% ethanol - JARDINÓPOLIS (SP) 2 and 57.3% sugar
LEME/LAGOA DA PRATA AGRO-INDUSTRIAL CLUSTER
Cresciumal (LEM) 2.1 million 6 48 36 51% ethanol and Granulated sugar, anhydrous alcohol, LEME (SP) 63.9% sugar hydrous alcohol, energy, dry yeast
Lagoa da Prata (LPT) 3.2 million 77 87 85 84.1% ethanol Granulated sugar, VHP sugar, anhydrous LAGOA DA PRATA (MG) and 63.2% sugar alcohol, hydrous alcohol, energy
MATO GROSSO DO SUL AGRO-INDUSTRIAL CLUSTER
Passa Tempo (PST) 3.3 million 49 66 78 66% ethanol and Granulated sugar, anhydrous RIO BRILHANTE (MS) 49.7% sugar alcohol, hydrous alcohol
Rio Brilhante (RBR) 5.0 million 200 80 90 46.8% ethanol Anhydrous alcohol, hydrous RIO BRILHANTE (MS) and 66.1% sugar alcohol, energy
Maracaju (MAR) 1.8 million 29 46 12 46.5% ethanol Granulated sugar, hydrous alcohol MARACAJU (MS) and 60.6% sugar
NORTHEAST AGRO-INDUSTRIAL CLUSTER
Estivas (EST) 1.8 million 49 22 21 24.6% ethanol Granulated sugar, refined sugar, AREZ (RN) and 78% sugar VHP sugar, anhydrous alcohol, hydrous alcohol, energy
Giasa (GIA) 1.2 million - 54 30 100% ethanol Neutral alcohol, anhydrous alcohol, PEDRA DO FOGO (PB) hydrous alcohol, energy
1 Biosev chose to use current data, considering that this report was completed in December 2014 2 The Jardest unit was placed in hibernation in the 2013/2014 crop year, and because of this, the consolidated data for installed capacity do not include this plant. GRI 2.9, 3.10
9 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
The MB unit, in Morro Agudo (SP), has a processing capacity of
2.8 million tons of sugarcane
10 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
EUROPE Bulgaria Croatia Spain Georgia ASIA Greece Bangladesh Holland China Italy South Korea Lithuania Philippines Montenegro India Poland Indonesia DESTINATION Portugal Malaysia OF EXPORTS Romania Vietnam Russia Sri Lanka Turkey Uzbekistan
NORTH AMERICA Canada
MIDDLE EAST United Arab Emirates AFRICA Yemen South Africa Iran Algeria Israel Angola Jordan Benin Syria Cameroon Ivory Coast Egypt OCEANIA Gambia Australia Ghana Solomon Islands Products are Guinea sold in Brazil Liberia and about Madagascar Morocco Mauritania Nigeria Senegal Sierra Leone 40 Tanzania other Togo countries Zimbabwe
11 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
AWARDS
GRI 2.10
uring this fiscal year, Biosev received two recognitions, and four of its units received Dcertifications: CERTIFICATIONS • The 20 agribusiness companies that are the biggest employers: in 2013, Certification Scope Biosev was listed in the annual publication of Exame magazine, Bonsucro EU Production Santa Elisa: Bonsucro is a multi-stakeholder ranked in 12th place. Standard association created to reduce the environmental and social impacts of sugarcane production, based on a • Agroindustry Vision Award: in standard that incorporates a set of principles, criteria and indicators. The certification for ethanol (anhydrous, the 2013 edition of this award, hydrous, neutral) and sugar (granulated and VHP) the company was included in the encompasses the chain of custody, including industrial ranking of Biggest and Best in Sales units, our own, as well as leased plantations. In 2013, Operations. the certification was extended to include the port.
EPA and CARB Vale do Rosário, MB, Santa Elisa, Cresciumal and Giasa: Biosev is one of the few companies in this sector that produces ethanol fuel registered with the EPA’s RFS2 Program (Renewable Fuel Standard 2), for commercialization in the United States. The Vale do Rosário, MB, Santa Elisa, Cresciumal and Giasa plants have all been approved. For the state of California, the company is registered with the LCFS (Low Fuel Carbon Standard) Program of CARB (California Air Resources Board), for which the Vale do Rosário, MB, Santa Elisa and Cresciumal plants have been approved.
NBR ISO 9001:2008 Santa Elisa: Production and sale of sugar (granulated, liquid, inverted syrup), alcohol (anhydrous, hydrous, extra-neutral, refined, distilled alcoholic) and cogen. Biosev has an installed MB: Harvesting, loading, shipping of cane, production and sale of granulated sugar, anhydrous cogen capacity of alcohol, hydrous alcohol and cogen. Vale do Rosário: Production and sale of granulated sugar, anhydrous alcohol, hydrous alcohol and cogen.
NBR ISO 22000:2005 Santa Elisa: Production of sugar (liquid, inverted syrup MW and granulated) from intake of raw materials to shipment 532 of finished products; Production of granulated sugar from of energy intake of raw materials to shipment of finished products.
Kosher Certification Santa Elisa, MB and Vale do Rosário: Production of sugar and alcohol at these units meets the standards of the Jewish community.
12 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
KEY INDICATORS GRI 2.8
2011/2012 2012/2013 2013/2014 Var. 12/13 X 13/14 (%) FINANCIAL
Net revenues (R$ million) 3,402.9 4,152.2 4,267.5 2.8%
Gross profit (R$ million) 457.3 390.5 560.4 43.5%
Adjusted EBITDA (R$ million) 1,134.6 1,286.0 1,147.8 -10.7%
Adjusted EBITDA Margin 33.3% 31.0% 26.9% - 4.1 p,p,
Net income (R$ million) (279.5) (619.6) (1,466.8) -
Adjusted net debt (R$ million) 3,845 3,660 3,302 -9.8%
EQUITY
Total assets (R$ million) 9,717 9,737 9,529 - 2.1%
Net equity 2,471 2,457 1,529 - 37.8%
SHARES 1
No. of shares (Common Stock-ON) - - 206,810,613 -
Share price on March 31 (R$/share) - - 8.50 -
Market cap (R$ million) - - 1,758 -
Average daily trading volume (R$ ‘000) - - 472 -
OPERATIONAL
Crushing (‘000 metric tons) 27,514 29,533 30,009 1.6%
In-house 17,286 18,515 17,623 -4.8%
Third parties 10,228 11,018 12,386 12.4%
Use of installed capacity (%) 68.7% 73.8% 79.2% 1.6%
Production (‘000 metric tons of TRS Product) 2 3,636 3,860 3,767 -2.4
Sugar (‘000 metric tons) 1,963 2,136 1,723 -19.3%
Ethanol (‘000 cubic meters) 928 952 1,150 20.7%
Harvest mechanization 89% 93% 94.7% 1.7 p,p,
Cogen for sale (GWh) 571 619 712 15.0%
SOCIO-ENVIRONMENTAL
Total employees 15,322 16,450 16,124 -2.0%
Water consumption per ton of processed cane (m3/tc) 1.19 1.34 1.37 2.2%
Indirect energy consumption (GJ/tc) 3 ND 0.0033 0.0029 - 12.1%
1 Biosev shares began to be traded on Bovespa (São Paulo Securities Exchange) on April 19, 2013 | 2 TRS = Total Recoverable Sugar 3 tc = ton of cane
13 HIGHLIGHTS Going public with an IPO, starting to trade on the Novo OF 2013/2014 Mercado segment of the CROP YEAR BM&FBovespa
Increase of 2.8% in net revenues, which totaled R$ 4.3 billion
28% growth in net revenues from energy, which stood at 23.7 kWh/crushed ton R$ 358 million reduction in net adjusted debt
Crushing of 13.2% increase in Improved 30 million tons of the efficiency of utilization of sugarcane, the cogeneration, which capacity, which largest volume in reached 23.7 came to 79.2% the past three years kWh/crushed ton
Revision of the Business Plan, Restructuring of the units at Sale of the São Carlos resulting in the hibernation of the Jardest four agro-industrial clusters GRI 2.9 industrial unit’s biologi- unit, and reassignment of its biological cal asset and cessation assets to a nearby plant of its activities GRI 2.9
Investments of : R$ 13.6 million R$ 9.4 million R$ 417,000 in health and safety in environmental initiatives in the community
14 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
Ltda.; Bioenergia Finance International B.V.; Biosev Bioenergia S.A.; Biosev Terminais Portuários e Participações Ltda.; Biosev Passatempo Bioenergia S.A.; Crystalsev Comércio e Representações Ltda.; Sociedade Operadora Portuária de São Paulo Ltda.; Terminal de Exportação de Açucar do Guarujá Ltda. (Teag); Crystalsev Participações Ltda.; ABOUT THIS REPORT Crystalsev International S.A.; Crystalsev Fomento Ltda.; Crystalsev Serviços or the third year in a row, Biosev de Intermediação de Negócios Ltda.; is presenting its Sustainability Crystalsev Bioenergia Ltda.; Indumel – Report, aiming to preserve Indústria e Comércio de Melaço Ltda.; Ftransparency with its stakeholders and Agrícola e Comercial MB Ltda. GRI 3.8 regarding the principles and commitments that guide its business, Consolidated data on installed capacity and on its performance during the fiscal for 2013/2014 do not take the Jardest year. This report covers the 2013/2014 LEVELS OF Unit into account, which was put into crop year, encompassing the period APPLICATION hibernation during the harvest. Other from April 1, 2013 to March 31, 2014. Biosev declares that changes of information published in this report fulfills earlier reports are due to enhancements To prepare this document, the company the requirements of of methods for taking measurements, adopted the guidelines of the Global Level B for application such as atmospheric emissions, and are Reporting Initiative (GRI), version G3.1, of the GRI G3.1 referenced throughout the document. a global and multi-industry standard guidelines, having GRI 3.10, 3.11 that guides companies in the use of complied with the indicators and principles for reporting requisites indicated their activities. GRI 3.1 in the table below With 46 performance indicators, as for such purpose: opposed to 36 in the previous report, this document provides economic, C C+ B B+ A A+ environmental, social and industry Profile of G3.1 Covers all items: Covers all criteria The same information for 11 plants in operation 1.1; 2.1 to 2.10; listed for Level C, as required 3.1 to 3.8; 3.10 to plus: 1.2; 3.9, 3.13; 4.5 for level B during the 2013/2014 crop year, 3.12; 4.1 to 4.4; to 4.13; 4.16 to 4.17 located in the Southeast, Northeast 4.14 and 4.15 and Center-West regions of Brazil, and for its subsidiary, Biosev Bioenergy Disclosures on Not required Information on Form Form of S.A. The financial indicators follow Management of Management Management International Financial Reporting Approach for each indicator reported for each category indicator category Standards (IFRS), and have been audited by Deloitte Touche Tohmatsu. The Performance Covers a Covers a minimum Covers each indicators of G3.1 minimum of 10 of 20 performance essential G3 socio-environmental data are keyed & Performance performance indicators, including and industry to Brazilian labor standards and in indicators of indicators, at least one from supplement* sector supllement including at each one of the indicator with due ISO 9001, ISO 22000 and Bonsucro least one from following performance consideration of each one of areas: economic, the materiality certifications.GRI 3.6, 3.7, 3.9 external verificationBy external verificationBy external verificationBy the following environmental, principle in one performance human rights, labor of the following In addition to Biosev S.A. and its areas: social, practices, society, ways: a) by subsidiary, Biosev Bioenergia S.A., economic and product responsibility. including the environmental. indicator, or b) economic performance indicators by explaining include data for companies that are the reason for part of the group: Biosev Bioenergia the omission. International S.A.; Biosev Bioenergia *The industry supplement in its final version
15 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
ENGAGEMENT AND MATERIALITY GRI 3.5, 4.14, 4.15, 4.16
o determine the content of this report, the company carried out an indirect updating Tof significant issues raised in the 2011/2012 cycle when, with the help of specialized consultants, a survey was conducted of interests and expectations that stakeholders considered strategic. These stakeholders were identified on the basis of an analysis of both the impacts and influence they exercise on company business, together with an analysis of the repercussions of Biosev MOST SIGNIFICANT activities. They include suppliers of SUBJECTS GRI 4.17 sugarcane, clients, shareholders and 1st materiality Updating of materiality Related GRI Indicators investors, communities, municipal The workforce; Conditions of the workforce, LA7, LA8, HR5, LA1 governments, non-governmental Employee health; and freedom of association organizations working in the area of Freedom of association; company operations, as well as the press. Respect for union negotiation; Possible risk of occurrence Possible risk of occurrence HR6,HR7 The updating of issues involved of child labor and/or labor of child labor and/or consultation on the internal focal points equivalent to slavery; equivalent to slave labor relating most strongly to strategic in the supply chain stakeholders. The revision also takes Local community; Relationship with SO1, EC6, EC7, EC9 into account an analysis of matters Transfer of agricultural technology; neighboring and traditional communities. given priority status by companies and Local development institutions in the sector, and surveys Climate change; Climate change and impacts EC2 of the socio-environmental concerns on the sugar-energy sector of clients and financial institutions, Market presence; Corporate governance EC1, SO7 as expressed in their questionnaires, Economic-financial balance; websites, policies and relationship Corporate Governance; strategies. Healthy foods; Product quality and PR1, PR2, PR3, FP5, FP8 On the basis of this, Biosev made Labeling of products and services; responsibility adjustments and introduced the topic - Environmental impacts EN3 a EN7 of the business’ environmental impacts. of business EN8 a EN10 Senior company management validated (water use, energy EN11 a EN15 the most significant issues identified production, biodiversity, by this process. Not all indicators on emissions, effluents EN16 a EN24 and waste)
16 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
subjects considered significant have been included in this document, but Biosev is committed to publishing this information in its next report.
RELATIONSHIP ACTIONS Engagement activities with strategic stakeholders are one-time events, taking place at gatherings, business meetings, seminars and presentations of results, among other occasions, where changes are identified in the market and in operations that could have an impact.
• Shareholders and investors – Regular meetings, quarterly teleconferences to present earnings results, and participation in events where issues relating to operational and financial indicators are addressed. • Clients – Ongoing communication via the Sales and Quality departments, including pro-active technical visits. For retail brands (Estrela and Dumel), a 0800 telephone customer service number Activities with is provided. Topics of greatest company stakeholders meetings, involving subjects relevance include product quality, such as pay, health and safety, and commercial and logistical training and capacity building. matters. • Suppliers – In addition to • Communities, municipal one-time contacts organized governments, NGOs – A department by the Origination department, for Social Responsibility, Community there are annual gatherings Relations and Private Social held by factories or regional Investment has been established clusters where issues relating that engages in outreach through to production, yields and labor social projects undertaken jointly practices are taken up. with NGOs, municipal governments and community associations, and • The Press – Activities can also be reached by phone and involving economic, social e-mail at any time. Recurring issues and environmental issues are involve environmental protection, organized on a case-by-case preservation and education, basis by the Press Affairs Office employee training and social via mailings, press releases, development. responses to inquiries and scheduling of interviews with • Employees – Ongoing contact via executives. intranet, e-mail and departmental
17 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
PARTICIPATION IN COMMITMENTS GRI 4.12 INDUSTRY ASSOCIATIONS GRI 4.13 Biosev is a signatory of initiatives geared towards progress in the sustainable performance of its To defend the interests of the sugar- activities, notably: energy industry and help companies The Agro-Environmental Protocol to conduct their activities sustainably, – All company units located in the Biosev is a member of industry state of São Paulo are signatories of associations such as: this state government initiative aimed Unica – This is the largest organization at recognizing good environmental representing the sugar-energy industry. practices in the sugar-energy industry The company has a seat on the board, through a certificate of compliance and contributes to the development that is renewed annually. This of environmental projects such as the initiative was undertaken on the basis Green Ethanol Program, conceived to of an understanding between the encourage sustainable production of government, mills and suppliers of biofuels from sugarcane. sugarcane on the RFS2 (Renewable Fuel Standard 2) program of the U.S. Association of Producers of Bionergy Environmental Protection Agency of Mato Grosso do Sul (Biosul) – By (EPA), and the LCFS (Low Fuel participating in the organization, Carbon Standard) of the California Biosev endeavors to follow and support Air Resources Board (CARB), and also the development of the sugar-energy in response to the need to organize industry and its interactions with agricultural and industrial activities society. In addition, the association is so that they harmonize with the responsible for organizing technical environment, thereby minimizing committees whose job it is to come up their social and environmental impact. with solutions for this sector. The Santa Elisa, MB, Continental Sindalcool – Participation in the and Vale do Rosário units signed the Alcohol Production Industry Syndicate protocol in 2007, and the Leme unit, in of Paraíba. 2008. The company is registered with the LCFS Program of the California Siamig – This organization brings Air Resources Board (CARB) – an together the Association of Sugar- exceptional case for the state of Energy Industries of Minas Gerais, California. the Alcohol Manufacturing Industry Syndicate and the Sugar Industry Madeira Legal (Legal Wood) – Syndicate of the State of Minas Gerais. The Green Seal represents forest replacement, which is granted by It also sits on committees for the the Secretary of the Environment Hydrographic Basins of the Paraíba River, to companies that properly fulfill the Southern Coast and the Tributaries of Activities tree replacement targets at a volume the Upper São Francisco River. with company stakeholders equivalent to that of forest products or by-products sold, used or processed in the previous year. At Biosev units, eucalyptus wood is used for starting up and stoking industrial boilers. This practice has been implemented by the Santa Elisa, MB, Continental, Vale do Rosário and Leme units.
