Annual and Sustainability Report 2017 Summary
4 Messages from Management 10 This Year’s Highlights
• Main indicators
• About this Report
• Value Chains
32 Ethics 24 and Integrity • Management JBS and Governance
• Mission, Values and Beliefs • Global Management Structure • Profile • Compliance
• Risk Management 50 Food Quality and Safety 68 Business
• JBS South America
• JBS North America 132 Financial Performance 136 Sustainability • Team Member Health and Safety
• Animal Welfare
• Water and Water Management 206 • Product Integrity GRI Content Summary • Climate Change 4 Messages from Management GRI 102-14
5 Focus on work, commitment to people and progress in transparency
When we started this business over In 2017, we achieved consolidated six decades ago, we always believed sales of R$ 163.2 billion, with 27% that focusing on our work and of global sales, or US$ 13.8 bilion, making a commitment to our people generated from exports particularly were the basics we needed to focus to Greater China, Africa and the on to build a successful Company. We Middle East. EBITDA was R$ 13.4 R$ 163.2 also believed these were the main billion, up 18.9% versus the preceding billion tools we would use to address any year, with an EBITDA margin of 8.2%. In consolidated challenge. The events of 2017 bore Annual net profit showed a marked sales this out. increase, reaching R$ 534.2 million, a 128.7% improvement compared to Last year drove us to be even 2016 and equivalent to R$ 0.19 per better. The values we share with share. our colleagues and the trust of our business partners were critical In addition to these robust results, factors in achieving one of the we also increased our commitment Company’s best ever operational to transparency, creating a global results. Compliance Department that operates independently and reports The values we share with our directly to the Board of Directors. colleagues and the trust of our business partners were critical factors in achieving one of the Company’s best ever operational results.
6 This year the area has made So we arrive in 2018, a symbolic year headway in several areas by for the Company, with pride in our improving our control mechanisms achievements and plenty of energy as and activities. New policies and we look ahead. We celebrate our 65th procedures were introduced in anniversary with even greater belief line with best global practices. Our in our future, supported by a capable many initiatives include Compliance team as we prepare to write another training courses for all leadership chapter in our history. To all of you positions in Brazil and the decision to who have supported us along this outsource our whistleblower hotline, journey and those who have been a which is now called the JBS Ethics part of it, my heartfelt thanks. Line.
The sustainability of our operations was confirmed by our financial José Batista results as well as our environmental Sobrinho conservation projects and policies. President One example was our performance of JBS in the assessment by the CDP, a global organization that provides sustainability process analyses. We are also one of the leading proponents of programs to reduce deforestation and manage water resources.
It has taken a lot of hard work to build this Company. Our progress is based on the efforts of the more than 230 thousand team members who share our values and the strength of our culture and the steadfast focus on our mission: to be the best in all that we do.
7 People and Culture
From the very beginning, JBS has We have focused on understanding always worked hard to be the best at consumer trends and demands. For whatever it sets its mind to. It is part example, we are the world’s largest of the Company’s DNA that good is producer of natural, organic chicken. More than just not good enough. We constantly In Brazil, satellite monitoring of cattle try to surpass our customers, supplier properties ensures our 230 investors and business partners’ raw materials are properly sourced. thousand expectations, wherever we are. These sustainable practices, which team members are constantly evolving, are also The constant pursuit of excellence a common thread across all our encompasses the Company’s focus businesses and increasingly a part of on creating innovative products, our strategies. processes and relationships. This includes the decision to create the 2017 was an atypical year. In Brazil, Global Quality and Food Safety we faced market perceptions that Department, which will raise food the Company was losing liquidity safety and product quality standards towards the end of the first half of and reinforce JBS’s position as a the year. We also felt a number of global leader in these areas. temporary impacts alongside the economic crisis in Brazil. We quickly resumed normal production volumes It is part of the Company’s in Brazil and our business proved DNA that good is just not resilient given strong performance enough and we constantly in our global operations. The try to surpass our customers, investors and business partners’ expectations, wherever we are.
8 factors that affected our Brazilian streamlined, highly focused and operations were offset by positive independent management structure performance from our operations in and especially the attitude of our other countries, especially in North team of more than 230,000 team America, which host the majority of members fully engaged with our our operations and generates the culture, have been the biggest vast majority of our revenues. In differentials in helping deliver great Brazil, we also reached a stabilization results this year, while filling us with agreement with local financial hope of a better future ahead for institutions. everyone involved.
We drew up a strategy that was easy to understand and execute, based on four pilars: people, cash generation, reduced leverage and readying the Gilberto Company for a new era of prosperity. Tomazoni JBS’s character, resilience and success Global COO this year was driven by our personnel and the Company’s relationships with its customers, suppliers and other partners.
Leadership in several of our markets, our scale, our geographic and portfolio diversity, our product quality, partners and brands, our
9 This Year’s Highlights
10 11 JBS 2017 Highlights
Net Revenue Gross Profit R$ 163.2 billion* R$ 23.8 billion* Down 4.2% vs. 2016 An 11.5% increase and gross margin *equivalent to US$ 51.5 billion growth from 12.5% in 2016 to 14.6% in 2017.
14.6% 170,380.5 163,170.0 12.5%
21,313.8 23,772.2 -4.2% 11.5%
2016 2017 2016 2017
Adjusted EBITDA Net Profit R$ 13.4 billion* R$ 2.1 billion* EBITDA rose from 6.6% in 2016 Reported net profit was R$ 534.2 million, to 8.2% in 2017. up 128.7% vs. 2016, with EPS of R$ 0.19. *Excluding the effect of signing up to PERT (for further details, see here: http://jbss.infoinvest.com.br/enu/4389/ JBS%20-%20Material%20Fact%20-%20PERT.pdf )
8.2% 6.6% 0.75 13,415.9 11,286.9 2,111.4 0.19 0.09 534.2 18.9% 233.6 804.0%
2016 2017 2016 2017* 2017
Operational Free Cash Cash Flow Flow R$ 5.2 billion* R$ 2.8 billion* Up 41.9% compared Up 2070% compared with 2016 with 2016 5,204.0 3,667.4 2,777.6
41.9% 128.0 2070%
2016 2017 2016 2017 * In millions of R$. * In millions of R$.
12 Main Indicators
2017 2016 2015 2014 2013 Economic/financial Indicators – R$ millions Net Operating Revenue 163,170.00 170,380.53 162,914.53 120,469.70 92,902.80 Cost of Products Sold 139,397.70 -149,066.70 -140,324.20 -101,796.30 -81,056.10 Gross Profit 23,772.20 21,313.83 22,590.30 18,673.40 11,846.70 Gross Margin % 14.60% 12.50% 13.90% 15.50% 12.80% EBITDA 13,415.90 11,286.90 13,300.40 11,090.00 6,130.30 EBITDA Margin (%) 8.20% 6.60% 8.20% 9.20% 6.60% Net Profit 534.20 233.60 4,640.10 2,035.90 926.9 Net Margin (%) 0.30% 0.10% 2.80% 1.70% 1.00% Investments 2,426.42 3,539.40 21,603.87 4,276.85 1,905.91 Net Debt 45,283.30 46,904.80 47,038.70 25,168.70 23,748.20 Operational Cash Flow 5,204.00 3,667.40 21,206.40 8,987.00 2,541.05 Free Cash Flow 2,777.60 128.00 -397.47 4,710.16 635.13 Social and Environmental Indicators Number of Team Members 233,797 237,061 227,168 208,503 191,426 Total GHG emissions, by weight (tCO2e) - scope 1 6,051,350.26 6,553,358.363 4,445,098.00 4,411,977.13 3,877,792.00 Total GHG emissions, by weight (tCO2e) - scope 2 1,780,144.14 1,814,793.763 1,779,980.77 1,457,679.79 2,423,078.00 Volume of Water Consumed (thousand m3) 180,438.23 190,961.163 165,606.003 66,709.002 67,813.002 Investments in Environmental Management and Improvements (R$ million) 806.50 855.20 716.60 N/D1 N/D1 1 No data available. 2 Data referring only to JBS operations in Brazil. 3 Revised numbers.
13 About this Report
The JBS S.A. Annual and Sustainability Standards (IFRS) issued by the This is the Report presents the Company’s 2017 International Accounting Standards eighth business results (from January 1 to Board (IASB) and audits are performed consecutive December 31). In this document, the by BDO RCS Independent Auditors. year that Company will highlight the initiatives GRI 102-48, 102-49, 102-51, 102-52, 102-54 that influenced its economic, social JBS S.A. has and environmental performance GRI performance (environmental, voluntarily throughout the year. The document social and economic) indicators reported this also includes information on our reported in this document refer to the information corporate structure, global business results achieved on each of the JBS in its annual strategy, the markets where we business platforms, divided into JBS report, in operate and our management and South America and JBS North America. accordance governance practices, among other GRI 102-49, 102-48 with guidelines topics. The global scope of the report – first adopted in 2015 – reflects the JBS is always looking to improve its from the Global Company’s position as one of the annual report. Hence, several channels Reporting world’s largest food companies. are available for any comments, Initiative (GRI). GRI 102-45, 102-48, 102-50, 102-52 suggestions, questions or criticism related to this document, including This is the eighth consecutive year [email protected]. The that JBS S.A. has voluntarily reported Investor Relations area (www.jbs.com. this information in its annual report, br/ri) is also available by phone + +55 in accordance with guidelines from (11) 3144-4224 and e-mail [email protected]. the Global Reporting Initiative (GRI). GRI 102-53 In this edition, the Company has adopted the new GRI Standards 1 JBS South America (Seara and JBS Carnes, which includes JBS Couros and methodology. As a result, this report JBS New Business) and JBS USA (JBS USA was prepared in accordance with the Beef, which includes the operations of GRI Standards: Essential Option. Our JBS Australia, JBS USA Pork and Pilgrim’s Pride Corporation, which extends to financial statement audits adhere Pilgrim’s Moy Park) to International Financial Reporting
14 15 Materiality Matrix based on their highly demanding GRI 102-46 approach to sustainability and their In order to report information level of engagement in each particular using the GRI Standards, JBS S.A. category. GRI 102-40, 102-42, 102-43 102- has selected five issues that are of 44, 103-1 significant importance for both global sustainability of its businesses and for The materiality matrices’ from each its principal stakeholders (GRI 102-47): business were discussed by the • Team Members Health and Safety respective sustainability departments, • Product Integrity which came to a consensus that the • Animal Welfare five issues listed above are the most • Water Management important the Company currently • Climate Change faces. GRI 103-1
These global issues reflect the Indicadores GRI materiality matrix underlying each Based on the selected issues, JBS Company business in each of the has defined the GRI reporting topics countries where it operates. As such, for this report. The information the matrix includes the methodologies provided is the outcome of interviews used by JBS South America and JBS and questionnaires applied to the North America, based on one-on- Company’s top executives at the one interviews with top Company South America and North America executives and hundred of external platforms, as well as the managers stakeholders to identify what responsible for activities related to factors lie behind the success of the each particular issue. business. Based on this information, representatives were selected from The GRI Content Summary contains our network (suppliers, internal and further details on these indicators. external customers, government and GRI 102-55 civil society) whose requirements and opinions were surveyed in person or by telephone. These groups were selected
Global material issues
Team Member Animal Water Product Climate Health Welfare Management Integrity Change and Safety
16 Materiality and its boundaries GRI 103-1, 102-47
GRI Topics Issue Description Where it occurs related Team Members Occupational Health and Safety; Team Members; Third 103-1; 103-2; Health and Safety Culture of Prevention and parties; Operational Units; 103-3; 403-1; Engagement; Legal Compliance; Administrative Units 403-2; 403-3; Training 403-4 Animal Welfare Management and Governance; Raw Material; Producer 103-1; 103-2; Best practices for Animal Farms; Environment; 103-3 Breeding, Transport and Slaughter; Suppliers; Operational Certification; Audits Units; Administrative Units Water Management Usage Reduction Targets; Environment; Operational 103-1; 103-2; Management and Governance; Units; Administrative 103-3; 303-1; Capture Sources: Eco-Efficient Units; Team Members; 303-3; 306-1 Practices; Reuse; Effluent Third Parties Treatment; Educational Activities Product Integrity Responsible Social And Environment; Producer 103-1; 103-2; Environmental Practices; Farms; Suppliers; 103-3; 304-2; Responsible Raw Material Operational Units; 308-1; 308-2; Procurement Supplier Administrative Units; 409-1; 414-1; Environmental Assessment; Customers; Consumers; 414-2; 416-1 Supplier Employment Practices Society in general Assessment; Forced Labor; Supplier Human Rights Assessment; Supplier Evaluation re. Impacts on Society; Certificate of Best Practices, Processes and Routines; Supplier-oriented Educational and Management Support Actions; Participation in Local and Global Issue-Related Forums Climate Change GGE Emissions Management; Environment; Operational 103-1; 103-2; Supplier and Producer Units; Administrative 103-3; 201-2; Engagement; Logistics Efficiency; Units; Suppliers; 302-1; 302-4; Energy Efficiency; Renewable Producers; Team Members; 305-1; 305-2; Energy Investments; Energy Third parties; Customers; 305-3; 305-4; Usage Reduction Targets; Solid Consumers; Society in 305-5; 306-2; Waste Collection; Materials Reuse general 306-4 and Recycling; Reduction in Product Packaging Volumes
17 Value Chains GRI 102-9 Poultry
RAW MATERIAL IS SEGREGATED
RAW MATERIAL PURCHASES RESPECT SOCIAL AND ANIMALS ARE ENVIRONMENTAL FEED SLAUGHTERED CRITERIA (SOYBEANS, MANUFACTURE RESPECTING CORN AND OTHERS) WELFARE GUIDELINES UNDERSTAND SPECIALIZED CONSUMER TRANSPORTATION DESIRES
FATTENING GENETICS ACQUISITION (UNTIL REACHING EGG HATCHING FEMALE | MALE THE WEIGHT BREEDER GENERATES GRANDPARENT REQUIRED TO MALE AND FEMALE MEET SPECIFIC REBREEDING CHICKS DEMANDS) AND BREEDER PRODUCTION CHICKS BROILER EGG INCUBATION BACKGROUNDING BROILER CHICK EGG INCUBATION
OWNED AND INTEGRATED FARMS
18 JBS HAS PRODUCTION UNITS AND COMMERCIAL OFFICES IN OVER 20 COUNTRIES
DOMESTIC MARKET
PREPARATION FOR FOOD OVER 300,000 CUSTOMERS, JBS PREPARES READY- INCLUDING RETAIL CHAINS, SPECIALIZED SPECIALIZED TO-EAT, FRESH, FROZEN, TRANSPORTATION WHOLESALE CLUBS AND PORTIONED AND OTHER TRANSPORTATION FOOD SERVICE COMPANIES CATEGORIES OF FOODS (RESTAURANTS, HOTELS, FOOD DISTRIBUTION SERVICE DISTRIBUTORS AND CENTER SUPPLEMENTARY PROCESSING COMPANIES).
STRIVING FOR CUSTOMER SPECIALIZED SATISFACTION TRANSPORTATION (B2B) STRIVING FOR CONSUMER SATISFACTION (B2C) FOREIGN MARKET
JBS SELLS ITS PRODUCTS TO OVER 150 COUNTRIES
JBS ENVIRONMENTAL
19 Value Chain GRI 102-9 Pork
RAW MATERIAL PURCHASES RESPECT SOCIAL AND FEED MANUFACTURE ENVIRONMENTAL RAW MATERIAL IS CRITERIA (SOYBEANS, SEGREGATED CORN AND OTHERS)
SPECIALIZED TRANSPORTATION UNDERSTAND CONSUMER ANIMALS ARE SLAUGHTERED DESIRES RESPECTING WELFARE GUIDELINES
PIGLETS FOR OWNED AND GENETICS INTEGRATED FARMS ACQUISITION SLAUGHTER FEMALE HOGS MALE HOGS BACKGROUNDING FATTEN UP ARTIFICIAL TO 110-120KG INSEMINATION BACKGROUNDING
THIRD- PARTY PORK PURCHASES
20 DOMESTIC JBS HAS MARKET PRODUCTION UNITS AND COMMERCIAL OFFICES IN OVER SPECIALIZED OVER 300,000 CUSTOMERS, 20 COUNTRIES TRANSPORTATION INCLUDING RETAIL CHAINS, WHOLESALE CLUBS AND FOOD SERVICE COMPANIES DISTRIBUTION (RESTAURANTS, HOTELS, FOOD CENTER SERVICE DISTRIBUTORS AND SUPPLEMENTARY PROCESSING COMPANIES).
FOOD PREPARATION JBS PREPARES READY- SPECIALIZED TO-EAT, FRESH, FROZEN, TRANSPORTATION PORTIONED AND OTHER CATEGORIES OF FOODS SPECIALIZED TRANSPORTATION STRIVING FOR STRIVING FOR CONSUMER CUSTOMER SATISFACTION SATISFACTION (B2C) (B2B)
FOREIGN MARKET JBS SELLS ITS PRODUCTS TO OVER 150 COUNTRIES
JBS ENVIRONMENTAL
21 Value Chain GRI 102-9 Cattle
JBS SHIPPING TALLOW, COLLAGEN, SERUM RAW MATERIAL IS AND OTHER SEGREGATED PRODUCTS
ANIMALS ARE SLAUGHTERED RESPECTING WELFARE GUIDELINES LEATHER
SPECIALIZED JBS SHIPPING UNDERSTAND TRANSPORTATION CASINGS CONSUMER DESIRES JBS ENVIRONMENTAL
RAW MATERIAL PURCHASES RESPECT SOCIAL AND JBS PERSONAL ENVIRONMENTAL HYGIENE AND CRITERIA (CATTLE) JBS LEATHER CLEANING
JBS BIODIESEL
JBS COLLAGEN
22 JBS HAS PRODUCTION UNITS AND COMMERCIAL OFFICES IN OVER 20 COUNTRIES DOMESTIC MARKET SPECIALIZED TRANSPORTATION SPECIALIZED OVER 300,000 CUSTOMERS, TRANSPORTATION INCLUDING RETAIL CHAINS, WHOLESALE CLUBS AND FOOD PREPARATION FOOD SERVICE COMPANIES JBS PREPARES READY- DISTRIBUTION (RESTAURANTS, HOTELS, FOOD TO-EAT, FRESH, FROZEN, CENTER SERVICE DISTRIBUTORS AND PORTIONED AND OTHER SUPPLEMENTARY PROCESSING CATEGORIES OF FOODS COMPANIES).
STRIVING FOR STRIVING FOR CONSUMER CUSTOMER SATISFACTION SPECIALIZED SATISFACTION (B2C) TRANSPORTATION (B2B)
JBS SELLS ITS PRODUCTS TO OVER 150 COUNTRIES
FOREIGN MARKET
JBS METAL PACKAGING
23 JBS
24 25 Our mission GRI 102-38 To be the best in all that we do, completely focused on our business, insuring the best products and services to our custumers, a relationship of trust with our suppliers, profitability for our shareholders and the opportunity of a better future for all our Ownership team members.
Humility
Our values
Sincerity
Simplicity
26 Determination
Discipline
Our beliefs
• Focus on details • Take a hands-on approach • Our achievements are based on hard work • The right person in the right place • Passion for what we do • Attitude is more important than knowledge • Leaders must earn trust • Lead by example Availability • Focus on results • Work with people better than us • Belief makes the difference • Product quality
27 Profile JBS is based in Sao Paulo, Brazil from major regional chains to small- and is the country’s largest private scale retailers, as well as wholesale sector non-financial Company. JBS clubs and food service companies stock is traded on the BM&FBovespa (restaurants, hotels, food service and the Company’s ADRs (American distributors and supplementary Depositary Receipts_ are traded on processing companies). the OTCQX over-the-counter market. GRI 102-2, 102-6, 102-7, 102-8 GRI 102-3, 102-5 The Company’s commitment JBS S.A. is the world’s second largest to innovation also reflects its food Company and a global leader in management approach to related several of its businesses. The Company businesses such as leather, biodiesel, has a diverse brand and product collagen, personal hygiene and portfolio with options ranging from cleaning products, natural casings, fresh and frozen meat to added value, solid waste management solutions, ready-to-eat, prepared and processed metal packaging and transportation, products. It sells these products under as well as the sustainability practices brands well-known for their excellence adopted throughout the value chain. and innovation, and which are leaders One example is the constant cattle in their respective markets, including supplier monitoring using satellite Friboi, Seara, Swift, Primo, Pilgrim’s imagery, georeferenced maps of Pride, Moy Park, Just Bare, and others. supplier farms and official data from GRI 102-1, 102-2 government agencies. GRI 102-2
The Company also focuses on the 2 Source: Valor Econômico newspaper 3 Source: Bloomberg highest possible food safety and 4 In this report, the expression “team quality standards and has adopted members” refers to our direct hires. i.e., best sustainability practices workers who have a formal working relationship with JBS. Contract labor will throughout its value chain, operating be identified as third-party or outsourced a global and diverse food production labor in this report. and distribution platform, with production units and commercial offices in over 20 countries and approximately 235,000 team members. We serve over 350,000 customers in more than 150 countries, managing a customer portfolio that includes various types of retailers,
28 In 2017, JBS headquarters in São principles – before, during and after Paulo achieved the Green Building construction. The 12,000 m2 building green level in the “new construction” optimizes energy usage, improves category, complying with the quality of life and ensures lower LEED (Leadership in Energy and operating and maintenance costs. Environmental Design) system, the It also uses water responsibly, with most widely recognized seal for equipment installed throughout the sustainable construction in Brazil building to reduce drinking water which has also been adopted by consumption, as well as a system over 160 countries. This certificate that collects rainwater to reuse for states the building complies with cleaning and irrigation. civil construction sustainability
29 Global Production and Sales Platform GRI 102-4 The Company has over 400 production units in more than 15 countries and commercial offices in 20 countries.
Canada
3%
USA Europe 5% 52%
Mexico
4%
Brazil Percentage of Total Revenue 1 14% Production platform
Note 1. Revenue by region includes domestic sales and imports
South America
1%
Global leader in each business sector
World’s largest beef producer 1st World’s largest leather processing Company World’s largest chicken producer World’s largest organic chicken producer
30 Russia
1%
Africa and the Middle East Asia 3% 13%
Oceania
4%
2nd Largest pork producer in the world Largest lamb producer in the world
31 Ethics and Integrity
32 33 Ethics and integrity play a very accordance with their powers important role supporting JBS’s under the Company’s bylaws, business sustainability. As such, both they provide overall guidance principles underpin the Company’s for Company business and set global strategies. economic, social and environmental targets. All JBS practices reflect the • Two new Board advisory best sustainability standards committees: Related Parties and currently available. One example Governance. The first, Related is the Company’s commitment to Parties, is responsible for ensuring constantly improving its corporate that Company transactions and governance practices, resulting in the those of its subsidiaries and highest ever number of independent affiliates reflect JBS’s interests directors representing 44% of the and comply with ethics and Board. Last year, the Company also transparency guidelines, as well reviewed the operation and structure as applicable legislation. The of the Board’s Advisory Committees Governance Committee is an and related policies. In parallel, advisory committee responsible JBS also took steps to improve its for instituting best governance Compliance practices, restructuring practices based on the highest another area focusing on this issue. global standards and for Reflecting ongoing changes in the monitoring compliance. business environment in Brazil,
Compliance will now report directly These new committees joined the to the Board of Directors and is now three pre-existing non-statutory a global department. committees: Sustainability, Audit and Financial and Risk Management This Year’s All of the committees were Highlights restructured during the course of the year, reviewing their respective • The Board of Directors - the charters and work agendas. For Company’s highest-ranking more information about these governance body - ended 2017 committees and their members, with nine members, including four please visit the JBS IR website independent directors (44%). In (http://jbss.infoinvest.com.br/). 2016, the Board had eight members • The Compliance area was - two of whom were independent restructured to create the Global (25%). Board members represent Compliance Department, which the shareholders and are elected reports directly to the Board of to serve a two-year term. In Directors (for further information, see pages 42 to 47).
34 • A policy was adopted for Related- Party Transactions, providing guidelines on the procedures JBS, its subsidiaries and its affiliates, as well as their team members, management and shareholders, are required to observe during transactions with related parties. This document now exists alongside four other policies governing Material Information Disclosures, Securities Trading, Dividends and Privacy. A full version of these policies, which support management in the ordinary course of business, is available on the Company website (http:// www.jbs.com.br/ri/, in Corporate Information / Codes and Policies).
• Three strategic areas were created, reporting directly to the President of Global Operations: Food Safety and Quality, Center of Excellence and Innovation and Global Sourcing (for further information, see page 71).
Three strategic areas were created, reporting directly to the President of Global Operations: Food Safety and Quality, Center of Excellence and Innovation and Global Sourcing.
35 Management
and Governance GRI 102-18
The right person in the right place This principle also applies to our JBS believes this attitude gives the Company leaders: the business is led Company a competitive edge. In fact, by experienced professionals who human capital is so important to the have an extensive track record in business that it is one of the main pillars their respective areas. This, alongside of our Company culture (see page 27). ongoing efforts to improve Corporate Governance practices, guides Company efforts to generate sustainable results for JBS stakeholders.
In fact, human capital is so important to the business that it is one of the main pillars of our Company culture.
36 JBS Management Team at the end of 2017
Board of Global Directors Compliance Department Jeremiah O’Callaghan* José Batista Sobrinho Aguinaldo Gomes Ramos Filho Gilberto Meirelles Xandó Baptista Wesley Mendonça Batista Filho José Gerardo Grossi** Sérgio Roberto Waldrich** Cledorvino Belini** Roberto Penteado de Camargo Ticoulat** Advisory Committees Sustainability Audit *AC President **AC independent members Financial and Risk Management Governance Related Parties
37 Global Management Structure
José Batista Sobrinho President and Global CEO of JBS
Gilberto Tomazoni Chief Operating Officer
Board of André Directors Nogueira PPC President of JBS USA
Bill Al Martin Tim Brent Lovette Byers Dooley Schellpeper Eastwood President President JBS President JBS JBS USA President JBS of PPC USA Regional USA Pork Fed Beef Australia Beef
38 Food Quality and Safety
Center of Excellence and Innovation
Global Sourcing
Wesley Batista Filho President of South America Operations
Joanita Renato Nelson Roberto Karoleski Costa Dalcanale Motta President President of JBS CEO of JBS New President of of Seara Carnes Business JBS Leather
JBS’s Reference Forms contain document here http://jbss. further information on our infoinvest.com.br/ptb/4414/70224. Governance bodies and their pdf, and see pages 446 to 536. leadership teams. View the
39 Best Governance • The chairman of the Board of Directors and the Company CEO Practices are separate posts held by different people. • For over 10 years, JBS stock has been listed in Brazil on the B3 New Market, • All shareholders are granted tag a listing segment for companies that along rights if a controlling stake have adopted a higher standard of in the Company is sold. This means 44% Corporate Governance. This means that anyone acquiring control of of the Board the Company has undertaken the Company is required to make members are certain governance commitments a public offering to acquire the independent which go beyond current legislative shares of all shareholders, offering requirements. the same price per share paid for the controlling block. • The Company’s equity is made up exclusively of common stock, giving • Permanent Fiscal Committee all shareholders equal rights. • All members of the Board and the • 35.86% of all shares issued are held Company’s committees, as well by minority shareholders, exceeding as the Fiscal Committee, receive the 25% figure required under New a fixed, monthly, performance- Market regulations. based salary. This means they do not receive any direct or indirect • 44% of board members are benefits nor do they receive a share independent directors, exceeding the in the Company profits. Other 20% minimum requirement under management compensation is New Market rules. performance-driven to encourage
40 Stock Market Listing JBS stock is also included in theoretical portfolios by the following sustainable medium and long-term BM&FBovespa indices: growth at JBS while incentivizing • •Differentiated Corporate efforts to reach short-term targets, Governance Stock Index (IGC) guaranteeing long term business • Differentiated Tag Along Stock continuity. Compensation is based Index (ITAG) on market research and is intended to attract and retain highly • Brazil Index (IBrX) qualified staff who are aligned with • Brazil Index 50 (IBrX -50) the interests of the Company, its executives and shareholders. • Wider Brazil Index (IBrA)
• Carbon Efficiency Index (ICO2) Financial Markets At the end of 2017, JBS S.A. had the • BM&FBovespa Consumer following equity position: index (ICON)
• BM&FBovespa Value Index (IVBX-2)
• Mid-Large Cap Index (MLCX)
• Trade Corporate Governance Index (IGCT)
In addition to trading on the B3 New Market, JBS stock is also traded as Level 1 ADRs (American Depositary 41.91% Controlling Group* Receipts) on the OTCQX over-the- 36.08% Minority Shareholders counter market.