18 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
an increase at units in the use of installed capacity, maximizing the dilution of fixed production costs and product margins. To reduce costs, increase scale and PILLARS improve efficiency, the company seeks to STRATEGY AND With its focus on strengthen operations at clusters through production of the following actions: VISION FOR sugar, alcohol and cogen, the company has • Additional investment in the THE FUTURE defined key points mechanization of agricultural GRI 1.2 to ensure its activities, and agricultural, industrial leadership position and information technologies; iosev seeks to strengthen its in a model for profitable • Enhancement of the logistical position of leadership in the and sustainable structure (ports, terminals, Brazilian and international operations warehouses and transportation); Bsugar-alcohol industry profitably and sustainably, to create value for • Investment in technologies that all of its stakeholders. The company allow for greater flexibility and operates in a vertically integrated optimization of the production mix manner, participating in all stages of of sugar and ethanol, so as to ensure production from planting, harvesting balance with price fluctuations; and processing sugarcane, to storage, • Achieving better industrial and logistics and commercialization of a agricultural market performance range of products in the Brazilian and indicators; international markets. • Use of supplementary fuels, such as Asset organization at the agro-industrial sugarcane straw at industrial units clusters, a measure adopted during the with assets for cogen. 2013/2014 crop year, allows for gains of scale and cost cutting on sugarcane production, purchasing and logistics, GROWTH THROUGH ensuring efficient management of BROWNFIELDS AND economic performance and the creation COGENERATION of value for all stakeholders. Operations are supported by four strategic pillars: Growth involves expanding sugarcane processing capacity units, to maximize ASSET OPTIMIZATION the potential of their installed assets. Expansion projects (brownfields) adhere Asset optimization involves expanding to operating efficiency and logistical our own cane production and criteria to ensure significant gains in purchasing sugarcane from third parties. margin, yields and scale, in addition In its productive chain, as an incentive to boosting capacity for cogeneration to suppliers, the company operates the and cogen export, which must receive Projeto Mais Cana (More Cane Project), investments in technology. which seeks to foster partnerships among producers by offering a package of benefits including materials, technology transfer and credit lines, among other things, so as to bring about
19 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
GETTING THE MOST OUT OF PRODUCTS AND MARKETS Getting the most out of products and markets involves taking advantage of flexibility in the production mix of sugar and ethanol in their various forms, access to the international market, the company’s strong brands and extensive sales channels so as to ensure speed STRATEGIC CHANGES and flexibility in three dimensions: 1) the product and its quality; 2) the NEW OPERATING GRI 2.9 market for commercialization; and 3) STRUCTURE The 2013/2014 crop year was marked the right time to execute the operation. by major challenges, both in terms Furthermore, Biosev is getting ready of weather as well as macroeconomic for possible opportunities, such as: Ribeirão Preto conditions. To contend with these Cluster (RP): Santa Elisa (SP), MB (SP), circumstances, Biosev reorganized its • Exports of sugar and ethanol in the Vale do Rosário (SP) operating structure, with the creation medium- and long-terms, owing and Continental (SP) of four agro-industrial clusters and to liberalization in restrictions units a reduction in levels of hierarchy, on trade and imports that which has entailed a 20% currently restrict access to Mato Grosso do reduction in the number of Leme-Lagoa Sul (MS) Cluster: certain big markets; Cluster: Leme (SP) directors and managers. Rio Brilhante (MS), and Lagoa da Prata Passa Tempo (MS) and • Growth in the demand for (MG) units ethanol fuel in Brazil; Maracaju (MS) units • The current trend in a variety of countries to find renewable Northeast The premise for the reorganization was sources of energy that pollute less, (NE) Cluster: to increase the competitiveness of assets such as clean ethanol; Giasa (PB) and Estivas (RN) units already installed, and to boost yields • Growth in the demand for ethanol and operating efficiency. To consolidate for other purposes, such as this, Biosev undertook a detailed production of bioplastics, beverages analysis of the economic viability of its and industrial pharmaceuticals and plants, deciding to place the Jardest unit cosmetics. in Jardinópolis (SP) in hibernation. The biological assets of the unit have been maintained along with the supply of sugarcane for its partners, which will be used by other units in the Ribeirão Preto region in the 2014/2015 crop year, and will raise operating efficiency. The initial results for these measures were presented at the end of the GOALS harvest. Despite unfavorable weather Goal events during the period, which was Goal 2013/2014 Accomplished 2014/2015 marked by drought, the volume of Crushing of Cane (million tons) 28.7 - 30.1 30 29.0-31.5 crushing totaled 30 million metric tons, the largest volume in the past three years, while the rate of capacity use also TRS Cane (Kg/ton) 125.0 - 131.0 124.9 128.0-134.0 improved, reaching 79.2% – compared to 73.8% in the previous harvest. TRS Product (million tons)1 3.6 - 3.9 3.7 3.7-4.2
1 TRS = Total Recoverable Sugar
20 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
AGRICULTURAL PLANTING TECHNOLOGY INTELLIGENCE Since 2011, the company has adopted the practice of alternate planting, The key approach for the 2013/2014 with spacing between sugarcane rows crop year was to increase geared towards optimizing activities competitiveness of assets already and boosting production. With this installed, to introduce a new profile approach, two sugarcane rows are of varieties better suited to exploiting planted 90 centimeters apart, with a gap the potential of sucrose, with a lower to the next row measuring 1.6 meters. incidence of disease and improved GENETIC Traditional planting maintains a uniform yields and operating efficiency. IMPROVEMENT distance of 1.5 meters between each row. Variety could leverage To ensure improvements in processes As a result, the planted area goes from productivity, due to involving technology, Biosev maintains 6,700 to 8,000 linear meters per hectare, the genetic material it partnerships with institutions which allows for increased production in presents. For the next such as the Centro de Tecnologia the same area. harvest, Biosev should Canavieira (Center for Sugarcane obtain competitive Alternate planting uses equipment that Field Technology - CTC), Ridesa varieties from the operates on autopilot. For harvesting, Agro and the Instituto Agronômico market, deriving from this system has been implemented for Campinas (Campinas Institute of adequate treatment for 100% of the crop at the MS Cluster, and Agronomy - IAC). As an example a high-standard crop is being introduced at the Ribeirão Preto of their contributions, the CTC and that is disease-free. and Leme/Lagoa da Prata Clusters. At IAC run programs for enhancements the MS Cluster, mapping of the stools in various productive settings, and has already begun in preparation for the the performance of these varieties is next harvest. monitored at Biosev units. Autopilot allows for high quality planting Through a technical cooperation based on the parallel arrangement and agreement with these institutions, spacing of cane rows, resulting in better Biosev actively participates in new use of space. The cane rows are geo- crop development, providing technical referenced and stored for subsequent support and areas for planting in use in other agricultural operations, order to select the best performing which benefit directly from this. Leveling varieties. After the selection stage, and sowing, for example, is carried out the final materials are distributed to without harming or even pulling up the Biosev units based on their specific stools. And at harvest time, there is a characteristics, with a view to reduction in losses of raw materials and achieving their maximum productive stool trampling. potential. The principal objectives of autopilot are: 1) reduction of row trampling, avoiding a decline in yields in later harvests, and greater plantation longevity; ON-BOARD 2) reduced raw materials losses, because COMPUTER the harvester is centered on the crop All harvesters today row; are monitored from a distance through an 3) total use of the cultivated area because on-board computer, of the correct parallel arrangements and which results in uniform gaps between rows. higher productivity.
21 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
• Minimize the risk of insufficiency of raw materials and ensure higher quality for these inputs, since the company has access to technological resources that smaller companies and producers can only arrange with difficulty; • Share production and price risks with sugarcane suppliers. COMPETITIVE DISTINGUISHING Furthermore, the company’s agricultural CHARACTERISTICS activities are characterized by a high ADVANTAGES A set of attributes degree of mechanization – from planting that enables the (63.5%), to crop treatments (100%) n its nearly 15 years of history, company to and harvesting (84%), the result of Biosev has established distinguishing operate more investments that have brought about characteristics that contribute to competitively in the reductions in production costs and labor Iits growth. market, differentiating dependence. The level of mechanization it from competitors of the harvest itself, for example, stood at Strategic location – Biosev assets are and ensuring 94.7% at the close of the 13/14 crop year, divided among four clusters (São the sustainable growth 1.7 percentage points higher than the Paulo-South, São Paulo-North, Mato of its business 12/13 crop year. Grosso do Sul and the Northeast) strategically located in regions with High processing capacity – Biosev’s climate conditions favorable to the average monthly processing capacity production of sugarcane, which ensures is more than 3 million metric tons, mitigation of risks involving weather, which helps dilute fixed costs. In cash flow and logistical optimization. addition, with the high flexibility of the Dividing assets into clusters keyed to production mix at its units, it is possible proximity between company units also to adjust production in response to allows for gains of scale, optimizing market opportunities based on the inventory management and assignment margins for each product. Other of specialized labor, fine-tuning factors include the structure for storage, distribution of raw materials, reducing with an inventory capacity of 754,000 transportation costs and establishing metric tons of sugar and 829,000 cubic conditions that are more favorable for meters of ethanol – which makes it sugarcane acquisition, among other possible to control the supply of these benefits. products on the market, as well as the best moment for their sale – and a joint Operational, agricultural and industrial venture at the Guarujá Sugar Export efficiency – The company has a flexible Terminal (TEAG), which expedites and integrated production platform, getting production to foreign markets at which encompasses everything from competitive costs. sugarcane planting to retail sugar sales. At present, 10 of the 11 industrial units Products with added value and access exhibit ample production flexibility to profitable markets – In addition switching between sugar and ethanol, to VHP sugar (the raw product for which allows us to allocate production export) and ethanol fuel, Biosev also based on the most favorable market produces granulated sugar, GC sugar opportunities. Due to regional (sucrose crystals with controlled peculiarities, this model enables us to: granulometry), liquid sugar, inverted sugar syrup, refined sugar, industrial • Institute profit margins normally ethanol and neutral ethanol, which associated with the agricultural help to expand our client base. In the production of sugarcane;
22 BIOSEV SUSTAINABILITY REPORT 2013/2014 BIOSEV
domestic sugar market, products with their own brands – Estrela and Dumel – are commercialized. In the ethanol market, on the other hand, the company has been certified to sell its product in the United States. For energy cogeneration, it has purchase and sale contracts at attractive prices that enhance financial performance. Integration with the Louis Dreyfus Commodities Group – The Group has over 160 years of history operating in the global commodity and Brazil’s sugar-alcohol markets. In addition to being one of the company’s main clients, accounting Products with added for the purchase of a portion of value and access to the sugar sent to foreign markets, profitable markets INVESTMENTS the Group provides Biosev with Biosev has built a competitive platform of access to information about sugar assets over the past few years, the result of demand, which assists with sales a cycle of investment expansion executed policy planning the management of with the disciplined use of capital. Using financial and market risks. this platform as a point of departure, Growth capacity – Since 2000, Biosev will plan for growth based on Biosev has acquired 13 industrial increased yields and efficiency. In this units belonging to five groups, context, the company will keep up its with a presence in different regions investments in planting, treatments and of Brazil, which ensures a more industrial maintenance in keeping with advantageous position in an industry previous crop years, substantially cutting that is still quite fragmented. At back on investments in expansion. present, 11 units are in operation – INVESTMENTS Investment in the completed 2013/2014 São Carlos, in Jaboticabal (SP), was (R$ ‘000) crop year totaled R$ 1.2 billion, a 10.3% de-activated in 2012, and the Jardest drop in relation to the previous harvest. unit in Jardinópolis (SP) was put into 1,336 1,345 The key factor in reducing the amount hibernation in 2013. Acquisitions 1,206 of investment between these two periods added to the units’ organic growth was a cutback of expenditures for giving rise to the current status as expansion due to the completion of the largest overall competitor in the Passa Tempo (MS) cogeneration projects industry, according to the Anuário that entered into operation in May of da Cana 2012 (2012 Cane Yearbook), 2013. As a consequence, the company’s with a leap in industrial processing cogeneration capacity went from 973 capacity from 900,000 metric tons/ GWh in 2010, to the current 1,346 GWh. year in 2000, to 36.4 million metric tons/year, as of March 31, 2014. 2011/ 2012/ 2013/ 2012 2013 2014
INVESTMENTS (R$ MILLION)
2011/2012 2012/2013 2013/2014 Expansion 173 189 54 Operations 1,163 1,156 1,152 TOTAL 1,336 1,345 1,206
23 BIOSEV SUSTAINABILITY REPORT 2013/2014
Listed in the Novo Mercado of the São Paulo Stock Exchange (BM&FBovespa), the company has adopted differentiated practices and ensures equal rights for all of its shareholders
CORPORATE GOVERNANCE GOVERNANCE
24 BIOSEV SUSTAINABILITY REPORT 2013/2014 CORPORATE GOVERNANCE
ased on best governance practices, business is conducted by a Board of Directors and an Executive BBoard. The Company’s By-laws provide for a non-permanent Fiscal Council responsible for supervising administrative activities and analyzing financial statements. Currently, the company has not convened a Fiscal Council. GRI 4.1 The Board is responsible for overseeing and supervising of 30 and 50, and 55.5% over 50. The BOARD OF DIRECTORS company performance Chairman of the Board does not hold any management position at Biosev, The Company’s By-laws state that the but is an executive of the controlling Board of Directors, the company’s shareholder group. GRI 4.3, LA13, 4.2 highest governance body, is responsible for establishing policies and general Three committees work to support the business guidelines, including long- Board of Directors: GRI 4.1 term strategy, control and supervision Strategic Committee – It is responsible of company performance, oversight of for reviewing budget proposals and their management and general adherence to adjustments, the business plan, the risk rules and regulations. management policy, major investment Meetings of the Board occur at least once projects, plans for mergers and per quarter, for analysis of issues relating acquisitions, formation of joint ventures to economic, social and environmental and partnerships involving the company, performance. The Executive Board, its subsidiaries and affiliates. appointed by the Board of Directors, Audit Committee – It is incumbent on oversees risks incurred and compliance the committee to review the financial with internal rules, external laws and statements; to analyze the Policy for regulations, conducting business in a Transactions between Related Parties quest for better economic, environmental and suggest to Board of Directors and social performance. GRI 4.9 possible adjustments regarding The Board is made up of nine members, transactions; to review the proposed four of them independents and none of fees for contracting the independent them executives, elected by the General auditor and the compliance policies and Assembly, with concurrent terms of practices adopted by the company; to two years, with re-election permitted. analyze instances of fraud, and generally, The concept of independence is the to carry out any tasks that may be same as the one adopted by regulations assigned by the chairman of the Board of of BM&FBovespa’s Novo Mercado, Directors. whereby individuals are not supposed Human Resources Committee – It is to have any connection to the company, responsible for reviewing policies and although they may own stock. All are plans for compensation and benefits men, white, with 44.5% between the ages
25 BIOSEV SUSTAINABILITY REPORT 2013/2014 CORPORATE GOVERNANCE
of all employees, including managers, providers, quality, etc., as well as and for seeking information on market hearing suggestions and complaints. conditions for compensation and Subsequently, information is forwarded recommending modifications to the to management for analysis and the Board regarding these policies. implementation of suitable responses. In the 2013/2014 crop year, these EXECUTIVE BOARD commissions will not be convened at the Northeast and Santa Elisa units. Responsible for coordinating and supervising Company activities, the COMPENSATION GRI 4.5 Executive Board was made up of 16 ALIGNMENT members at the close of the 2013/2014 Variable compensation Remuneration policies for executive crop year, five of them Statutory of officers is tied to officers and members of the Board of Executive Board members. Of the 16 performance, Directors essentially aim to attract, directors, two (12.5%) are women. All sustainability motivate and retain highly skilled are white, 56.2% are between the ages of and business professionals with experience and ability 30 and 50, and 43.8% are over 50; 100% growth strategy to create and implement the strategies of the members of are between the ages of our business, generating value for of 30 and 50. Their term of office is our shareholders and promoting results, one year, and they have the experience based on sustainable growth over the necessary to manage Biosev and execute short, medium- and long-term. its strategy. GRI LA13 The total compensation of officers is composed of fixed and variable COMMUNICATION GRI 4.4 remuneration. The benchmark for analysis of values is market research The General Shareholders Meeting is carried out by independent consultants. the main communication channel to Variable remuneration is divided into enable shareholders to make decisions short-term (50%) and long-term (50%) about company affairs, whose priority compensation, encompassing the is the company’s economic-financial business’ performance and sustainable performance. Convened by the growth strategy. chairman of the Board of Directors, or by shareholders, it ordinarily occurs once To ensure alignment and consistency of a year, within four months following the long-term results, Biosev uses the variable close of the company’s fiscal year and, remuneration long-term deferred model, under extraordinary circumstances, with a grace period of four years for whenever it may be required for the sake total redemption of amounts (4 X 25%), of company interests. aligned with the business’ growth in each year of operation. The Investor Relations department also provides an indirect channel for communication with the CONFLICTS OF INTEREST GRI 4.6 Board of Directors, via e-mail and Biosev has adopted rules and practices to telephone, available through company identify and manage conflicts of interest communication channels. Shareholders as set forth in the Corporations Law, and and/or their representatives have in the regulations of BM&FBovespa’s access to the company’s administrative Novo Mercado. In addition, there is a committees. Policy for Transactions with Related Currently under review are the Parties, reviewed and approved by the functions of the Internal Employee Board of Directors in September of 2013, Commissions (CIC), created for the which establishes rules for executing purpose of resolving issues involving transactions of this nature in order to human resources, safety, service preserve and protect company interests.
26 BIOSEV SUSTAINABILITY REPORT 2013/2014 CORPORATE GOVERNANCE
ETHICAL BEHAVIOR
GRI 4.4, 4.8
o conduct business, Biosev bases itself on four values: commitment, Tentrepreneurship, humility and diversity. These are communicated to new employees through the company’s internal media (bulletin boards, intranet and the Conexão Cana - Cane Connection) radio program, as well through visual communication in the main office and the units.
Solid values for business sustainability
VALUES GRI 4.8
COMMITMENT ENTREPRENEURSHIP HUMILITY DIVERSITY We build relationships We are entrepreneurs. The cycle is not eternal. We respect each based on trust, through We make fast and We create and encourage individual. We respect consistent ethical personal clear decisions at the a culture of trust to a variety of approaches conduct. It satisfies us to boundaries of our generate growth and to solving problems and serve our partners well, to authority, drawing on stability in the long- honest communication develop as individuals and reasoned arguments term. We learn through between employees from to offer superior results to take calculated questioning and diverse regions, cultures for our shareholders. and controlled risks. constructive criticism. and activities, helping to We have an unshakeable Because our approach is Even though we may develop the communities determination to achieve brimming with energy recognize that a way of where we operate. excellence in everything and enthusiasm we doing things may be good, we do, respecting the law take initiatives and act we constantly strive to and the communities creatively. learn from each other and where we operate. to find better solutions.
27 BIOSEV SUSTAINABILITY REPORT 2013/2014 CORPORATE GOVERNANCE
CONDUCT With the aim of guiding its business in line with environmental, economic and social factors, Biosev has internal policies based on the following premises: • All accidents and losses suffered by employees, third parties, visitors, facilities and the environment can be prevented, and it is up to the company to take the necessary steps to mitigate them; • Every member of the company must be engaged in his or her respective activities in such a way as to inspire good practices and attitudes, assigning maximum priority to people’s safety and health, and to the environment; • Everyone must actively participate in safety programs, audits and inspections, and aspire to meet or surpass all standards and regulations applicable to safety, health and the environment; • To reduce the environmental impacts of activities, taking measures to prevent pollution and promote the sustainability of natural resources used; • To manufacture products competitively in accordance with standards for quality, food safety and the applicable legal requirements; • To monitor and promote continuous improvement in the Quality Management and Food Safety systems that are vital to the conduct of our business; • To foster quality relationships encouraging communication, participation and employee development.
The manufacturing of products to top quality and food safety standards
28 BIOSEV SUSTAINABILITY REPORT 2013/2014 CORPORATE GOVERNANCE
A Code of Conduct establishes FIGHTING CORRUPTION GRI SO3, SO4 principles and standards to guide Biosev does not tolerate anti- daily activities and the personal competitive practices or any practices deportment of management, involving corruption. In addition to members of the Board of Directors, being stated in the Code of Conduct, senior management and other this matter is addressed by preventive employees. The Code of Conduct mechanisms. and internal rules together constitute a fundamental part of company The Internal Audit includes a risk governance, and the Executive Board matrix to ensure that all verifiable establishes internal processes and COMMUNICATION processes and units are audited at least committees, assigning staff to ensure CHANNELS once every five years. In the 2013/2014 that they are upheld. During this crop year crop year, 100% of all business and Biosev expanded operating units were evaluated for This document establishes guidelines its communication risks of corruption. The result of for ethical conduct as well as channels, consolidating these audits is forwarded to the Louis standards, limitations and specific them into a single Dreyfus Group’s Executive Committee conditions aimed at preventing the 0800 number, (0800 and Audit Committee, which can risk of corruption. The text addresses 9409-199) to receive take steps to reduce or eliminate issues such as discrimination, moral suggestions, opinions, risks of corruption, as well as make or sexual harassment, occupational criticism and doubts improvements. GRI SO2 safety, conflicts of interest, child labor about the company. or labor analogous to slavery, and The focus is on issues The Internal Audit area also is indigenous issues. of health, consumer responsible for handling complaints of unethical behavior, including cases It is available on the company safety, employees of corruption, which are then assessed website, the Investor Relations and communities, the and can lead to disciplinary measures website, and on the intranet, while all environment, social and penalties for those involved, such as new employees are given the Code responsibility and clients. contract termination and/or dismissal. upon arrival to become familiar with It is an outsourced, In addition to receiving training in the issues it addresses. automated service operating from 8 a.m. to ethical questions upon joining the To receive complaints involving 8 p.m. Monday-Friday. company, when the Code of Conduct violations of the principles of the is presented, all regular employees are Code, the company operates the retrained annually on the subject when Ethics Hotline. All cases reported they come back from vacation. No cases are registered and brought before the of corruption were registered in this Audit Committee, which determines crop year. appropriate measures and possible penalties following analysis of the Internal Audit.
EMPLOYEES TRAINED IN THE CODE OF CONDUCT GRI SO3
2011/2012 2012/2013 2013/2014 NON-MANAGEMENT STAFF Number of employees trained 14,249 16,328 15,997 Percentage of all employees 94.68% 100% 100% MANAGEMENT STAFF Number of employees trained 1,483 121 127 Percentage of all employees 83.36% 100% 100%
29 BIOSEV SUSTAINABILITY REPORT 2013/2014 CORPORATE GOVERNANCE
UNDER CONTROL An integrated risk management system allows for monitoring of key factors that may have an impact on business performance and deciding on corrective and mitigating RISK MANAGEMENT actions.
GRI 1.2
iosev has developed an integrated prevent environmental degradation. management system to identify Sustainability committees monitor and monitor on an ongoing water consumption, atmospheric Bbasis the risk factors to which it is emissions, areas that are permanently exposed that can directly affect the protected as well as areas undergoing sustainability of the business. This restoration. For each one of these system determines the application of factors, measures are adopted to techniques for the analysis of issues/ reduce impacts. Initiatives include impacts for all company activities, and studies on ways to optimize the by cross-matching probability data with transportation of raw materials and outcome data (the risk matrix), as well products consumed. GRI 4.11 analyzing historical data and engaging The Department of Risk Management in discussions in multi-disciplinary and Compliance, under the committees, it is possible to assess the supervision of Financial management, impact of processes and products. calculates, measures, analyzes, In September 2013 the Board of mitigates and monitors exposure to Directors approved a Financial risk factors, allowing for corrective and Risk Management policy that action to be taken. The following establishes prudent parameters and programs support this process: a transparent orientation for all Nice Program – Seeks to guarantee company stakeholders. For example, reliability in the preparation of as an objective for the medium-term, financial statements and ensure it sets limits on leverage levels, with a compliance with the requirements maximum net debt 2.5 times adjusted of CVM Instruction No. 480, of EBITDA, and fixes the current liquidity December 7, 2009, applicable to index at a minimum of 1.1. It also sets all public companies traded on the minimum guidelines for debt structure, BM&FBovespa. currency exchange risk management and prices. The policy can be obtained Axia Project – The purpose of in the Download Folder on the Investor this project is to unify budgetary Relations website: www.biosev.com/ri management by redefining its processes and forecasting company When it comes to the environment, results, drawing on input from the company uses the precautionary operational departments and principle whereby, if there is a threat processing SAP/BPC data. of serious or irreversible damage, the lack of absolute scientific certainty shall not be invoked as grounds for moving forward with measures that are otherwise economically viable, to
30 BIOSEV SUSTAINABILITY REPORT 2013/2014
With the crushing of 30 million metric tons of sugarcane, the highest volume in recent years, the company registered 79% capacity utilization in its mills in the 2013/2014 crop year ECONOMIC PERFORMANCE
31 BIOSEV SUSTAINABILITY REPORT 2013/2014 ECONOMIC PERFORMANCE
OPERATING PERFORMANCE
rushing of sugarcane for the 2013/14 crop year came to 30 million metric tons, the highest Cvolume in the past three years. The portion of our own cane was 58.7%, compared to 62.7% in the previous harvest. This variation was due chiefly to the sale of the biological assets of the São Carlos plant, which took place in 2013, and involved the conversion of some 900,000 metric tons of our own cane into cane from third parties, with a consequent reduction in the percentage of our own cane. In addition, there was the impact of frost in Mato Grosso do Sul, which primarily affected our own cane fields, also helping to account for this mix. Biosev moved forward with improvements in its operating efficiency, and the capacity utilization Mechanized harvesting: 94.7% in our own areas rate went from 73.8% to 79.2% CRUSHING OF CANE between harvests. The highlight was the Ribeirão Preto cluster, where the 29,533 30,009 utilization rate was 87.4%. This result 27,514 reflects improved yields from our 79.2% 73.8% own sugarcane fields together with an 68.7% increase in the supply of cane from third parties. Mechanization of our own harvest reached 94.7% at the close of the 2013/2014 crop year, 1.7 percentage points above the 2012/2013 crop year, the result of investments made over 2011/ 2012/ 2013/ the past few years to increase the use of 2012 2013 2014 harvesting technology. Crushing (‘000 metric tons) Utilization ratio (%)
32 BIOSEV SUSTAINABILITY REPORT 2013/2014 ECONOMIC PERFORMANCE
PRODUCTIVITY Yields from sugarcane fields, as measured by Ton of Cane per Hectare (TCH), stayed in line with the 2012/2013 crop year, adding up to 71.0 t/ha in a performance heavily impacted by frosts occurring in the Mato Grosso do Sul Agroindustrial Cluster in the second quarter. The increase in yields from sugarcane fields in the Ribeirão Preto region helped to maintain TCH at base levels consolidated at the same volumes in the previous harvest, even with the occurrence of frosts. This performance is due chiefly to the use of planting technology with alternating double spaced rows and the development Efficiency of crop management adjusted to of operational capacity plantation age, varieties (types of cane) and harvest planning (for more information, see Agricultural METRIC TONS OF CANE TOTAL RECOVERABLE Intelligence). TCH went up by 6.6%, PER HECTARE (TCH) SUGAR – TRS (kg/ton) from 78.1 t/ha to 83.3 t/ha at the Ribeirão Preto Agroindustrial Cluster. 71.1 71.0 132.7 133.0 69.0 124.9 Total Recoverable Sugar (TRS) content declined 6.1% in relation to the 2012/2013 crop year, to 124.9 kg/t. This variation is mainly due to adverse weather conditions, particularly frost at the MS Cluster.
PRODUCTION
Production of TRS product stood at 2011/ 2012/ 2013/ 2011/ 2012/ 2013/ 3.7 million metric tons, a decline of 2012 2013 2014 2012 2013 2014 2.4% in relation to the 2012/2013 crop year, chiefly in response to the 6.1% SUGAR PRODUCTION ETHANOL PRODUCTION drop in cane TRS content. This decline (‘000 t) (‘000 m3) was partly offset by a 1.6% increase in crushing and an increase in the 2,136 1,150 efficiency of the industrial process. The 1,963 952 harvest mix was balanced, with 51% 1,723 928 assigned to sugar, compared to 61% in the previous harvest. This result reflects Biosev’s operational flexibility, which constitutes a major competitive advantage.
2011/ 2012/ 2013/ 2011/ 2012/ 2013/ 2012 2013 2014 2012 2013 2014
33 BIOSEV SUSTAINABILITY REPORT 2013/2014 ECONOMIC PERFORMANCE
Sustainable energy with cogeneration Sugarcane bagasse, which is the waste left over from the crushing process, powers Biosev’s 11 mills, which do not need to buy energy for their industrial process. At nine of these units, cogeneration technology produces more energy than needed to operate. Accordingly, they export this surplus to the National Interconnected System, which is responsible for the production and transmission of cogen all over Brazil. Cogeneration intended for sale went up 15.0% in the 2013/2014 crop year, totaling 712 GWh, the result of the greater availability of energy for sale, due to investments in additional export capacity at the Lagoa da Prata (LPT) plant, completed in July of 2012, and the Passa Tempo (PTP) plant, completed in May of 2013, and also due to the increase in yields at cogeneration units. Yields rose 13.2%, going from 21.0 kWh/t of crushed sugarcane to 23.7 kWh/t, as a result of Clean energy: 9 out of 11 the startup of new units equipped with plants are self-sufficient steam boilers with new technology. By ceasing to use fuels from non- COGENERATION renewable sources, such as oil, coal SURPLUS SOLD (GWH) and natural gas, Biosev is locking in a self-sustaining process that is 712 economical in financial terms and 619 environmentally friendly, since the 571 energy generated does not pollute. Another advantage is that cogeneration offers benefits to some of the regions where the company operates: when there is no rain and the hydroelectric plants face water shortages, the energy produced by Biosev supplies public energy needs. 2011/ 2012/ 2013/ 2012 2013 2014
34 BIOSEV SUSTAINABILITY REPORT 2013/2014 ECONOMIC PERFORMANCE
harvest is due to: (i) a greater volume NET REVENUES of co-generated energy because of the (R$ MILLION) startup of the Passa Tempo plant; (ii) additional cogeneration using biomass 4,268 purchased in the marketplace; (iii) 4,152 higher electricity prices on the spot 3,403 market, which reached the ceiling of FINANCIAL R$ 823/MWh. Other products – Revenues came to PERFORMANCE R$ 138 million, 141.5% more than the EC1, EC2 last harvest. These include earnings from dry yeast, powdered molasses, raw bagasse and hydrolyzed bagasse for NET REVENUES animal feed, among other things that 2011/ 2012/ 2013/ are booked under Other Products. et revenues for the 2013/2014 2012 2013 2014 crop year totaled R$ 4.3 billion, 2.8% above the figure for the NET REVENUES NET REVENUES N2012/2013 crop year. This performance BY PRODUCT BY MARKET is due to the increase in the volume of 2013/2014 CROP YEAR 2013/2014 CROP YEAR ethanol sales and revenues from cogen, which rose by 28% in comparison with the previous harvest. Sugar – Net revenues stood at R$ 2.2 billion, a drop of 7.7% in relation to the previous harvest. This decline is directly tied to the change in the mix, with production oriented more towards ethanol. The average price of Biosev Sugar 52.0% External 56.0% sugar for the 2013/2014 crop year was Ethanol 39.1% Domestic 44.0% 1.2% higher. The average appreciation Energy 5.7% of the dollar by roughly 8% offset the Others 3.2% decline of approximately 20% in average prices on the international market. Ethanol – Net revenues came to R$1.7 REVENUES REVENUES billion, an 11.1% increase in relation to BY TYPE OF SUGAR BY TYPE OF ETHANOL 2013/2014 CROP YEAR 2013/2014 CROP YEAR the 2012/2013 crop year. This increase is the result of the shift to ethanol production owing to higher profitability observed in the domestic market. Average prices rose by 6.7%, featuring a 9.9% gain in the domestic market. Demand for anhydrous ethanol in the domestic market that was about 10% greater also helped to boost revenues. VHP 75.2% Anhydrous 51.2% Energy – Cogeneration surplus sales net revenues came to R$ 243 million. Granulated 20.3% Hydrated 43.0% This 28% increase over the previous Refined 4.5% Neutral 5.8%
35 BIOSEV SUSTAINABILITY REPORT 2013/2014 ECONOMIC PERFORMANCE
CLIMATE IMPACT GRI EC2 Adverse weather events negatively affected Biosev’s results. The amount of the impact was estimated at R$ 328 million, before taxes, for the 2013/2014 crop year.