21.32% BNDES Participações S.A. (BNDESPAR) At the end of 2017, JBS had a market 0.70% Treasury Shares value of R$ 26.8 billion. * Including FB Participações and Banco Original
41 Compliance GRI 102-16
JBS restructured its Compliance area results. Indeed, this approach has in 2017. Previously a management underpinned many of our 2017 area, Compliance became a Global initiatives and others forecast for the Department reporting directly to next several years. the Board of Directors. This helps The “Always JBS improve its existing control Compliance Culture Do It Right” mechanisms and activities and The “Always Do It Right” Compliance program develop new policies and procedures program includes a number of includes a in line with best global practices. activities intended to expand a number of compliance-based culture with a actions aimed A robust Compliance program view to avoiding unlawful conduct at advancing offers greater long-term business and helping to anticipate possible continuity, supports corporate irregularities. a Compliance development and is an important culture. asset in helping to improve medium As a result, communication and and long-term economic/financial dialogue play a strategic role with in-house and external audiences. Special emphasis has therefore been given to disclosing and disseminating compliance-related information and the relevant policies and procedures. Marcelo The Company’s various management- related activities have also been an Proença, important tool in efforts to multiply Global best practices. Compliance Director All of these efforts exist in parallel with the other verticals that form the Proença has 27 years experience. basis of the JBS Compliance Program:
He has previously worked as an Leadership and Governance attorney and holds a master’s JBS believes a Compliance culture degree and doctorate in Law involves a wide range of approaches from the São Paulo University that focus on management and it Law Faculty, where he is currently has developed initiatives to ensure a professor of Commercial Law. everyone understands the Company’s He is also a professor teaching on current policies and procedures and the Getúlio Vargas Foundation the management team is able to multiply this knowledge across its GVLaw course and has published teams. eight books.
42 Pillars of the JBS Compliance Program
Risk Leadership and Policies and Ethics Controls Training and Third-Party Due Assessment, Assessment Governance Procedures Reporting Communication Diligence Oversight and Channels Discipline
Some of the activities organized in ›› Training courses were organized 2017 to improve the Leadership and for the Board and its respective Governance pillar include: advisory committees, as well as • The “Speak to Compliance “ the Fiscal Committee, addressing event held between June and their duties and responsibilities August in Brazil. This initiative and reinforcing the issues set out was organized to inform people in the Ethical Conduct Manual. that the Compliance area had The initiative also addressed other been restructured and explain areas such as corruption, money the corresponding roles and laundering, conflicts of interest, responsibilities. Approximately antitrust matters and employment 800 members of the compliance. This training course, management team were involved. which will be mandatory from 2018, was brought forward by JBS in line • Leadership training – throughout with efforts to build a Company- the year, various interactions wide Compliance culture. were organized for the leaders of the Company’s various • Ethics Committees – these businesses: committees are responsible for monitoring the “Always Do It Right” ›› Specific training courses were program at each business unit and held for 120 directors in Brazil; assessing investigations triggered ›› Leadership events such as through the reporting channel. Compliance Program Disclosure The committees are organized as were arranged; follows:
43 Ethics Committees Structures
Board of Directors
JBS Ethics Committee
JBS New JBS Carnes Seara JBS Leather SWIFT Corporate Business Ethics Ethics Ethics Ethics Ethics Ethics Committee Committee Committee Committee Committee Committee
Policies and Procedures Ethics Reporting Channels Reviewing and publishing policies JBS created a new ethics reporting and procedures was a priority issue in channel at the end of 2017. Called the JBS 2017. These activities helped further Ethics Line, it is available to all Company implementation of compliance rules stakeholders (team members, suppliers, at all Brazil units, in accordance customers, investors and others). This with best market practices. The new channel, which was set up so that documents include: people could report unlawful behavior or • Sponsorship Policies activities contravening the JBS Ethical Conduct Manual, is available in three • Product Donation Policy languages (Portuguese, English and • Product Donation Procedure Spanish) and is managed by a specialist provider from outside the Company to • Related Party Transactions Policy ensure complete independence and • Consequences Policy security for any whistleblowers, who can also file reports anonymously, if they • Reporting Investigation Policy so wish.
• Ethics Committees’ Charters The Company responsible for the JBS Ethics Line registers the report, classifying it based on the issues involved and incident severity, and submits the information to the JBS Compliance area, which will take appropriate action.
44 Controls Third-Party Due Diligence Procedures for sponsorship or Beginning in the third quarter donations involving products or of 2017, the Company improved other goods and services have its third-party due diligence also changed. A new policy has procedure. In 2017, more than now been published specifically 280 third parties went through addressing these issues, setting this new process and 13% were out guidelines and responsibilities rejected because they failed to at all JBS businesses in Brazil. comply with the Company’s new rules. A consultancy Company Among other issues, the document was hired at the end of 2017 to states that all donations must automate this process, which be requested by a philanthropic means the Company will be able organization helping to improve its to analyze a larger pool of third local community, where JBS must parties. A pilot project for this new also have a significant number tool is scheduled to start in 2018. of team members. Donations to government agencies or officials are prohibited, to avoid preferential treatment, undue advantages, conflicts of interests or any effort to influence decisions taken by a government or private sector officials.
Best transparency and anti-corruption practices
In the Transparency in Corporate Reporting study by Transparency International (TI), which was based on information from the 100 biggest companies in Brazil and the largest Brazilian banks, JBS was ranked 23rd. The survey analyzed each organization’s transparency and anti-corruption practices. JBS was ranked as having an average of 8.1, two points above the 5.7 average classification for all Brazilian companies. The ranking is calculated using the ACP (Anticorruption Program - 73%) + OT (Organizational Transparency - 88%) indices. The TI ranking shows that JBS’s initiatives, which are aligned with best global practices, reinforce the Compliance efforts the Company has adopted and will support the Company’s ongoing and firm intent to be a global benchmark in this area.
45 Compliance Progress in 2017
September • Leadership events, such as Compliance Program Disclosure, were concluded
• Internal communications were expanded to July keep all Company team • Leadership events such members abreast of as Compliance Program Compliance-related Disclosure were put in place issues
• The “Speak to Compliance” • New staff were hired event was held at the JBS for the Compliance area, head office for around which now has a total of 600 Company leaders, 8 team members. providing information on the department’s restructuring process and relevant roles and responsibilities
June August October • The Global Compliance • Training courses began • Presentations and training Department was created for the JBS Board of courses were organized at the Directors and the Fiscal Annual JBS Carnes meeting • The Global “Always Do Committee in Brazil. (held at the Company’s head It Right” Compliance These courses were office), at units in Cuiabá Program was announced held on five different (MT) and Campo Grande • Three new committees days and at varying (MS) and during the Seara were set up (the times for groups of Supply Leaders meeting in Executive, Governance around 30 directors, Itajaí (SC). Around 270 leaders and Related Parties addressing Compliance, were involved and were Committees) Anticorruption, subsequently responsible for Antitrust and Conflict transmitting the information of Interest matters they received to their respective units
• The Compliance department attended Quality Week, offering training courses on consumer rights
46 Targets for 2018 The Compliance Program includes ongoing efforts to improve practices, policies and procedures. As such, JBS November will continue existing initiatives in order to: • Expand all of the ongoing initiatives in Brazil into other • A consultancy Company was regions where JBS has operations hired to implement a new third- party due diligence methodology • Expand and improve communications globally
• Training courses were held for • Expand and improve third-party due diligence whistle-blowing investigators procedures
• Training courses were organized • Expand and improve team member training programs for the JBS Ethics Committees • Carry out ongoing analysis of and address compliance • Ethics Committees were created risks, which will include creating and reviewing internal policies to handle ethics reporting • Improve internal controls based on risk assessments • The Company began mapping possible conflicts of interest • Monitor the Compliance Program on a continuous basis among JBS S/A Team Members through existing Ethics Committees (at management level)
December • The new ethics reporting • Training courses were channel (the JBS Ethics Line) organized for the Board and was launched its respective committees, as well as the Fiscal Committee, • The Compliance Program was addressing their duties and presented during JBS Day, an responsibilities and reinforcing event for Company investors. the issues set out in the • A global risk assessment was Conduct Manual. carried out by a specialist Company
• In-house rules were created governing the activities of all 7 Ethics Committees and setting out the repercussions and investigation policies
47 Risk Management GRI 102-11, 201-2
Given the nature and diversity of its example of our risk management business, JBS and its subsidiaries are efforts is the georeferencing system exposed to several financial, social developed in Brazil to monitor and environmental risks as part of supplier farms located in the Legal their day-to-day operations. Financial Amazon. Using this system, JBS can controls are based on the Financial identify non-conformities and avoid and Commodities Risk Management purchasing of raw material from Policy, approved by the Board of suppliers who fail to adopt relevant Directors. Using these guidelines, the social and environmental practices. Risk Management Department takes steps to identify, evaluate, mitigate Risks are classified using predefined and monitor financial risks inherent categories and severity levels. to JBS’s activities. Risks in other The Company can then use this areas, such as environmental and information to evaluate existing operational risks, are addressed in a scenarios and prioritize any series of Regulatory Instructions and corrective measures that might be In-House Procedural Manuals. These required. As such, risk management documents are approved by each helps support towards operational business and describe the procedures sustainability and business team members are required to adopt continuity. in their specific areas and businesses in order to map all possible risks the Company may face. The Financial and Risk Management helps operational Commodities Risk areas monitor and identify their respective financial risks, using Management Policy specific systems and appointing is produced by the professionals trained to assess, analyze and manage them. These Risk Management measures improve efficiency and Committee and productivity, reduce costs and help develop new business, helping set JBS approved by the apart from its competitors. Another Board of Directors.
48 The main financial, social and environmental risks* indentified and monitored
Category Types Definition Mitigation method Financial Risks Market Currency, interest • Exposure is mapped in real time rate and commodity price risks when price • Hedging instruments, including derivatives, are used, fluctuations could affect subject to approval from the Board of Directors. JBS businesses. Credit The risk of default on Accounts receivable: portfolio is diluted and secure credit accounts receivable from parameters are set (based on proportional limits, financial customers, financial and operational ratios and credit agency queries) to investments and hedge reduce risks. contracts. Financial transactions with financial institution counterparties: exposure thresholds are defined by the Risk Management Committee and approved by the Board of Directors, based rating agency classifications. Liquidity The possibility of Capital management structure focuses on immediate, imbalances appearing modified liquidity metrics - i.e. cash on hand and financial between negotiable assets investments, divided by short-term debt - and working and enforceable liabilities capital, to maintain natural leverage for the Company and that could affect the its subsidiaries. Company’s ability to fulfill future financial obligations. Social and Raw Material The risk of purchasing raw Cattle purchases: Notify the market of the social and Environmental Procurement materials from suppliers environmental criteria adopted for cattle purchases and Risks involved in deforestation support for the use of best farming practices. In Brazil, monitor of native forests, invasion supplier farms located in the Legal Amazon States using a of protected areas geospatial system capable of identifying non-conformities and such - as indigenous barring raw material purchases from non-compliant suppliers land or environmental (http://jbs.com.br/sustentabilidade/dialogo-transparencia-e- conservation units -, use comunicacao/). of child or forced labor or products that could pose Poultry: the Company’s relationship with animal breeders a risk to consumer health. assures raw material quality. Suppliers are visited periodically and are audited to ensure production practices are in line with the JBS’s criteria. (http://jbs.com.br/sustentabilidade/dialogo- transparencia-e-comunicacao/).
Product quality: a global area that focuses on all production processes, which are audited internally by various regulators and customers to maintain high food quality and safety standards and remain eligible to serve all markets. Climate Climate change could have We monitor the environmental impacts from our direct Change a negative impact on the (industrial, logistics and shipping) operations and taking Company’s businesses. steps to minimize the impact of our own and our suppliers’ Resources like water, operations. Monitoring involves taking a global inventory of electricity and animal feed direct and indirect GHG emissions using the international (which is dependent on GHG Protocol methodology. The results of the inventory are farming) are critical for published annually on the CDP platform. JBS also monitors production of raw materials indicators representing the volume of water and electricity (cattle, poultry, pork and used by its operations in order to optimize production lamb). Businesses could processes and gradually reduce consumption. To reduce also be affected by new the impact from JBS operations and create opportunities, legislation and regulation in the Company has an annual plan to invest in environmental this area. improvements that focuses on use of natural resources, water and waste recycling and other issues.
*All potential risk factors known to the Company are presented and detailed in sections 4 and 5 of the JBS S/A Reference Form, available at http://jbss.infoinvest.com.br/ptb/4414/70224.pdf
49 Food Quality and Safety
50 51 Improve and pioneer raw materials, By applying the same standards to manufacturing and food supply all Company products and processes, quality standards worldwide the new area - based in Greeley, Colorado (USA) - is intended to The JBS business strategy is expand JBS’s access to global export predicated on quality excellence markets, efficiently meeting and and food safety. Continuous efforts exceeding the most stringent quality are made to constantly improve control and safety standards. manufacturing, operational and supply standards. In 2017, the These efforts are part of JBS’s global Company took another major step strategy to set the bar on food in this direction: it created the quality and safety. The Global Food Global Food Quality and Safety Quality and Safety Department Department, which is responsible - which reports directly to the for improving deployment of global President of Global Operations - has quality programs and procedures and therefore been studying the specific surpassing requirements in even the characteristics of each market. most demanding markets.
In 2017 the Company created the Global Food Quality and Safety Department.
52 Al Amanza, Global Head of Food Safety and Quality Assurance
Amanza spent almost 40 years from September 2014 until working for the USDA’s FSIS December 2016. Over the past Food Safety and Inspection 10 years, Amanza has been Services) department. His a Food Safety administrator career began as a food safety for the US Inspection Service, inspector at a small plant leading scientific efforts in the city of Dalhart, Texas to modernize food safety, (USA), before he rose to Under regulatory strategies and Secretary for Food Safety public health at the USDA, as a at the US Department of means of preventing diseases Agriculture, a position he held caused by food poisoning.
53 Ivone Delazari, Food Safety and Quality Assurance Director for South America
Delazari has over 40 years’ experience She is also a member of various food in this area. She began her career safety scientific associations, such at the Campinas Food Technology as the International Association of Institute in Sao Paulo, where she Food Protection, and Anvisa working worked at the Analysis and Research groups focused on Food Quality and Laboratory. After 10 years, she Safety. She is also a representative moved to the food industry, where for the Brazilian Food Industry she pursued a career working in the Association (ABIA). Quality Assurance area.
The Company takes the approach distribution activities. The initiative that quality is a continuous process, includes training for factory teams which means the best practices and and customers and annual refresher processes we have already adopted courses for other personnel, as are being prioritized throughout the well as opportunities to exchange Company, particularly at its Brazilian experiences on best practices and operations. Created in 2015 for its thereby provide additional support cattle operation, the innovative during each stage of the process. management model guarantees rigorous control of the value chain The quality management model based on financial results, customer is based on software that collects satisfaction and relationship information in real time across indicators. The process includes various stages of the management several phases, from raw material process. Al Almanza, JBS’s Global Head procurement controls to auditing of Food Safety and Quality Assurance, product presentation standards analyzed the project during a visit to at the point-of-sale and includes Brazil at the end of 2017. tightly controlling its production and
54 Customer satisfaction indices beyond current regulations and indicate the management model’s includes some of the most stringent effectiveness: in the past two years, global certificates and protocols. JBS has observed a substantial R$ 2 mi reduction in the number of The seal focuses on certifying In training and complaints on Reclame Aqui - the Guaranteed Sourcing, streamlining audits in Brazil website customers use to review the process of verifying customer and different companies – and had consumer requirements. It provides overall very good reviews in 2017. a simple and effective method of Another positive aspect is how checking that the Company has consumers perceive the Company. complied with all requirements put Studies carried out by the marketing in place by its various markets and area recently found that 61% of consumers. interviewees associate the Brazilian Friboi brand with quality. Seal audits are carried out by the Brazilian Certification Service (SBC), an Quality Control Certificate independent Company with 16 years’ In 2017, JBS Carnes launched the experience in product sourcing. Of Supply Chain Seal, an initiative that the 36 JBS Carnes production units certifies compliance with international in Brazil, 13 are already operating and standards and common customer have been audited in accordance requirements in all markets the with Supply Chain Seal protocols. Company serves. The certification The Company invested more than system has further improved quality R$ 2 million in training and audits. controls across the production chain. The goal is to have all JBS Carnes The seal addresses issues that go units following a single, standardized protocol by the end of 2018.
55 56 Quality Commitment JBS has more certificates GRI 102-2, 308-1 from the BRC (British Retail JBS implements the initiatives mentioned Consortium), a global at all its businesses. This focuses efforts benchmark for protein on ensuring that the products consumers production quality, than any put on their tables are safe and meet other Brazilian Company. The the highest possible quality standards. These guidelines apply to a number of Company is also certified in areas, from ensuring full compliance with ISO 9001 quality management regulatory and certification requirements standards. on the more than 150 consumer markets the Company currently serves – and In Brazil alone, there are not selling prohibited products in these more than 2,000 JBS staff locations – to value chain management focusing exclusively on quality processes and policies (including responsible raw material procurement), assurance. Around 70,000 supplier partnerships, team health and team members undergo safety, training courses and other areas. annual quality assurance As a result, these activities are a common training every year. thread through all of the Company’s processes and are discussed in page 136.
Quality management is an ongoing process and health missions and customers frequently audit Company facilities.
57 Different markets, different Operating Procedures – SOPs - All JBS units requirements: GRI 416-1 and Sanitation Standard Operating focus on • In Brazil, all plants face municipal, Procedures - SSOP). continuously state or federal health inspections. • In Mexico, Pilgrim’s plants comply improving their This means all Company units are with best chicken farming practices inspected by the Federal Inspection processes. published by the Secretariat Service (FIS), which represents the for Agriculture, Livestock, Rule Brazilian government’s Ministry of Development, Fishing and Food Agriculture, Livestock and Supply (SAGARPA) and the national (MAPA) certifying the Company Agriculture and Food Health, Safety to sell and export products that and Quality Service (SENASICA). comply with the highest food Additionally, each Mexican plant safety standards. holds a TIF (Federal Inspection • In the US, all beef, pork and poultry Certificate) which is issued by processing units are regularly the government to certify that inspected by the U.S. Department foodstuffs comply with World of Agriculture’s Food Safety and Animal Health Organization Inspection Service (FSIS), to ensure standards and the Codex food products comply with federal Alimentarius of the United Nations’ standards. Food safety procedures Food and Agriculture Organization. – Hazard Analysis and Critical Units that do not have the TIF seal Control Point (HAACP) - are based follow highly specific food quality on certain prerequisites set out and safety guidelines as well as in the Hygiene Best Practices general guidelines issued by the Programs, which establish specific Ministry of Health and only TIF- regulations addressing (Best accredited plants are allowed to Manufacturing Practices, Standard export.
58 Best Practices and biotechnology equipment and Infrastructure provides molecular biology support. All JBS units focus on continuously It is able to carry out 12,000 analyses improving their processes. Efforts per shift and it serves the six JBS are focused on ensuring product Carnes units in the region. quality and integrity, protecting team members health and safety This lab, alongside another 9 and guaranteeing animal welfare, as laboratories the Company manages well as adopting practices that are across the country, are used for intended to minimize the impact of official and microbiological analyses our operations, including measures to provide food safety indicators and to reduce water consumption at guarantee quality. Together, they our facilities and greenhouse gas support the 36 JBS Carnes plants emissions. The Company has also around Brazil. expanded the number of initiatives focused on waste recycling and By modernizing its infrastructure renewable energy. These initiatives and equipment, JBS is able to achieve are detailed in pages 193 and 198. increasingly accurate analyses in shorter time frames. There was an 8% In addition to the day-to-day increase in the number of analyses efforts to address food safety and carried out and a 17% drop in cost per quality, JBS is constantly investing analysis in 2017. As the 10 laboratories in state-of-the-art infrastructure. are located all around the country, For example, in 2017, it concluded the Company has been able to reduce construction of its Campo Grande II logistics costs by 10% year on year. (MS) laboratory. This is one of Brazil’s most modern laboratories and is equipped with latest generation
59 Labeling All JBS products comply the relevant ANVISA (the with a wide range of labeling National Health Regulator) requirements in accordance resolution. with local regulations. Labels contain information In the US, all products on product composition, carry the United States a nutritional table, the Department of Agriculture, product name, net weight, Food Safety and Inspection conservation instructions, the Service (USDA, FSIS) seal. manufacturing date, sell-by Certain products also present date and manufacturing unit information on how they data. In Brazil, the Company’s should be prepared and product labeling also carries consumed, as well as a variety the Federal Inspection Service of recipes and suggested (FIS) seal from the Ministry accompaniments. Labels of Agriculture, Livestock and also provide information Supply (MAPA). Labels also about any ingredients and state products contain or may additives, specifically any that contain one of 18 possible may contain allergens, added allergens, in accordance with vitamins, minerals, fiber etc.
60 Seara also has its own in-house food Quality Management analysis laboratories. Analysis results Systems and Governance are included on the Laboratory GRI 103-2 Information Management System JBS Carnes (Brazil) has a Safety (LIMS), which generates a periodically Advisory Committee which who updated database of performance discuss issues related to the beef and standards compliance and derivative production in order information used by the entire to improve products and processes. Company. This allows the Company Committee members include a to view results from each individual number of reputable industry unit – including products and and academic experts as well as processes as well as microbiological government representatives. and physical/chemical analyses – and any monthly changes in results. This Since 2011, Pilgrim’s Moy Park (Europe) is in line with Seara’s commitment to has been supported by its Antibiotic validating its processes in order to Stewardship Forum, made up of guarantee a high standard of product independent experts. Its work focuses quality and safety. on reducing the need for antibiotics, training and investment on farms, Pilgrim’s Moy Park, in Europe, to provide higher levels of animal manages a network of accredited welfare and help develop innovative laboratories that offer fast, efficient alternatives. and high quality microbiological testing solutions. All analyses are Environmental management System carried out using standardized (EMS). In Europe, Moy Park facilities methods or are verified using (processing, incubating and feed fully documented quality control manufacturing units) adopt an procedures to guarantee their Environmental Management System accuracy, which includes double (EMS) based on ISO 14001. The EMS checking all results. All Moy Park covers important aspects of each operations are assessed on criteria operation, maps improvement including product and service health plans and monitors our initiatives and safety. The laboratories are to support ongoing environmental accredited up to CLAS standard performance improvement at all our and comply with BS EN ISO / IEC operations. 17025: 2005.
JBS Carnes (Brazil) has a Safety Advisory Committee to improve products and processes.
61 In Brazil, Seara Product Quality Strategy. Created Product Microscore. Also created has implemented by Moy Park in 2016, this strategy by Moy Park, this tool centralizes a Quality System, focuses on the product quality information from product sampling which includes index and is the main tool used to results. Using this data, an indicator the best and measure the quality of unit products. is produced showing product quality The strategy is based on six pillars: throughout the product lifecycle. most up-to-date operational performance, tasting, The Product Microscore is influenced approaches from training courses, audits, sales results by three factors: raw material domestic and and consumer surveys. The Company quality, environmental and handling international also has a Safety Forum comprised hygiene and product storage, prior agencies. of outside specialists who support to packaging. As part of the supply ongoing improvement and present chain, the Company also uses an opportunities, technologies and ideas ingredient risk assessment tool. that focus on guaranteeing poultry health and safety. HACCP. Pilgrim’s (in the US and Mexico) has voluntarily adopted the Environmental Microscore. This Hazard Analysis and Critical Control initiative has been adopted by Moy Point (HACCP) system, a control Park to monitor production unit system that reinforces animal hygiene. The score is calculated quality and safety by prioritizing using the results of microbiological and controlling potential physical, analyses of equipment and chemical and microbiological hazards installations in all processing areas, during the production process, immediately after general cleaning detecting any preventive steps that and before production begins. may be required to guarantee the highest possible level of consumer
62 protection. The Company joined the Quality System. In Brazil, Seara has system in 1989, 10 years before it implemented a Quality System, which was adopted by the US Department includes the best and most up-to- of Agriculture (USDA) as a rule date approaches from domestic for industrial meat and poultry and international agencies. To processes. Since then, Pilgrim’s has help implement the system, the invested millions of dollars in new Company complies with guidelines poultry processing equipment and in the “Quality Book”, a set of 15 programs to improve its products’ management tools that support microbiological profile. As a result, planning, execution, control and the Company has exceeded USDA improvements, in addition to defining pathogen reduction standards. roles and responsibilities throughout the production chain. Seara has also adopted HACCP in Brazil to underpin periodic quality Ravex System. This is used by the audit settlements plants. The Seara Logistics area to provide real- program supports continuous time monitoring of the distribution improvement for processes, products fleet cold chain. The system has and the quality system throughout reinforced food safety and quality. the organization. The program evaluates best production, cleaning Excellence Pillars. Seara’s Excellence and equipment practices as well Pillars have standardized industrial as operational and allergen health management procedures to achieve controls. additional growth and profitability, while continuously improving product quality.
63 Self-management of Pests. The Seara specifications; these criteria are All Pilgrim’s Moy quality area invests in pest control audited twice year by Moy Park and Park (Europe) management systems that comply external auditors. These checks plants undergo with a wide range of prerequisites cover issues such as animal welfare, an independent for safe food production. Staff are traceability and HACCP, and others. trained by consultancy Company that technical audit also provides technical supervision at Over the past two years, JBS units and are required all units. in Brazil have undergone 340 to meet the quality audits and the Company most stringent Audits GRI 416-1 acted robustly to ensure the same industry All Pilgrim’s Moy Park (Europe) plants commitment from its suppliers. standards. undergo an independent technical audit and are required to meet the In 2017, all JBS Carnes (Brazil) units most stringent industry standards in underwent 178 audits to retain order to ensure the best food safety current certificates or obtain new practices are in place and certify ones. The Company depends on these compliance with our customers’ certificates to continue exporting quality requirements. Additionally, to many of its markets. Industrial the Company offers team members plants obtained 97% approval and technical training in their particular were audited in accordance with areas of expertise. international standards such as BRC Global Standards, ISO9001, ISO17025, In France, Moy Park Beef Orleans and were audited by the Brazilian works directly with 28 meatpacking Ministry of Agriculture, clients and companies. The Company Quality market organizations (sanitary Department approves and audits missions from other countries). suppliers annually. This routine – supported by annual external Various food quality and safety audits – verifies compliance with systems are audited annually at JBS traceability, safety, hygiene, animal USA. All US plants and most Mexican welfare and meat quality best units are audited and certified practices. All beef comes from by the British Retail Consortium suppliers on the approved supplier (BRC), one of four auditing systems list. Spot market purchases are recognized by the Global Food Safety prohibited. All of this raw material Initiative (GFSI). Most of our retail is used to supply a key customer. customers currently require these This means all suppliers (including audits. Quarterly internal audits are meat packing and deboning) must also carried out by the respective comply with the customer’s Europe corporate quality assurance teams.
64 65 Certification • ISO 9001 – refers to set of Today, 13 JBS In addition to operational certificates, technical guidelines that establish Carnes (Brazil) several JBS units also hold additional a quality management model for units, 16 Seara organizations in general, whatever certificates that guarantee access units (also in to an even larger market, including their size or business. Currently, five Brazil) and most international customers. These JBS Carnes (Brazil) have adopted US and Australian certificates include: this standard. • The British Retail Consortium (BRC) plants hold • ISO 17025 – this standard is – this certificate is a prerequisite British Retail used to standardize laboratory for supplying European customers. Consortium (BRC) testing and calibration. JBS has Recognized by the Global Food three laboratories in Brazil with certification. Safety Initiative, this is one of this certificate and the others the most rigorous certification are currently going through the processes in the industry, looking certification process. at 326 different plant safety and quality criteria. Today, 13 JBS Carnes • Leather Working Group (LWG) – a (Brazil) units, 16 Seara units (also in British organization which certifies Brazil) and most US and Australian companies that have adopted best plants hold BRC certification. The environmental practices at tanning plants in the US and Australia are plants worldwide. In Brazil, over 85% also audited for compliance with of the leather produced by JBS was GFSI criteria. The GFSI is a global made at units that have achieved initiative supporting continuous the LWG’s gold standard. In the improvement in food safety US, 100% of JBS letter produced management systems and ensure in Cactus, Texas and Tannery have people worldwide can trust the achieved the gold standard. food they buy is safe. • Global Gap – this is an external • McDonalds – certification monitors audit focusing on the farming animal welfare, food safety and production chain (breeders/ best manufacturing practices, incubators/broiler chicken farms). among other criteria. Today, seven Two Seara units have been certified. JBS Carnes (Brazil) and four Seara • CFM – Seara holds this certificate, units are certified to supply the which is a standard for food raw materials used to manufacture component standards to guarantee McDonald’s hamburgers. One of product safety. the Company’s units is certified to produce a hamburger in accordance • SMETA – this is a social with the SQMS (Supplier Quality responsibility and sustainability Management System) and the audit required by European other, in the city of Colíder, in the state of Mato Grosso, is certified to produce McDonald’s sustainable hamburger.
66 customers. It assesses working Union, a Company that specializes conditions (number of hours in cargo inspection, supervision worked, special equipment and transportation globally. The conditions, hazards, etc.), contract certificate means JBS Trading is Team Members and relevant now able to sell its products to the legislation. Nine Seara units have European Union. been certified. • Pilgrim’s Moy Park holds the • YUM! – this audit is carried out by following certificates, including: the Company that owns the KFC, FSC, Roundtable on Sustainable Pizza Hut and Taco Bell Brands. Palm Oil (RSPO); Sustainable There are three audits required for Agricultural Initiative and QS YUM! approval: quality system, food Standard. (https://www.moypark. safety and farming (management, com/en/sustainability) best practices and animal welfare). 13 Seara units have been certified.
• Seara also holds certificates from KFC Agropecuária – UK, McDonald’s, Swiss Law, GlobalGap and other organizations, including certificates and audits carried out by Brazilian and foreign customers.
• In 2016, JBS Trading obtained the ISCC (International Sustainability and Carbon Certificate). This seal attests that companies are taking a responsible approach to reducing greenhouse gas affects, sustainable soil usage, protecting natural biospheres and increasing social sustainability. This audit was carried out by the Control
67 68 Business
69 Business Strategy GRI 102-2, 102-7, 102-10
The Center of Excellence The Company runs its business and Innovation was in accordance with the following guidelines: created to support and • Continuous enhancement of the expand synergies and brand and product mix. JBS owns exchange experiences many brands that are leaders in across businesses. their respective markets and is constantly working to increase the number of items in each portfolio in line with consumer demand. It offers many products, from fresh and frozen meat to ready-to- eat products and is constantly investing in new, healthier and high quality options.
70 • Segments. JBS leads the market access to global export markets in processing several different and ensuring compliance with proteins, including beef, poultry, the highest food safety and pork and lamb. quality control standards. For further information, see page 52. • Markets. JBS has operations on five continents where it manages • Innovation – Innovation is a processing units, distribution means of expanding the product centers and commercial offices This and brand mix, which is one of gives JBS a global competitive edge, the Company’s ongoing goals. it minimizes exposure to health, The Center of Excellence and business, economic or policy risks Innovation was created to in any given region. support and expand synergies and exchange experiences The goal of being the best at what we across businesses. This is a do is the backbone of JBS’s business global Center that will speed model. JBS constantly focuses on up adoption of best practices improving its practices in order and execution of new ideas to surpass the latest standards worldwide. in all its markets. The business • Global Sourcing – JBS created strategy adopted in 2017 exemplifies the Global Sourcing area JBS’s commitment to continuous to capture synergies by improvement. Four areas were consolidating volumes, which prioritized throughout the year: should improve the Company’s • Compliance – JBS has improved negotiating position and its existing control mechanisms encourage cross-pollination of and activities and developed new best supply practices. Based in policies and procedures in line Greeley, in the US, the area also with best global practices. It also runs five regional offices in South created the Global Compliance America, North America, Mexico, Department, which was discussed Europe and Australia. Created in chapter Compliance (page 70). in 2016, but consolidated since • Food Quality and Safety – JBS has 2017, this area initially focused focused on increasing its quality on the livestock and chemicals leadership, offering customers segments for tanning plants and and consumers the best possible has already seen positive results experiences with its products. To in other areas with significant do so, it created the Global Food cost reductions for ingredients Quality and Safety Department, used to make feed, chemicals, which is responsible for expanding packaging and food ingredients.
71 Operational structure that competes on highly competitive GRI 102-7, 102-10, 102-45, 102-49 markets with companies well-known Businesses are run with a certain for their management skills and best amount of autonomy, which allows practices. This structure is split into them to make quicker decisions. JBS two business platforms: has a unique operational structure
JBS South America
JBS New Seara JBS Meats JBS Leather Business
JBS North America
JBS USA JBS USA Pilgrim’s Beef Pork Pride
JBS JBS Pilgrim’s Australia Canada Moy Park
72 In addition to the businesses part of JBS Mercosul. The assets distributed across the platforms that were sold for US$ 300 million. The £ are based in Brazil, JBS also acquired Company also sold its Five Rivers 1bi Rigamonti, in 2010. Based in Italy Cattle Feeding feedlot operation in This was (Montagna/Valtelina), Rigamonti is Canada for around US$ 40 million, how much the leading producer of Bresaola - a and Moy Park, in Northern Ireland, Moy Park’s processed beef product - which is was acquired by Pilgrim’s Pride, for operations exported to 20 countries. around £ 1 billion pounds. In March were sold to 2018, it also concluded the sale of Pilgrim’s Pride. To bolster JBS’s liquidity and divest its entire Five Rivers Cattle Feeding itself of certain non-core businesses, feedlot operation in the US to affiliates the Company changed its operational of Pinnacle Asset Management. This structure in 2017 in accordance with transaction generated US$ 200 million. the divestment plan announced on The buyer also signed a long-term June 20 last year. The Company sold contract to supply cattle to JBS’s US its beef operations in Argentina, meatpacking units. Paraguay and Uruguay. These units, alongside JBS Brazil, were previously
73 1993 JBS South America Increased GRI 102-2, 102-7 production capacity After acquiring the Planaltina-DF and JBS’s South American operations This operation reported Luziânia units - GO including leading companies in their R$ 23.4 billion in 2017 revenues, in the 80s, the respective segments. This operation representing 14% of the Company increased includes the Brazilian beef units (JBS Company’s total revenues. its production Carnes); pork and poultry, including capacity by buying the fresh and processed, prepared and Last year, exports represented Anápolis-GO plant, frozen products (Seara); leather (JBS around 45% of JBS’s results capable of processing Leather) and related businesses in South America. Its fresh 1,000 animals a day. (JBS New Business), including products were mainly exported This was a big step biodiesel, collagen, personal hygiene to Hong Kong, China, Russia, Iran, forward, as it was here and cleaning products, natural Chile and Europe. Its processed the first deboned casings, solid waste management products were shipped meats were sold solutions, metal packaging and principally to the US, Europe and and first small-scale transportation. Canada. exports took place.
JBS South America: more than 60 years of history
1953 1957 1970 Casa de Carnes Off to Brasília-DF The first meatpacking Mineira is founded When construction plant is acquired and the José Batista Sobrinho, of Brasilia began, Friboi name is born also known as “Zé there were plenty When Brasilia, Brazil’s Mineiro”, created what of opportunities for capital, had been built, is now JBS in the city Brazilians to improve the Company’s founder of Anápolis -GO. At their lot. José Batista saw an opportunity to the small butcher’s Sobrinho took the expand his business shop known as Casa opportunity and and purchase his first de Carnes Mineira he became one of the meatpacking plant in the started building the first beef suppliers to city of Formosa, in the foundations of the the construction sites state of Goiás. The Friboi Company’s current building Brazil’s future brand was launched the Values and Culture. capital. same year.
74 1997 2007 2017 The JBS management IPO and Swift Returning to run the system pillars are born. acquisitions in the US JBS Board of Directors, The foundations of the and Australia. JBS unanimously JBS management system JBS held what was, approved the were created at the unit at the time, the appointment of José in Barra do Garças-MT, biggest ever IPO on Batista Sobrinho, the including the budget the Brazilian stock Company founder, to systems, management market. The Company chair the Company. matrix, the Zero Base name was changed In addition to his Budget (ZBB), routine to JBS in honor of its return, the Company management and Friboi founder, José Batista also improved Total Quality (FTQ). Sobrinho. JBS also its Compliance These tools improved acquired Swift in the practices, creating an the Company’s ability US and Australia the independent global to operate its plants same year (for more department that distributed throughout details, see page 106). reports directly to the the country. Board of Directors.
1996 1999 2013 Exports to the European First steps into the Seara Acquisition in Brazil Common Market begin processed product As a result of the Seara Buying the Goiânia- market acquisition, JBS became GO unit meant the The Andradina-SP unit one of Brazil’s biggest Company was able to acquisition gave the companies in Brazil’s start exporting to a Company a foothold on poultry, pork and demanding European the processed foods processed foods business. Common Market. This and US markets. This With brands such as Seara, meant the Company was a major step for the Fiesta, Rezende, Massa substantially improved Company as its first plant Leve, LeBon, Doriana, all its quality standards, based in the state of Sao Frangosul and others, the increased staff training Paulo. Company created what has and adopted more become one of the biggest sophisticated logistics, chilled and frozen product financial and commercial manufacturing, innovation systems. and distribution platforms.
75 JBS Meats GRI 102-2
The JBS Carnes business unit controls some of Brazil’s favorite Main Brands GRI 102-2 meat brands. It owns well-known brand names include market leaders like Friboi. Consumers say that the brand’s foremost characteristic is its quality. This information was collected during a survey carried outduring the second half of last year. The survey interviewed around 1000 consumers in the Southeast, South, Midwest and Northeast regions and found that Friboi is still top of mind in Brazil and was mentioned by 60% of interviewees. Additionally, over 40% of participants said the brand’s biggest attribute is its quality.
76 Operational Platform GRI 102-7
PA CE
PE AC TO RO BA MT
GO MG MS SP RJ PR
RS
beef 3 27 processing Feedlots Distribution 35 units centers
77 JBS Carnes created a category management system, it explored the advantages offered by each brand and its respective products. Examples are the Ribs, Giblets, Jerked Beef JBS Carnes created category and Salt Beef ranges, as well as cuts management and explored offered in MAT (Modified Atmosphere) packaging, which offers retailers the advantages of each brand products that are ready for sale, such and its respective products. as ground meat, hamburgers, steaks, strip steaks and medallions. JBS Carnes’ business strategy is to stand out from the competition Another highlight was the 1953 brand based on its product quality and launch, expanding premium beef service excellence, in addition offerings available to consumers to highlighting the value of its by including major retail chains product mix, which last year among the various outlets used to resulted in an average 12% increase distribute this category of product, in average prices of fresh meat. which was previously restricted to In 2017, it concentrated on added food service and boutique channels. value products (AVP) with the dual The 1953 name refers to the year JBS objective of including more options was founded and the range will offer in its portfolio and boosting sales. 14 cuts with unique standardization In order to achieve these goals, and trimming, including: Baby Beef,
78 Rib Eye, Chorizo Steak, Rump, Eye of 2017 Highlights Rump, Skirt, Sirloin, Filé Mignon, Chuck • Jerked and dried beef unit Eye Roll, Sirloin Steak, Short Loin, expansion - The Company Shoulder Steak, Brisket and Short Rib. invested R$ 18 million to increase The brand unveiling also reflects the production capacity and reinforce synergies across JBS operations: it environmental controls at its was inspired by Swift’s 1855 brand in plant in Santana de Parnaíba the US, which also refers to the year (SP). The plant has modernized the Company was founded. its deboning, salting, drying and waste treatment processes and In addition to launching 1953, JBS has been expanded so that it can also invested in other new product house additional machinery; the launches supporting its strategy to plant has also optimized a number expand the product mix. The new of processes and increased output products include: from 1,000 to 1,600 tons/month. In • A superchilled range from Friboi: addition to the domestic market, beef croquettes and mini beef kafta, the plant – the most modern jerked to meet growing demand for easy beef factory in the country – also to prepare products. exports jerked beef to Angola and Cuba. • Pulled beef jerky: Friboi launch this product in November, in a 200 g • Cargo terminal capacity doubled package which has already been - The Company invested R$ 23 desalted and is ready-to-eat. million to double capacity at its logistics terminal in Cubatão (SP), • New canned products from which processes approximately Bordon, Brazil’s leading producer of 50% of the group’s exports. hashed beef and poultry protein. Following expansion, it will be able There were eight new products: to handle 1.2 thousand containers beef meatballs in sauce; ribs simultaneously, equivalent to with manioc; hot dog sausages 34,000 tons. Additionally, instead in sauce; spicy aperitif sausages; of only receiving beef containers, it smoked aperitif sausages and will also handle chicken, pork and sirloin flavored ham. It also invested leather products. in items sold in modern pouch packaging. This type of packaging is not only easy to open, it keeps products fresh without using R$ 23 million preservatives. They also need no Cargo terminal capacity refrigeration and can be placed investment directly into the microwave. This format was used to launch (gluten- free) cooked and shredded chicken breast as well as sausages with black beans.
79 Seara Alimentos GRI 102-2
This unit centralizes JBS business in GRI 102-2 Main brands the fresh pork and poultry, as well as processed, prepared, industrialized and frozen foodstuffs segments. It owns leading brands in the various markets where it operates and manages 65 production units and 14 distribution centers around Brazil. In 2017, it produced 1.2 billion poultry, 5.1 million pigs and 712,000 tons of prepared products. Approximately half this output is exported to around 125 countries, particularly China, where there is growing demand for pork and chicken in both the retail and food service sectors. Other markets, such as Japan and Europe, have also increased demand for Seara products, particularly highly customized and processed products that offer greater added value. Commercial departments were created in eight different markets as exports make such a significant contribution to the Company’s results. Offices were opened in China, Japan, Singapore, Europe (the Netherlands and the UK), Brazil, the United Arab Emirates and South Africa. The Johannesburg (South Africa) office was opened in 2017. Each office is equipped with its own customer service structure.
80 Production infrastructure GRI 102-7
CE
PE
BA MT
DF MG MS SP RJ PR SC RS
29 8 21 14 Poultry Pork Added-value Distribution processing processing processing units centers units units
81 Innovative products gained greater emphasis, offering healthy as well as practical and 2017 output: convenient options. 1.2 billion head of poultry
5 million head of pork
712,000 tons of product
82 In addition to strengthening Seara’s such as chicken cubes, chicken commercial approach abroad, its 2017 fillets, chicken breast (sassami) business strategy also included: and others are now sold in this • Product mix diversification, format as part of the Seara prioritizing higher added value DaGranja Turma da Mônica range. items. Innovative products gained The product is manually cut to an greater emphasis, offering healthy appropriate size for children and as well as practical and convenient sold in 600g packages. options. Some examples are: ›› The “Cold Cut Trio” campaign ›› Lasagna that uses “uniform was also launched, focusing on heating” technology, allowing turkey breast, ham and smoked heat waves from the microwave mortadella. The promotional to penetrate more centrally campaign emphasized the fact into the product, which means that Seara offers a number of it warms from the inside out different options to cater to and the heat is distributed different tastes via a full range of evenly across the lasagna. products across the category. This technology – a new food • “Seara Gourmet” Portfolio preparation and consumption expansion. The premium product experience – does not use range, which targets gourmet preservatives and is available in offerings, included a number of new Bolognese, four cheeses, ham & options, such as special German cheese and chicken versions. sausages (Weiss, Frankfurt and ›› The Company also expanded Schublig) and Bologna Mortadella, its portfolio of IQF (Individually which, like traditional Italian Quick Frozen) products which mortadella, is handmade using are offered in Ziploc packaging high-quality ingredients. The so that consumers only need to product is steamed and contains defrost what they want to eat 44% pork, from the Large White and return the package to the breed, and 31% beef as well as freezer safely sealed. Products Italian spices and white pepper grains. Seara Gourmet was launched in 2016 and sales have shown consistent growth.
83 • “Q for Quality” campaign. Launched In conjunction, these initiatives in 2017, the Seara communication helped Seara reinforce its position campaign focused on reinforcing as one of Brazil’s preferred brands. the brand’s main attribute in According to a survey by Kantar recent years: its excellence and MillwardBrown, it is the second position as a quality benchmark most recalled brand in the segment. across the food industry. Using the Seara has also increased product slogan “quality that will surprise penetration in Brazilian homes, rising you”, the campaign emphasizes from 71.5 percentage points in 2015 to the fact that Seara products offer 73.5 percentage points in 2017, which that little extra: flavor, freshness, is clear evidence of its increasing delicious aromas, carefully selected market share. Across this period, ingredients and principally quality. the rate of repetition has hovered around 9.3 percentage points. Both • Regional brands. Seara Alimentos of these figures are from the Kantar has also invested in its regional WorldPanel. brands in order to cater to demand around the country and expand its This performance produced revenues portfolio. For example, Big Frango, of R$ 17.5 billion and EBITDA of R$ 1.6 the leading poultry supplier in billion, with the EBITDA margin rising Parana, is now selling in the states from 8.8% to 9%. This expansion was of São Paulo and Minas Gerais, mainly achieved with support from where it is already the second most the positive grain cycle, with corn popular brand. Nhô Bento has also prices recovering and production made headway in new markets and costs subsequently falling. is currently Brazil’s top of mind
free range chicken. Agrovêneto, a traditional brand from southern Brazil, became the leading chicken brand in Santa Catarina in 2017 with a complete portfolio of fresh products.
In conjunction, these initiatives helped Seara reinforce its position as one of Brazil’s preferred brands.
84 85 2017 Highlights stage of the breeding process, Investments. The Company backed by traceability throughout invested R$ 140 million to expand the production chain. Animal feed, production capacity and update its which is specially made from 100% technology infrastructure at units vegetable sources, is also strictly in Dourados (MS), which focuses on controlled and poultry farm climate pork processing, and Lajes (SC), which conditions are monitored. produces pizza and lasagna. Preference for coastal shipping. Seara DaGranja product sales rise The volume of cargo Seara 85%. The Seara DaGranja range of transported using coastal shipping chicken, which is produced without between Brazilian ports rose using any antibiotics, hormones or significantly throughout the year. preservatives, saw sales rise 85% in In October, Seara shipped 265 2017, an increase attributed to the containers, up 125% on the first 85% global trend towards increasingly semester average of 118 containers/ Increased healthy products, as well as the month. This figure rose again in sales at Seara Company strategy to expand its December: it shipped 312 containers, DaGranja portfolio to meet this demand. Today, up a further 17% on October. the Seara DaGranja range includes Altogether, the Company shipped 18 products, from whole chickens, 2,135 containers using coastal routes, multipack cuts and zip lock bags 45% up on the previous year. The with individually frozen products Company is increasing its focus on (IQF) to an exclusive range of dishes this mode of transportation because seasoned using natural ingredients of the cost and service advantages and innovative packaging that it offers. Containers are connected can go straight from the freezer to power outlets and temperatures to the oven. These products hold are monitored until arrival at the international certification from WQS destination, helping guarantee – a leading Brazilian Company in product freshness and quality. the supplier control and monitoring sector – to guarantee animal welfare and certify that chickens are not given any antibiotics, hormones or preservatives at any
86 Partnerships. Seara has continued Seara has continued its its strategy of partnering with strategy of partnering with global customers, an initiative that global customers, an initiative leverages the quality of its products, that leverages the quality of its extensive portfolio and its scope of operations. For example, its products, its extensive it has become a major supplier portfolio and its scope of of hamburgers to McDonald’s in operations. Brazil, supplying 75% of the chain’s requirements, and was also voted supplier of the year. In Japan and Europe, the Company has been building partnerships with food services chains, offering customized products for each specific market. The Company also partners with other global customers, such as McDonald’s, Burger King, Subway, Outback, KFC, Pizza Hut and Wendy’s, among others.
Yum! restaurants awarded Seara its “Standout Product” trophy for the Pizza Hut brand. One of the main reasons for the award was the Company’s development of a specific type of pepperoni especially for Pizza Hut. In Brazil, Yum! manages the Taco Bell, KFC and Pizza Hut brands which are all JBS Carnes and Seara customers.
87 JBS Leather GRI 102-2
JBS Leather’ 2017 highlights include producing 6 million square meters a significant increase in leather of finished leather. This is over seven production at its Vietnam unit and its times its 2014 volumes, when JBS investment in a US tannery. Leather took over the unit. The leather produced here is marketed to the The Vietnamese unit operated at furniture markets in Asia, Europe and full capacity throughout the year, the United States.
Operational platform GRI 102-7
United States
Mexico
production 23 units
distribution 3 centers Brazil
cutting 3 units Uruguay 2 showrooms
Argentina commercial 3 offices
88 Unit growth has benefitted from the JBS is the world’s largest producer of wet unit’s strategic location. It is based near blue, semi-finished and finished leather. It Ho Chi Minh, the country’s largest city operates 23 production units, distribution and main financial, corporate and trading centers and commercial offices in North centre, it is located in a major Asian and South America, Europe and Asia, industrial hub, offering easy logistical serving several markets around the world access to the region’s main leather with automotive, furniture and footwear consumer markets. products and artifacts. Synergy with the Company’s other operations and close proximity to the world’s largest commercial cattle producers affords it privileged access to raw materials. Operations are Germany managed with a high level of control over all processes, which includes a robust traceability system. This system can track products from the time cattle are loaded at farms, through leather removal at meatpacking plants, up to final product delivery, which is a major advantage over any other leather supplier.
In addition to producing leather, the Company also develops leather artifacts and goods and studies trends, which enables JBS Leather to innovate when displaying products in its showroom in Italy High Point, North Carolina (USA). It displays the leather in use, on sofas and armchairs, rather than displaying hides, which is the normal practice throughout the industry. China This reflects the approach taken at another showroom the division manages in Arzignano, Italy, which is normal industry practice. The year JBS also introduced its own collections, including the “Authentic Collection”, which is focused primarily on the furniture market and leverages raw materials from all Company sources - South America, North America and Europe - alongside products from all its global manufacturing bases (Asia and Europe).
Vietnam
89 JBS New Business GRI 102-2
JBS New Business is responsible for made using organic waste from The JBS New JBS operations that are directly and its factories. The new business Business indirectly linked to the Company’s will receive around R$ 30 million structure core business. The Company in investment and is expected to currently transforms byproducts and waste start operating in 2018, making it from processed beef, pork and JBS Brazil’s first food Company to includes 12 chicken into high added-value enter the agricultural market - the plants and products, generating value for the fertilizers can be used on major 49 affiliates. Company and developing more crops including soybeans, corn, sustainable production methods for coffee and cotton, or on vegetable the entire group. and fruit plantations. This business will also benefit Brazilian farmers With ten fully independent business who currently import much of their units, it provides JBS with certain fertilizers. competitive advantages and one of its main attributes is the closed cycle, The fertilizer unit will stand which means it can reintroduce these alongside the other 10 businesses products onto the market, leading JBS New Business has built. They all to significant cost savings and help to develop more sustainable increasing sustainability throughout production methods across the the production chain. The JBS New group as they focus on solutions Business structure currently includes that range from waste recycling 12 plants and 49 affiliates. to tallow-based biodiesel, as well as products such as collagen or Based on this strategy, in 2017 hygiene and cleaning materials. the Company announced it was These products are sold in Brazil launching another fertilizer product and exported to over 20 countries.