Severe frosts hit the state of Mato Grosso do Sul, where the company’s COST OF GOODS SOLD (COGS) sugarcane plantations that feed the three Total COGS of R$ 3.7 billion for the mills (Maracaju, Passa Tempo and Rio harvest was 1.5% lower than that Brilhante) that make up this agribusiness registered for 2012/2013. Excluding cluster are located. Temperatures dropped cash effects, an increase of 2.7% was below 0° C and impacted the growth of registered. The main factors with an the affected cane fields, with potential to impact on cost were the 3.5% rise reduce the grinding of industrial units in in raw materials, due to the greater the region. proportion of third-party cane, and a 14.3% reduction in expenditures The frost caused a reduction of 6.1% in on industrial inputs owing to the GROSS CASH PROFIT Total Recoverable Sugar content (TRS), (R$ MILLION) 20% drop in sugar production, with which ended the harvest at 124.9 kg/ton of cane crushed. concomitantly lower packaging costs. 1,848 1,600 1,641 GROSS PROFIT Gross cash profit totaled R$ 1.6 billion, a reduction of 11.2% in relation to the year before. This decline was the result of a 14% rise in the cash cost of goods sold (COGS), chiefly due to a 6.1% loss in the TRS content of sugarcane, primarily because of weather events during the 2011/ 2012/ 2013/ 2012 2013 2014 harvest.
EBITDA AND EBITDA EBITDA MARGIN
Adjusted EBITDA stood at R$ 1.1 1,286 billion, a 10.7% decline in relation 1,135 1,148 to the close of the previous crop year. Adjusted EBITDA margin was 26.9%, a drop of 4.1 p.p. Key factors contributing to this result were: (i) a 14.0% increase in the cash cost of 33.3% 31.3% Impact of changes goods sold (COGS); (ii) the positive 26.9% in weather assessed at impact of the provision for writing off assets and expenditures owing to organizational restructuring. Excluding resale effects, adjusted 2011/ 2012/ 2013/ R$ 2012 2013 2014 million EBITDA margin stood at 31.7% for 328 the 2013/2014 crop year, as opposed EBITDA (R$ million) chiefly due to the effect of frosts to 35.3% for the previous harvest. EBITDA margin
36 BIOSEV SUSTAINABILITY REPORT 2013/2014 ECONOMIC PERFORMANCE
Adjusted net debt registered a reduction of
HEDGE Biosev’s hedge policy is mainly designed to protect its future cash flow. As part 9.8% of this policy, the company makes compared to the use of hedge mechanisms through previous crop year futures contracts and other exchange rate derivatives, for sugar, ethanol and interest rates, including operations on derivatives markets in Brazil and abroad aimed at protecting results from some of the possible fluctuations in exchange rates, sugar and ethanol prices, as well as interest rates.
EARNINGS RESULT FOR THE FISCAL YEAR Income for the 2013/2014 crop year was a negative (-) R$ 1.5 billion. Apart from factors bearing on the gross profit and generation of cash flow, there was a negative impact from a provision DEBT GRI 2.8 of R$ 467 million, having to do with 31/3/2014 31/3/2013 Var. % a reduction of deferred income tax. Excluding the non-recurring effects Gross Debt (5,322) (5,222) 1.9% that accrued, income stood at (-)R$725 Short term (1,907) (1,254) 52.0% million, as compared to R$ 620 million Long term (3,415) (3,967) -13.9% posted in the previous crop year. Cash and financial investments 1,848 1,364 35.5% Net debt (3,474) (3,858) -10.0% DEBT Readily marketable inventories 172 198 -13.4% Adjusted net debt totaled R$ 3.3 billion, Adjusted net debt (3,302) (3,660) -9.8% 9.8% below the previous crop year. Key factors impacting this decline were: (i) the use of IPO resources in a R$ 700 million offering; (ii) amortization of advances for foreign currency DISTRIBUTION OF ADDED VALUE (DAV) GRI EC1 exchange contracts (ACCs) and other Composition of Added Value (R$/’000) 2011/2012 2012/2013 2013/2014 international financings, partially offset Direct Economic Value Generated (EVG) 3,974,627 4,995,067 4,912,511 by new funding; (iii) reduction in the need for working capital in the amount 1) Revenue 3,686,780 4,785,813 4,712,543 of R$ 171 million. 2) Value received in transfers 287,847 209,254 199,968 Of total indebtedness at the end of Economic Value Distributed (EVD) 3,974,627 4,995,067 4,912,511 the 2013/2014 crop year, about 70% 2) Operating Costs 2,669,576 3,769,756 4,069,085 represented US dollar loans and 3) Employees (salaries and benefits) 547,882 553,638 586,994 financings, of which 48.1% were 4) Suppliers of capital 850,563 641,920 -322,963 naturally protected (with hedges) by 4.1) Remuneration of third party capital 1,130,016 1,261,478 1,143,836 future export flows. 4.2) Remuneration of own capital -279,453 -619,558 -1,466,799 5) Government and society (taxes, -93,394 29,753 579,395 fees and contributions)
37 BIOSEV SUSTAINABILITY REPORT 2013/2014 ECONOMIC PERFORMANCE
PUT OPTIONS1 Biosev became a publicly traded company on April 16, 2013, when 46,666,667 common shares were issued on the Brazilian Stock Exchange (BM&FBovespa) and R$ 700 million were raised in an IPO. In the same offering, 37,406,609 put options were acquired by certain shareholders, at a price of R$ 0.25 CAPITAL MARKET per option. The holders of such put options had the right to exercise iosev launched its IPO in them against Hédera Investimentos April 2013, when its shares e Participações (subsidiary of the were listed on the São Paulo controlling shareholder LDCH Group) BStock Exchange’s Novo Mercado on July 21, 2014, at a strike price segment under ticker symbol of R$ 16.57 per option. On July 21, BSEV3. 2014, 37,402,763 put options were The shares are part of the exercised, representing 99,9% of Differentiated Corporate the outstanding put options. GRI 2.6 Governance (IGC) index, that consists of companies quoted on the Novo Mercado (IGCNM) and which 1 Note: In view of the fact this Report, exceptionally, was completed and published in December 2014, and because this is information offer tag-along rights (Itag) – a that is important to the market, Biosev decided to update the topic mechanism by which, in the event of as the facts occurred. transfer of control of the company, minority shareholders are granted SHAREHOLDER COMPOSITION AS AT 31/3/2014 the same rights as the controlling Number Shareholding shareholders. Shareholder of shares stake The initial public offering (IPO) Sugar Holding B.V. 103,126,446 49.87% comprised 46,666,667 common NL Participações Holdings 2 B.V. 8,919,302 4.31% shares and 37,406,609 put options. NL Participações Holdings 4 B.V. 8,919,302 4.31% The exercise date of the put options Hédera Investimentos e Participações Ltda. 37,402,763 18.09% is July 21, 2014; they have an Santelisa Participações S.A. 12,094,232 5.85% exercise price of R$ 16.57 per share, with the counterparty being the Others 36,348,568 17.58% controlling shareholder, the Louis TOTAL 206,810,613 100.00% Dreyfus Commodities Group. Since its listing, the average daily trading volume of BSEV3 is R$ 427,000. BSEV3 VS. IBOVESPA The chart to the right shows the company’s share price performance IBOV BSEV3 since the IPO, up to the end of the 20% crop year: 10%
0 50,414 -6.5% -10
-20%
-30% -33.9% -40% 8.50
-50% Apr/13 May/13 Jun/13 Jul/13 Ago/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14
38 BIOSEV SUSTAINABILITY REPORT 2013/2014
Biosev’s relationship with its sugarcane suppliers, customers, communities in the areas where it operates and society in general, is characterized by commitment to sustainable development. SOCIAL PERFORMANCE
39 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
RELATIONS WITH SUPPLIERS
strong link in Biosev’s value chain, sugarcane suppliers account for approximately A40% of the raw material processed by the company. As part of its strategy of generating sustained value, the company seeks to build solid, ethical and transparent relationships with its suppliers, and encourages the adoption of good practices.
MAIS CANA (MORE CANE) PROGRAM Mais Cana (more cane) In order to strengthen this relationship, Program: initiative that seeks to promote greater the company has created the Mais Cana synergy with suppliers plant other crops between sugarcane Program, which consists of a series intercrop period, providing additional of tools and that seeks to promote income during the period. For the greater synergy and loyalty on the part company, this represents a saving of of suppliers, as well as agricultural resources in the preparing of soil for partners. Focused on boosting yields sugarcane planting, since the supplier and reducing costs, the program brings conducts the preparation after reaping benefits for Biosev, suppliers and the cereal during the intercrop period. partners alike, and is applied at all the In addition to this, crop rotation operating units. The initiatives comprise leaves various nutrients in the soil that the following:GRI EC9 are subsequently consumed by the sugarcane. The passing-on of land area for the planting of sugarcane: Biosev’s land Sale of the company’s farms: Biosev is passed on to partners and suppliers prioritizes the offering of its own land based on criteria such as production for sale to potential suppliers who capacity and efficiency. The objective are thus able to add additional new is to achieve cost reductions both for sugarcane sales volume. This tool has the supplier as well as the company, enabled the company to obtain an increasing yields and encouraging additional 1.3 million metric tons of loyalty in the supply of new sugarcane sugarcane in the last five years. During sales volume. the 2013/2014 crop year, 1,755.92 hectares were sold, as part of a strategy Passing-on of areas for the plantation of maximizing the use of assets and of cereals: Biosev passes on areas of reducing bank debt. land so that selected suppliers can
40 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
Advantages of more animal feed
Biosev has increased its animal feed production capacity by 70%, with the inauguration of its third animal feed plant, annexed to the plant at Lagoa da Prata (MG). With production based on by-products – principally sugarcane bagasse, molasses and yeast – animal feed enables Biosev to create a differential in negotiating and encouraging loyalty on the part of producers who also raise cattle, as well as offering a more economic and efficient option for animal breeders. R$ 5.3 million have been invested in the plant, which has a production capacity of 35,000 metric tons of animal feed, raising Biosev’s total production to Animal nutrition: a 85,000 metric tons a year. The company differential in encouraging also has animal feed plants annexed loyalty on the part of Purchase of ICMS credits: Biosev rural producers to the Vale do Rosário and MB plants, acquires ICMS credits from suppliers both located in Morro Agudo (SP). in the state of São Paulo, comprising According to Regina Margarido, balances referring to the purchase of Biosev’s zootech manager, the gain in inputs and diesel. For the 2013/14 crop animal weight amounts to an average of year, R$ 1.3 billion in ICMS credits 1.6 kg per day, with the price of animal were purchased. feed per ton being approximately Planting: replenishment and renewal of R$ 100 less than normal animal feed. the suppliers’ and partners’ sugarcane As 80% of the feed is manufactured fields is encouraged through the from by-products resulting from the granting of credit, or providing funds extraction of sugar and the production in advance for the purchase of inputs of sugarcane alcohol, its production and sugarcane seedlings. The payment cost is lower, and this is saving is passed period is spread over three crop years. on to the animal breeders. Sugarcane saplings: Biosev has a The principal gain in the use of animal number of nurseries for the production feed based on sugarcane bagasse is cost of seedlings, reproducing new reduction. Producers do not need to sugarcane varieties both for its own use, produce fodder for their animals, which as well as its suppliers, to whom special eliminates the cost of the installation sales conditions are offered. and maintenance of silos, as well as the labor necessary to operate this Credit: Advance funding for the equipment. It also allows agricultural purchase of sugarcane, agricultural land to be freed up for other more partnerships and the purchase of profitable crops, such as sugarcane.
41 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
SELECTION GRI HR2, HR6, HR7 Buying decisions and the selection of suppliers take into consideration economic and qualitative factors, as well as legal compliance. The main items assessed from a legal compliance perspective are those related to the risk of occurrence of child labor or labor that is forced or analogous to slavery. To this end, 100% of contracts carry human rights clauses, which express the repudiation of these practices and make provision for contract cancellation in the event of their occurrence. The planting and manual sugarcane stumps. In addition to harvesting operations are susceptible to encouraging supplier loyalty, the aim is this risk, but there were no cases of this to create new partnerships and invest nature identified during the harvest, the quality of the sugarcane fields. when audits were carried out of those Technology transfer: A series of sugarcane suppliers considered material technical seminars promotes the to the company. integration and transfer of technology In addition to the clause present in to partners and sugarcane suppliers. the contracts signed by suppliers, the Themes are chosen that have the company is striving to mechanize the greatest relevance to the ongoing largest possible number of operations. harvest. For the period covered by For the 2013/2014 crop year, 94.7% this report, topics were covered such of the harvest was mechanized. This as pest control, plant nutrition, the measure aims to achieve greater application of crop defense products, efficiency and create a more satisfactory mechanization of the sector, and market and specialized working environment, initiatives. thus minimizing risks of child or forced Purchase of agricultural inputs – labor. A pamphlet was also distributed in partnership with Coopercitrus, to suppliers carrying guidelines on good Biosev buys crop defense products and labor practices. This material is available fertilizers more cheaply, due to the large for consultation on the Internet (http:// scale of its purchases, selling these to www.biosev.com.br/cartilha/). suppliers and passing on the discount obtained. 1 Feed for livestock breeding: The HUMAN RIGHTS ASPECTS COVERED IN CONTRACTS GRI HR2 animal feed produced at three of the 2010/2011 2011/2012 2012/2013 2013/2014 company’s units is supplied at cost price Total number of suppliers and 1,286 2,337 8,024 3,856 to business partners and sugarcane other partners in the business suppliers. This measure helps to Number of contracts with 1,710 4,149 5.587 6,816 reduce production costs; assists in the human rights clauses 2 diversification and optimization of the Number of audits and inspections 158 241 151 2 property and in the providing of food with human rights criteria during periods of drought. Suppliers Contracts with human 100% 93.38% 100% 100% have the right to a quota of 1% of the rights clauses sugarcane sales volume delivered at the CONTRACTS REFUSED 0% 0% 0% 0% previous harvest. 1 includes suppliers of sugarcane and other supplies 2 the same supplier may have more than one contract
42 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
RELATIONS WITH THE COMMUNITY GRI SO1
Operating in one of the most inclusive business segments in Brazil, capable of generating jobs in the countryside in regions under development a long way from major cities, Biosev seeks to ensure sustainability by prioritizing its relationship with the community. It operates on the premise of following and complying with legislation, technical standards and good practices, which results in the company having a very organized management. Biosev has a department — Corporate Social Responsibility — especially dedicated to building closer ties with the populations near its units, which manages both this relationship as well as social investments. In this way, there is an active connection with public bodies from all three spheres, associations and NGOs, with open dialogue channels via e-mail and a toll-free number 0800-9409-199. To this end, in September 2013 the 0800 toll-free number, previously available only to Estrela consumers, also became a contact channel for other matters, such as suggestions, opinions, criticisms and queries with respect to health, safety, the environment, and corporate social responsibility at the company’s plants. Emphasis on education in Interface with municipal authorities community relationships in the municipalities where the units are based usually takes place
43 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
through the environmental and social development secretarial departments. While through sector and class associations such as Siamig- MG, Biosul-MS, Sindálcool-PB and Unica, the company defines priority areas for investment. Frequently these associations seek to form partnerships or programs with major significance or influence in the sugar-energy sector, such as environmental education and the qualification and technical training of labor as a consequence of the phasing out of jobs due to mechanization in the field. MANAGEMENT OF IMPACTS
Significant socio-environmental Potential or real impacts Mitigating actions aspects for the communities close Degradation of Permanent Seedling nursery to the company’s operational units Preservation Areas were among the main concerns APProximar program (Estivas and Giasa) for the public audiences that have Plan for the recuperation of degraded areas the closest relationship with the Mata da Bela (Estivas) department during the harvest. ASF environmental education program (Lagoa da Prata) For the period covered by this report, the themes of recycling, Air pollution resulting from the Agro-Environmental Protocol – Green Ethanol Certification burning of sugarcane and bagasse Brazilian biomes, soil and water Investment in gas scrubbing systems conservation and the donation of seedlings have been covered, with Soil contamination Residue centers (Corporate) the communities neighboring the Integrated Management of Solid Residues (Corporate) units in Lagoa da Prata, Estivas, APProximar program (Estivas and Giasa) Giasa, Maracaju, Passa Tempo and Clean town program – municipal authority of Colômbia Ribeirão Preto. and Coopercolombia recycling co-operative (Continental) All the social responsibility Training and educational campaigns (Corporate) projects are related to the Recycling station (Santa Elisa) company’s social, economic and environmental impacts. Contamination and excessive Investment in: consumption of water In the table below are shown ETE - Sewage-Treatment Plants the potential and real impacts ETA – Water Treatment Plants identified that are related to projects invested in, with a view to ETAR – Treatment Plants for the Reuse of Water mitigating them: Decanting plant for soot and grime Cooling towers
Reduction in the hiring of laborers APProximar program (Estivas and Giasa) as a result of mechanization
Overloading of public Vaccination campaigns municipal health system Training and internal campaigns for disease prevention Occupational health structure, with doctors and nurses in the workplace Health and dental plans offered to all employees
44 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
LIGA PELA PAZ (PROMOTING PEACE) PROGRAM In 2013, Biosev completed the fourth year of its Liga pela Paz (Promoting Peace) Program, created by the Inteligência Relacional (Relational Intelligence) non-governmental organization. Developed in partnership with the education PROGRESS SEEN IN LIGA PELA PAZ PROGRAM departments of the municipalities 12,164 525 13 where the company has its units, 12 8,237 the project has the objective of 10 10 encouraging a culture of peace, 7,283 376 386 respect for differences, non-violence, understanding, compassion and solidarity among pupils in elementary 3,041 143 schools, through the distribution of material to students in the public education network of these Pupils Educators Municipalities municipalities. The material consists 2011 2012 2013 2014 of CDs with songs, digital books, orientation guides, training videos, as well as tools for continuous training, and the evaluation of results, among EVALUATION OF SOCIAL AND EMOTIONAL SKILLS GENERAL AVERAGE other aspects. 81.9% The Liga pela Paz Education System 76.3% 67.9% 66.6% 64.7% also employs an evaluation process, 58.8% which measures the development of the behavioral skills of pupils from the perception of class teachers. In this evaluation process, a “before” test is applied at the beginning of the year, with a subsequent comparison “after” 2011 2012 2013 test at the end of the educational year. Data from each application is Before test After test measured and compared, as well as the child’s development of general social skills, empathy, assertiveness, self- LIGA PELA PAZ PROGRAM control and level of participation. Municipality No. of schools No. of educators No. of pupils Having shown a significant improvement in 2011 and 2012 – Colômbia/SP 3 14 239 learning to deal with emotions and Jardinópolis/SP 9 64 1,306 improvement in the ability to live Morro Agudo/SP 6 56 1,189 alongside colleagues, teachers and Viradouro/SP 3 24 615 families – in 2013 the results of the Lagoa da Prata/MG 6 37 730 evaluation process were also excellent: pupils showed themselves better Rio Brilhante/MS 6 40 874 able to identify, understand and deal Maracaju/MS 9 62 1,484 with their emotions, building a more Arez/RN 2 15 366 harmonious relationships in a quest Goianinha/RN 1 9 200 for peaceful living. Pedras de Fogo/PB 16 65 1,234 TOTAL 61 386 8,237
45 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
Acervo Museu Nacional do Açúcar e do Álcool APPROXIMAR PROGRAM Created in 2012 with the objective of establishing initiatives that contribute to sustainable development in the local communities neighboring the units at Estivas (RN) and Giasa (PB), the APProximar program (preservation of native forests and permanent preservation areas – APPs – in the Northeast) underwent development of a second phase in 2013, the execution of an Action Plan in communities identified as being a priority in the project’s first phase. A circuit of 12 workshops was organized in the Imbiribeira/ Riacho do Salto community in Pedras de Fogo (PB). Carried out in partnership with the Association for the Protection of Atlantic Forest of the Northeast (Amane) and the Center for Environmental Research of the Northeast (Cepan), the workshops Machinery on display at brought together dozens of people the Museum of Sugar and to deal with themes such as Agro- Alcohol, in Pontal (SP) NATIONAL SUGAR ecology and Biodiversity Conservation, AND ALCOHOL MUSEUM Environmental Education and Since December 2013, employees from Citizenship, Agro-ecology and the the unit at Santa Elisa (SP), in addition distribution of the benefits of Atlantic to the community as a whole, have been Forest biodiversity. At the meetings, able to make use of a space set aside those present have the opportunity dedicated to memorabilia from the of participating in entertaining and sugarcane industry. This is the National educational activities, such as seminars, Sugar and Alcohol Museum, located in thematic video presentations and even the municipality of Pontal (SP), built a theater presentation, which raises the on the site of the old installations of spectators’ awareness of the need to Engenho Central mill, which produced protect the forests. sugar in the 20th century. Sponsored by Also part of the initiative’s agenda Biosev, the museum’s collection includes is the start of practical courses for historic objects and rare equipment, forest sapling nursery workers, the such as a Scottish machine from the construction of a nursery for the 1880s, consisting of grinders, boilers cultivation of seedlings (50,000 and crystallizers, among other items. seedlings/year) and the holding of a As a point of curiosity, all these items socio-cultural event in the community. are shown in their original positions on the mill’s production line. All this is designed to preserve each individual memory of the place, in accordance with the wishes of the Biagi family, when it conceived and created the museum. It is open to the public from Tuesday to Sunday, from 10 a.m. to 4 p.m, with entrance free of charge.
46 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
CLIENTS AND CONSUMERS
iosev has a broad client base distributed across the sugar and ethanol markets, with sales both Bin Brazil and international markets. The domestic market sugar client portfolio includes wholesale and retail chains, as well as food and beverage manufacturers. In retail, the company sells its products under its own Estrela and Dumel brands, with the Estrela brand, according to figures published by Nielsen do Brasil Ltda., being the leader in the crystal sugar market in the Brazilian Northeast. Aerial view of the The company exports to various regions Guarujá export terminal through action plans managed by around the globe, in particular China, at the Port of Santos Corporate Quality Management Southeast Asia, Russia, the European department, which participates actively Union, North and East Africa and in meetings and workshops held by the Middle East, with the majority of clients for the publicizing of demands transactions being with international related to Food Safety (responsible trading companies. sourcing) and presentation of supplier rankings. In the ethanol area, the Brazilian market accounts for over two-thirds The implementation of the process of of the product, with domestic ethanol dealing with requests and complaints, fuel and industrial ethanol clients and the continuous monitoring of the being principally fuel distributors, initiatives arising from these processes and food, pharmaceutical and enables Biosev to meet the demands of beverage industries. With regard to its clients in a timely manner to ensure the export market, ethanol is exported their satisfaction. directly to end-customers, or through In addition, satisfaction levels are international trading companies, with measured through polls carried out export sales mainly being to the United annually. The information obtained States, Japan, Greece and Switzerland. through this process also enables Biosev The clients, as specified by contract, to draw up initiatives for continuous receive technical visits aimed at improvement of its processes. GRI PR5 improving interaction and identification of their needs. Improvements discussed and agreed with clients are monitored
47 BIOSEV SUSTAINABILITY REPORT 2013/2014 SOCIAL PERFORMANCE
Sugar carrying ISO 22000 certification corresponded to
11% PRODUCT QUALITY of total production In the period covered by this report, the Santa Elisa unit produced 416,707.815 Biosev’s 11 operational units for the 2013/2014 metric tons of sugar, 81% of which manufacture products adhering to crop-year being crystal sugar – 335,486.09 metric good manufacturing practices, based tons or 6,709,721 50 kg bags – and 19% on national regulatory requirements (81,221.72 metric tons) being liquid sugar (RDC 275 – Anvisa), which involves or inverted liquid sugar (AL/ALI). The the verification of items material to the unit production corresponded to 11.06% food safety management system. of the total sugar sales volume produced Management of the regulatory by Biosev for the crop-year. GRI FP5 requirements applicable to the company’s businesses is carried out at LABELING all the units using CAL software, from Ius Natura. The technical specifications Labeling of packaging for products sold of the products sold are updated and in the retail segment – the company’s monitored by Corporate Quality own Estrela and Dumel sugar brands Management in accordance with needs – complies with domestic regulatory and legislation, and involve physical- requirements. The regulations chemical analyses, microbiological require the publication of nutritional analyses, analyses for heavy metals and information, production data (type pesticides, and information on use, of product, manufacturing batch, handling, transport and validity dates. manufacturing date, validity, crop year, sequential production number, quantity) Meanwhile, verification of the for the purpose of traceability; guidelines compliance of the units to standard on conservation as well as product origin quality certification requirements, (production unit). GRI PR3, FP8 which have a validity period of three years, is carried out through internal Biosev, however, does not have a and external audits (the latter being an communications, marketing and outsourced company - SGS). advertising policy, neither does it have a policy or program which involves The Santa Elisa, Vale do Rosário and the publicizing of the nutritional MB units carry external certification information on its products in the in accordance with the internationally community. recognized standards of the NBR ISO 9001 Quality Management System, Considered as being a potential cause of pursuant to the specific scope of each allergies, the sulfite present in sugar is unit. However, only the Santa Elisa monitored during the production stages unit carries NBR ISO 22000 external and in the final product. The amounts certification – Food Safety Management considered are those permitted by System for the manufacture of liquid Codex Alimentarius. While gluten, also sugar and inverted liquid sugar, from considered as potentially allergy causing, receipt of the raw material up to the is not part of the sugar composition shipping of the final products, as well as make-up, this information is displayed the manufacturing process. on the retail packaging. The retail packaging also includes a number of culinary recipes for sugar application.
48 BIOSEV RELATÓRIO DE SUSTENTABILIDADE SAFRA 2013/2014 SOCIAL PERFORMANCE
Seminar for the discussion of the Forestry Code in sugar-alcohol Sucroe production tor ner e gé S t o ic d o
s e o m ç
n M
a
G
v A
S l e a m t n in e á bi Advances made rio Am
in Minas Gerais Lâmina C The new Forestry Code, the practice representatives from the entire of environmental compensation, production chain, from farmers and care with relation to civil to government representatives, environmental responsibility, inspection bodies, universities were discussed at the Seminar for and the community in general. Environmental Advances in the Sugar- The objective was to present Energy Sector in Minas Gerais, which information, promote debate and took place in June 2013, at Lagoa provide clarification for queries on da Prata, which is approximately themes important to agricultural 203 km from Belo Horizonte. activities, and which contribute to Hosted by Biosev, which has an the economic and environmental operational unit in the municipality, development of the region. the event’s focus was on sugar- Researchers and professional alcohol production, one of Lagoa staff from Biosev also provided da Prata’s principal economic clarification on the principal myths activities. The event brought together surrounding sugarcane cultivation.
49 BIOSEV SUSTAINABILITY REPORT 2013/2014
Biosev contributes to create quality jobs, train and qualify its employees in the use of new technologies and encourage attitudes and practices that promote people’s health and safety PERSONNEL MANAGEMENT
50 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
THE WORKFORCE
iosev is aware that with the mechanization of cultivation it has an important role to play in Bthe generation of quality jobs, for which study and knowledge are necessary. Based on this, the company has begun a process of bringing its workforce in- house, and a portion of the maintenance workers, previously outsourced, began to be directly employed in the 2013/2014 crop year. However, the overall headcount declined 2% during the crop year due to operational restructuring and the consequent mothballing of the Jardest unit, in Jardinópolis (SP). Part of the workforce was reallocated to other units and Biosev ended the period with 16,124 direct employees. GRI LA1, 3.10 During the year, 100% of Biosev’s employees were covered by collective Commitment to wage bargaining agreements and there the generation is no inherent risk whatsoever within of quality jobs the company to freedom of association of this type, as associations and union participation are both permitted. The TOTAL NUMBER OF company also allows the unions to EMPLOYEES GRI LA1 fully exercise their role and at the end 10,137 of the 2013/2014 crop year, it had a 655 relationship with 47 different entities. GRI LA4, HR5
9,482 3,409 2,578 380 78 3,029 2,500
Center- Northeast Southeast West Men Women
51 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
EMPLOYEES BY REGION GRI LA1
2011/2012 2012/2013 2013/2014 Men Women Total Men Women Total Men Women Total Center-West 3,001 351 3,352 3,194 379 3,573 3,029 380 3,409 Northeast 2,532 86 2,618 2,628 82 2,710 2,500 78 2,578 Southeast 8,904 666 9,570 9,540 627 10,167 9,482 655 10,137 TOTAL 14,437 1,103 15,540 15,362 1,088 16,450 15,011 1,113 16,124
1 EMPLOYEES BY TYPE AND WORK CONTRACT GRI LA1
2011/2012 2012/2013 2013/2014 Men Women Total Men Women Total Men Women Total Limited time period 1,359 15 1,374 2,894 73 2,967 2,892 99 2,991 Unlimited time period 13,078 1,088 14,166 12,468 1,015 13,483 12,119 1,014 13,133 Subtotal 14,437 1,103 15,540 15,362 1,088 16,450 15,011 1,113 16,124
1 All employees are hired on a full-time basis, including temporary shift workers
STAFF TURNOVER GRI LA2
Average Average Average of of employees of employees employees in the year admitted dismissed Admission rate Dismissal rate Turnover BY GENDER 16,124 765 484 4.74% 3.00% 3.87% Masculine 15,011 718 452 4.78% 3.01% 3.90% Feminine 1,113 47 33 4.22% 2.92% 3.57% BY AGE 16,124 765 484 4.74% 3.00% 3.87% 18 to 25 years 2,714 234 119 8.61% 4.38% 6.50% 26 to 30 years 3,197 161 107 5.02% 3.34% 4.18% 31 to 40 years 5,273 217 152 4.11% 2.88% 3.49% 41 to 50 years 3,289 107 71 3.26% 2.16% 2.71% 51 to 60 years 1,464 43 30 2.90% 2.07% 2.48% Over 60 years 186 4 5 2.28% 2.86% 2.57% BY REGION 16,124 765 484 4.74% 3.00% 3.87% Center-West 3,409 129 103 3.79% 3.02% 3.41% Northeast 2,578 165 58 6.41% 2.25% 4.33% Southeast 10,137 470 323 4.64% 3.19% 3.91% Note: In the 2013/2014 crop year, Biosev changed the way of reporting “Turnover” to better reflect the company’s reality. Now, the calculation is based on the average of the numbers (admitted or dismissed) for the period encompassing April/13 to March/14, to follow the same assumption already used to calculate the number of employees, which also makes up the formula used for the turnover rate. The formula is ((average admitted + average dismissed)/2)/HC average. HC average = average of employees (excluding trainees and those dismissed) in the April 13 to March 14 period.