A JBS é líder global: GRI 102-7
Verticalized Manufacture Production biodiesel and supply of of beef production using animal-based collagen beef tallow casings
90 Operational Platform GRI 102-7
MT
GO MG
SP
RS
Environmental New Business Pet Food Complex
Biodiesel Hygiene and Cleaning Collagen
Casings Can Plant Transport
91 Making full use of raw materials
Meat is the main product we obtain from cattle cholesterol, arthritis and arthrosis. Cattle and chicken, but not the only one. These animals or chicken manure generates biogas after it also provide raw materials for other value-added decomposes. By using every part of each steer or products. Fat, bone, blood, feathers, skin and bird, the Company reduces waste and minimizes intestines can all be used to make a wide variety its impact on the environment. of products, like shampoo, because metrics, soap, glass, animal feed and fertilizer. They can also be In Brazil, JBS has a specific business unit focusing used to produce pharmaceuticals, clothing and on these products: JBS New Business5 - Using accessories or as a renewable source of energy. cutting-edge technology and highly trained Estimates show that one steer can generate raw teams, the unit focuses on developing products material for 260 different industries. and solutions that are used in-house and exported to over 20 countries. For example, beef tallow can be used to produce biodiesel or cleaning and hygiene products. At our US operations, co-products are also reused Intestines are transformed into casings, which either to produce tallow and flours or as raw is the name used for the membrane used to material sold to other companies, like animal feed wrap items like sausages. Skin is used to produce manufacturers. collagen. Internal organs, like the intestinal mucosa, bile and trachea can be used to make anticoagulants as well as drugs to control 5 http://jbs.com.br/novos-negocios-int/
CATTLE AS A RAW MATERIAL 58% 17% 25% of the carcass is is converted is used for other purposes, such sent for deboning into leather as cosmetics, rubber, enzyme and and transformed animal and human supplements into meat
POULTRY AS A RAW MATERIAL 80% 20% 80% of the bird is is used for animal feed products, used as food detergent, fertilizers and drugs, among other products
92 JBS Environmental – This Company is when the division began adapting focused on the circular economy and to Anvisa’s Best Manufacturing develops products and solutions for Practices (BMPs) - a range of industrial waste such as plastic, wood measures companies (particularly and metal. Some of these inputs are in the foodstuff industry) should recycled and return to JBS industrial adopt in order to guarantee health plants as trash bags, tarpaulins, bags quality and product compliance with or plastic coverings (http://www. Anvisa’s technical regulations. These jbsambiental.com.br/). rules include recommendations for everything from personal hygiene The Company is also responsible and cleaning the workplace, to for managing and processing non- detailed written procedures for recyclable solid waste, disposing of it product processing and team correctly and obtaining the requisite training. legal certificates. It employs a smart system to track waste from source JBS Environmental has nine waste to final disposal. In 2017, it handled processing centers in the states of around 26,000 tons of solid waste, São Paulo, Rio de Janeiro, Goiás and including plastics, metals, paper Mato Grosso do Sul. and hazardous and non-recyclable materials. JBS Biodiesel – Created in 2007, JBS Biodiesel is the world’s largest In 2017, JBS Environmental increased verticalized producer of biodiesel using its product range and now also beef tallow. The goal of the business is manufactures trays and plastic to properly process and add value to covers for leathers, investing tallow, the main byproduct from beef around R$ 3.5 million to increase the processing. As the biodiesel program infrastructure at its plant in Lins (SP). has evolved, other byproducts have also However, the process of creating this been used to make biofuel. new area began two years previously,
JBS Environmental has nine waste processing centers in the states of São Paulo, Rio de Janeiro, Goiás and Mato Grosso do Sul.
93 With two factories, located in Campo JBS has supported for nine years Verde (MT) and Lins (SP), JBS Biodiesel – that ensures small-scale family produced 210 million liters of biodiesel farmers and livestock breeders in 2017. 20 million liters were made are able to sell their produce and using recycled cooking oil. In 2017, livestock to biodiesel companies. partnering with JBS Environmental, In 2016, JBS Biodiesel took steps the Company created the Friendly Oil to extend these benefits to small- project to start using cooking oil as scale livestock breeders in the São a raw material and increase society’s Miguel do Guaporé (RO). In 2017, it awareness of the importance of proper purchased 1.9 thousand head of used oil disposal. The project collected cattle produced by family farmers around 2 million liters of cooking based in the region, generating oil throughout the year. Estimates R$ 3.5 in revenues for around 100 show that each liter collected avoids local families. Contracts are already contaminating 20,000 to 25,000 of in place to purchase over 6,000 head water, or avoids treatment by sewage of cattle per year in 2018 and 2019 companies, reducing costs for the and the target is to reach 50,000 government and taxpayers. The head of cattle every two years. This program was successful, attracting a initiative will further support social R$ 5.5 million investment at the and economic development in farming Lins plant, where the cooking oil is communities throughout the country processed, to expand the initiative. and create additional opportunities for the Company, as beef tallow is the The biodiesel unit also supports family second most important source of raw farming through the Social Fuel Seal, a material for the Brazilian biodiesel federal government program – which industry.
94 JBS Natural Casings – The world’s Brazil; it can produce 5000 tons of largest producer of natural cattle- collagen and 4000 tons of functional based casings in the world operates ingredients for industrialized products to processing units in Brazil: Goiânia annually. The business unit supplies (GO) and Ituiutaba (MG). These units a number of industries, such as fresh 210 supply some of the biggest companies processed meat products, baking, million liters in the world, serving highly demanding cosmetics and pharmaceutical sectors of biodiesel were customers and markets for a variety from its unit in Guaiçara (SP). In 2017, produced in two of casing products, such as salami the business unit celebrated its 15th factories located in and sausages. Internationally anniversary and saw exports rise 68% Campo Verde (MT) recognized because of their supply as it opened up new markets and and Lins (SP). capabilities as well as product quality reached customers in the Americas, and traceability, all raw materials are Asia, Africa, Oceania and Europe. controlled from source and selected and calibrated by specialists, which JBS Metal Packaging – With two is all part of their market-leading factories in the interior of São Paulo, structure. Some of the business in Lins and Barretos, this business unit’s output includes non-food unit produces steel cans for products products, such as raw materials used that need protection from physical, to manufacture cords for musical chemical and biological interactions. instruments, tennis rackets and The Company therefore serves the surgical stitches. food industry and other areas, such as the aerosol sector. It is capable of Novaprom Food Ingredients – A global producing approximately 1 billion cans leader in beef collagen, was founded annually, making it one of the biggest in 2002 and pioneered manufacturing can manufacturers in Latin America. of powdered and fiber collagen in
95 JBS Personal In recent years, JBS Metal Packaging With a production unit in Lins (SP), it Hygiene & has invested over R$ 48 million to also produces base mass for vegetable Cleaning launch new products and increase or animal and glycerin based soaps. production capacity; in 2017, it The unit not only serves major brands Products is also invested to acquire three new in Brazil, it has customers in Nigeria, the biggest production lines for its unit in Lins Cape Verde, Angola, Cuba, Argentina, producer of (SP). By expanding its manufacturing Peru, Colombia, Paraguay, Venezuela liquid and bar structure, it has been able to start and Uruguay. soaps in the making cans for luncheon meats, B2B segment, sardines and tuna (extruded) and JBS Trading – Centralizes sales of its products increase its current capacity for the raw materials to the food, hygiene, vegetable and tomato segment, cleaning and biodiesel industries. It are supplied to among others. manages products such as vegetables some of Brazil’s oils, animal fats and chemicals. It is foremost Metal packaging is not only high responsible for selling 35% of the beauty and quality and robust, is also considered tallow produced in Brazil and in 2017 hygiene brands. highly sustainable: it is 100% it imported and exported around recyclable and can be returned to 110,000 tons of products. market without downcycling, which involves transforming it into a lower JBS Carriers – This unit serves JBS value product by recycling. and outside customers via its fleet of 1,100 trucks, all of which are tracked JBS Personal Hygiene & Cleaning by satellite. The business unit has 35 Products – The biggest producer affiliates located around Brazil and of liquid and bar soaps in the B2B serves the entire country, particularly segment, its products are supplied to the Mid-West, Southeast, South and some of Brazil’s foremost beauty and North regions, providing logistics hygiene brands. Beginning in 2016 services to a variety of industries and and moving quickly ahead in 2017, guaranteeing product integrity. the business unit has invested in industrial automation as a strategy JBS Carriers renewed part of its fleet to improve its business: it purchased in 2017 and invested in monitoring 12 robots, five used to box products systems: and seven to stack boxes on wooden • It purchased 273 trucks, updating pallets and they all include features around 25% of its fleet. Its R$ 57 which can be used to monitor million investment was focused on production line yields. The unit’s guaranteeing cost competitiveness goal is to reduce fixed costs and and increasing team members subsequently offer customers even safety. more competitive prices.
96 • It renewed the Animal Welfare • It adopted a new tire control cattle truck fleet, purchasing more system. The system, called TOP 10 than 100 new trucks capable of Tire Management, monitors tires transporting 54 head of cattle each throughout their lifecycle, from while reducing diesel consumption. purchase to disposal. In addition to minimizing environmental • It installed telemetry systems on impacts, this tool helps reduce fleet all 1,100 trucks across the fleet. maintenance costs by between 15 The technology, which can be and 20%. operated by satellite or mobile phone, provides real-time driver TRP Preowned Trucks – This unit performance controls and helps is responsible for negotiating new reduce operating costs and traffic vehicle purchases for JBS companies fines. By increasing predictability, and selling an average of 2,000 used this tool helps meet delivery trucks and trailers a year. deadlines, increase safety and ensure cargoes arrive intact. The next challenge will be to use the tracking information to predict the possible mechanical problems. Predictive maintenance will create savings, reduce material wastage and increase the trucks’ working life.
For the third consecutive year, JBS Carriers received the “Right Way” award, which is an agreement among businesses to combat the sexual exploitation of children and adolescents on Brazilian highways. This award for the unit’s compliance with certain program criteria, such as the organization of Team Members awareness campaigns.
97 Human Resources Management – South America
As guardians of the Company Culture, At the end of 2017, the platform had JBS’s Human Resources areas focus around 120,000 team members, on strategies to promote corporate distributed as follows: values across the Company. For example, the Company Culture is the Business Team basis for Team Members Performance units members Assessments, new staff hiring and all JBS Brazil (includes area strategies. JBS Carnes, JBS Leather and JBS New Business) + 49,000 At its South American businesses, Seara + 73,000 the Human Resources Department is responsible for all team members • All team members are covered by hiring, retention and development at collective bargaining agreements. JBS Brazil – including JBS Carnes, JBS Leather and JBS New Business - and • All have full-time contracts with Seara. the Company.
• All units respect team members’ right to unionize or organize.
• JBS does not allow or tolerate child or forced labor.
98 Inclusion is a major issue at JBS. For example, it works hard to attract people with disabilities. Here, the Company works alongside Senai (the National Industrial Learning Service) and the Office of the Public Prosecutor to At its South American map opportunities, raise awareness businesses, the Human at factories and work with nearby community. These initiatives help the Resources Department Company ensure legal compliance and is responsible for fulfill its social commitments. all team members hiring, retention and At the end of 2017, the Company had development at 2,462 disabled team members. For JBS Brazil. example, 83% of Seara plants hired team members with disabilities. The target is for all units to hire disabled team members in 2018.
In 2017, the South America HR platform was focused on reinforcing communication channels with this audience and consolidating the previous years’ effort to develop talent.
99 With this in mind, it developed a to Leather and New Business in number of initiatives throughout the 2016. The training process takes year, including: between six-eight months and in addition to leadership issues, it Leadership Training also addresses technical areas and • Leadership Academy. A career routine management matters. 70 development program for leaders team members were trained in with outstanding performance 2016 and another 27 are still on the assessments. The program is course. At Seara, the program was intended to increase knowledge expanded from just the operational and skills and ready these team area to include the commercial and members for new challenges at JBS. logistics areas. 1,065 team members joined the program in 2017, divided into Technical training 47 groups. • Seara University – This is a distance learning platform • In-house Talent. This project available to approximately aims to develop and train team 7,000 team members, including members who show potential administrative and technical as well for future supervisory positions. as management staff. The platform People looking for new challenges offers various career development at the Company can contact their tracks and looks at operational and managers and enroll in the project. administrative activities. The program initially focused on Carnes and Seara, but was extended
100 • Quality Academy. This is a • Valued Youth. This is an initiative development program for Quality created to keep university students personnel at Seara. better informed about JBS. It includes the Valued Youth platform 360º performance • Labor Lawyer. This course was (jovensdevalorjbs.com.br) that had assessment created in 2016 to train labor 9,416 registered users in 2016, called methodology. lawyers. It is for attorneys who the JBS at Uni program, which Based on graduated at least two years offers talks at universities about meritocracy, it is previously and involves a 90-day JBS values - it held 34 talks and used to diagnose training course at JBS headquarters visits to universities throughout and analyze in Sao Paulo. During the course, the year, speaking to 3,300 professional trainees will gain theoretical and students - and the JBS Values’ attitudes and practical experience and receive Immersion program, a project that interpersonal behavioral and technical training selects students to find out more relationships. and refresher courses on legal about the Company following a issues. 12 attorneys out of the social media competition. Over 1620 who enrolled on the program 1,200 students enrolled for the concluded the course and are now program. 20 were selected to visit working in various regions around JBS headquarters in Sao Paulo. the country. The initiative also has a Facebook • Trainee. This program has a profile, which has published over more industrial focus and selects 3,000 posts and has around 37,000 youngsters who show potential followers. (and who have graduated from university within the past two Performance Review years) to join the Company’s Based on meritocracy, the 360° business units. The idea is to methodology is used to diagnose help them develop and produce and analyze professional attitudes leaders capable of managing teams and interpersonal relationships. In and processes. The program was addition to revealing talent that revisited in 2017 and is now applied could later take up management regionally. This means that talent responsibilities within the Company, hiring is now carried out locally the assessment results are used as by factories. It attracted 6000 a benchmark for future training and candidates to the JBS Leather and development programs. All team JBS New Business units running members at the JBS head office and the program. 11 of these candidates production unit leaders (coordinators, were selected. The program takes a supervisors, managers and directors) year to complete. undergo assessment. In 2017, 6,624 team members from all businesses were evaluated.
101 Stakeholder Relationships GRI 102-40, 102-42, 102-43
JBS maintains communications channels with various target markets:
Audience Channels In-house • JBS Intranet - gathering news and information about the Company and HR-related information. • Learn More - bi-weekly newsletter • Stay Tuned - leadership newsletter • HR Reports, Always Do The It Right News, Releases, e-mail marketing, JBS TV, among others - aimed at informing the in-house audience about events involving JBS businesses and operations. • Ombudsman - intended to deal with day-to-day work-related matters, such as criticism, questions and suggestions about internal processes and procedures. • JBS Ethics Line* - managed by a specialist third-party Company, the hotline receives reports of misconduct or situations that may imply a violation of the Code of Ethics and Conduct. Customers • Customer Services 2.0 (JBS Carnes), adding an online, interactive channel alongside its traditional customer service system, available at http://www.friboi.com.br • 0800 JBS Carnes: 0800 11 5057 • Seara Customer Service available via a toll-free number (0800 47 2425), e-mail and social media. Media • Specialized support services in each business • Press room (http://jbs.com.br/imprensa/) Shareholders • IR areas in Brazil and the US and investors • IR website • Quarterly results telephone conferences • JBS Day • Visits to JBS facilities Suppliers • JBS Connection (http://www.conexaojbs.com.br/)
*The JBS Ethics Line is available to all of the Company’s stakeholders. The line is available to team members and can also be reached by customers, suppliers, investors, shareholders and other stakeholders 24 hours a day, 7 days a week, in Portuguese, English or Spanish. Complaints are made via the 0800 377 8055 number. For further information, visit www.linhaeticajbs.com.br
102 Aimed at domestic customers and One differential in JBS’ consumers, the Seara Customer Service customer and supplier center is available on a toll-free number support interactions is the and six internal email channels covering QR Code. These codes are the Seara, Macedo, Rezende, Massa Leve, Doriana, Frigor Hans, Big Frango and other included on Friboi meat brands. It also responds via Reclame Aqui packaging and provide and supports social media interactions. In information about producer 2017, these channels received an average farms (name and location). of over 54 thousand contacts per month. Customer support interactions covered several topics, such as product and services queries, compliments, criticism and customer dissatisfaction, among other issues. The Customer Service system generates daily reports that are sent to factory leaders for follow-up.
One differential in JBS’ customer and supplier support interactions is the QR Code. These codes are included on Friboi meat packaging and provide information about producer farms (name and location). Consumers simply scan the code using a smartphone or visit the www.confiancadesdeaorigemjbs. com.br website, where they insert the manufacturing date and FIS (Federal Inspection Service) number.
103 Communities Due to the scale and scope of JBS is the main sponsor of operations, JBS has an important the Germinare Institute. It role to play creating direct and is a nonprofit organization indirect jobs in many locations. that offers children and By contributing to development across these regions, the Company’s teenagers a high-quality, activities have a very significant full-time, education in a social impact. business school setting at no cost to young people The Company also supports with development potential. education and training courses for children and youngsters, professional training courses for teenagers and adults and training and social inclusion for the disabled.
Germinare Institute – JBS is the main sponsor of the Germinare Institute. It is a nonprofit organization that offers children and teenagers a high-quality, full-time, education in a business school setting at no cost
104 Recycling industry training – JBS is committed to support for professional training in the recycling industry and raising the incomes of team members who engage in these environmental to young people with development activities. The Company support potential. The Institute’s main several initiatives aimed at generating differential is its methodology, which social, economic and environmental has been approved by the Ministry benefits that are in line with the of Education, supplementing the National Solid Waste Policy, including traditional curriculum using themes training recyclable waste collectors and activities to encourage students and improving cooperatives and to develop an entrepreneurial associations through investments in outlook and teach them about fixed assets and equipment. In 2017, JBS business management. The goal extended these initiatives to recyclable here is to create future leaders. It material collector cooperatives in Mato offers free, high-quality and full- Grosso do Sul, adding to those it already time education to children and supports in the Paraná and Sao Paulo adolescents between 12 and 18 years states. of age (students from the 6th year of Elementary School to the 3rd year Special Chefs – This initiative focuses of High School). Ranked 9th on the on increasing social inclusion for city of São Paulo schools ranking, youngsters with Down’s Syndrome according to the National Middle through gastronomy and has been School Exam (ENEM), which monitors sponsored by Friboi since 2013. The learning achievement among Institution’s campaigns include free students concluding high school in workshops with well-known chefs, Brazil, it is one of the top 100 schools who teach youngsters recipes and nationwide. The institution ended how to use ingredients, as part of an 2017 with 485 students enrolled effort to transform cooking into a tool (http://www.escolagerminare. to increase their independence, self- org.br/). esteem and motor coordination.
105 JBS North America GRI 102-2
In 2017, JBS’s US and Australia the beef, poultry, lamb and pork 2010 operations celebrated their 10th segments. It has operations • The Company anniversary. The Company, which in North America, Europe and expanded its opened up a number of new Oceania and is one of the top two operations in Australia markets after acquiring Swift, companies in each of its markets. when it acquired is now a major global player in GRI 102-6, 102-7 Tatiara Meats, with its extensive lamb operations, and Rockdale Beef.
• Acquires McElhaney Feedyard in Welton, JBS USA: A 10-year journey of quality JBS USA: Arizona (USA), products and leadership GRI 102-10 expanding its feedlot operations.
2007 2008 2009 Swift & Company • The Company expanded into • The Company entered acquisition. Australia following acquisition the poultry market of the Tasman Group, which when it acquired a This transaction kicked has three beef processing controlling stake in off JBS activities in plants in Victoria and another the Pilgrim’s Pride the US and Australia, three in Tasmania. Corporation, which in the beef, pork and was the second- lamb markets. • The Company expanded largest US Company its US beef business when in the sector at the it acquired the Smithfield time, with operations Beef Group, including its Five in Mexico and Puerto Rivers feedlot operations. Rico as well. This transaction increased JBS’s footprint across the US, adding four slaughterhouses in the northeast and southeast of the US to those already operating in the country.
106 2015 • Pilgrim’s Pride acquired plants in Iowa and Illinois, Tyson, in Mexico, which five genetic units, two in included three vertically Missouri and the others in integrated processing Arkansas, Iowa and Texas, as plants across the country. well as four pork farms, two 2012 in Arkansas and one each in • In the US, it acquired the • JBS increased its Oklahoma and Texas. Cargill pork business, which Pilgrim’s Pride included two processing shareholding to 75.3%.
• It acquired XL Foods, its first foray into the 2016 Canadian beef market. • The Company acquired a controlling stake (51% of the equity) in Scott Technology Ltd., based in New Zealand, and focused on developing deboning technologies for cattle and sheep and other solutions.
2014 2017 • It expanded its US case ready • JBS USA acquires Plumrose, which makes bacon, operations when it took over ham and other processed meat products. The Alex Lee, in North Carolina, acquisition included five case ready food plants and acquired Fresh&Easy, a and two distribution centers in the US. case ready factory based in • Pilgrim’s Pride acquired the GNP Company, a California. leading supplier of chicken products with premium • It acquired a controlling brands in the US Midwest. The transaction included stake in Andrews Meat two chicken processing plants in Minnesota and Industries, located in Sydney, Wisconsin, as well as an added value processing Australia, which focuses on unit in Minnesota. premium red meat products • Pilgrim’s Pride also acquired Moy Park, the largest for the food service and privately held Company in Northern Ireland and a export markets. leading poultry producer in Europe. After absorbing both operations – GNP and Moy Park – Pilgrims became the world’s largest poultry Company, capable of producing 8.6 million birds a day. It is also the world’s leading producer of organic chicken.
107 In 2017, the 2017, the best results Following these acquisitions, best period for in a decade the JBS USA portfolio of assets the Company, In 2017, JBS USA had the best year changed: the Five Rivers Cattle Feeding feedlot operations were business in a decade in North America and sold in Canada and the US as part performance Oceania: business performance improved in both absolute and of the JBS S.A. divestment plan improved in percentage terms, posting record disclosed to the market on June 20, both absolute figures for beef and pork. It 2017 (http://jbss.infoinvest.com. and percentage performed strongly in the poultry br/ptb/4182/Fato20Relevante20- terms, posting sector and became the world’s 20Plano20de20Desinvestimento.pdf). record figures leading poultry supplier through the JBS USA therefore ended the year for beef and Pilgrim’s Pride Corporation, which managing the JBS USA Beef business, pork. achieved this position after acquiring Moy Park, in Northern Ireland. which focuses on beef production in Pilgrim’s is also the world’s largest the US, Canada Australia, JBS Pork, producer of organic chicken. which focuses on producing pork and added value products in the US, and Other acquisitions also took place Pilgrim’s. All of the businesses are run throughout the year, in line with its on a strategy that prioritizes ongoing market consolidation and portfolio performance improvements, product diversification strategy. Plumrose, and service quality and building a major producer of ham, bacon partnerships with customers. and other products in the US, was folded into the business, as was GNP Company, a US chicken producer integrated into the Pilgrim’s portfolio.
108 Construction of the Global Food Innovation Center at the University of Colorado
One of the highlights for JBS of best practices in food safety, USA last year was innovation meat sciences and animal and this included investing in welfare. The Center will also be the Global Food Innovation a venue for industry dialogue Center at the Colorado and collaboration, which will State University (CSU). This include ongoing education and teaching and research unit is training as well as equipment the outcome of a partnership development and testing. between the Company and University and is intended to further advance development
109 JBS USA Beef GRI 102-2
This unit includes JBS beef operations In turn, JBS Australia is the country’s It exports to in the US, Canada and Australia. biggest animal protein processing more than Company. It runs 13 strategically The Company offers a wide and varied located processing units and five portfolio of fresh products under feedlots across the country and is 80 well-known, leading brands in the capable of processing more than countries. US and Canada sold locally and for 8000 head of cattle per day. Its export. It has 19 units producing for products are exported to over 80 the domestic and export markets. countries and it also has a significant share of the domestic beef and lamb markets.
Operational Structure GRI 102-7 United States and Canada
Alberta (Canada)
ID WI ID MI
PA NE UT CO KS
AZ OK GA
TX
110 Australia and New Zealand
Queensland Western Australia
South Australia New South Wales
Victoria
Tazmania Nova Zelândia
19 6 2 6 Beef Feedlots Leather Logistics processing units units units
8 8 3 1 Case ready Distribution Lamb Pork product units centers units unit
111 112 Production capacity GRI 102-7
• 42,400 heads a day • 6 feedlots ›› 28,000 in the USA ›› 6 in Australia / Capacity to process ›› 4,200 in Canada 150,000 heads ›› 10,200 in Australia • 8 distribution centers • 12,900 hides a day ›› 7 DCs in Australia ›› 5,000 in the USA ›› 1 DC in New Zealand ›› 7,900 in Australia ›› 6 logistics units in the US
Another JBS USA asset in Australia meatpacking plants, processing units, is Primo Smallgoods, the leading distribution centers and retail stores. local maker of ham, sausage and bacon, focusing on higher added JBS USA Beef focuses on continuously value items that are developed improving business performance, through investment in research paying special attention to product and development. Its operational and service quality. The Company also structure is spread across Australia works hard to build partnerships and and New Zealand and includes add value to customer businesses.
113 Record Results This meant that supply conditions Jointly, in 2017, the North America made 2017 a challenging year and Oceania operations generated a in Oceania for both cattle and record US$ 21.7 billion, compared with lamb operations. However, this US$ 20.6 billion in 2016. EBITDA was is expected to change in 2018, US$ 1.308 billion, 177% up year on year, especially in the second half of the and the EBITDA margin was 6%. year, and improve further over the two following years. These results were attributed to three factors. First was market Robotics for lamb deboning conditions, as cattle supplies One of last year’s highlights increased in the US and Canada was the lamb deboning process, alongside strong demand for protein which came online in 2017 at the on the back of rising employment Brooklyn, Australia lamb unit. The and incomes in North America. process uses robotic technology, Operational efficiency also increased operates at high speed and is able across the Company and improved to debone 10 carcasses/minute. quality, increasing performance US$15.7 million was invested in the ahead of its peers. This is the new, fully automated production business strategy adopted by the line, which was developed by Scott Company, which focuses on quality, Technology, a Company from New service and partnering with the Zealand controlled by JBS. The Company’s best customers while robotic technology developed working to expand the product mix for this project uses DEXA (dual in both North America and Oceania, energy x-rays) which are able to including a growing number of added measure the percentage of lean value and more profitable options in meat, fatty meat and bone in each its portfolio. lamb carcass. This information can also help producers adjust or In Australia, JBS USA Beef is still going change animal feed or reproductive through a period of herd rebuilding. practices and obtain better results.
Jointly, in 2017, the North America and Oceania operations generated a record US$ 21.7 billion, compared with US$ 20.6 billion in 2016.
114 Mains US brands GRI 102-2
®
Main Australian brands GRI 102-2 Beef
Lamb Processed foods
115 JBS USA Pork GRI 102-2
The second-largest pork producer The key issue in the JBS USA Pork in the US, JBS USA Pork operations strategy is performance. Continuous are mainly concentrated in the west improvement means focusing on of the country. Its product portfolio product and service quality as well as includes leading brands such as customer partnerships. Swift® and Swift Premium® as well as options ranging from fresh meat up to ready to cook products.