52 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
EMPLOYEE HEALTH
ased on a policy of sustainable Programs provide support development based on the for improving the culture of health and safety measures presented to management. key elements of people, the Accident control statistics are Benvironment, the community and summarized monthly, with all accidents partners, Biosev’s safety, health and being classified (fatal, very severe, severe, environmental management system light and those not involving lost work has functioned since 2010 through time), time lost, near accidents and the application of this strategy. Using number of accidents (both for direct internationally recognized standards employees as well as outsourced staff). of management efficiency, the system’s In this summary, the Frequency and main aim is to prevent harm coming Severity Rate is calculated in accordance to people, the company’s assets and with NBR 14280 and all information is the environment; it meets or exceeds evaluated and approved by the engineers applicable standards and regulations; it at each unit as well as the management reduces general environmental impacts, of SHE at the cluster, before being passed adopting measures for the preventing of on for consolidation. pollution; and promotes the sustainability of the natural resources used. REDUCTION Implemented by the Department for Safety, Health and Environment (SHE), The standardization of the group’s the management of occupational safety units has made a positive contribution is backed by safety committees that to the management of SHE and represent 100% of employees. Present Biosev achieved a 20% reduction in at all Biosev’s units, these committees accidents in the 2013/2014 crop year, ensure compliance with this policy. compared to the previous period. The These are the Accident Prevention frequency and severity of accidents Internal Commissions (Cipas), with occurring in the group declined 28% members from both the industrial and 54%, respectively. However, one as well as the administrative area; death occurred at the Santa Elisa unit CipaTRs, with members from the as a result of an accident to one of agricultural and administrative areas; the company’s own employees in the Specialist Services in Engineering Safety industrial milling area. and Occupational Medicine (SESMT) and the SHE committee. GRI LA6 Information on accidents is compiled weekly at the focal points of the agro- SAFETY COMMITTEES industrial clusters and passed on to Number of Members 2011/2012 2012/2013 2013/2014 the corporate area of SHE where data is evaluated, discussed and control Cipas 387 360 358 Local committees (NR10 and others) 408 378 410
53 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
QUALITY OF LIFE GRI LA8 In addition to the management controls, Process standardization behavioral programs applied at the resulted in a The creation of agro-industrial company contributed to improving clusters that took place during the safety culture, of particular note being crop year is also reflected in the area BBS – Behavior Based Safety. In its first of health within the company. Now, a phase, in 2011, this program worked doctor in the workplace, who reports towards raising awareness of employees 20% directly to the SHE manager of the and training them in the identification reduction in the corresponding cluster, coordinates of dangers and risks, training specialist number of accidents teams from the health area at the staff to pass on this culture. During during the crop year units. However, directives for the area the 2013/2014 crop year, the program are defined globally, in accordance trained operational leaders as observers with SHE standards, with the and facilitators for behavioral change. results being assessed and discussed together with SHE management. SHE PYRAMID All Biosev’s units have collective bargaining wage agreements signed with Another important initiative, the local unions which are renegotiated development of which was begun on an annual basis. Comprehensive this crop year, was the SHE pyramid, in nature, these agreements include a project for the registration and specific clauses on health and safety informing of possible irregularities and the free provision of work tools in terms of safety, health and the and individual protection equipment environment. The intention of the SHE (EPI); rules on the constitution of pyramid is to communicate deviations Cipa/CipaTR, proper sanitary facilities that take place, both behavioral as well and water supply for agriculture, as as those related to working environment well as medicine expenses. GRI LA9 conditions, enabling appropriate measures to be taken to prevent problems, so avoiding accidents. Records of irregularities are entered on block notation forms, which can be obtained by workers from the Occupational Safety SAFETY INDICATORS GRI LA7 sector. Having filled in a form it is only then necessary to put it in one of the 2012/2013 2013/2014 boxes that are placed around the unit. Men Women Total Men Women Total The manager responsible for the sector NUMBER OF ACCIDENTS NOT INVOLVING LOST TIME collects the forms and has an obligation Center-West 78 11 89 73 9 82 to provide a response to the individual Northeast 54 2 56 37 1 38 employees who submitted them. Southeast 295 9 304 230 11 241 The vehicle safety program, in turn, Total 427 22 449 340 21 361 has the objective of disseminating the NUMBER OF ACCIDENTS WITH LOST TIME importance of safe driving behavior to eliminate accidents occurring with Center-West 112 12 124 34 3 37 light vehicles, and reducing fines for Northeast 58 - 58 13 - 13 exceeding the speed limit. Every crop Southeast 102 2 104 75 5 80 year the program has shown itself to be Total 272 14 286 122 8 130 increasingly satisfactory, as a result of the efforts made by the Occupational Safety FREQUENCY RATE INCLUDING ACCIDENTS REQUIRING FIRST AID TREATMENT (%) Department. During the year, there was a 2012/2013 2013/2014 reduction of 87% in fines for driving over Men Women Men Women the speed limit (15 fines in 2013 and only Center-West 20.0 19.0 19.41 - two in 2014) and zero accidents for light vehicles in 2014. Northeast 9.0 6.0 - - Southeast 35.0 17.0 16.37 13.45
54 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
Initiatives seek to create a work environment that is healthy, safe and productive
Aware of the importance of working thus contributing effectively in in a safe and healthy location, raising yield and competitiveness. Biosev’s employees have actively participated in campaigns scheduled During the program a diagnosis annually by the Corporate Health is also made to assist the company area. Seminars and informational in identifying the condition of the materials passed out to employees quality of life of its workers, measuring help to cover these themes both variables that have a direct influence within the units, as well as with their on yield, such as: quality of work, families and the community at large. health and lifestyle, assessing the conditions of the working environment INDUSTRIAL HEALTH and organizational climate. Since 2010, all Biosev’s units have At the Leme unit, for example, the carried a seal of certification referring Industrial Health Program, carried to the National Commitment for the out in partnership with Sesi, include Improvement of Working Conditions services that are integrated with in the Sugarcane Segment, a tripartite the promotion of workers’ health initiative involving representation and quality of life. The objective is from agro-industries, agricultural to create a working environment workers and the Federal government. that allows the adoption of a safe, healthy and productive lifestyle,
55 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
where the average annual salary is R$ 688 (101% of the minimum national salary, of R$ 678). While the highest wage floor negotiated is at the Leme unit, with an average monthly salary of R$ 1,049.18 (155% of the minimum salary). GRI EC5
PERFORMANCE EVALUATION
MERITOCRACY Biosev has two types of performance evaluations: one for managers and Biosev uses a bonus COMPENSATION the other aimed at the operational model linked to contingent, both linked to variable operational results AND BENEFITS compensation. and performance iosev surveyed salaries in 2012 assessment, in line Evaluation of the performance of with the objective of remaining with the best market officers, managers, supervisors, aligned with the best market practices. It is a more coordinators and specialists, a universe Bpractices, as well as meeting the needs transparent concept, around 500 people, takes place using and expectations of its workers in which values merit. a management performance tool accordance with the region and job (Nine Box), aligned with market function exercised. The company’s practices, known and used globally. benefits package — which is covered by Using an electronic system, each collective wage bargaining agreements person evaluated together with their for each unit — includes medical respective manager, draws up and assistance, vaccinations, a subsidy carries out half-yearly revisions to their for pharmaceutical expenses, freight Individual Development Plan. This transport, transport vouchers, variable includes feedback, quantitative targets compensation according to the Profit and qualitative analyses with respect Sharing Plan (PPR), subsidies for to behavioral skills defined by the education and language courses, meal company. Meeting of individual targets vouchers, a range of basic foodstuffs is what defines annual bonus payments, and private pension arrangements. GRI LA3 in conjunction with the results achieved by the particular area, and the company For the 2013/2014 crop-year, the wage as a whole. floor negotiated with the unions was R$ 868.80, based on a total of 220 Workers not covered by this hours/month, in other words an average methodology are assessed using of R$ 3.95 per hour for operational staff. collective targets defined by the On average, these salary floors are 120% different unions annually, because they above the minimum regional salary. have a direct bearing on profit-sharing payments (PPR). The lowest average wage floor negotiated was at the Estivas unit, The controls are kept within the system itself and collective targets are registered on spreadsheets by 1 WORKERS EVALUATED GRI LA12 Department, and centralized at 2011/2012 2012/2013 2013/2014 Human Resources, which accompanies the entire process and manages the Quantity % Quantity % Quantity % collective targets. The evaluation results Masculine 945 6.55% 295 1.92% 307 2.05% form the basis of the targets that define Feminine 259 23.48% 44 4.04% 54 4.85% profit-sharing payments and annually TOTAL2 1,204 7.89% 339 2.06% 361 2.24% underpin the salary progression of
1 Not including trainees and those on sick leave. those who are evaluated. 2 As of 2012/2013, the evaluation system was restructured to encompass the group eligible to receive a bonus
56 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
For the 2013/2014 One new development in the training crop year, area in this crop year was the start of total training Mapeamento de Prontidão (Readiness amounted to Mapping), which is the identification of technical and behavioral aspects, which can improve the leadership skills of managers in their current positions. 32 Approximately 185 leaders above the co-ordination level participated in the hours on average project. TRAINING AND per worker EDUCATION FORMAR (TO TRAIN) PROJECT GRI LA11 The Formar project seeks to train employees who work directly in iosev seeks, through the training the field as machinery operators and qualification of its workers, to and drivers. Classes operate on a increase its operational efficiency. partnership basis with the National BTo eliminate and reduce knowledge Agricultural Apprenticeship Service gaps within its teams, the company (Senar) and the National Program has an Annual Training Program, for Access to Technical Instruction which runs courses for the promotion and Employment (Pronatec). of awareness with respect to attitudes Approximately 150 employees from on safety, quality, technical training in the Estivas unit were qualified in these specific activities, and acquisition of training programs, which took place new knowledge with a view to career from April to July 2013. In addition evolution. to the machinery operator course, pupils also went through modules on In addition to this, there are various Human Relations, the Environment, types of training at the operational and Occupational Health and Safety. level, the principal aim of which is to Pronatec is a Federal government comply with operational standards for Initiative in partnership with state and machinery. For the 2013/2014 crop- year, the total amount of training hours amounted to 512,789 hours, with an average of 32 hours per employee. AVERAGE TRAINING HOURS GRI LA10 The company also offers financial Men Women assistance for technical training, higher Management positions 12 3 education, post-graduation and English Posts requiring higher education 27 19 language courses. Rules such as time Posts not requiring 33 23 worked with the company, performance higher education evaluation and job held, as well as budgetary questions, define who can TOTAL AVERAGE 32 take advantage of these benefits. All training hours are considered, including English classes. Training hours for student trainees were not included. There are also partnerships with different institutions. Seven workers INVESTMENT IN TRAINING (R$) from the Estivas (RN) unit, for example, completed an Industrial Apprenticeship Type Total and Technical Qualification in July Education subsidies 500,604 2013 after two years of study, a Language course subsidies 160,259 result of student grants offered in Technical training 1,342,410 partnership with the National Industrial Apprenticeship Service (Senai). Behavioral training 1,342,410 TOTAL 3,345,683
57 BIOSEV SUSTAINABILITY REPORT 2013/2014 PERSONNEL MANAGEMENT
successful that it is to be expanded to other units in the MS complex and other clusters. As a result of the program, there was a gain seen in average repair times (MTTR), the average time between breakdowns (MTBF) and in consumption of diesel fuel and hydraulic fluids.
DIGITAL INCLUSION In partnership with the Social Service for Industry (Sesi) and the municipal authority of Pedras de Fogo, Biosev began a digital inclusion program at its Giasa unit (PB). Aimed at employees and their dependents, the program consists of classes in basic information technology and Internet access. The 168 students in the first 12 classes concluded a course lasting 90 class/hours in December 2013. The project represents an opportunity to acquire knowledge and training, and emphasizes to students the importance of access to technology in today’s world.
TRAINEE PROGRAM Launched in June 2013, the Trainee Operators are being trained Program runs for two years, during municipal governments, the objective to maintain sugarcane which time recently graduated young of which is to provide student grants harvest equipment people learn the company’s various and financing for professional processes and specialize in their qualification courses. respective areas.
MAINTENANCE The selection was divided into three OPERATOR PROGRAM phases (online evaluation, group dynamics and interview panels with Started in the 2013/2014 crop-year as a managers). The process reviewed pilot labor program in the Rio Brilhante over 17,000 applications, and took Unit (MS), the Maintenance Operator place in four cities: São Paulo (SP), Program’s goal is to train harvesting Ribeirão Preto (SP), Campo Grande machine operators, developing (MS) and Belo Horizonte (MG). A the necessary skills for the basic total of 19 young people were selected, maintenance of sugarcane harvesting who will work in Safety, Health and machines, with a view to improving the Environment (SHE), Finance, results, as well as maintenance Commerce, Human Resources, standards (both during the harvest and Agriculture and Industry areas. between harvests). The scheme involved 20 employees (operators and leaders) and was so
58 BIOSEV SUSTAINABILITY REPORT 2013/2014
Biosev’s actions are based on impact monitoring and management policies and programs, along with initiatives for the environmental education of employees, suppliers and communities ENVIRONMENTAL ENVIRONMENTAL MANAGEMENT
59 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
mportant social-environmental issues for communities neighboring our operations were among the Iprincipal concerns of Biosev’s main stakeholders during the 2013/2014 crop year. During the period, topics related to recycling, Brazilian biomes, water and soil conservation and seedling donations were brought up with the Lagoa da Prata, Estivas, Giasa, Maracaju, Passa Tempo communities and the Ribeirão Preto Complex. Biosev frequently conducts qualitative and quantitative environmental monitoring of water resources and atmospheric emissions, making it possible to prepare engineering studies that are reflected in the installation of systems and equipment to mitigate the more significant environmental impacts of its activities. Monitoring is carried out as follows: • Water resources: through laboratory analyses, installation of automatic measuring equipment, closing industrial process circuits, setting annual efficiency reduction targets (m³/tc), and using effluents after analysis of aspects such as sugarcane crop fertigation, pursuant to rules established by the environmental agencies; • Atmospheric emissions: via collection, by specialized laboratories, which issue analytical certificates for the purpose of regular maintenance and adjustments in particulate capture systems.
Our own nurseries produce native seedlings for reforestation purposes
60 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
For their part, reduction of impacts caused by generation of waste in the industrial manufacturing process occurs through use of filter cake and soot as organic materials for crops. Other wastes are separated out and stored in the units’ Waste Collection Centers until the moment of disposal or sale to companies licensed by the environmental agencies or through Integrated Waste Management centers implemented in some of the units since 2011. GRI EN26 As precautionary measures, investments totaling some R$ 16 million were carried out for the following purposes: installation of cooling towers for closing the circuits, to minimize captured volumes; soot, to improve water reutilization efficiencies; modern Technology for the gas scrubbers to satisfy emission treatment and verification standards and waste collection of atmospheric emissions centers for their management; a Wastewater Treatment Station (ETAR) and a Sewage Treatment Station (ETE); construction of a chemical product storage facility and revamping of an effluent pump house. During the period, some R$ 9.2 million was invested to improve MANAGEMENT OF ENVIRONMENTAL IMPACTS GRI EN26 processes and apply technologies to minimize the environmental impacts Impact Mitigation action of its activities. Despite these efforts, Water consumption Investment in water re-use and recirculation in the process some impacts — such as, forest fires Waste generation Training and qualification of the main generation that affect the entire sugar–energy areas, creation of a website to disseminate good sector and neighboring communities practices, focusing on the 3Rs – reduce, re-use — still require more study to find and recycle – and training and qualification of the effective solutions. team responsible for process management Atmospheric emissions Investment in technologies for treatment of We are presenting below the atmospheric emissions, which include gas scrubbing company’s main environmental equipment preventive maintenance programs impacts and the mitigating actions Industrial effluents Investment in improvements in the water channels and conducted in period: ducts, river crossings and storage tanks, as well as conducting pilot studies on automation of the entire process. Forest fires Training of firefighting brigade, conducting simulations and investments in anti-flame technologies for the mechanized harvest equipment Permanent Preservation Areas Reform and expansion of native seedling nurseries, training and qualification of those responsible for the nurseries, preparation of research, recovery of degraded areas using new technologies — tubettes, gel to retain seedling humidity, among others — and investments in environmental education programs in communities neighboring the mills
61 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
RESOURCE CONSUMPTION
WATER Water consumption at Biosev’s units increased 9.4% in the 2013/2014 crop year compared to the previous one, 3 totaling 40,994,993 cubic meters. TOTAL WATER CONSUMED BY SOURCE (‘000 m ) GRI EN8 This is due to some operational flaws 2011/2012 2012/2013 2013/2014 that have already been resolved, adopting more rigorous monitoring of Capture Volume (m3) m3/tc* Volume (m3) m3/tc* Volume (m3) m3/tc* consumption. Subterranean 4,005.8 0.15 5,604.2 0.19 5,512.8 0.18 Surface 28,687.6 1.05 33,757.5 1.15 35,482.2 1.18 The company continued applying its action plan to reduce water TOTAL 32,693.4 1.19 39,361.7 1.34 40,995.0 1.37 consumption, and pursued investment *tc = total tons of crushed sugarcane referring to the crop year. in training and development of its environmental professionals, sponsoring internal and external courses taught by specialists in various AFFECTED WATER SOURCES GRI EN9 fields, including water and effluent 2012/2013 2013/2014 management. Volume Volume New equipment allowing for Units Main sources Description (m3/h) Description (m3/h) recirculation of more water in the Rio Brilhante Guarani (Botucatu) Subterranean 760.0 Subterranean 760.0 manufacturing process was installed, Lagoa da Rio São Francisco Surface 3,525 Surface 3,525 along with remote monitoring Prata systems linked to the industrial units’ Vale do Serra Geral/ Subterranean 169.53 Subterranean 169.53 Operating Control Centers (OPCs), Rosário Guarani (Botucatu) permitting interaction with other Formation systems and flow control integration Santa Elisa Formação Serra Subterranean 435 Subterranean 435 for managing environmental risks. Geral/ Guarani (Botucatu) In addition, specific measures were Formation implemented in the mills to improve Jardest Guarani (Botucatu) Subterranean 220 Subterranean 220 this management. The Rio Brilhante TOTAL 5,190.62 5,190.62 unit, for example, received a filtration * The sources of the unlisted units are not significantly affected by withdrawal of water system for the wastewater from the filter press screen washing process, using it for wetting the presser. In RECYCLED AND RE-USED WATER GRI EN10 the Leme unit, improvements were made to the bagasse slurry drainage 2011/2012 2012/2013 2013/2014 system. For their part, the Estivas and Effluents re-used by the 35,920,774.31 38,189,830.87 41,796,086.74 Giasa units received more investments organization’s other facilities (m3) Percentage of water recycled/re-used 96.97% 98.12% 101.95%
62 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
earmarked for environmental controls: two industrial effluent storage tanks Closing of were sealed at Estivas and a system to control ruptures was installed by water circuits Giasa. The most emblematic success These improvements reduced the in reducing water consumption generation of wastewater (stemming in the crop year was at the MB from sugarcane washing and cooling unit, where investments in two systems, and effluents passing processes involving water circuits through treatment plants or water accounted reduction of 821 m³ and oil separation tanks) by about per hour in water capture. 4 million liters (volume equivalent to 172 Olympic pools). At the same Improvements occurred through time, there was greater generation closing the water cooling circuit of vinasse, which was primarily due for sugar production and the to an increase in the mix of ethanol water circuit for the boiler production during the harvest. Thus, combustion gas scrubber. GRI EN26 the volume of recycled water topped 100% of the total captured, since the calculation of this value takes into account the sum of the volume of vinasse with wastewater divided by the DIRECT ENERGY CONSUMPTION (GJ) (GJ) GRI EN3 total amount of water withdrawn from Uso 2012/2013 1 2013/2014 the source. GRI EN26 RENEWABLE ENERGY SOURCES – OWN PRODUCTION Ethanol Vehicles - 91,746.75 ENERGY Biofuels (sugarcane bagasse) Boiler 4,430,142.79 77,703,423.12 Biosev posted energy consumption RENEWABLE SOURCES – ENERGY PURCHASED of 84,952,773.34 gigajoules (GJ) in Biofuels (bagasse plus wood) Boiler 74,493.92 5,956,956.40 the 2013/2014 crop year, of which 84,864,909.84 GJ was direct energy and NON-RENEWABLE SOURCES – ENERGY PURCHASED 87,863.5 GJ was indirect energy. The Gasoline Vehicles 5,537.71 2,135.51 data are not comparable to the previous Diesel Agricultural machinery 3,939,599.38 4,043,933.01 crop year because the calculation now Liquefied Petroleum Gas – GLP Forklift trucks - 27,335.44 includes purchased bagasse and ethanol as renewable energy sources and there DIRECT ENERGY FROM RENEWABLE SOURCES SOLD was a change in methodology for Bagasse - - 402,916.40 calculating direct energy produced from Biofuels - 2,249,367.23 2,557,713.00 renewable sources. GRI 3.10 TOTAL CONSUMPTION OF DIRECT ENERGY Until the 2012/2013 crop year, direct Renewable - 2,255,269.48 80,791,505.88 energy produced from renewable Non-Renewable - 3,945,137.09 4,073,403.96 sources was considered exclusively TOTAL 6,200,400.60 84,864,909.84 to be that which was generated 1 Data from the 2012/2013 does not include ethanol produced and sugarcane bagasse acquired from third parties. by burning bagasse. As of the 2013/2014 crop year, the calculation 1 was extended to include all energy INDIRECT ENERGY CONSUMPTION GRI EN4 available in the bagasse (taking into 2012/2013 2013/2014
account the calorific value of this 2 material in the same way as is done GJ GJ/tc GJ GJ/tc for diesel, ethanol and wood), which Electric energy 3 96,529.3 0.0033 87,863.5 0.0029 explains the significant difference 1 Energy consumed for the supply of intermediate energy needs (such as electricity, heating and cooling) 2 tc = total tons of sugarcane crushed in the referred crop year. between the values of one crop year to 3 The energy consumed comes from the National Interconnected System (SIN). According to the National Energy Balance Sheet - 2014, based on data from 2013, published by Empresa de Pesquisa Energética (EPE), the share of renewable sources in the the another. Brazilian energy matrix was 79.3%, predominantly hydropower (70.6% ).
63 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
The new methodology now also reducing consumption of steam. includes sugarcane bagasse and its The strategy included maximizing respective calorific value for the power generation when using the calculations of renewable energy thermoelectric plant, which operates purchased and renewable energy during crushing operation shutdowns sold. Cogenerated electricity and thus increases overall energy sold was considered to be the consumption during times when electricity sold to the National there is no sugarcane processing and Interconnected System (SIN). directly impacts the rates of specific consumption. The beginning of replacement of Biosev’s automobile fleet with flex Suppliers and partners also vehicles, to use ethanol as primary were optimized. All new motors fuel, led to a reduction of 60% in are purchased from WEG (the gasoline purchases in the crop manufacturer), featuring greater year and inclusion of own ethanol efficiency and lower power production, among consumed fuels, consumption. Cleansing evaporation which also has an effect of reducing now is conducted more intensively, greenhouse gas emissions. As of the to improve heat exchange efficiencies current crop year the company will and to reduce steam consumption. begin to include the LPG consumption Another element in the pursuit of of its forklift trucks in the calculation. maximum efficiency was employee GRI EN26 training for the operation, supervision Several other investments in the crop and coordination of steam and power year were made to improve equipment generation, always using the best performance and, hence, reduce equipment configuration. energy consumption. Among these, An energy committee meets weekly to we are highlighting those aimed at review results and propose corrective improving the efficiency of the mills, actions, as well as working to enhance such as installing broth/condensate energy exports to the maximum. regenerators in the Lagoa da Prata Daily meetings are held with all and Maracuja units, installing more power generation unit supervisors, efficient turbines (condensation) in the Lagoa da Prata unit, and other adjustments and maintenance of steam
generation (boilers, water treatment, ENERGY SAVED (GJ) GRI EN5 etc.) systems, with a focus on reducing bagasse humidity. Conservation and efficiency improvements 2011/2012 2012/2013 2013/2014 Electricity cogeneration (cogen) was Equipment conversion 42,140.00 52,081,173,16 32,870,942 installed in the Passa Tempo unit, and retrofitting swapping lower pressure and lower Change in employee behavior 63,211.00 34,720,782,10 43,827,922 capacity boilers for a higher pressure and more efficient unit. The turbine Process redesign 316,053.00 260,405,865,78 142,449,747 crushing machine’s drives were TOTAL 421,404.00 347,207,821.04 219,139.61 replaced by a much more effective electric motor and generator turbines were substituted for new, more CONSUMPTION EVOLUTION efficient models. Evolution 2012/2013 2013/2014 Process redesign also included replacement of heating and Steam consumption (tons) 13,946,514 15,124,913 evaporation equipment for those Specific consumption of steam (Kg/tc) 506.67 504.01 using more noble materials and Electric energy consumption (MWh) 625,414 674,741 Specific consumption of electric energy (kWh/tc) 21.33 22.48
64 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
during which reactive and proactive indicators and action plans are drawn up to address existing deviations. New proactive energy indicators were inserted into the routines at the units, also to maximize focus and results. However, consumption was not reduced even more because of high rainfall levels and the need to conduct process startups and shutdowns, leading to higher consumption of steam and energy due to very high liquidation and start levels.
BIODIVERSITY In the 2013/2014 crop year, Biosev continued to invest in new environmental technologies, in environmental preservation in its crop areas, in native species seedlings for protection of riparian forest, in springs and permanent preservation areas and in training and qualification of professionals who work in its nurseries. It also was involved during the period in environmental education, promotion of events to discuss important Brazilian environmental legislation issues and donations of tree seedlings to public schools, municipalities and farmers. It increased the amount of land under protection during the crop year by 1,263 hectares (8.68%) compared to the previous period. The Giasa unit was particularly notable in this aspect, intensifying actions designed to protect water sources and riparian forest areas. The Estivas and UMB units maintained a total of 81.63 hectares of restored native areas during the period. Restoration, which Control of protected areas to began in 2013, will continue for at ensure the preservation of least two and a half years to ensure biodiversity the native species planted achieve sufficient size to grow into adult PROTECTED AND RESTORED HABITAT trees. These areas were recovered GRI EN13 as a result of damage caused by 2012/2013 2013/2014 fires of unknown origin, caused by factors such as unfavorable weather Protected habitats (ha) 14,557.07 15,820.67 conditions and proximity to urban Restored habitats (ha) 81.63 18.00
65 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
areas or highways. Furthermore, new Nurseries for areas were added in Vale do Rosario, Santa Elisa and Continental as a restoration result of the continuing pursuit on the part of these units to regularize their purposes legal reserves with the competent authorities. Biosev produces seedlings for forest restoration purposes in the regions FIRES in which it operates, both in its own areas as well as those of partners, and The high rate of fires of unknown it also donates them to communities. origin has caused damage to The nurseries in Vale do Rosário (SP), conservation areas under Biosev’s Continental (SP), Santa Elisa (SP), Lagoa protection. Concerned about the da Prata (MG), Giasa (PB) and Estivas issue, the company has been seeking (RN) units have production capacity solutions to minimize impacts of DEADLINE FOR of 410,000 native seedlings per year. fires, such as the creation of specific ELIMINATION Production includes several species environmental indicators. OF BURNING OF SUGARCANE STRAW found in Atlantic Forest and Cerrado Among the actions taken, of note IN THE STATE OF region biomes, such as Luehea divaricata, are training and formation of forest SÃO PAULO mimosa, Jatoba, Cedar, ceiba speciosa, and firefighting brigades, creation of ingazeiro ipe, among others. procedures for inspection and MECHANIZABLE AREAS The Vale do Rosário unit has entered into maintenance of equipment and % partnership with the Luiz de Queiroz vehicles used in emergency situations 0 School of Agriculture (Esalq), USP, in and fire simulators, involving 10 Piracicaba. For its part the Estivas unit participation of companies and 20 30 (RN) works with the Chico Mendes organizations affiliated with the 40 Institute for Biodiversity Conservation Mutual Assistance Plan (Pame). 50 (ICMBIO), which it assists by providing 60 seedlings from its nursery and also TECHNOLOGIES 70 80 offering training to employees, enhancing Green Ethanol is an important 90 the methodologies used for seedling agricultural technology project for 100 production and planting practices. The the preservation of biodiversity. 2006 2010 2011 2014 2016 2021 Continental unit joined the Semear Accepting the program advances (Seed) Program, which strives to elimination of the burning of rehabilitate prison inmates, through sugarcane straw in mechanized NON-MECHANIZABLE AREAS cultivation of native tree seedlings in São % areas by 2014 and by 2017 in non- 0 Paulo state penitentiaries. mechanized areas for mills located 10 In partnership with Biosev, the in the state of São Paulo. By state law, 20 Environmentalist Association of the deadlines are, respectively, 2021 30 the Upper São Francisco (ASF) and and 2031. 40 50 the Committee of the Tributaries The following chart shows a 60 of the Upper São Francisco Water comparison of the Green Ethanol 70 Basin (CBHSF1) donated 900 urban 80 Agro-Environmental Protocol with 90 and fruit tree seedlings to the Sol State Law No. 11.241/02. 100 Nascente neighborhood community 2007 2010 2011 2016 2017 2021 2026 2031 in Lagoa da Prata in January 2014. The initiative, which was supported by the Agro-environmental Protocol Environmental Police and the Municipal
State Law no. 11.214/02 Environmental Secretariat, aimed to encourage tree planting and foster Note: The highlighted points show the specific years cited in the law or protocol. environmental awareness of members of Prepared by Unica. the local community. GRI EN13
66 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
EMISSIONS Emissions of greenhouse gases (GHGs) totaled 8,672,363 metric tons of carbon equivalent. The inventory is based on the GHG Protocol international methodology and the ABNT NBR ISO 14064-1 standard and encompasses all operating units. Renewable emissions represented 85.18% of total emissions, compared to 84.74% in the 2012/2013 crop year,
remaining stable at 0.23 tCO2e per metric ton of sugarcane produced. These emissions reflect carbon recently sequestered from the atmosphere, thus not contributing to an increase in GHG concentrations. Nonrenewable emissions were lower, Atmospheric emissions are going from 0.41t CO e per metric ton inventoried based on GHG 2 Protocol methodology Another contribution to higher of sugarcane crushed to 0.40 CO e, due 2 renewable emissions was startup of a to: an increase in the burning of bagasse new cogeneration unit, which burns in fermentation tanks, higher emission biomass (bagasse), at the Passa Tempo of CO in fermentation vats as a result 2 mill, with installed capacity of 77.8 MW. of higher ethanol blending in fuels, expansion of the car fleet using ethanol During a review of 2013-2014 crop as a primary fuel and an increase of year data, an error was identified in the the fraction of biodiesel used in diesel- calculation of indirect emissions from fueled equipment. transportation of workers, which also occurred in the 2012/2013 inventory. As a result, the values informed in the previous report, also including the calculation of emissions from road GREENHOUSE GAS EMISSIONS GRI EN16, EN17 transportation of agricultural inputs, GRI 3.10 2012/2013 2013/2014 Change were corrected.
Emissions considered tCo2e tCO2e/tc tCo2e tCO2e/tc tCO2e/tc One of Biosev’s chief concerns is to Scope 1 425,415.88 0.014 489,554.00 0.017 -14.48% reduce the environmental impacts of its operations. To this end, the company Scope 2 3,568 0.0001 3,348.00 0.0001 4.87% invests in actions and technologies that Scope 3 779,272 0.026 721,524 0.024 6.30% contribute to sustainable development TOTAL 1,208,255.16 0.040 1,214,426 0.041 -2.08% of its activities. The main actions Renewable Emissions in 2013/2014 related to harvest and Scope 1 6,932,483.52 0.2310 6,736,458.00 0.2281 1.28% transportation emissions involved GRI EN18, EN26 : Scope 2 - 0.0 0.0 0.0000000 Scope 3 9,501.59 0.0003 7.341 0.0002 27.38% • Optimize sugarcane transportation TOTAL 6,941,985.10 0.23 6,743,798 0,23 1.30% logistics - The initiative included Total emissions 8,150,240.26 0.27 7,958,225 0.27 0.79% use of satellite imagery and (considered + renewable) highway mapping tools, leading
Note: Data from the 2012/2013 crop year was revised due to improvement of measurements GRI 3.10 to a comprehensive study at the Scope 1: direct GHG emissions | Scope 2: emissions from consumption of purchased electricity | Scope 3:other indirect emissions
67 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
Ribeirão Preto Complex’s units. Total waste generation This effluent is mixed with vinasse, a The goal is to improve sugarcane registered reduction of manufacturing process by-product, transportation, taking into account and the entire volume is used for factors such as distance, mill capacity, soil fertigation. In 2012, a vinasse road conditions and municipal Master Plan was created, consisting restrictions. 18% of a technical diagnosis of the full structure for handling, transportation • Optimize logistics of transporting and disposal of industrial effluents that finished products - Biosev invested assists in making decisions and setting in use of multimodal transportation compared to priorities to drive effluent control for distribution of finished products previous crop results. (sugar and ethanol) using road transportation for transshipment to During the crop year, several actions railways, a cleaner and more efficient to better control management and mode. reduction of environmental risks were taken. The Giasa unit installed • Use of ethanol in the light vehicle an automatic control system that fleet - Over the past few years prevents rupture of water mains in the company has been replacing event of accidental leakage of effluents, its fleet of light vehicles used for using automated controls connected administrative, agricultural and to the facility’s pumping system. industrial support activities for The Estivas unit was equipped with flexible fuel vehicles (which run on the same automated controls along both gasoline and ethanol). These with improvements in its industrial vehicles are fueled up at the mills wastewater pumping system, improving with internally produced ethanol. process efficiency, reducing time spent • Planting and harvest technologies on these operations and enhancing - Another important advance, equipment safety protection. A new currently in an experimental stage, system for capturing the Leme unit’s is use of planting and harvesting mulch pile effluents was built, ensuring technologies together with satellite proper disposal. GRI EN21 navigation systems. With systems linked electronically to the 1 equipment, it is possible to precisely EFFLUENTS GRI EN21 conduct planting, fertilizing, pesticide application and sugarcane 2012/2013 2013/2014 harvesting operations, minimizing WW + WW + the process and, thus, optimizing fuel Generation vinasse Generation vinasse (m³) m³/tc (m3/tc) (m³) m³/tc (m3/tc) consumption. Wastewater (m3) 26,433,829.97 0.90 26,429,829.79 0.88 1.34 1.39 Vinasse (m3) 13,074,174.63 0.44 15,366,256.95 0.51 EFFLUENTS AND WASTE 1 100% of the effluents are used for soil irrigation; tc: tons of sugarcane Biosev is continuously improving effluent and waste control by sharing METHODS OF DISPOSAL DISCARDS GRI EN22 good practices developed in-house Total by employees. Termed wastewater, Type of waste generated (t) Recycling (t) Reuse (t)1 Waste (t)2 the effluent generated by the mills 2012/ 2013/ 2012/ 2013/ 2012/ 2013/ 2012/ 2013/ originates in various process sectors 2013 2014 2013 2014 2013 2014 2013 2014 (sugarcane washing, cooling, effluent treatment plants, final effluent from the Class I waste 1,194 1,024 505 156 297 457 392 410 water and oil separation tanks, etc.). Class II waste 11,952 9,813 10,098 7,692 50 487 1,803 1,628 TOTAL 13,146 10,837 10,603 7,848 348 944 2,195 2,038
1 Waste destined for co-processing and re-refining 2 Waste destined for industrial and sanitary landfill
68 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
The Santa Elisa unit received the Recycling Station pilot project Support for recycling The total waste generated was 17.6% Through the Continental unit, Biosev lower than in previous crop: 10,837 donates recyclable materials such as tons compared to 13,146 tons. cardboard, plastic and big bags to the Colômbia Cooperativa, a cardboard SELECTIVE COLLECTION collector family cooperative in the municipality of Colômbia (SP). The For waste management, selective project, besides adding financial value collectors from reused drums, to the association with the profit from storage containers for light bulbs the sale of these materials to recycling made of packaging equipment companies being transferred to the (wooden boxes), containment basins cooperative - is environmentally to store discarded oil and grease built responsible, because it ensures proper with scrap parts, shelves for storage disposal of waste materials. of tires, also from scrap, are some examples of good practices that have Another aim is distribution of ecobags been shared and multiplied. (ecologically friendly bags) made by the cooperative and offered city Biosev has central, modern residents, used for storage of recyclable temporary waste storage facilities materials. The initiative contributes equipped with hydraulic presses and to the Colômbia city authority’s Clean electric pallet jacks for baling and City Project, which makes dumpsters transportation of waste, which helps available for disposal of construction reduce the ergonomic risks of these site debris and waste from tree pruning activities. activities, among others.