Operational Structure GRI 102-7 United States
VT MN
IA IL IN
CA KY
OK AR NC MS
pork case ready Production Capacity processing product 5 units 7 units • 92.000 pigs a day ›› 100% in the USA • 7 case ready product units
genetics distribution ›› Examples include ham, bacon, pork 2 units 2 centers fillet and deboned chops
116 Main brands GRI 102-2
Unmatched Results in 2017 ham, sliced meats and pork cuts. In 2017, the unit achieved record net The US$230 million acquisition revenues of US$ 6.2 billion, up 16.2% included five factories in the compared with 2016. EBITDA was states of Iowa, Vermont, Indiana R$ 780 million with a margin of and Mississippi as well as two 12.6%. distribution centers, also located in Indiana and Mississippi. Although Business was driven by market this transaction only took place conditions, with a significant supply recently, Plumrose’s operations of pork and growing demand have already been integrated with for products, as well as ongoing JBS USA Pork and performance gains in operational efficiency. has improved, highlighting JBS’s This means that animal output positive approach to acquisitions. is growing in step with increased An example of this is the pork processing capacity. Additionally, processing plant acquisitions in the Company reinforced its strategy recent years. In 2015, prior to these to expand the product range and acquisitions, the units employed areas of operation when it acquired 5,500 people and processed 18,500 Plumrose, further strengthening pigs/day, manufacturing few added its range of fresh and processed value products. At the end of 2017, products. these same units were processing over 21,000 pigs using 4,500 people Plumrose is involved in the case and added value items represented ready and high added value product around 30% of output. segment, which includes bacon,
117 Pilgrim’s Pride Corporation GRI 102-2
Pilgrim’s is the world’s leading Pilgrims was founded over 60 chicken producer and processor years ago and during this time, and the largest producer of organic it has focused on offering safe, chicken in the world. Its operational nutritional, healthy and high quality structure is distributed across 14 US chicken products. Its business states and it has operations in Puerto strategy is to focus on continuously Rico, Mexico, the UK and continental improving performance and building Europe as well. It produces fresh partnerships with its customers. It meat – including segmented has a wide-ranging product portfolio products based on poultry size – from natural chicken to ready-to- as well as high added value items, eat, processed and ready to cook including ready-to-eat and ready to products. cook options.
Operational Structure GRI 102-7 United States and Mexico
MN WI
WA VA KY NC TN AR SC AL GA TX LA FL
Mexico
118 Europe United Kingdom
The Netherlands
France
36 14 21 poultry case ready distribution processing product units centers units
Production capacity
• 8.3 million birds/day ›› 4 units in the UK
›› 25 units/6.6 million birds in the US ›› 3 units in France ›› 1 unit/66,000 birds in Puerto Rico ›› 1 unit in the Netherlands ›› 6 units/820,000 birds in Mexico • 21 distribution centers ›› 4 units/860,000 birds in the UK ›› 20 in Mexico • 34,000 tons of case ready product/month ›› 1 in Puerto Rico
›› 4 units in the US ›› 2 units in Mexico
119 Pilgrims was founded over 60 years ago and during this time, it has focused on offering safe, nutritional, healthy and high quality chicken products.
Market leadership The 2017 highlights for Pilgrim’s consolidation were the expansion of its business In 2017, Pilgrim’s achieved net model, with additional investment revenues of US$ 10.8 billion, up 9% in added value products and brands. on 2016. EBITDA was US$ 1.388 billion, Additionally, the Company invested 34.8% higher than in 2016, with an in acquisitions to consolidate its EBITDA margin of 12.9%. These results leadership position on the markets reflect lower input costs, record grain where it operates. In 2017, another crops and rising output to meet two companies joined its portfolio: increasing demand in both the retail GNP Company and Moy Park. Both and food service markets, particularly acquisitions are already integrated in the US and Mexico. with Pilgrim’s, showing synergy gains and improved performance in terms Pilgrim’s is listed on the NASDAQ. of cost, production capacity By the end of 2017, its market cap and sales. was US$ 7.7 billion, 61.9% up on the previous year. Its shares traded at US$ 31.6.
120 121 Moy Park was voted the biggest Company in Northern Ireland for the sixth consecutive year by the Ulster Business Top 100 Companies, organized by the Ulster Business magazine
The Pilgrim’s chicken the free range system, where production plant in Mayfield, chickens are left to run free, and Kentucky (USA) underwent a also developed an organic chicken production system. It was also the modernization and expansion first Company to launch ready- project. to-eat and pre-cooked vegetarian products. • GNP Company specializes in premium chicken products made • Although better known for its with organic and antibiotic free raw chicken protein operations, the materials. The acquisition reinforces Company also does significant Pilgrim’s position in two areas: it is business in beef, ready-to-eat dishes now the leading global producer of including entrées, main courses organic chicken and it has expanded and desserts, and in the private its footprint, as GNP sells across the label sector, producing items sold North of the US Midwest and has under retailer brands. Furthermore, production units in Minnesota and the Company is continuously Wisconsin. investing to improve its production processes. One example is its 2017 • Moy Park is the largest privately investment in the Ashbourne unit held Company in Northern Ireland in Ireland. The £ 4 million injection and one of Europe’s leading was used to install new processing poultry producers. This acquisition lines and refurbish classification and raised Pilgrim’s to the position of warehousing areas and purchase world’s largest chicken producer. advanced refrigeration and other Additionally, Pilgrim’s portfolio now equipment, which increased includes a Company recognized for productivity and boosted output by its innovation. Moy Park pioneered over 30% to 1 million chickens a week.
122 Chicken unit modernization weekly chicken production rose The Pilgrim’s chicken production by 450,000 kg. 155 new jobs were plant in Mayfield, Kentucky (USA) also created. The modernization underwent a modernization and project was part of the Company’s expansion project. This was intended cash flow reinvestment plan which to increase chicken production, will invest around US$ 190 million process larger birds and serve key in order to continue improving customers more efficiently. Following operational efficiency and strengthen the unit’s expansion – which included partnerships with key customers, building over 75 chicken cages to offering them the opportunity to be used by local family farms – accelerate sales.
Main Brands GRI 102-2
123 Human Resources Management – North America
Human Resources Management at policies, as well as continuously our companies on the North American investing to develop talent and platform focus on safeguarding leaders. the JBS Culture and promoting our corporate principles. The Company has an Equal Employment Policy, reaffirming its In order to be the best at what it commitment to recruiting and hiring does, JBS USA manages this issue staff regardless of race, religion, color, by acting as responsible employer origin, gender, sexual orientation, and taking steps to ensure team gender identity or age. The same members are proud they work for principle applies to team member the Company. This includes efforts training and career development. JBS to hire, retain and develop team USA is committed to offering equal members who are dedicated to opportunities to everyone, including operational excellence and identify veterans and the disabled. with the JBS mission, vision and values. JBS is also committed to improving The Company gives great emphasis to team members welfare, providing dialogue and building trust. In order to safe and healthy working conditions maintain a culture of trust and respect, and adopting diversity and inclusion it offers team members opportunities to put their points of view to their leaders and colleagues. The Company
124 organizes a number of periodic • JBS respects team members’ right meetings referred to as Roundtable, to unionize or organize. In 2017, 62% Townhall and Safety and Production of JBS USA team members working Meetings. All team members from every in the US and 90% in Canada, 75% department are invited to these events in Mexico, 35% in Europe and 100% and are encouraged to put forward in Australia and New Zealand were their ideas and concerns. An action plan covered by collective bargaining is drawn up for each issue identified agreements. GRI 102-41 and the team members presenting • Respect for diversity, reinforced by these issues are kept abreast of the Equal Employment Policy. For subsequent developments. example, at women occupy 18% of the executive positions at JBS USA and At the end of 2017, the platform 15% at Pilgrim’s. GRI 102-41 had around 98,000 team members, distributed as follows: • JBS USA has a Corporate Policy setting out the procedures that must No. Team be followed to comply with local, Unit Members state and federal laws on slave labor 1 JBS USA 32,640 and human trafficking. Pilgrim’s USA2 30,993 Pilgrim’s Mexico 10,248 JBS USA is committed Pilgrim's Moy Park 13,738 JBS Australia 10,841 to offering equal
1 Includes operations in the US and Canada, opportunities to except poultry only factories 2 Includes factories in the US and Puerto Rico everyone, including veterans and disabled team members.
125 HR Management Practices it is called the Prideline. At JBS At the • The Code of Conduct provides Australia, the channel is called the beginning of guidelines for ethical behavior in Complaints Hotline, while Moy 2016, Moy Park the workplace. It aims to ensure Park refers to it as the Support (Europe) created appropriate conduct, safe and Assistance Helpline. Every case efficient operations and the well- raised in 2017 has been resolved. a strategic skills being of all team members. The development • Engagement Surveys. The Company Code of Conduct adopted by JBS program. carries out regular engagement USA, Pilgrim’s and JBS Australia surveys to frequently assess team applies to all team members at member satisfaction with the any level of the Company and sets workplace environment and their out their responsibilities. There are jobs. Managers also speak to team also sanctions for noncompliance. members on a regular basis to All team members receive a copy ensure everyone’s expectations of the document when they join remain in alignment. The results of the Company. Failure to comply the surveys are not disclosed. with these guidelines results in corrective action, warnings and, Training and Professional depending on the severity of the Development Programs incident, dismissal. In 2017, JBS USA held a number of • Open Door Policy: this program Leadership training programs. The encourages team members to coursework was split cross eight present any problems affecting the programs 1) Summit, 2) JBS Way of overall work environment to their Leading, People First, 4) Elective supervisors or the HR area. The Learnings, 5) Leadership Fundamentals, discussions and debates that take 6) JBS Trainee Program, 7) External place as part of this program also Trainee program, and 8) the Intern help Company leaders understand Program. how team members view a variety of work-related topics, including The Summit program lasts ten weeks payments and benefits, scheduling, over the summer and challenges safety and satisfaction with university students with a range of Company leaders. practical learning experiences and significant projects that provide • Hotlines: toll-free numbers valuable workplace experience. The managed by third parties that team program also helps to identify future members can use to safely and team members. 110 students took part anonymously report any workplace in the 2017 program. 20% of them are concerns, unethical behavior or likely to return to the Company in the policy violations. At JBS USA, this future as permanent hires. channel is called the Best Work Environment Hotline. At Pilgrim’s
126 JBS Way of Leading – this program At the beginning of 2016, Moy Park identifies team members with (Europe) created a strategic skills leadership skills at our plants. After development program. The project mapping, they undergo a professional included various training and learning development program that involves initiatives for the entire work force, a 6-month rotation at a JBS plant. In including leadership and management 2017, we promoted and trained 53 in- training and refresher courses for house talents as part of the program, technical and operational skills. with an 88% retention rate. The Company also organizes the Moy JBS Trainee Program – develops Park Food Skills Academy. Launched future leaders as part of a program as a pilot program in 2016, it is being where people rotate through the tested at the Anwick unit and trains Company’s US, Canadian and Mexican team members on processing operations over a twelve month operations, ensuring that everyone period. In addition to building project is properly prepared to help improve management, problem-solving and productivity and innovation. The collaboration skills, the program Graduate Management Trainee also provides skills and knowledge in Program is also an important project. leadership and process and people The program develops the next management. The program had 90 generation of leaders and focuses trainees in 2017, 93% of whom were on recent university graduates. It hired. The program attracted over covers several areas of the Company 1,500 candidates in the US and Canada. to help participants’ communications and interpersonal skills as well as JBS Leadership Warehouse Program their commercial nous and financial – launched in 2016, it consists of five awareness. Participants also receive different leadership programs for guidance from top management different profiles. The program is for executives. leaders with high potential, mid-level managers, production supervisors and recently promoted or hired managers.
110 students took part in the Summit program
127 Stakeholder Relationships GRI 102-40, 102-42, 102-43
The JBS companies in the North communications with their various America platform maintain stakeholders:
Audience Channels In-house Direct lines to anonymously report work-related or ethical issues:
JBS USA: Best Work Environment Hotline Pilgrim’s: Prideline JBS Australia: Complaints Hotline Moy Park Support Assistance Helpline Engagement Surveys. Open Door Policy: a program to communicate directly with Company leaders where team members can present specific issues affecting their performance or the workplace environment.
JBS USA: News Roundup, a daily newsletter with the main events involving JBS USA, competitors and the market.
Moy Park Magazine, published quarterly Customers and A website for each business. Consumers Consumer Hotline: 1-800-312-1470, available from Monday to Friday in the USA during business hours
FreshTraceTM. SAP Cloud for Customers Chicken Check In Platform Media Specific media teams for each business. Shareholders United States customer service areas (Pilgrim’s): and investors IR website (Pilgrim’s) Suppliers A website for each business.
128 JBS has a differential in its • Chicken Check In Platform - communications with customers and produced by the National Chicken suppliers: it can identify the source Council - a nationwide, nonprofit of all products from the Pilgrim’s trade association representing the Pride Corporation. The FreshTrace™ North American broiler industry – mechanism can identify the producer offers information on the chicken farm and it complies with related production process, from the farm requirements determined by the FDA. to the table, and includes useful Simply type in the code on a specific videos, information on the latest website. Click here to find out more. chicken trends and real farmers’ stories. Additionally, Pilgrim’s offers other consumer communication tools: • SAP Cloud for Customers – can track and monitor consumer issues and complaints in real-time. This customer service channel can be used to send videos, photographs or text, helping the Company respond to customer queries more quickly and take operational steps, as and when required.
129 Corporate unit, which has an annual budget Responsibility Leader to support local communities and initiatives. For example, some units Moy Park received the choose to support initiatives that CORE Standard for focus on children and adolescents, Responsible Business in and sponsoring school sports 2017 and was recognized events. Others may find it makes for its corporate more sense to support projects responsibility practices to combat hunger. These efforts in Northern Ireland. The are supported by initiatives to award, which is issued by raise funds from team members and their families or through the institution carrying the volunteering programs, which are same name, is the only one organized by the units themselves. in the country highlighting This means that each strategy companies that have reflects the needs of each unit’s adopted best corporate local community and helps to responsibility practices. engage team members.
The Prince’s Countryside Fund. Moy Park sponsors social, economic and environmental development in rural communities near its units through donations and support for this initiative. Communities The Prince’s Countryside Fund is JBS USA understands that the currently running over 120 projects biggest influence it can have in the UK that benefit around is to create jobs and generate 100,000 people. income, thereby helping to support development in the communities Feeding Britain’s Future. This where it operates. It therefore program trains young adults sponsors or joins community looking for employment activities to improve education and opportunities in the food training for children and adolescents industry, which is the UK’s biggest and help provide adolescents and employer with over 3.7 million jobs. adults with professional training. Created and managed by the IGD Association, the program includes Pilgrim’s does not set donation or professional training courses and volunteership targets. The issue is visits to production units. managed independently at each
130 131 Financial Performance
132 133 2017 Financial Highlights
In 2017, JBS reported its best ever operating results, led by the excellent performance of its US operations.
Net Revenues Gross Profit R$ 163.2 billion* R$ 23.8 billion Down 4.2% vs. 2016. An 11.5% increase and gross margin growth from 12.5% in 2016 to 14.6% in 2017.
170,380.5 163,170.0 14.6% 12.5% 21,313.8 23,772.2 -4.2% 11.5%
2016 2017 2016 2017 *equivalent to US$ 51.5 billion
Adjusted EBITDA Net Profit R$ 13.4 billion R$ 2.1 billion* EBITDA rose from 6.6% in 2016 Reported net profit was up 128.7% vs. 2016, to 8.2% in 2017. with EPS1 of R$ 0.19.
8.2% 0.75 6.6% 13,415.9 2,111.4 0.19 11,286.9 0.09 534.2 18.9% 233.6 804.0%
2016 2017 2016 2017* 2017
*Excluding the effect of signing up to PERT (for further details, see here: http://jbss.infoinvest.com.br/ ptb/4387/584744.11.17.pdf ). 1 EPS: earnings per share
134 Operational Cash Flow Free Cash Flow R$ 5.2 billion* R$ 2.8 billion* Up 41.9% compared with 2016. Up 2070% compared with 2016.
5,204.0 3,667.4 2,777.6
41.9% 128.0 2070%
2016 2017 2016 2017 * In millions of R$ * In millions of R$
New Debt and Leverage
Leverage fell by 3.38x in 2017, despite 4.16x the impact from dollar appreciation 3.38x at the end the year. 46,904.8 45,283.3
-3.5%
2016 2017
135 Sustainability GRI 102-2
136 137 The commitment to supplying Each business unit has the autonomy safe, high-quality food includes a to identify relevant issues and number of strategies and initiatives develop the necessary action plans that are developed and applied for their respective operations. at various stages of the value These issues are addressed by chain. They include eco-efficiency the respective Sustainability initiatives and environmental Departments on both business responsibility activities intended to platforms – South America and North constantly improve the operational, America. These are multidisciplinary manufacturing and supply standards areas that employ specialist staff for the Company’s food products, who are experts in JBS’s various in order to support JBS business businesses, which means they are sustainability. able to help the companies make decisions in this area. These activities and strategies are applied from the time we source our As sustainability is a strategic raw materials up to the point where business issue with global we dispose of post-consumption repercussions, the Company has also product packaging. As such, they created a Sustainability Committee, help reduce the environmental reporting to our Board of Directors. impacts from the Company’s various The Company also focuses on business units and support of continuously creating synergies social, environmental and economic based on best management practices development in local communities, at operations in every country. As a creating value for stakeholders. result, five issues have been identified as material and strategic for JBS as they are critical to the business’s success and highly relevant to Company stakeholders. GRI 102-46
Global material issues GRI 102-47
Team Member Animal Water Product Climate Health and Safety Welfare Integrity Change
138 Each business Although global guidelines exist Business Risk Management. In terms unit has the instituting regional sustainability of sustainability, the Company’s autonomy strategies, each Company manages biggest risk in Brazil is raw material, to identify these issues autonomously in particularly cattle, procurement. relevant issues accordance with local challenges In order to address this issue, and the regulatory environment in JBS employ a satellite system to and develop each market. For example, the South monitor supplier farms which helps the necessary America platform has adopted a it purchase cattle from livestock action plans for sustainability strategy to support risk breeders who are not harming the their respective management, reduce the Company’s environment or operating illegally. operations. environmental footprint and manage In order to assist suppliers and relationships with society and address environmental compliance stakeholder engagement. issues, the Company also has a wide- ranging sustainability program for integrated supplies, which focuses on encouraging them to adopt best sustainability practices and improve governance of third-party contracting processes.
139 Reducing the Environmental intended to engage with stakeholders. Footprint – This is a group of actions The Company believes sustainability intended to reduce emissions, water is an ongoing process of continuous consumption and waste. Every year, improvement that involves increasing JBS has improved its eco-efficiency business performance in the short and has worked to support innovative and long terms while balancing and initiatives related to its processes, managing economic, social and governance and products. JBS made environmental factors. progress in this area during 2017 when it prioritized investments at Since 2015, as part of efforts to plants in Brazil posing a water risk. manage this issue the Company has Actions such as this resulted in the adopted over 30 key performance Company in Brazil being recognized indicators (KPI’s) in high-priority for its approach to the issue and it areas at over 50 US and Canadian was ranked as one of the leading facilities. Each facility is responsible for food industry companies by the CDP identifying improvement targets and (Driving Sustainable Economies). drawing up an implementation plan to achieve these objectives. The program Relationships with society and has brought about measurable stakeholder engagement – change, driving continuous Society demands increased improvements in responsible resource transparency throughout the usage, meeting the expectations of production chain. In response, JBS both the Company’s management Brazil has implemented a robust team and its stakeholders. strategy and a variety of tools to offer high-quality products and To learn more about JBS USA’s high standards of animal welfare, comprehensive approach to health, sustainability and traceability. sustainability, including 2017 This helps to build trust with performance and 2020 goals, please customers and consumers and makes visit: https://sustainability.jbssa.com/ sustainability – alongside Compliance and Corporate Governance – a The Pilgrim’s Pride sustainability central issue in JBS’s reputation and strategy is based on a range of image management. goals involving animal welfare, team member health and safety, the The sustainability strategies adopted environment and suppliers, which it by JBS USA also includes a number of plans to achieve by 2020. initiatives throughout the value chain
Sustainability is an ongoing process of continuous improvement that involves increasing business performance in the short and long terms while balancing and managing economic, social and environmental factors.
140 2020 Goals Pilgrim’s Pride Corporation (PPC) is committed to achieving a range of sustainability goals by 2020:
Team Member Health and Safety Reduce severe incidents by 15% year over year Animal welfare Achieve a combined score of 92.5% or better across all Pilgrim’s complexes on our Pilgrim’s Animal Health and Welfare Scorecard and convert 25% of our production facilities to antibiotic-free 2020 Goals
Suppliers Implement Pilgrim’s Supplier Code of Business Ethics and Conduct with all of our suppliers
Environment • Reduce water use intensity by 10%
• Decrease electricity use intensity by 12%
• Reduce natural gas use intensity by 14% To learn more about Pilgrim’s • Reduce greenhouse gas comprehensive approach to sustainability, emissions intensity by 14% including 2020 goals, please visit: https://sustainability.pilgrims.com.
141 Team Member Health and Safety GRI 103-2, 103-3, 403-2, 403-3, 403-4
All South America operations use The South America operations have The South mapping, analysis, monitoring and therefore invested R$ 130.8 million America control processes to guarantee the to structurally adapt their facilities operations health, safety and quality of life of all and purchase equipment. The biggest have therefore our team members. In order to address advance last year was the creation these issues on a preventive and of the health management system, invested corrective basis, JBS Brazil also takes allowing business areas to address R$ 130.8 million steps to continuously improve industrial the issue autonomously and speed to structurally routines, which include offering the best up their responses. The system, which adapt their possible working conditions, including offers standardized Occupational facilities. personal protective equipment, safe Health & Safety processes, had been machinery and facilities, ergonomics introduced at 95% of JBS plants by the programs and quality-of-life initiatives. end of the year. The standards were The careful approach to issues such digitized, having only been available as these, which is critical to improving in print format previously, which also team member performance, is not meant that specific training courses only intended to eliminate workplace were needed for unit health teams and accidents, but also to improve team engineers. The training programs on member well-being at the Company and offer include ergonomic training at JBS elsewhere. Carnes and medical team training at Seara.
Health and safety issues in the North America and Australia operations are addressed through a culture of prevention and team member
142 engagement. There are ongoing Health and Safety Management efforts to identify risks and correct • Across all our South American any shortcomings before incidents businesses, this issue is addressed can occur, which includes team by the Occupational Health training and education and meets and Safety Service (SESMT), Occupational Safety and Health a department that focuses Administration (OSHA) standards specifically on Occupational Health. issued by the US Department of This area reports to the Corporate Health. Human Resources Department.
›› Business performance is Health and safety are also critical monitored and assessed by the factors in any business decisions taken SESMT committee, which is made by Pilgrim’s Moy Park. The Company up of Company executives and involves its workforce in its health monitors Workplace Safety and and safety programs and encourages Occupational Health indicators on leaders to take an active role in a daily basis. identifying and managing risks as well as analyzing performance. ›› JBS Brazil’s activities in this area must comply with Regulatory In Brazil, last year’s activities focused Standards (RSs) published by the on social security leave, an issue that Ministry of Labor. came under much stricter control, as well as inclusion programs for ›› Team member health and safety people with disabilities and the issues are also addressed by 158 communication and awareness collective bargaining agreements activities that took place across all and other arrangements. businesses to raise team member This represents 84.95% of all awareness of this issue. JBS North agreements and arrangements for America also improved its controls the year. in this area. The Company adopted indicators (KPI’s), in line with the 2015 three-year plan to identify and reduce potential risks.
143 Health and safety award winner for the third consecutive year Moy Park received the Food and Drink Health & Safety Award for the third consecutive year. The award, organized by the RoSPA, recognizes best accident prevention practices and companies’ commitments to making ongoing improvements in this area. It also received the Gold Fleet Safety Award for its highway and traffic risk management efforts.
›› The SESMT, alongside the legal • Operational units in North America compliance and internal audit employ safety management teams areas, is intended to guarantee that are constantly working to application and enforcement of improve current programs, setting legal rules involving workplace aggressive annual health and safety environments, machinery and targets for the entire Company team members, including third and directly monitoring related parties. indicators. There is a daily, weekly and monthly routine for reporting • Due to the importance of health unit performance to these teams, and safety, there is a specific supporting fast and effective health subcommittee in North America and safety decisions. reporting to the Company’s executive leadership team, which ›› Each year, additional key holds quarterly meetings to or preventive performance oversee, monitor and support indicators (KPI’s), are included a robust and effective safety in line with the three-year plan management structure. The Safety to identify and reduce potential Index, which is tailored for each risks implemented in 2015. This local operation, monitors all of initiative includes an in-depth these activities and the resulting analysis of all policies and performance. programs related to walking surfaces, protection against Operational units in North falls and electrical safety, America employ safety among various other issues. For management teams that are example, a specific inspection constantly working to improve program was created to improve machinery protections. All items current programs. encountered have been resolved.
144 ›› The Company has adopted year with 42 procedures, included best industry management a number of specific health-related practices and guidelines, in line procedures developed throughout with recommendations from the year. This is in addition to the institutions including the North pre-existing issues it addressed, American Meat Institute, the such as Labor, Machinery, Workplace National Chicken Council and the Environment, Methods and National Pork Producers Council, Measurement. These procedures are and other organizations. aligned with the relevant regulatory standards on each of these topics. Health and Safety in Practice GRI 403-1 All Brazil units have Internal Accident At each of the South America Prevention Committees (CIPA) operations, all of these issues are whose members are elected by team managed using a standardized members and have representative internal process, in line with the appointed by the Company, Self-Management Health and representing team members in Safety Program (PSSAG), which ongoing workplace environment brings together the rules and improvement efforts. During regular principles used to standardize meetings with the SESMT, the CIPA internal processes, programs and address team member health and occupational health and safety safety issues. legislation. Part of the PSSAG was computerized in 2017 and ended the
JB004317A Cartaz Locomocao A3.pdf 1 10/10/17 11:21
145 There are also Health and Safety JBS USA and Pilgrim’s also have Committees at all JBS Carnes, JBS Occupational Health Medical Leather, JBS New Business and Seara Services, staffed by experts who plants in Brazil. The multidisciplinary support ongoing improvement in our approach, which includes the plant practices; they also support specific manager and representatives from programs at each individual facility HR, SESMT and CIPA and other to reduce team member exposure to organizations, looks at team member issues such as ergonomic problems, issues as well as infrastructure repetitive stress injuries or incorrect conditions, including machinery and posture. equipment. These committees also verify safety indicators, monitor Each plant undergoes three different accident action plans, address annual audits focusing on safety outstanding nonconformities raised management systems, fleet safety during safety inspections, assess and occupational health. Each mandatory training indicators Pilgrim’s unit undergoes daily safety specified by the NRs and deal with assessments (five times a week) other matters. based on the DuPont Behavior Based Observation (BBS) process. At JBS North America, each Company unit also has a safety committee made up of local team members.
146 Occupational Health and Safety Global Performance1 GRI 403-2
South America2 North America JBS USA Pilgrim’s Australia Canada Accidents Accidents with leave 885 260 276 279 8 Accidents without leave 3138 1412 816 426 245 Total number of accidents 4028 2290 1092 705 253 Injuries Rate of Injuries with leave (RI)* 4.23 0.75 0.58 14.6 0.32 (Frequency) Rate of Injuries without leave (RI)* 15 N.A. N.A. 22.22 N.A. Total injuries (frequency) 6.6 33.77 N.A. Lost Days (Severity Lost days with accidents 22191 6,973 2,296 N.A. 661 Rate) Lost days rate (LDR) 359 20.11 9.91 N.A. 26.95 Dart Rate Days away, restricted or job transfer rate N.A. 4.82 2.46 N.A. N.A. Deaths Work accidents 3 0 1 1 0 Accidents on the route to work 5 N.A. N.A. 0 NA Total number of deaths* 8 0 1 1 0
1 The indicators for each region/business are calculated using specific formula, in accordance with current legislation in each country. 2 JBS Carnes, JBS Leather, Seara and New Business. N.A. - Not applicable N.A. - Not available
1 million accident-free hours In 2017, the Dungannon unit (Northern Ireland) reached 1 million accident-free hours. This was achieved by adopting a work plan that set parameters for work routines and motivated teams by setting achievable targets and objectives.
147 Animal Welfare GRI 103-2, 103-3
This issue, which is also critical for in order to guarantee the five global level business sustainability, fundamental animal freedoms: is addressed by every JBS operation
1 2 3 4 5
Freedom Freedom from Freedom from Freedom to Freedom from from thirst, discomfort pain, injury or express natural fear or stress hunger and diseases behavior malnutrition
In order to support and improve its Workplace routines at all of the practices, in 2017 JBS invested R$ 14.7 Company’s operations follow million in Brazil and US$ 19.6 million specific procedures and policies to in the US and Canada in animal guarantee animals’ five fundamental welfare to strengthen and improve freedoms. In Brazil, Seara and JBS current practices. Carnes have their own specific Animal Welfare policies, drawn Animal Welfare Governance up in line with best practices and Management and legislative requirements. For JBS employs specialist teams for example, Seara has an Animal each type of protein to manage Welfare and Biosecurity Manual that this issue. These multidisciplinary provides guidelines on mandatory teams are constantly refining their practices at all own and integrated approach in accordance with best poultry farms. market practices.
148 JBS Carnes is also one of the only food industry companies in Brazil that uses cameras to monitor animal welfare indicators at all units, covering all phases from disembarkation through slaughter. This also helps encourage team members to adopt best animal management practices.
The Company Pilgrim’s Pride Corporation has Each operation also has production believes its own Animal Welfare Program. policies and techniques intended training is a Developed by a Corporate to comply with humane slaughter Committee focusing specifically on principles and ensure appropriate critical process this issue, the program is revised pre-slaughter procedures, including to ensure best annually to ensure poultry well- proper animal stunning. The practices. being is respected at all stages of Company has adopted technical the process, including hatching, and religious approaches at all growth, transportation and meatpacking units (in specific slaughter. The practices adopted in markets) to comply with stringent the US reflect guidelines published animal freedom principles. JBS by the National Chicken Council exports to many markets around (NCC). In Mexico, production the world and is therefore required complies with the government’s to adopt strict quality and animal Buenas Prácticas Pecuarias en la welfare controls to meet the Producción de Pollo en Engorda, international standards required by program, which is published by the its customers. Secretariat for Agriculture, Livestock, Rule Development, Fishing and The Company believes training is Food (SAGARPA) and the National a critical process to ensure best Agriculture and Food Health, Safety practices. It therefore carries and Quality Service (SENASICA). out routine training for its team The Company has trained staff at members and integrated producers, each production location to ensure that may include specific training that animal welfare practices are courses emphasizing particular implemented at these facilities. animal welfare issues. Over 14,800 JBS team members and producers in Brazil attended these training courses during 2017.
149 In Brazil, JBS operations • indicators such as have a checklist used by transportation density industrial unit quality and appropriate teams to evaluate animal unloading conditions welfare indicators on • ambience and waiting a periodic basis. This conditions checklist is based on • stunning efficiency current legislation and complies with customer • fasting times and certification • bleeding efficiency requirements. This routine • poultry injuries and hog includes: slips/falls • developing structured action plans to address • transportation mortality any issues that arise records (with root cause studies when required)
150 In addition to routine training which includes videos on related courses, all Seara units in Brazil techniques. These courses are part of underwent more extensive training the animal welfare training programs in 2017. The program included offered to factory teams. six specific training courses on animal welfare – five for poultry JBS USA also focuses on training and one for hogs, attended by programs and initiatives to guarantee 176 team members. The training that animals are treated humanely courses focused on humane and ethically. Additionally, all team slaughter and addressed issues members are encouraged to report such as slaughterhouse waiting any program violations anonymously times, animal unloading, leading or take them to their immediate to slaughter (hogs) and hanging superiors. (poultry), as well as stunning and bleeding. All participants received Various initiatives have been taken the animal welfare certificate to ensure that animal welfare issued by WAP - World Animal programs have been deployed Protection, a nongovernmental efficiently. The process begins with organization (NGO), valid for five producers, who must comply with years. WAP is a global benchmark in the Company’s rules and policies, this area. and include transport, offloading and handling at JBS facilities. Any breach JBS Carnes has also adopted a of animal welfare program policies document that team members by suppliers will result in disciplinary sign to acknowledge they have actions and may lead to termination been informed of the Company’s of employment or the relevant raw guidelines, which is intended material supply agreement. These to increase team members’ programs, like the animal care knowledge of those guidelines and programs, are constantly evaluated promote engagement with animal by internal and external auditors. welfare practices. There is also an Performance under these initiatives e-learning platform with courses is measured by monitoring key on animal welfare best practices, performance indicators (KPI’s).
JBS USA focuses on training programs and initiatives to guarantee that animals are treated humanely and ethically.
151 and other criteria during the verification process. Internal audits are mainly intended to monitor animal welfare practices and drive ongoing improvement. Most of the items that are verified involve JBS Brazil also offers animal handlers practices that go beyond what is special clothing, setting it apart from legally required, reinforcing JBS’s other companies in the industry commitment to pursuing best and demonstrating its commitment practices in this area. to this area. In Brazil, Seara and JBS Carnes team members working in The Company’s operations are positions that involve animal welfare subject to a number of certification use different uniforms, making it audits (see page 66). They include easier to identify them and monitor the Global GAP (Good Agricultural their workday routines. Practices) at Seara units, focusing on the agribusiness chain (breeders/ Company operations are subject to incubators/broiler chicken farms) animal welfare audits carried out and PAACO (Professional Animal by in-house or third-party auditors. Auditor Certification Organization). In Brazil, the Company receives The PAACO audit of JBS Carnes frequent audits from domestic operations is based on the NAMI and foreign customers, who check (Animal Handling- Guidelines & Audit sanitation, animal welfare, quality Guide) checklist. In 2017, JBS Carnes
152 Animal Welfare in Practice In order to offer high-quality products and guarantee that products that arrive on the consumer’s table comply with best animal welfare practices, JBS Brazil implements a number of initiatives throughout the value chain, including: also developed the Supply Chain • In-house and supplier animal Seal (jbs.com.br/sustenbilidade/ breeding bem-estar-animal). The seal focuses on certifying Guaranteed • Animal transportation Sourcing (which includes animal • Slaughter welfare), streamlining the process of verifying customer and consumer From breeding to slaughter, requirements. Program audits including transportation, JBS Brazil are carried out by the Brazilian has invested in techniques that Certification Service (SBC). avoid animal suffering and provide comfort and welfare. The Company’s practices in this area are intended to meet predetermined In addition to these various targets and results are measured initiatives, the South America using performance indicators. operation also emphasized educational and informational In 2017, JBS Brazil created the Animal activities throughout the year for Welfare Committee as part of its both its team members and the efforts to continuously improve value chain. For example, JBS Brazil its management of this issue. The published an institutional video initiative is run by representatives on animal welfare (jbs.com.br/ from the Sustainability, Quality, sustentabilidade/bem-estar-animal), Animal Welfare, Agriculture highlighting the standards adopted and Livestock and Corporate during workday routines at cattle Communications areas. In 2017, the operating units and during audits Committee was responsible for and customer visits. organizing a week-long in-house campaign on animal welfare, which included various activities at JBS Brazil factories and the head office in São Paulo. The group also structured In 2017, JBS Brazil created content for the new animal welfare the Animal Welfare page on the JBS S.A. website (http:// Committee as part of its jbs.com.br/sustentabilidade/bem- efforts to continuously estar-animal), an important step in improve its management increasing transparency of related activities, commitments and policies. of this issue.
153 There was also a wide-ranging communication campaign in Brazil with bulletins periodically emailed and displayed on murals at Company units and the head office, as well as an in-house campaign on world animal day to inform team members Animal Breeding about how the issue is addressed Process Oversight with cattle suppliers, at its own All raw materials acquired by Seara and integrated pork and poultry (chickens, pork and turkeys) are farms, during animal transportation produced at our own or integrated and at factories. This included farms. This allows the Company to presentations at the JBS head office monitor the entire animal breeding in São Paulo by animal welfare process in detail. Additionally, specialists, ending with a round table Seara is responsible for producing that provided a highly beneficial and supplying all inputs used by discussion and knowledge sharing producers, such as chicks, feed session. In addition to promoting in- and medication, and provides all house engagement by distributing necessary technical support. It information on ethical, commercial has a team of farm management and quality issues, the initiative also specialists and veterinary surgeons reinforced the importance of animal who periodically visit all poultry welfare and JBS’s responsibility farms to ensure that the correct as the largest animal protein practices are being adopted. processing Company in the world.
In 2017, a specific animal welfare All raw materials acquired management panel was introduced at poultry units. Used by 30 plants, by Seara (chickens, pork and it includes 20 animal welfare turkeys) are produced at our indicators including team training, own or integrated farms. handling, aviary infrastructure and transportation, among others. Used internally, it consolidates the monthly self-assessments carried out at each of the units and provides data that can be used to monitor ongoing practices and drive continuous improvement. Most of the items that are verified involve practices that go beyond what is legally required, reinforcing JBS’s commitment to pursuing best practices in this area. The management panel will be extended to the pork units in 2018.
154 Seara is the only member representing Brazilian poultry farming on the ‘Livestock Technical Committee’, an initiative organized by Global GAP, an independent global certification agency, which discusses global animal welfare parameters.
US beef and pork production (4) Ongoing process improvements, facilities have adopted animal based on internal and external welfare policies in line with North audits, adoption of regulatory American Meat Institute (NAMI) changes, performance trends guidelines and local regulations. and improvement opportunities Program compliance is verified daily identified during Animal Welfare by third-party auditors. All facilities meetings. have voluntarily instituted the More than 90% of Pilgrim’s chicken “Systematic Approach to Humane farms provide electronic climate Handling and Slaughter” program. control to maximize comfort and The program, recommended by the protect birds from poor weather USDA, covers four aspects of animal and disease. Internal and external handling: audits were carried out in 2017 at (1) An initial site assesses the all facilities. The audits were carried circumstances in which cattle out to ensure compliance with the may face excessive emotion, Animal Welfare Program and verify discomfort or accidental appropriate capture, handling and injury during transportation, transportation procedures. In the containment or slaughter; US, Pilgrim’s target is to achieve a (2) Adoption of facilities, training score of 95% or higher in all audits. courses and practices based The results of 2017 internal audits on rules intended to minimize resulted in grades varying between the risk of undue excitement, 90% and 100%. The results of discomfort or accidental injury; external audits produced grades varying between 97% and 100%. (3) Periodic audits of facilities and practices to ensure cattle are treated humanely; and
155 The Moy Park Beef Orleans unit, Cage-free Eggs. By 2020, all eggs which produces hamburger patties, used as ingredients in Seara has a special tool to evaluate animal products in Brazil will be purchased welfare on farms. By 2018, all 1,500 exclusively from egg-laying beef suppliers will be required to chickens bred outside cages. In 2017 implement these controls. JBS committed to a short-term suspension on purchasing eggs from Technical Guidelines. Seara uses chickens bred in cages in Brazil. Technical Guidelines (TGs) to define the best and most up-to-date Gestation Crates for Reproductive handling practices its more than Hogs. In 2014, JBS is also committed 8,500 pork and poultry producers to adopting collective gestation should adopt, including animal for pork production throughout welfare practices. Brazil and abandoning the individual gestation format. By the end of Technical parameters such as 2017, 45% of animals were also housing density, the number of feed being bred using the system and and drinking troughs, the heating all producers in Brazil are expected and cooling system, water quality, to adopt it by 2025. The South nutritional levels, compliance with American operations are supporting the five fundamental freedoms integrated suppliers during this and environmental controls transition. (temperature, humidity, ventilation, lighting and “bed” quality) are Foot and Mouth Vaccination monitored by the Seara technical Campaign. In Brazil, JBS organized team. In addition to the TGs and a first-of-its-kind educational checklists, producers use other campaign on the correct method control forms providing animal for vaccinating cattle against foot welfare indicators that can be and mouth disease. As mistakes monitored and controlled on a made during vaccination can periodic basis. have repercussions for the entire production chain, the Targeted In Brazil, JBS organized a Vaccination campaign was not first-of-a-kind educational restricted to Company suppliers. The goal was to reach livestock campaign on the correct breeders throughout Brazil. The 30- method of vaccinating cattle day campaign ran on digital channels against foot and mouth and also employed relationship disease. actions. A specific website
156 157 (www.vacinapeao.com.br) was used Faculty of Agricultural and Veterinary Seara and to host content developed for Sciences. As the raw material JBS Pilgrim’s are the initiative, including posters, uses in Brazil comes from supplier committed presentations and ready-to- farms, this material is intended to reducing print folders. High technology to educate breeders about best syringes were also distributed to animal welfare practices and offer antibiotics JBS suppliers in Brazil responsible guidance for six phases of the value throughout its for 50% of the Company’s meat chain: calving, vaccination, shipping, supply chain processing volumes. The syringe, identification, transportation and every year. which is recognized worldwide as corral design and construction. the safest method on the market because it reduces accidents with Use of Antibiotics. Seara is needles, is protected by a plastic committed to reducing antibiotics capsule that creates a fold in the throughout its supply chain every cattle’s skin that means the dose year. This means antibiotics are only is injected correctly. The kit was administered when strictly required presented to farmers in person, and on veterinary recommendation, alongside a bag and posters to to avoid comprising animal welfare display in corrals. and food safety.
Animal Welfare Manuals. JBS is Pilgrim’s has adopted its own supporting the relaunch of the antibiotics policy. Updated in 2016, Animal Welfare Manuals to provide it complies with FDA guidelines 209 high quality content on best and 216, which include discontinuing handling practices in Brazil. The use of antibiotics in animals if they Manuals were developed by the are critical to human health, in line Animal Ecology and Etiology Study with the guidelines issued by the and Research Group (Etco) at the World Health Organization (WHO), Sao Paulo State University (Unesp) unless prescribed by a veterinarian to treat a specific disease. All sub- therapeutic use of antibiotics has also been discontinued. As a result of its efforts, Pilgrim’s is a worldwide leader in No Antibiotics Ever (NAE) production.
158 Pilgrim’s Moy Park (Europe) medical Examples of best practices routines no longer include the use adopted by Pilgrim’s Moy Park of antibiotics. The Company focuses • All poultry farms must provide on producing healthy chickens and natural lighting turkeys using best hygiene and breeding practices. Use of antibiotics • Over 84% of chicken facilities have is still strictly regulated by the water heaters industry and requires authorization from the veterinarians who care • All chickens at the Hénin for the birds. All drugs used are Beaumont (France) facility are bred licensed by the UK Veterinary on “enriched” farms, where animals Medicines Department and are have access to natural light, subject to an intensive set of tests prior to being approved for use. objects to distract them, perches Approvals for drugs used at poultry and balls of straw farms are inspected by auditors from the Red Tractor Scheme and local animal health inspectors, as required by law. Moy Park also maintains an Antimicrobial Handling Forum focused on educating poultry farmers about antimicrobial resistance and adopting best practices to reduce the use of Antibiotics Management Forum to antimicrobial products. It also implement practices that protect collects a wide range of data to give chicken and turkey health and the poultry industry and regulators a support food safety. These forms are clear understanding of antimicrobial staffed by outside specialists who trends. Pilgrim’s Moy Park also provide the Company with the latest has a Food Safety Forum and an scientific developments.
159 Transport This is an important phase for animal welfare and is carried out by trained teams using vehicles that have been specially developed to protect animals against injury during transportation and minimize stress members’ jobs, reducing the number during embarkation, transportation of carcass injuries and thereby and disembarkation. ensuring better quality products for consumers. In 2017, the second At Seara, pork and poultry year that trucks with elevators were transportation from farms to in operation, the fleet purchased meatpacking units complies with the another 158 new vehicles complying following practices: with more modern standards. • In order to reduce the time animals Alongside those introduced in 2016, spend in transit, logistics planning they now represent around 50% teams look at the best routes, of the Company’s entire Brazilian starting points and destinations. cattle transportation fleet. The first stage of a project focusing • Maximum distances between farms on cattle transportation was and meatpacking units are defined concluded in 2017 and resulted in to guarantee animal comfort. structural changes to the most recently acquired trucks. The study • Transport routines are managed was carried out in partnership with using indicators, such as cage the ETCO Group from the Paulista density and weight during loading State University (UNESP). A second to guarantee appropriate practices stage of assessments will take are adopted. place in 2018 to test the alterations • Trained teams are used to load implemented after the first phase. trucks, using techniques that minimize animals stress. The entire cattle transport fleet is now equipped with a tracking The JBS Carnes fleet is constantly system. This new feature means being renewed with more modern animal welfare can now be and efficient vehicles, which are controlled directly as, among other built to provide better space and functions, it detects sharp braking accommodation for cattle, with or acceleration, vehicle speed, appropriate ceiling heights and a curve handling and is able to lock hydraulic elevator, better organizing the doors, making transportation the animals’ entry and departure. more comfortable for the animals These features help to improve and reducing the risk of injury or animal welfare, facilitating team accident en route.
160 In the USA, JBS USA Carriers is responsible for safely transporting over 1.5 million cattle a year. The Company offers driver training on animal handling and safety. The training material is based on the Master Cattle Transporter Guide, which is part of the Meat Quality Assurance program from The entire cattle the National Cattlemen’s Beef transport fleet is Association (NCBA), a well-known now equipped with a industry standard for truck driver tracking system. training.
University Partnerships. JBS partners with Universities and well-known research centers and researchers to develop projects aimed at generating new solutions and/or improving current practices.
161 Slaughter GNP’s brands include Just Bare, JBS’s guiding principle in this area which focuses on organic chicken. is humane slaughter, guaranteeing In the US, the Company pioneered appropriate handling from the time the use of high technology chicken the animal arrives up to the time production techniques, with it is slaughtered, including animal processes that include gas-based stunning. JBS therefore uses the stunning and automated deboning, best equipment available on the among others. All GNP products global market. carry the American Humane Certified seal, which certifies the animals were In 2017, JBS Carnes sponsored a bred humanely. cattle stunning project to improve stunning efficiency. The study was Pilgrim’s Moy Park has breeding carried out by Unesp researchers processes that feed poultry a with the direct involvement of vegetable-based diet that includes Neville Gregory, a professor at the cereals, like corn and wheat, as University of London and one of the well as soybeans and other oilseed foremost specialists in the area. proteins, without any growth At Seara, pigs and poultry are kept promoters or added antibiotics. in temperature controlled waiting The birds are a variety that grows bays or warehouses. Routines more slowly. The longer time it involving pigs now have improved takes to reach maturity creates a pre-slaughter handling procedures. more succulent bird with better Based on the best practices already flavor. Pilgrim’s is the leading in place, JBS partnered with a producer of organic poultry in the manufacturer to develop new U.S. and Europe. Differentiated equipment that minimizes animal animal welfare practices create discomfort during this stage of the market opportunities for growth process. and differentiation, including some specialized product lines that provide birds free-range access to
Leading Producer of Organic Products Higher-quality animal welfare practices have allowed JBS to expand its organic and premium offerings. In 2017, through the efforts of Pilgrim’s Pride, it became the top global producer of organic chicken. This was achieved via PPC’s 2017 acquisitions of GNP Company, which specializes in producing premium chicken products made with organic, antibiotic-free raw materials, and Moy Park, which is based in Northern Ireland.
162 pasture during the day. These farms JBS Australia Launches Certified also provide natural ventilation and Organic Meat lower density occupancy, giving the In addition to producing organic animals freedom to move around. chicken, JBS has gone a step further and transferred this approach to Pilgrim’s Moy Park is the UK and the beef market. In 2017, it started Ireland’s largest producer of free- processing its first certified organic range, organic poultry. It has over herd in Australia, sold under the 110 small-scale farms producing Acres brand and bred specially for organic chickens. Apart from this type of product. The meat is being the biggest organic chicken produced at the Rockhampton producer, it was also the first to plant in Queensland and will deploy this breeding method in serve Australian and other major the UK in the 1980s. The following international customers. For decade it started breeding example, this brand will be supplied organic chicken. Turkeys are also to both the food service and retail produced using the same breeding sectors in the US. The initiative is methods. For more than 20 years in line with the business strategy the Company has been breeding focused on developing stronger turkeys from different lineages at brands reflecting domestic and naturally ventilated farms, using international customer expectations. diets based entirely on wheat The decision to launch an organic and soybeans, produced at the beef product will help JBS Australia Company’s own feed factory and serve rising demand in this niche transported using special trucks. market and increase its international Animal breeding is supervised competitiveness. Organic beef is by qualified Company staff and produced on certified farms that all farms are certified by Quality comply with strict environmental British Turkey and Bord Bia. and animal handling regulations.
JBS Brazil offers similar products. In 2017, JBS started The Seara DaGranja range - which processing its first certified carries international animal organic herd in Australia, welfare certification - supplies sold under the Acres brand chickens bred on exclusive farms without the use of antibiotics or and bred specially for this anticoccidials. The animals also type of product. receive 100% vegetable feed to guarantee traceability throughout the production chain. Seara also has a special breed of free range chicken: Frango Caipira Nhô Bento.
163 Water and Water Management GRI 103-2, 103-3
Animal feeding and breeding, as well • A 6% reduction in water use as JBS’s other operating procedures, intensity in its global operations depend, to a great extent, on water outside of Brazil. availability. Water is essential for • A 2.8% increase in water reuse in the production chain and the wider Brazil compared with the previous industry to guarantee process and year, avoiding the capture of 1.7 product health standards and to million liters. clean facilities, equipment and tools. This means it is an input that runs • A 34% year-on-year increase in through all other material issues rainwater capture in Brazil. identified by the Company. JBS is also working to encourage and Water management on the South engage the value chain in efforts to America platform is based on adopt best water usage practices. corporate and water reduction One example is the incentive in guidelines that include water usage Brazil to use cisterns to capture and awareness and encompassing store rainwater on Seara’s integrated the entire water cycle. In 2017, the poultry farms. Company progressed in the following areas: JBS USA works closely with local, • A 12% reduction in overall state and federal agents and water consumption in its authorities in the countries hosting Brazil operations as a result of its operations, developing joint increasingly efficient production solutions.All Company production processes. This has saved over units employ water reuse programs 8.2 trillion liters of water. and mechanisms.
Evolving Eco-Efficiency Practices CDP Water In 2017, the CDP Water program recognized the ongoing improvements of JBS’s water management strategies and policies. JBS was ranked 2015 in the Leadership category with an A- grade, improving on its B performance in recent years. The CDP Water methodology is based on a structured questionnaire that assesses water usage reduction risks 2016 and opportunities, governance, strategies, compliance, performance, B initiatives and targets. Companies are classified in eight categories (A to D-), with A considered the “Leadership” category and D the “Disclosure” category. 2017 A-
164 Highlight among McDonald’s top suppliers Arcos Dorados (McDonald’s) usage performance indicators. Over acknowledged JBS’s outstanding 310 of McDonald’s Latin American performance in the CDP Supply suppliers were assessed in 2017, which Chain Water 2017 program. The included food and packaging suppliers, CDP program, developed exclusively logistics providers and others. JBS for companies that evaluate and was the only animal protein industry incentivize their suppliers, looks at Company to be highlighted during the policies, strategies and opportunity assessment. and risk management, as well as water
The projects and initiatives we It is also used to mitigate the risk have adopted require more of shortages and increase target- than innovation and specialized based usage efficiency. The SWMP is engineering from the operational also used to measure water-related and environmental teams. They also financial impacts, provide strategic require commitment and partnership tools and methodologies to support across teams, which include food investment decisions. SWMP actions safety experts, USDA team members, in 2017 prioritized environmental business analysts and financial education and awareness, with managers. Every effort is made initiatives that focus on changing to engage and educate teams on team member behavior. One example the approach they are expected to is the Water Campaign in Brazil, which have towards correct water use and ran throughout the year, engaging conservation. team members and their families on conscientious water usage. Content Management and Governance highlighting the importance of water Water reuse procedures at our South and how to use water responsibly at America operations comply with the work and at home was distributed Sustainable Water Management during various phases of the Program (SWMP). This initiative, which campaign. A drawing competition has been implemented at all the for team members’ children and Company’s Brazil businesses (Meats, other initiatives was also organized. Seara, Leather and New Business) The issue was also discussed at the is used to identify critical areas and WSD (Weekly Safety Dialogue), an prioritize facilities and hydrographic occasional meeting for sector leaders basins as Company operations, which and their teams. are spread across over 100 units around the country, use water from many of Brazil’s major hydrographic basins.
165 The JBS Water Cycle
1 2 3 Catchment Treatment Monitoring
Mainly from surface (input) Water consumption is and underground Before being used, the water measured and controlled sources is treated to guarantee the by a number of devices and necessary quality systems
The JBS USA water management • Environmental Management mechanisms are defined by unit System (EMS) monitoring, which leaders and they reflect that unit’s includes ongoing audits and goals and objectives. It is up to opportunity mapping for best each unit to meet local challenges practices. and establish the most effective • Overall water usage and water approach, which includes water intensity (water usage per ton of sources, disposal sites, wastewater products or per animal) are closely treatment programs and reuse/ monitored. This methodology helps recycling strategies. All units make to support ongoing improvements. annual investments to achieve their goals and overcome their various JBS Canada employs Key local challenges. Performance Indicators (KPIs) to constantly monitor water All JBS USA facilities include the consumption. Operational leaders following in their routines: are trained to track and measure GRI 303-3 monthly and weekly progress, relaying the results to management. In the production area, the units rely
166 4 5 6 7 Management Usage Treatment Disposal
Usage reduction targets Water is used in (output) Captured water our production and As wastewater – this is is returned to the cleaning processes what water is called after environment and industrial usage and the discharged into bodies pollutants are removed of water or on to soil at in-house effluent used for crop farming treatment stations (a system called fertirrigation)
on various flow meters. Information One of the Company’s showcase is collected at the end of every shift projects is being deployed at the and relayed to area supervisors. Flow Ashbourne unit in Ireland. The restrictors are also used on hoses. unit has installed air extraction Regular audits identify inefficiencies and purification systems, aimed at such as faucet leaks and quickly reducing airflow, thereby saving 14 arrange for maintenance. gallons of water per day.