69 BIOSEV SUSTAINABILITY REPORT 2013/2014 ENVIRONMENTAL MANAGEMENT
The company also maintained its commitment to promote training and effectively control all waste generated in its agricultural and industrial processes, expanding opportunities to reduce or recycle waste. Automotive Workshops employee sin all units received Solid Waste Management training covering 212 training participants. A partnership between the Agriculture area and SHE made it possible to orient participants about appropriate ways to segregate, package and store solid waste. Adoption of these initiatives results in lower solid waste generation, with environmental, economic and social gains. During Selective garbage collection the training session also addressed encourages good practices among employees were SHE Good Practices, presenting WORLD ENVIRONMENT DAY examples of suggestions that already have been adopted. To commemorate and strengthen World Environment Day, the HSE team RECYCLING STATION organized an intensive program in all of Biosev’s units during the week of The Santa Elisa unit launched a June 5. Waste was the central campaign pilot project in July 2013 to raise theme in 2013 to raise awareness among environmental awareness about our employees and in communities. the Recycling Station, encouraging The goal was for everyone to realize the employees to deposit recyclable waste importance of reducing, reusing and from their homes. Collection bins recycling all kinds of waste at home, are in the central building’s parking in the workplace or in the community. lot to receive items such as paper, A Clean Mill seal, to encourage this cardboard, plastics and packaging, attitude among employees, marked the aluminum, glass, light bulbs and visual identity of the campaign. electronics. In 2013, 23,680 kilos of Large bins displaying the seal were waste were collected and sent for spread on the grounds of the facilities to recycling. call everyone’s attention to the theme. Furthermore, partnerships with SESI/ SENAI enabled various recycling workshops. In the SP North and South units, employees painted screens made from the reuse of sugar packing bags. The agenda for the commemorative week also included distribution of educational booklets about waste in schools in 12 municipalities where the mills are located; the running of an Environmental Seminar in Lagoa da Prata (MG), and Simulated Chemical Emergencies in the Estivas (RN), Rio Brilhante (MS) and Jardest (SP) units.
70 BIOSEV SUSTAINABILITY REPORT 2013/2014
GRI CONTENT INDEX GRI 3.12
Page/Comment Reporting level STRATEGY AND ANALYSIS 1.1 Statement by holder of greater decision-making power in the organization about 5 Partial the relevance of sustainability to the organization and its strategy 1.2 Description of main impacts, risks and opportunities 5, 19, 30 Partial ORGANIZATIONAL PROFILE 2.1 Name of Organization 7 Complete 2.2 Main brands, products and/or services 7 Complete 2.3 Operational structure, i including main divisions, operating units, subsidiaries and joint ventures 7, 8 Complete 2.4 Location of headquarters 75 Complete 2.5 Number of countries where the organization operates, and names of countries in which its main 7, 8 Complete operations are located or are specifically relevant to the sustainability issues covered in the report 2.6 Type and legal nature of the property 7 Complete 2.7 Markets served (regions, sectors and types of customers / beneficiaries) 7, 38 Complete 2.8 Size of the Organization 7, 13, 37 Complete
2.9 Significant changes during the reporting period regarding size, structure or ownership 9, 14, 20 Complete 2.10 Awards received during the period covered by the report 12 Complete REPORT PROFILE 3.1 Period covered by the report for the information presented 15 Complete 3.2 Date of most recent past report 2012/2013 Complete 3.3 Report issuance cycle Annually Complete 3.4 Contact information in case of questions regarding the report or its contents 75 Complete 3.5 Process for defining report content 16-17 Partial 3.6 Limit of the report (countries, divisions, subsidiaries, suppliers) 15 Complete 3.7 Declaration about specific limitations with respect to report scope or limit 15 Complete 3.8 Basis for preparation of the report in relation to joint ventures, subsidiaries, leased 15 Complete facilities, outsourced operations and other entities that can significantly affect comparability from period to period and / or between organizations 3.9 Data measurement techniques and bases for calculations 15 Complete 3.10 Effect of any restatements of information provided in earlier 9, 15, 51, 63, 67 Complete reports and the reasons for such reformulations 3.11 Significant changes compared to previous years regarding the scope, 15 Complete boundary, or measurement methods applied in the report 3.12 Table identifying the location of information in the report 71 Complete 3.13 Policy and current practice in relation to search for external verification for the report There was no external verification Complete for the 2013/2014 crop year. GOVERNANCE, COMMITMENTS AND ENGAGEMENT 4.1 Governance structure of the organization 25 Complete 4.2 Indicate whether the head of the highest governance body is also an officer 25 Complete 4.3 Independent or non-executive members of the highest governance body 25 Complete 4.4 Mechanisms for shareholders and employees to provide recommendations 26, 27 Partial or guidance to the highest governance body 4.5 Linkage between compensation for members of the highest governance body, senior managers, 26 Complete and executives (including rescission agreements) and the organization's performance 4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided 26 Complete
71 BIOSEV SUSTAINABILITY REPORT 2013/2014 GRI content index
Page/Comment Reporting level 4.7 Process for a given composition, skills and knowledge of members of the Process for a given composition, skills Complete highest governance body to define the strategy of the Organization and knowledge of members of the highest governance body to define the strategy of the Organization There is no structured process. Members of the Board must ensure the faithful observance of the legal rules and regulations pertaining to the activities of the company and its subsidiaries, and must possess an unblemished reputation, and those prevented by law or judicial condemnation are not eligible for election. 4.8 Statements of mission or values, codes of conduct and principles relevant to economic, 27 Complete environmental and social performance and the status of their implementation 4.9 Procedures of the highest governance body for overseeing the identification and management of the 25 Complete organization's economic, environmental and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles 4.10 Processes for evaluating the performance of the highest governance body, particularly The company does not have a structured Complete with respect to economic, environmental and social performance self-assessment of the Board process, rather only performance analysis of officers, managers, supervisors, coordinators and specialists. 4.11 Explanation of how the organization applies the precautionary principle 30 Partial 4.12 Charters, principles or other initiatives of economic, environmental and 18 Complete social nature to which the organization subscribes or endorses 4.13 Memberships in associations and/or national/international advocacy organizations 18 Complete 4.14 Relationship of stakeholder groups engaged by the organization 16 Complete 4.15 Basis for identification and selection of stakeholders with whom to engage 16 Complete 4.16 Approaches to stakeholder engagement, including frequency of 16 Complete engagement by type and by stakeholder group 4.17 Key topics and concerns raised through stakeholder engagement, and 16 Partial what measures the company has adopted to treat them
PERFORMANCE INDICATORS Page / Comment Level of reporting ECONOMIC PERFORMANCE Form of management 19-23, 30, 35-37 Partial EC1 Direct generated and distributed economic value 35 Complete EC2 Financial implications, risks and opportunities for the organization's activities due to climate change 35, 36 Complete EC5 Lowest wage by gender compared to local minimum wage 56 Complete EC6 Policies, practices and proportion of spending on locally-based suppliers The company is improving the management Not available of this material subject and the data should be available in the 2014/2015 season EC7 Procedures for local hiring The company is improving the management Not available of this material subject and the data should be available in the 2014/2015 season EC9 Identifying and describing significant indirect economic impacts, including the extent of impacts The company is improving the management Not available of this material subject and the data should be available in the 2014/2015 season ENVIRONMENTAL PERFORMANCE Form of management 60-70 Partial EN3 Direct energy consumption breakdown by main energy source 63 Complete EN4 Indirect energy consumption by primary source 63 Complete EN5 Energy saved due to conservation and efficiency improvements 64 Complete EN6 Energy saved due to conservation and efficiency improvements The company is improving its Not available management of this material subject EN7 Initiatives to provide products and services with low power consumption and the information should be available Not available in the 2014/2015 crop year. EN8 Total water intake by source 62 Complete
EN9 Water sources significantly affected by water intake 62 Complete
72 BIOSEV SUSTAINABILITY REPORT 2013/2014 GRI content index
Page/Comment Reporting level
EN10 Percentage and total volume of water recycled and reused 62 Complete
EN11 Location and size of the company's land in protected or high biodiversity areas The company is improving management of Not available this material subject and the data should EN12 Description of significant impacts on biodiversity be available in the 2014/2015 crop year. Not available
EN13 Protected or restored habitats 65, 66 Partial
EN14 Managing impacts on biodiversity The company is improving management of Not available this material subject and the data should EN15 Number of species on the IUCN Red List and national conservation list be available in the 2014/2015 crop year. Not available
EN16 Total direct and indirect emissions of greenhouse gases responsible, by weight 67 Complete
EN17 Other significant indirect emissions of greenhouse gases, by weight 67 Complete
EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 67 Partial
EN19 Emissions of substances that destroy the ozone layer, by weight The company is improving the management Not available of this material subject and the data should EN20 NOx, SOx and other significant air emissions, by type and weight be available in the 2014/2015 crop year. Not available
EN21 Total water discharge, by quality and destination 68 Complete
EN22 Total weight of waste by type and disposal method 68 Partial
EN23 Total number and volume of significant spills The company is improving the management Not available of these material issues, and data will be EN24 Weight of hazardous waste transported, imported, exported, or treated available in the 2014/2015 crop year. Not available EN25 Biodiversity value of water bodies and habitats affected by discharges of water and runoff Not available
EN26 Initiatives to mitigate environmental impacts of products and services and extent of impacts 61, 63, 64, 67 Partial
LABOR PRACTICES AND DECENT WORK
Form of management 51, 53-58 Complete
LA1 Workers by employment type, employment contract and region, broken down by gender 51, 52 Complete
LA2 Total number of employees leaving employment and new hires during the period 52 Complete and rate of employee turnover by age group, gender and region
LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees 56 Complete
LA4 Percentage of employees covered by collective bargaining agreements 51 Complete
LA6 Percentage of total workforce represented in formal health and safety committees, composed of 53 Complete managers and workers that help monitor and advise on occupational health and safety programs
LA7 Rates of injuries, occupational diseases, lost days, absenteeism and work-related fatalities by region 54 Partial
LA8 Education, training, counseling, prevention and risk-control programs in place to assist 54-55 Partial workforce members, their families or community members regarding serious diseases
LA9 Issues relating to health and safety covered in formal agreements with trade unions 54 Complete
LA10 Average hours of training per year per employee, by employee category 57 Complete
LA11 Program for skills management and continuous learning that support the 57 Complete continued employability of employees and to manage end of careers There are programs for managing end-of-career
LA12 Percentage of employees receiving regular performance analyses 56 Complete
LA13 Composition of governance bodies and breakdown of employees per category according 25, 26 Partial to gender, minority group membership and other indicators of diversity
HUMAN RIGHTS Form of management 27-29, 42 Partial
HR2 Percentage of significant suppliers, contractors and business partners that 42 Complete have undergone screening on human rights and actions taken
HR5 Operations and significant suppliers identified in which the right to exercise freedom of association and 51 Complete collective bargaining may be being violated or at significant risk, and actions taken to support these rights
HR6 Operations and significant suppliers identified as having significant risk for incidents of 42 Complete child labor, and measures taken to contribute to the elimination of child labor
HR7 Significant operations and suppliers identified as having significant risk for 42 Complete incidents of forced labor or analogous to slave labor, and measures taken to contribute to the eradication of forced or analogous to slave labor
73 BIOSEV SUSTAINABILITY REPORT 2013/2014 GRI content index
Page/Comment Reporting level SOCIETY Form of management 43-46 Partial SO1 Nature, scope and effectiveness of any programs and practices that assess and manage the 43-46 Complete impacts of operations in communities, including installation, operations and closeout SO1 Percentage of operations in which engagement practices were implemented 100% Complete (G3.1) with the community, impact assessment and program development FP4 Nature, scope and effectiveness of any programs and practices that promote access to healthy lifestyles Does not have programs or practices that Complete promote access to healthy lifestyles or raise awareness about the consumption of sugar. SO2 Percentage and total number of business units analyzed for risks related to corruption 29 Complete SO3 Percentage of employees trained in anti-corruption policies and procedures of the Organization 29 Complete SO4 Actions taken in response to incidents of corruption 29 Complete SO7 Lawsuits for unfair competition, anti-trust and monopoly - Not available SO8 Monetary value of significant fines and total number of non-monetary During the period, there were a total of ten Complete sanctions for noncompliance with laws and regulations non-monetary sanctions for noncompliance with laws and regulations. The sum of significant fines was R$ 336,605.88. PRODUCT LIABILITY Form of management 47-48 Complete PR1 Phases of the product life cycle and services that are valued impacts of health and safety The company is improving the Not available management of this material theme PR2 Compliance with regulations and voluntary codes concerning health and safety and the information should be available Not available in the 2014/2015 crop year. PR3 Type of information on products and services required by labeling procedures 48 Partial FP5 Percentage of production volume in certified units - food safety 48 Complete FP8 Communication to consumers about ingredients and nutritional information 48 Complete PR5 Related to customer satisfaction practices, including results of surveys measuring customer satisfaction 47 Partial PR6 For adherence to laws, standards and voluntary codes related to marketing Biosev sells Estrela and Dumel own brands Complete communications, including advertising, promotion and sponsorship programs in the regional wholesale market and there are no advertising and marketing communication actions for these brands. PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning Were not recorded. Complete marketing communications, including advertising, promotion and sponsorship by type of result PR8 Total number of substantiated complaints regarding breaches Were not recorded. Complete of customer privacy and loss of customer data
74 BIOSEV SUSTAINABILITY REPORT 2013/2014
CORPORATE INFORMATION
BOARD OF DIRECTORS The preparation of this HEADQUARTERS GRI 2.4 Sustainability Report is Claude Pierre Ehlinger Biosev The Louis Dreyfus the result of the efforts CHAIRMAN Commodities Company of the entire Biosev Adrien Dominique Lucien Tardy Av. Brigadeiro Faria Lima, 1355 -11TH Floor VICE CHAIRMAN team. Requests for São Paulo / SP CEP 01452-919 André Roth clarifications regarding Telephone: (11) 3092-5200 MEMBER the content of this Antonio Delfim Netto publication should INDEPENDENT MEMBER be sent by e-mail to Ciro Echesortu sustentabilidade@ MEMBER biosev.com GRI 3.4 Cristiano Biagi MEMBER Ian Clive Barnard INDEPENDENT MEMBER Philippe Jean Henri Delleur INDEPENDENT MEMBER Ricardo Barbosa Leonardos INDEPENDENT MEMBER
EXECUTIVE BOARD Rui Chammas CHIEF EXECUTIVE OFFICER - CEO Carlos Alberto Ribeiro Campos Gradim TREASURY OFFICER Daniel Schmidt Pitta LEGAL OFFICER Dante Lanza dos Santos ORIGINATION ASSOCIATE DIRECTOR Eduardo Lemes Das Neves COMPETITIVENESS DIRECTOR Enrico Biancheri COMMERCIAL OFFICER Evandro Schmidt Pause CHIEF OPERATING OFFICER Luiz Henrique Cerqueira Valverde CREDITS INVESTOR RELATIONS OFFICER General coordination and GRI content Manoel de Moura Silva Filho CONTROLLING AND DIRECTOR OF FP & A HSE Department - Health Safety Marcel Resende Porto and the Environment INVESTMENTS OFFICER Corporate Communication Department Maria Paula Ferreira Curto HUMAN RESOURCES OFFICER Text and editing Mauro Sergio Gines Martins Editora Contadino ENGINEERING OFFICER Patrick Julien Treuer Translation STRATEGY OFFICER Dash Ltda. – Steve Yolen Paulo Prignolato CHIEF FINANCIAL AND INVESTOR RELATIONS OFFICER Graphic and layout project Tereza Cristina Peixoto Multi Design AGRICULTURE OFFICER Walter Biagi Becker Photographs NATIONAL ORIGINATION OFFICER Biosev Image Bank
75