In 2017, Pilgrim’s Moy Park achieved a To learn more about JBS USA’s goal initially set for 2020: decreasing approach to water management, water usage by 20%. including the Company’s 2020 water reduction target, please visit https:// The Company achieved a 23% water sustainability.jbssa.com flow decrease compared to 2010, three years earlier than expected.
The JBS USA water management mechanisms are defined by unit leaders and they reflect that unit’s goals and objectives.
167 Capture Sources education and awareness campaigns, The Company reduced the amount as well as constant waste efficiency of water captured by 6%, equivalent initiatives, which include replacing to 10,522.93 m3 of water. Another equipment, identifying improvements standout issue is the increase in and adopting water reuse initiatives. rainwater capture in Brazil, which All water is treated to ensure it reflects efforts in a variety of provides the quality levels required areas: they include environmental by our production process.
Total JBS water capture, by source GRI 303-1
JBS Global 2017 2016 Variation / year Source thousand m3 % thousand m3 % Surface 53,363.79 29.57% 91,403.56* 47.87% Underground 47,410.50 26.28% 68,147.16* 35.69% -30% Public supply 16,886.96 9.36% 31,202.68* 16.34% -46°% Rainwater 172.54 0.10% 128.79 0.07% 34% Other sources 62,604.44 34.70% 78.97 0.04% 79,180°% Total water volume 180,438.23 190,961.16* -6% -6% *Revised figures
168 The Brooklyn unit, in Australia, invested in its wastewater treatment system and deployed two three- phase decanters to improve the Dissolved Air Flotation and sludge management performance. Now, it can to treat up to 4 megaliters of wastewater per day, besides generating 400 kilos of sludge with dehydration. This project is able to produce a solid mass ready for the Reuse. Business areas are encouraged fertilizer market, reducing annual to develop programs and projects waste costs by half and saving that improve sustainable water usage US$ 2.5 million. as part of our industrial processes. These eco-efficient practices have Effluent. All water used by our helped operations reuse 3.24% of all industrial processes is sent to water, improving on the 3% reported effluent treatment stations at in 2016 by 2%. Company units or discharged into the public network. Plants that For example, four major water carry out their own treatment recycling projects have been invested in their plants to modrnize implemented by the beef production treatment stations and improve unit in Greeley, Colorado (USA), to treatment efficiency. One example optimize water usage across all is the mechanism JBS Carnes processes. These initiatives include adopted at the jerked and dried beef water reuse systems at various unit in Santana de Parnaíba (SP), stages of the process. Following a which modernized several stages US$ 1.3 million investment, these of the production and wastewater mechanisms now save 1 million treatment process in 2017. All water gallons a day at the unit and have used by our industrial processes is also helped save a significant amount sent to effluent treatment stations of energy. As the recycled water at Company units or discharged into undergoes a prior heating process, the public network. The unit has the temperature stays the same been supplied with new wastewater throughout the process, removing treatment equipment, which means the need for natural gas to maintain the required temperature. Following All water used by our the positive outcomes from these industrial processes is measures, the Company will expand sent to effluent treatment these approaches to other beef- stations at Company units producing units in the country. or discharged into the public network.
169 that water used during the process gas emissions. Equipment and can be returned to the environment processes were installed at various in a 97% pure state, thanks to new plants to further improve treatment. electrolytic panels installed in the GRI 303-3 tank. Treatment capacity has also been increased to match additional In 2017, JBS’s global operations output capabilities. reduced effluent volumes by 20%. The drop at “other sources” reflects In 2017, there was an even greater improved information collection with improvement in unit effluent effluent disposal now being reported treatment efficiency resulting in a in other categories. significant reduction in greenhouse
Volume of Wastewater Generated and Treated GRI 306-1
JBS Global 2017 2016 Variation/year thousand m3 % thousand m3 % 1.1. Volume discarded – body of water 59,887.05 51.24% 63,754.35 43.68% -6% 1.2. Volume discarded – Fertirrigation 19,010.57 16.27% 12,401.48 8.50% 53% 1.3. Volume discarded – Public supply network 22,917.22 19.61% 23,862.25 16.35% -4% 1.5. Volume discarded – other type of disposal 15,052.39 12.88% 45,947.57 31.48% -67% Total wastewater volume discarded 116,867.24 145,965.65 -20%
170 Team members are the protagonists in awareness activities
Water’s importance to the value chain has triggered • JBS Leather has also developed a project a range of initiatives at JBS’s Brazilian operations in which, instead of disposing of the water used order to optimize water usage. Team members have to process cattle skins, treats it and pumps it developed projects to effectively battle water waste out to fertirrigate pasture. Three units - Colíder, and encourage reuse. Some examples are: Barra do Garças (MT) and Itumbiara (GO) - have • The JBS Leather unit in Cascavel has implemented already joined this initiative. For example, the a water reuse project developed by a unit Colíder plant treats around 700 cubic meters (or team member, saving 90% of the water used 700 thousand liters of water) per day which is during the leather opening process, called then used on a farm that has up to 1.6 thousand semi-finished stretch. The tanks use a filtering on 240 hectares of land and productivity of system equipped with refurbished parts from 6.6 head per hectare/year. This contrasts with maintenance operations. The system now filters average productivity in the region of just two the approximately 3 thousand liters of water head per hectare/year, because of the lack of used in the tank - which was previously changed rain. This increase in output is the result of out three or four times a day - and the water can both irrigation during the dry season and the now be reused for several days, without affecting water’s characteristics. After being used as part process quality. To date, the mechanism has only of our production processes, the treated water been installed on one machine, but will also be contains nutrients that fertilize the soil. The used on the other three machines at the plant. Company carries out soil analyses on a regular The initiative will save the unit around R$ 60 basis to increase quality and evaluate the impact thousand a year. from fertirrigation. Following the success of this project, three other farms in the region will • Seara’s unit in São Gonçalo dos Campos (BA) also receive this water, subject to appropriate implemented a separate initiative to identify regulations and obtaining the relevant reuse opportunities. Called Water Guardians, environmental licenses. the program includes daily facility inspections to ensure, for example, that taps have been • JBS Carnes has been saving 3 million liters of closed or whether flow reducer nozzles need to water a month - equivalent to the amount be replaced. The initiatives also include fixing of water 200 families would use at home leaks and installing equipment to reduce water every month - because of an animal hygiene consumption. This has reduced water usage and carcass washing automation project by 44%. implemented in the slaughter area and the use of timers. The project was developed • The JBS Leather unit in Lins (SP) replaced the by Company team members and has been material used to build its tanning drums (that replicated at another 15 plants. produce a mechanical effect triggering a chemical reaction between the chemicals, water and leather) used during the retanning process. Instead of wood, the drums are now made of polypropylene, an inert and smoother, as well as less porous material, which saves water during washing.
• This initiative has saved 16 million liters of water a year, sufficient to fill seven Olympic swimming pools. Lower consumption has reduced water costs by R$ 130 thousand a year.
171 Product Integrity GRI 103-2, 103-3
At JBS, product integrity means in Brazil by satellite using an in- respecting the highest standards house system, helping ensure it only in food quality and safety. To purchases cattle from breeders who comply with these criteria, the do not employ forced labor, carry Company is constantly improving out deforestation or encroach on its operational, manufacturing and indigenous lands or environmental supply methods, which includes conservation areas. GRI 308-1 its social and environmental practices, such as responsible raw a. Value chain material procurement and third- management party certification of best practices, GRI 103-2, 308-1, 308-2 processes and routines. The fact that JBS’s suppliers adopt best sustainability practices has a JBS’s value chain management direct impact on product quality. sets the industry bar and it is JBS acts as an agent of change and constantly encouraging suppliers innovation in each of its production to adopt best practices. Another chains, supporting suppliers and area where JBS stands apart from offering guidance on how to the competition is in responsible improve quality as well as reduce raw material procurement. For environmental impacts. JBS organizes example, the Company is constantly a number of initiatives to transform monitoring cattle supplier farms suppliers into business partners,
172 such as helping to improve their Following classification, JBS offers management processes and develop breeders bonuses linked to carcass best social and environmental quality. In 2017, livestock breeders practices, which subsequently received R$ 34.3 million in bonuses improve the quality of the raw under the policy. This sets JBS Brazil material they supply to the Company. apart from the rest of the market and has increased the number of Quality Ranking green light classifications, i.e., it is This tool is used to manage raw receiving higher quality carcasses, material quality and communicate while reducing the number of red with livestock breeders in Brazil. light classifications. When the Quality It was developed by JBS Brazil to Ranking was launched in 2014, 14% establish a link between carcass of animals were green lighted while technical parameters - such as 33% were given the red light. In 2017, weight, animal age, fat finish and these figures were 21% and 10%, gender - and a quality-based respectively. bonus policy. This means carcasses obtain either a green light (desired JBS’s value chain management standard), yellow light (admissible sets the industry bar and it standard) or red light (undesirable is constantly encouraging standard), making it easier for suppliers to adopt best breeders to understand the importance of improving the quality practices. of cattle supplied to the Company. 45% of cattle purchased in Brazil in 2017 were classified using this system.
173 Connection Management Legal Supplier Program The Connection Management This is a JBS Brazil campaign initiative was launched in Brazil to to help meat suppliers arrange improve management capabilities of environmental enrollment with the mid-size livestock breeders supplying government’s Rural Environmental between 300 and 2,000 animals Registration (CAR). In order to annually. It offers a range of tools comply with Brazilian legislative that help increase efficiency in every requirements, the Company also link of the beef production chain, offers assistance through a group of from breeders to the end consumer. consultants specializing in the CAR, Run in partnership with the Inttegra helping farmers adapt to the Brazilian Institute, the initiative was launched Forestry Code. in 2017 and initially assisted ten livestock breeders based in the state Livestock Breeder of Mato Gross do Sul. Another nine Communications Actions groups of ten breeders each will be JBS Connection Website organized in 2018 elsewhere in The JBS Connection Website in the country. Brazil (www.conexaojbs.com.br) was launched in 2017 to strengthen The Sustainable Hamburger relationships with livestock breeders, JBS Brazil has been an exclusive whether or not they supply the McDonald’s partner and supplier Company. The website content is since 2016, when the Sustainable intended to support discussion, Hamburger program was launched distribute relevant information and as a pioneering effort to produce help producers generally improve hamburgers that meet certain their businesses. It also offers social and environmental criteria producers that would like to partner applied throughout the value chain. with JBS more information about the For example, based on McDonald’s Company and the way it works. The quality requirements, the initiative website provides a dynamic interface only allows cattle purchases from that is easy to browse and is divided farms not involved in deforestation, into three main sections: not located on indigenous land or in • I Want to Sell - this section offers conservation areas and that do not a number of options for contacting use any type of forced labor. It also the Company in order to sell requires cattle monitoring from birth, cattle. It also provides additional compliance with the Sustainable information on selling options as Livestock Breeding Guidelines well as the livestock improvement (GIPS), produced by the Sustainable projects implemented by JBS (for Livestock Working Group (GTPS), example, the Quality Ranking and and independent verification of the Carcass Grading). project’s entire management system.
174 • I Want to Find out More - in this JBS has been an exclusive section, livestock breeders can find McDonald’s partner and information, news, daily prices and supplier since 2016, when technical information they can the Sustainable Hamburger save, share or print. program was launched as a • I Want to Connect - here, visitors pioneering effort to produce to the website can contact their hamburgers that meet certain nearest meatpacking plant and social and environmental find answers to frequently asked criteria applied throughout the questions. value chain. Additionally, JBS Connection provides access to the Cattle Breeder Website (pecuarista.jbs.com.br) where producers have free access to all slaughter figures from each of their farms, the status of JBS social and environmental criteria and photographic information on finishing classes with validation from academics, industry associations and specialists to ensure that carcass grading is transparent and auditable.
175 176 Giro do Boi Platform Sensory Analysis Events This platform includes a website A number of group dynamics were for livestock breeders with market held for breeders throughout the In 2017, 50% of information, news and prices as well year to encourage comparisons JBS livestock as other data, a social media profile between meat quality versus and daily TV program. Broadcast on production systems. Blind testing suppliers the Rural Channel, the Giro do Boi was carried out at seven events followed the program is an important source of organized around Brazil - attended by Giro do Boi information for people across the 217 livestock breeders - during which program, industry. One of the main highlights participants tasted cuts of meat from broadcast is the Brazil Tour, with information different systems, from the castrated on the Rural on the daily prices JBS practices to the entire zebu. Channel. throughout the country. In 2017, 50% of JBS livestock suppliers followed Social Fuel Seal the program. The website received JBS Biodiesel, a JBS New Business over 150,000 visits a month, three Company, supports family farming times as many as the previous year. through the Social Fuel Seal, a federal One of the main website content government program – which the items was the Cowboy Vaccination Company has supported for nine campaign, raising awareness and years – ensuring that small-scale providing guidance on cattle handling family farmers are able to sell their techniques for foot and mouth produce to biodiesel manufacturers. vaccination. One of the videos In 2016, JBS Biodiesel took steps to available on the website was viewed extend these benefits to small-scale 260,000 times. livestock breeders in the São Miguel do Guaporé region of Rondônia. Producing Technical Content This initiative will further support for the Supply Chain social and economic development JBS sponsored an edition of “The in farming communities throughout Economics of Livestock Breeding”, the country and create additional a book by Ivan Wedekin, who has opportunities for the Company, extensive experience in agribusiness, as beef tallow is the second most and looks at issues from the meat important source of raw material production chain to meat exports. for the Brazilian biodiesel industry. Two thousand copies of the book Additionally, in 2017, JBS Biodiesel were sold and the author gave 25 purchased 1,900 head of cattle talks to livestock breeders around produced by family farmers in São the country. Eleven short videos were Miguel do Guaporé (RO), generating also produced for the Giro do Boi R$ 3.5 in revenues for around 100 website (www.girodoboi.com.br) on local families. Contracts are already in each chapter in the book. place to purchase over 6,000 head of cattle per year in 2018 and 2019 and the target is to reach 50,000 head of cattle every two years.
177 Integrated Supply Chain Management GRI 304-2, 409-1, 414-1, 416,1 Seara (Brazil) has adopted a commercial integration methodology which offers producers all the consumables they need to rear safe and healthy pork and poultry and guidance on production processes and environmental practices. There • Water supply system shielding, is a strictly controlled system in from source to trough, to avoid place to manage every stage of the organic contamination; production process, from genetic • And a ban on water from rivers, selection of breeding animals and lakes, streams or other sources processing to point-of-sale delivery. that have not been protected. This system affords greater control Protections must be approved by over sanitary and nutritional issues the Company’s technical team and guarantees product quality, food safety and cost efficiency. • Sealing poultry warehouses using lateral and gate screens to stop Seara has a group of 300 farm other birds from gaining access. management specialists who: • provide integrated producers • Sanitary protections for vehicles with production management and trucks arriving at chicken assistance. farms, with disinfection systems and training courses to ensure • The specialists frequently visit vehicles do not become vectors for farms and offer help implementing contamination. responsible production practices, including quality standards that • Aviary bed fermentation, which comply with animal welfare significantly reduces the number of principles. contaminants and improves poultry health. • They also verify environmental practices adopted at breeding and • Each unit holds at least two annual poultry farms to ensure compliance health workshops to increase with the relevant contract terms. poultry breeder awareness of This includes using cisterns to best practices. There are frequent capture rainwater, biodigesters and simulations for emergency disease composting. prevention procedures.
Seara has also implemented several Seara’s production system is vertically biosafety initiatives. Adaptations to integrated, which means the Company farm infrastructure and facilities help produces 100% of its own breeder protect flocks from contaminants; stock. This provide significant advantages, such as:
178 • Greater control over poultry health, reducing the risk of disease;
• Greater control over poultry nutrition, offering gains from food conversion, lot uniformity and • monitors pork and poultry reduced mortality; and breeding through all phases of the process and throughout the • Lower poultry breeding costs animals’ lifecycle; compared with the rest of the industry. • structures each phase in the production chain in order to The Company also focuses on support sustainable development. maintaining high levels of food safety and quality, which are essential to meet customer specifications, prevent Seara (Brazil) has adopted contamination and minimize the risk a commercial integration of animal disease epidemics, which methodology which means the Company: offers producers all the • employs modern traceability consumables they need to systems to quickly identify and rear safe and healthy pork isolate any farm posing a quality or and poultry. health risk;
179 Pilgrim’s Moy Park (Europe) and more than 4000 family farmers in Pilgrim’s Pride Corporation (North the US and Mexico and supplies America) partner with breeder poultry, feed and technical/ families to guarantee safe and veterinary services to producers. Pilgrim’s healthy pork and poultry breeding This means Pilgrim’s is able to Moy Park and appropriate raw material ensure customers receive safe, (Europe) and sourcing. This involves offering high quality products. Pilgrim’s Pride producers all the consumables • In turn, Pilgrim’s Moy Park is Corporation they need to rear safe and healthy the only poultry Company in (North America) pork and poultry and providing the United Kingdom or Europe partner with guidance on production processes with a fully integrated system and environmental compliance. breeder families covering three generations of Pilgrim’s tightly manages every to guarantee animals – grandparents and stage of the production process, safe and parents (for reproduction) and from genetic selection of breeding healthy pork broiler chickens (to produce meat). animals and animal processing to The Company also has a tracking and poultry point-of-sale delivery. This affords system for animal feed and raw breeding and us greater control over sanitary and materials covering the production, appropriate nutritional issues and guarantees processing and distribution product quality, food safety and cost raw material phases. These tools help the efficiency. sourcing. Company guarantee food quality • The Pilgrim’s Pride Corporation and safety. (PCP) currently partners with
180 b. Responsible For example, Seara (Brazil) carries out technical and health visits Raw Material before and during any procurement 5 Procurement activity and when certifying new GRI 103-2, 103-3, 308-1, 308-2, suppliers, who must also hold the GRI 414-1, 414-2 requisite environmental licenses. JBS Carnes (Brazil) does not purchase The Company also carries out on- animals from farms that are involved site checks to ensure suppliers fulfill in deforestation of native forests, their contractual obligations. In encroach on indigenous land turn, JBS Carnes employs a satellite or environmental conservation monitoring system to certify that projects, or have been embargoed it sources meat from farms that are by the Brazilian Institute for the operating legally and comply with Environment and Natural Resources relevant labor and environmental (IBAMA). It also refuses to work with legislation. suppliers that employ child or forced labor, which are specifically prohibited At JBS USA, all raw materials under our agreements. The Company purchases comply with federal and has adopted a number of rigorous local regulations and adhere to contractual controls to uphold responsible procurement principles. If these principles and is continuously any wrongdoing arises or any service monitoring its service providers and fails to comply with best practices, suppliers. the supplier’s contract is terminated. Initiatives at Company’s units include: 5 This item, which is included in the global material issue “Product Integrity”, only refers to animal procurement
181 Meat-based product suppliers must at least hold Red Tractor or equivalent certification. The Company also checks whether its suppliers employ child or forced • At Pilgrim’s Moy Park, the labor. new supplier approval process • JBS USA is developing a Supplier includes prequalification, where Code of Conduct covering issues all companies must comply with such as human rights, forced the Company’s environmental labor, freedom of association and requirements and receive approval collective bargaining, as well as from the Quality Department. For health and safety, animal welfare, example, all poultry suppliers must environmental and business be certified by the British Retail integrity issues and other factors. Consortium (BRC) or an equivalent The Company has set a target of organization, such as IFS or FSSC 100% compliance from all suppliers 22000. All poultry suppliers must by 2020. be certified by Red Tractor and comply with Red Tractor, Bord Bia • Suppliers are also monitored by or equivalent criteria. Suppliers ISNetworld, a system that evaluates are audited by independent and criteria to assess product quality approved certification bodies. and occupational safety.
182 Raw Material Procurement Criteria GRI 103-2, 103-3, 308-1, 308-2, 409-1, GRI 414-1, 414-2 JBS South America requires suppliers to present a range of certificates proving compliance with local labor regulations. These include employment contracts and Social Security registration, evidence of FGTS and INSS payments, a clearance certificate from the Labor Courts, proof of technical expertise, vehicle and equipment safety compliance documents and so on. • The United States and Canada units require all cattle suppliers Compliance with contract terms to provide a statement is regularly audited, based on a expressing their compliance monthly check list requiring proof of with government regulations payment for team member salaries and national animal welfare and and (INSS and FGTS) contributions, quality certification programs. relevant business taxes (IR, CSSL, PIS, COFINS, ISS and others) and a daily • In the United States, the Animal check list for contractor vehicles and Welfare Program requirements equipment. Transport vehicles and are monitored through supplier equipment are also verified daily. audits, which are carried out
by internal (PAACO-certified Beef purchases must comply with the auditors) and external third party Public Livestock Commitment. This auditors. commitment is intended to ensure • In Mexico, all suppliers are audited that the Brazilian beef industry in compliance with Mexican does not purchase raw materials government standards. from farms involved in Amazon forest deforestation from October • In Australia, all animal suppliers 2009 onwards, that use forced must provide the National Vendor labor or occupy indigenous land or Declaration (NVD), a document conservation units. allowing product tracking. When the NVD is signed, the producer declares it is compliant with the At Pilgrim’s Moy Park, the new Livestock Production Assurance supplier approval process (LPA) program, which is an includes prequalification, which audit-independent food safety means all applicants must certification program adopted comply with the Company’s by suppliers. The NVD contains environmental requirements and important information about receive approval from the Quality cattle breeding. Department.
183 This commitment is intended JBS operations in the US and to ensure that the Brazilian beef Mexico are governed by a corporate industry does not purchase raw policy setting out procedures on materials from farms involved in forced labor and people trafficking. Amazon forest deforestation from The document sets out criteria October 2009 onwards, that use for ensuring all related matters forced labor or occupy indigenous are addressed by Company team land or conservation units. The members, staff, third parties and Company also verifies whether its suppliers in accordance with local, procurement activities comply with state and federal law. Suppliers also the Commitment. Every year, a sign a document attesting that representative sample of all beef raw they comply with all related laws material purchases is taken. During and regulations. In the US, farmer the last inspection, published in relationships are regulated by the 2017, 99.97% of purchases were found U.S. Department of Agriculture’s Grain to be in compliance. The analysis, Inspection, Packers and Stockyards which samples nine thousand cattle Administration. purchases from supplier farms in the Amazon Biome, was carried out by JBS USA Pork units require all independent auditor DNV GL, which family-based suppliers that provide is internationally recognized for its pork fattening services to obtain environmental work. certification and evaluation from Pork Quality Assurance (PQA) Plus, which In Europe, Pilgrim’s Moy Park bases is managed by the National Pork its policy on the ETI Base Code, an Board. Random audits are also carried internationally recognized document out by an independent third-party which itself follows the guidelines under the “Common Food Industry issued by the International Labor Audit” principles, a PAACO-certified Organization (ILO) to address illegal pork industry platform aimed at working conditions by working with producers, packers and processors. suppliers and team members. The These guidelines offer greater welfare Company has an Ethics Leadership and food safety guarantees to Forum made up of Company team consumers. members to maintain, develop and continuously improve these At JBS Australia, cattle and pork are practices. tagged with a device (called an NLIS) before leaving the property, which Around 70,000 Brazilian cattle means they can be traced from the suppliers are assessed daily farm where they were bred using a using satellite imagery, farm national database. geo-referencing data and information from government agencies.
184 Social and Environmental Based on these analyses, 6,244 Monitoring at Supplier suppliers have suspended, of which: Farms • 3,849 were barred because their farms are located in areas where GRI 103-2, 103-3, 304-2, 308-2, deforestation native forest (since 409-1, 414-1, 414-2 October 2009) and/or invasion of JBS has a robust monitoring system indigenous lands or environmental that it uses to monitor and verify conservation areas has occurred; whether supplier procedures comply with social and environmental • 2,379 were blocked because they criteria, which includes ensuring they were included on Ibama’s List of are not involved with deforestation Embargoed Areas; and of native forests, occupation of indigenous land or environmental • 16 were suspended because they conservation areas and that they do were listed as using forced labor. not use forced labor. The entire cattle procurement Around 70,000 Brazilian cattle process and the JBS Carnes’ Social suppliers are assessed daily using and Environmental Monitoring satellite imagery, farm geo- System are audited annually by referencing data and information independent, third-party auditors. from government agencies6. This The audit reports can be viewed exclusive JBS monitoring system on the Company website and covers over 59 million hectares in are available at http://jbs.com. the Amazon region and 437 Brazilian br/sustentabilidade/dialogo- cities. If it detects farms that fail to transparencia-e-comunicacao/. comply with any of the Company’s social and environmental criteria, the system suspends trading with the supplier and blocks and purchases until the situation has been corrected.
6 To monitor deforestation, the Company consults data published by the National Space Research Institute (INPE). In order to monitor embargoed areas, the Company consults data published by the Brazilian Environmental and Renewable Natural Resources Institute (Ibama) and monitors forced labor using figures published by the Ministry of Jobs and Employment (MTE).
185 Institutional advocacy Of the 15 units in South America, eight GRI 102-12, 102-13 factories have maximum traceability Both the South American and North certification and production processes America operations are member at seven production units and a of several major local and global distribution center were certified as This is a leather sustainability forums. Some address having best environmental practices. industry product integrity issues: The Barra do Garças (MT), Cacoal (RO), initiative Colorado do Oeste (RO), Porangatu involving National Pact Institute for the (GO) and São Luiz de Montes Belos international (GO) units in Brazil retained their gold Eradication of Forced Labor brands, tanners, (InPACTO) - An initiative intended medals. The units in Uberlândia (MG) suppliers to strengthen efforts to combat and Buenos Aires (Magdalena), in forced labor in Brazil. JBS has been Argentina, retained their silver medals and retailers a signatory of the National Pact in this round of audits. The Campo to promote Institute for the Eradication of Forced Grande (MS) distribution also achieved industry- Labor in Brazil since 2007 and a top marks (100%) following its first appropriate member of the Institute since 2014. audit under the LWG distribution and sustainable protocol. All of the units mentioned environmental Leather Working Group (LWG) – above achieved the highest ranking for management This is a leather industry initiative traceability, with all processed leathers practices. involving international brands, physically marked and traceable. Six tanners, suppliers and retailers other plants in the region will renew to promote industry-appropriate their certificates in 2018 and already and sustainable environmental hold a gold medal and the highest management practices. JBS Leather possible ranking for traceability. The has taken an active role on the Montenegro (RS) and Montevideo unit, Technical Sub-Group and Trader in Uruguay, will undergo their first Working Group, actively supporting audits this year. development of LWG certification.
186 British Poultry Council (BPC) – The U.S. Roundtable for Sustainable Council represents the European Beef (USRSB) – The USRSB poultry industry and works to create supports continuous sustainability closer ties between companies, improvements throughout the US other stakeholders, governments beef value chain, helping to engage and regulators. The organization companies and organizations with holds debates on best food safety this issue. JBS is one of its founding practices, focusing on poultry health members and is inline to chair the and welfare. In addition to taking Board of Directors. an active role on BPC committees, Pilgrim’s Moy Park is also a member Australian Beef Sustainability of its Board of Directors. Framework – JBS is a member of the Australian Beef Sustainability The Canadian Roundtable for Framework, which focuses on driving Sustainable Beef (CRSB) – This prosperity across the Australian organization connects leaders meat industry by constantly throughout the sector to drive improving community, animals and advances in sustainability for the environmental well-being. Canadian meat industry. JBS USA is one of its founding members The Sustainable Agriculture Initiative and currently sits on the Board of - Pilgrim’s Moy Park is a member of Directors. the SAI platform which develops secure and prosperous agricultural The Global Roundtable for supply chains and protects natural Sustainable Beef (GRSB) – This resources through the adoption of organization focuses on ongoing sustainable practices that generate sustainability improvements value for members, farmers, farming throughout the global beef value communities and consumers. chain through leadership, science, engagement and collaboration. In addition to being a founding member, JBS USA also has a seat on the Executive Committee.
187 Climate Change GRI 103-2, 103-3
One of the areas JBS works on to Gestão de Emissões reduce its environmental footprint Management depends on is greenhouse gas emissions (GGE). measurement. This means the It uses various greenhouse gas Company measures direct emissions indicators to manage the issue, as (scope 1), indirect energy emissions well as several operational initiatives (scope 2) and indirect emissions that include: (scope 3) annually. The resulting • reducing dependence on fossil fuels information is used to produce an emissions profile and assess the • conscientious energy usage effectiveness of our initiatives. • increasing use of clean energy In 2017, JBS emitted 6,051,350.26 tCO2e • reusing waste to generate power corresponding to scope 1, 1,780,144.14 • implementing efficient industrial tCO2e corresponding to scope 2 and effluent treatments 593,089.12 tCO2e corresponding to scope 3. • increasing logistics efficiency for own and contracted fleets Looking at scope 1 and 2, there • preventing deforestation has been a 1% and 2% reduction in throughout the supply chain. respective greenhouse gas emissions, representing gross emission of 67,782 • Operational Greenhouse Gas tons of CO2e. Emissions
• Emissions Management
Operational Greenhouse Gas Emissions GRI 305-1, 305-2, 305-3, 305-4 JBS Global 2017 2016 Variation / year Scope 1 tCO2e 6,051,350.26 6,084,483.08* -1°% Scope 2 tCO2e 1,780,144.14 1,814,793.76* -2% Scope 3 tCO2e 593,089.12 627,850.78* -6%
*Revised figures
188 JBS highlighted by CDP Forests
JBS’s deforestation prevention initiatives have been noted by CDP Forests, a program developed by the CDP, a global theme-based questionnaire organization that evaluates that assesses risks and corporate actions and policies opportunities, governance, to prevent deforestation linked strategies, compliance, with the main agricultural traceability, procurement commodities (cattle, soybeans, policies, chain engagement timber and palm oil). JBS and target-setting. Companies received an A- for cattle and are classified in 8 categories (A timber and a B for soybeans. to D-), with A considered the The data survey used by the “Leadership” category and D study is collected using a the “Disclosure” category.
189 The annual inventory, which can be The data is used as a basis for viewed on the Public Commissions Company strategies and to underpin Records Platform maintained by the actions implemented throughout the Brazil GHG Protocol Program and on value chain. In 2017, initiatives adopted the CDB Platform, has been taken since by our South America operations 2009. Initially, the inventory focused focused on engagement with suppliers only on the Company’s Brazilian and producers, logistics efficiency, operations, but in 2012 it was expanded waste management and industrial to include all global operations. effluent treatment, as well as energy Emissions data are reported to B3 efficiency gains. GRI 305-5 (formerly BM&FBovespa), as JBS stock • Supplier Engagement is included on the Carbon Efficiency ›› Preventing Deforestation based Index (ICO2), and to the Sao Paulo and on satellite monitoring of cattle Paraná State Environment Secretariats supplier farms. in Brazil as part of a voluntary annual ›› Environmental Compliance for reporting process that has been in livestock breeders based on the place since 2015. In the US, emissions Legal Supplier Program. are reported to the Environmental Protection Agency (EPA) as part of the SmartWay program for Shipping companies and via 40 CFR 98 (the Greenhouse Gas Reporting Rule) for beef, pork and poultry facilities, as required by law.
Global Sustainability Forum
During the 8th International Conference benchmark for the Lifecycle Assessment on Lifecycle Management (LCM 2017) in (ACV) methodology, a technique used to Luxemburg, JBS presented a first-of-a- analyze industrial performance (for goods kind study on the Company’s carbon and services) based on natural resource footprint across its beef (Picanha usage across various stages of the value Maturatta Friboi) and chicken (Seara chain: from raw material production to DaGranja Whole Chicken) product product disposal, including processing, manufacturing cycle. Carried out in distribution and consumption. Using partnership with the Getulio Vargas this information, the ACV is able to Foundation’s Sustainability Study Center identify environmental impacts from (GVces) as part of the Applied Lifecycle these processes and support strategic (CiViA) initiative, the study was used as a decisions to minimize them.
190 • Logistics Efficiency • Energy Efficiency Projects ›› Redução do Consumo de ›› More energy from renewable Reducing Fuel Consumption by sources. cutting journey distances for our ›› Reusing waste to generate own and third-party fleets. One energy and manufacture new example is the Route Optimizing products. project at JBS Carriers. The fleet of trucks that ships JBS products ›› Industrial wastewater treatment makes the return trip carrying efficiency improvements. cargo from partner companies. As a result, the trucks save over 2.8 million liters of diesel and avoid In 2017, initiatives adopted by 2,811.85 tons of CO2e emissions. our South America operations focused on engagement ›› Less Pollutant Shipping Options, with suppliers and producers, such as coastal shipping, which logistics efficiency, waste Seara is using with greater management and industrial frequency. In 2017, coastal shipping volumes rose 45% year effluent treatment. on year. According to data from the Brazil GHG Protocol, a ship emits 15 times less greenhouse gas, on average, to ship the same cargo as a refrigerated truck.
191 North America adopts similar collaboration via targets that offer strategies to those implemented in financial bonuses for senior operational South America. There is a significant and sustainability managers. It is also emphasis on value chain engagement involved in external initiatives as a and adoption of best practices, means of influencing public policy as well as a number of actions at in this area, engaging directly with various operations to improve energy policymakers and industry associations efficiency, such as power generation such as the British Poultry Council and using renewable sources, reusing Confederation of Business and Industry, waste to generate energy, operational among others. It also a member of the effluent treatment and disposal European Union’s Emissions Trading solutions and logistics efficiency System and complies with the Energy projects For example, Pilgrim’s Moy Saving Opportunities Plan and the Park has also made headway reducing industrial and farming Climate Change
fleet emissions. Since 2011, gCO2/km Agreement. metrics have fallen 16%, generating significant reduction in greenhouse The Company is a signatory gas emissions. The Company is a of the Federation House signatory of the Federation House Commitment. It is also a Commitment. It is also a member of member of the EU Emissions the EU Emissions Trade System (ETS) Trade System (ETS) and the and the Climate Change Agreement Scheme for the industrial and Climate Change Agreement agricultural sectors, reinforcing its Scheme for the industrial and commitment to finding solutions for agricultural sectors. the sector. It also drives team member
192 Energy energy and shows an overall GRI 103-2, 103-3, 302-1, 302-4 increase in the share of renewable JBS believes that investing in energy, rising from 14% to 17% renewable energy and energy in 2017. efficiency can help reduce greenhouse gas emissions. As a result, the Analyzing Brazil operations Company is constantly investing in separately, the percentage of more efficient equipment, increasing renewable energy rises to 88% use of renewable energy sources and as the Company has prioritized its operations have adopted energy renewable fuels to produce steam usage reduction targets. from its boilers. This is also up on the 86.7% reported in 2016. For In 2017, JBS operations reduced energy example, 98.6% of all energy used consumption by 20% (GJ), as shown by Company boilers in Brazil comes in the following table. This reflects from renewable sources. the 23% drop in the use of renewable
Energy Consumption by Source
JBS Global 2017 2016 Variation/ year % Total GJ* - Direct Energy GJ 179,558,105.58 224,892,963.81** -20% Renewable GJ GJ 30,428,735.28 17% 30,600,873.00** 14% -1% Non-renewable GJ GJ 149,129,370.30 83% 194,292,090.82** 86% -23% * Including electricity generation, fuel used to generate steam, thermal heating (stationary combustion) and fuel used to operate the Company fleet (mobile combustion). ** Revised figures
193 Action Taken in 2017 In addition to the energy consumption reduction targets adopted across all operations, in 2017 JBS invested in more efficient equipment and introduced new practices based on new technologies and solutions, placing a much greater emphasis on clean energy sources.
Energy Efficiency Projects
1 2
Migrating to the Open Market Facility Automation Over the year, JBS noted a significant In 2017, JBS Carnes invested R$ 15 million reduction in energy costs across its to automate the machine rooms at nine Brazilian businesses after several plants factories. Half of this investment was migrated to the open market and replaced repaid within the year after the initiative obsolete electrical equipment. It also generated R$ 7.5 million in savings. reduced energy consumption at peak hours, when electricity prices are higher. Elsewhere, the Pilgrim’s Moy Park Ashbourne unit installed air treatment v units which reduce air flows and save 96 thousand KWh annually.
194 Incentivized Energy Purchases Reduced Natural Gas Consumption In Brazil, JBS has a specialist team JBS USA Beef unit reduced natural gas consumption purchasing incentivized energy on the by approximately 4.3% and electricity usage by open market from small hydroelectric around 3% per animal. At Pilgrim’s, natural gas power stations or other sources of consumption fell 4.6% and electricity usage was renewable energy, such as wind parks, reduced by 1.3%, per animal. These results reflect a solar parks or biomass energy plants. number of metering and monitoring initiatives put In 2017, the team purchased 1.5 million in place at all facilities as well as ongoing investment MWh on the open market. 46% was in higher efficiency equipment. For example, the produced using renewable sources. Plainwell plant received two new boilers, cutting These energy purchases are certified consumption by 15%. At the Greeley factory, the using the Sinerconsult methodology, Company partnered with suppliers to create the which is based on the “GHG Protocol “Focus on Energy” program, cutting costs by 10%. Corporate Standard” protocol, itself part Another goal is to residual heat as a means of of the “The Greenhouse Gas Protocol cutting boiler natural gas consumption. JBS Canada Initiative”. has implemented specific technology to recycle heat and achieve this objective.
3 4 5
Replacing Convention Lights with LEDs JBS Leather has decided to gradually replace all conventional lights with LED bulbs. All new projects are equipped with LED lighting from the outset. This type of lighting reduces electricity consumption by 75% compared with conventional bulbs.
JBS Canada adopts regular preventive maintenance to ensure all equipment operates at maximum efficiency. Energy-efficient LED lamps are used in all factory areas and team members are advised to turn off all equipment when not in use. A number of projects were implemented at Pilgrim’s to switch lamps to an LED system, including the US factories in Lufkin, Sanford, Natchitoches, Marshville, Mt. Pleasant, Sumter, Atenas and Moorefield.
195 Reusing Waste for Energy
Energy cogeneration In Brazil, JBS owns a cogeneration unit which employs biomass (sugarcane bagasse, sawdust, peanut and rice husks and eucalyptus chips) to generate thermal energy and steam. Cogeneration takes place at Biolins, which is located in the Lins Industrial Park, based in Lins (Sao Paulo), in the interior of the state of São Paulo. Biolins runs a thermal plant capable of generating around 45 MW of energy per hour, sufficient to supply a city of 300,000 inhabitants. Around 33% of this electricity is used to supply the Meat, Leather and New Business plants based at the Lins industrial complex. The remainder is distributed to JBS units and sold on the domestic market. The steam produced by the plant supplies the adjacent JBS units. Biolins alone generates the equivalent of 22.5% of all energy used by every JBS plant in Brazil.
1 2 3
Reusing Waste for Energy Biogas South American units reused 16 tons of 10 JBS USA units are using biogas produced waste to produce energy and reduce their by the Company’s own wastewater greenhouse gas emissions. Waste such as treatment systems. For example, the pork cattle rumen (9 tons) and poultry tallow (7.5 processing unit located in Marshalltown, tons) was not sent to landfills or disposed Iowa, Is recovering biogas from an of using less sustainable methods anaerobic treatment to Lake. The Hyrum unit has a biogas collection and usage system that provides around 15% of the natural gas used at its facilities.
196 Biomass Moy Park (JBS Europe) is using biomass technology as an alternative energy source for its poultry processing units’ heating systems.
4 5
Effluent The beef plant in Brooks, located in Alberta, Canada, has expanded its effluent treatment systems, investing over US$ 2.5 million in improving recovery of grease, which is a byproduct. As a result, the plant recovered an additional 25% grease and removed over 25,000 tons of CH 4 from the effluent treatment process. The beef plant in Dinmore, located in Queensland, Australia, has modernized its effluent treatment system, investing over US$ 8.7 million in a biogas capture system. This offset over 74,140 GJ of natural gas per annum and reduced GGE emissions from the effluent treatment system by more than 97% (burned using a flare or used in the boiler), equivalent to over 44.000 tCO2e.
197 Solid Waste generated, increasing recycling and Greenhouse GRI 103-2, 103-3, 301-1, 301-2, 306-4 reuse of materials and encourages gas emission Greenhouse gas emission (GGE) environmentally appropriate waste (GGE) reduction disposal reduction also involves solid waste also involves management. This includes (post- solid waste industrial) waste produced by This policy also creates shared Company operations and post- responsibilities for all parties management. consumption packaging. A number of generating post-industrial and post- initiatives have been implemented in consumption waste (packaging). order to properly treat this waste and JBS signed up to the Ministry of the avoid environmental impacts such Environment’s Industry Packaging as methane (CH4) emissions from Accord in 2014 alongside over decomposition, which is one of the 300 companies from around the causes of global warming. country, who are now committed to supporting recycling nationwide. The Brazil operations, which are The Company also signed a part of the South America platform, Consent Decree with the State comply with the local National Solid Environmental Secretariat in Paraná, Waste Policy (PNRS), which focuses towards the same objective (www. on reducing the amount of waste coalizaoembalagens.com.br).
Post-consumption Recycling In Brazil, JBS includes symbols on all product packaging to identify the type of packaging material used and provide proper disposal instructions. This complies with the Environmental Labeling rules issued by the Brazilian Association of Technical Standards in ABNT NBR 16182.
198 Volume of Operational Waste Generated GRI 306-2
JBS Global 2017 2016 Variation / year Total Non- Hazardous Waste ton 1,865,196.52 99.5% 2,065,488.07* 92.35% -10% Total Hazardous Waste ton 9,356.68 0.5°% 171,159.63* 7.65% -95% Total Waste ton 1,874,553.20 2,236,647.70* -16% -16% Industrial/Sanitary Landfill - Own ton 22,828.20 1.22°% 34,474.01 1.54% -34% Industrial/Sanitary Landfill – Third Party ton 245,691.31 13.11% 409,161.39* 18.29% -40% Composting ton 637,852.68 34.03°% 712,265.16* 31.85% -10% Incineration ton 7,456.44 0.4% 11,328.59* 0.51% -34% Recycling ton 399,072.37 21.29% 324,983.79 14.53% 23% Energy Reuse ton 57,438.97 3.06% 51,324.57 2.29% 12% Cogeneration ton 28,277.42 1.51% 7,371.52* 0.33% 284% Fertirrigation (Land Farm) ton 387,726.40 20.68% 465,224.24* 20.8% -17% Others ton 88,209.40 4.71% 220,514.43 9.86% -60%
*Revised figures
There was a 16% reduction in industrial waste generated by JBS operational waste volumes operations was used for composting, compared with the previous year. recycling, energy reuse and energy This change was mainly driven by a cogeneration. In 2017, this system significant drop in waste volumes processed over 1.0 million tons of sent to landfills. 59.89% of post- waste.
199 Main Activities in 2017 donate equipment to cooperatives JBS Biodiesel Biodiesel From Cooking Oil. JBS and associations of recyclable material produced 210 Biodiesel produced 210 million liters collectors nationwide. This is intended million liters of fuel in 2017. Partnering with JBS to help increase collectors’ revenues of fuel in 2017. Environmental, the Company created and train industry professionals, the Friendly Oil project to increase boosting the number of recycling 20 million liter society’s awareness of the importance initiatives in Brazil. were made using of properly disposing of used cooking used cooking oil and produced 20 million liters from For example, in 2017 JBS started oil, a result of this used oil. Throughout the year, the sponsoring the Separate. Don’t the partnership initiative collected around 2 millions of Stop Initiative. The project is run by with JBS cooking oil. Estimates show that each the Packaging Coalition, a group of Environmental. liter of cooking oil that is collected associations representing a number avoids contamination of 20 to 25 of packaging businesses - including thousand liters of water or treatment JBS - which also created an Industry by sewage companies, reducing costs Agreement to expand recycling in for the government and taxpayers. The Brazil and comply with targets in the program was successful, attracting a National Solid Waste Policy (PNRS, R$ 5.5 million investment at the Law 12,305/2010). The law creates Lins plant, where the cooking oil is tools for proper solid waste treatment processed, to expand the initiative. nationwide. The Company plans to collect around 3 million liters of used cooking oil in 2018. Separate. Don’t Stop is a public awareness initiative in Brazil set up to Professional Training for the Recycling make people more aware about the Industry. JBS has taken steps to provide importance of recycling, encouraging training, improve infrastructure and them to change the way the dispose of used packaging.
200 Launched in 2017, Separate. Don’t Stop In 2017, the projects JBS sponsors initially focused on environmental directly benefitted: education. It created a website and • 3,369 people, based on the social media profiles on Instagram and population served by material Facebook aiming to educate people on collected and sold by cooperatives proper packaging disposal methods. It that signed up to the program in also started a number of relationship cities receiving our support actions, liaising with the Municipal • 60 recyclable material collectors’ Urban Cleaning Authority (AMLURB) associations (which received direct in Sao Paulo, and with a number support from the JBS program and of condominiums via the Housing indirect support from ANCAT) Association (SECOVI). • 148 cooperatives. Separate. Don’t Stop is now one of several initiatives organized by the Pilgrim’s Moy Park unit, in Europe, Packaging Coalition between 2012 and no longer sends waste to landfills. 2017. This period represented PHASE 1 Compare this with 2012, when the of the agreement, which obtained the unit sent 80% of its waste to landfills. following results in Brazil: Reducing this to 0% has been a • 802 waste collection organizations notable achievement for the Company received our support. and highlights its commitment to the environment and local communities. • recyclable material collectors’ associations received 4,487 training, The Craigavon unit at Pilgrim’s management, structural and Moy Park received the ‘Investors in adaptation initiatives. Zero Waste’ 3-star category award. • 2,082 Voluntary Delivery Points This award is for the continuous were implemented. improvement initiative to expand use of recyclable materials within the • 5,570 cities received our support. unit, thereby reducing waste disposal. • R$ 2.8 billion was invested. ‘Investors in Zero Waste’ is an initiative aimed at awarding innovative projects As part of these initiatives, JBS directly by companies, public agencies and the supports recyclable material collectors’ third sector that focus on reducing associations in the states of São Paulo, waste. Over 80% of waste produced Paraná and Mato Grosso do Sul. in the Orleans unit is recycled or reused. By introducing new waste containers, team members now help to sort the waste. This means around 150 kg of organic waste is now sent for composting instead of incineration.
201 Institutional support. In Brazil, JBS supports ANVAT - the National Association of Recyclable Material Collectors and, through its Metal Packaging business, it partners with Prolata Recycling, a nonprofit JBS USA has clear targets to reduce association of steel can value chain packaging volumes for each of its manufacturers in Brazil whose goal finished products. While complying is to increase the amount of steel with product safety requirements, the recovered and reuse it in the value Company has examined alternative chain. This is an ongoing, post- materials that can also be recycled, consumption, steel can recycling as well as technologies to reduce the program with no specific expiry amount of packaging used. date that has a number of goals. It is intended to facilitate returns JBS USA and Pilgrim’s reuse or recycle of steel product packaging after a as much material as possible in order product has been used and encourage to reduce landfill. In 2017, they recycled: environmentally appropriate disposal • 80% of cardboard, which was sent of any returned materials, focusing to paper factories or recycling particularly on steel waste recycling. centers for reuse Prolata also partners with • 95% of pallets, which were returned Cooperatives to create capillarity to their supplies for reuse in 11 states and with 55 partner • 95% of metal, which was recycled organizations. It also works with receiving centers that handle • 95% of plastic, provided it was large volumes of material and sets clean and uncontaminated, which up voluntary delivery points for was collected in boxes and sent to consumers. recycling centers
• 95% of high density polyethylene The Prolata Program was created (HDPE) plastic bags were returned in 2012 and has already invested to manufacturers for reuse, around R$ 3 million on monitoring, creating a closed cycle training and diagnostics programs and purchasing material from cooperatives.
202 Environmental Gains: Reducing the Ecological Footprint By recycling 15,017 tons of steel, the Program has helped reduce our ecological footprint. 17,119 tons of iron ore and 2,314 of coal were not mined.
70% water saving 55,567 tons fewer greenhouse gases were emitted, equivalent to 306,019 trees.
Social Gains The Prolata program celebrated its 4th anniversary with the following results:
improvement in incomes from steel 110% sales Moe quality of life for
Greater value is now Professional 1,925 given to the work training and higher done by recycling productivity cooperative members collectors, (better work increasing infrastructure, food and their self-esteem income)
203 Results The Prolata program celebrated its 4th anniversary in 2017 with the following results: 1 2 3 100 recycled material The PROLATA Model Center collector cooperatives Deployment of the st was created in São Paulo and were analyzed and 55 are 1 PEV Assessment is capable of handling 200 active (initial target: 50). The for new PEVs in the ton/month of waste. program is operating in 17 city of São Paulo. Brazilian cities.
Reduction in Product Packaging Materials Reuse and Recycling Volumes. The Research and Tire Recycling. Tires phased out Development (R&D) areas have been by JBS Carriers are reused as an working to reduce product packaging. alternative fuel by the cement In 2017, there was a 4% reduction in industry or to manufacture shoe packaging weight per product. soles, sealing rubber, rain water ducts, GRI 301-3 sports flooring, industrial flooring and car mats. The Company partners Packaging materials used in Brazil with Reciclanip – a national tire (listed by volume – renewable and industry organization responsible nonrenewable) for collecting and disposing of tires that can no longer be reused Tipo % Categoria or refurbished - which correctly Plastic 18.40% Nonrenewable disposes of any unusable tires. This Paper 0.51% Renewable means the Company avoided disposal Cardboard 72.74% Renewable of an average 1.1 thousand tires every Metal 8.34% Nonrenewable month. Polystyrene 0.01% Nonrenewable Cellulose/ Tires phased out by JBS Carriers Wood 0.01% Renewable are reused as an alternative fuel by the cement industry or to % manufacture shoe soles, sealing Primary and secondary rubber, rain water ducts, sports packaging 31.64% flooring, industrial flooring and Tertiary packaging 68.36% car mats.
We note that over 73% of Company packaging material comes from renewable sources.
204 Pallet Reuse. The Carnes and Seara closed cycle, which is a process units implemented a project to where recycled waste returns to the collect pallets used to transport their market after being processed and products and reuse them, instead of converted into other raw materials or throwing them away. Apart from the products (http://www.jbsambiental. financial benefits, the project also com.br/). reduces landfill waste, cuts the volume of natural resources used to make new In 2017, JBS Environmental handled pallets and diminishes greenhouse gas around 18 thousand tons of solid emissions by avoiding decomposition. waste, including plastics, metals, Seara created a Pallet Center as part paper and hazardous and non- of the program in 2017. This increased recyclable materials. turnover by 41%, up from an average 6.4 in 2016 and 9.1 in 2017. 152.5 thousand Some of this waste was recycled more pallets were collected compared and returned to industrial plants with 2016, eliminating procurement of as trash bags, tarpaulins, bags or 151 thousand pallets. The Seara project plastic coverings (further information also eliminated 42.5 thousand tCO2e available here). The Lins Recycling emissions. The Carnes project cut 33.5 unit alone processes around 260 thousand tCO21e in 2017 and reuse tons of various types of plastics every rose from 8.24 to 9.42. month and transforms into recycled plastic resins, a raw material used to In order to manage postindustrial manufacture new plastic products. waste produced by JBS and other Output totaled 3,123 tons in 2017, up companies in Brazil, JBS uses certified 1.3% on 2016. third parties or JBS Environmental. The unit produced 4,694,450 plastic JBS Environmental, a JBS Company, trash bags during the year, all used develops solutions, products at other JBS plants. JBS Leather used and services using cutting-edge 262,984 plastic covers produced technologies that dispose of waste by the plant to protect leather without impacting on the environment items from weather damage and while providing the necessary legal contamination. JBS Environmental certification. The Company uses a also produced 216,260 trays in 2017.
JBS Environmental Volumes Managed In 2017 (thousand tons)
3,172 3,124 6,280 Cardboard Plastic Metal
205 GRI Content Summary GRI 102-55
GRI GRI Standards Topic Disclosure Page/ Response GRI 102 - 102-14 Statement from senior decision-maker 5 General 102-1 Name of the organization 28 Disclosures 102-2 Activities, brands, products, and services 28, 57, 70, 74, 76, 2016 80, 88, 90, 106, 110, 115, 116, 117, 118, 123, 136 102-3 Location of headquarters 28 102-4 Location of operations 30 102-5 Ownership and legal form 28 102-6 Markets served 28, 106 102-7 Scale of the organization 28, 70, 72, 74, 77, 81, 88, 90, 91, 106, 110, 112, 116, 118 102-8 Information on employees and other workers 28 102-41 Collective bargaining agreements 125 102-9 Supply chain 18, 20, 22 102-10 Significant changes to the organization and its 70, 72, 106 supply chain 102-11 Precautionary Principle or approach 48 102-12 External initiatives 186 102-13 Membership of associations 186 102-45 Entities included in the consolidated financial 14, 72 statements 102-46 Defining report content and topic Boundaries 16, 138 102-47 List of material topics 16, 17, 138 103-1 Explanation of the material topic and its 17 Boundary 102-48 Restatements of information 14 102-49 Changes in reporting 14, 72
206 GRI GRI Standards Topic Disclosure Page/ Response GRI 102 - 102-40 List of stakeholder groups 16, 102, 128 General 102-42 Identifying and selecting stakeholders 16, 102, 128 Disclosures 102-43 Approach to stakeholder engagement 16, 102, 128 2016 102-44 Key topics and concerns raised 16 102-50 Reporting period 14 102-51 Date of most recent report 14 102-52 Reporting cycle 14 102-53 Contact point for questions regarding the report 14 102-54 Claims of reporting in accordance with the GRI 14 Standards 102-55 GRI content index 16, 206 102-56 External assurance Este relatório não foi submetido à verificação externa de terceira parte, mas foi elaborado de acordo com as Normas GRI. 102-18 Governance structure 36 102-16 Values, principles, standards, and norms 42 of behavior
207 Material GRI Page/ Topic GRI Standards Topic Disclosure Response Health and GRI 403: 403-1 Types of injury and rates of injury, 145 Safety Occupational occupational diseases, lost days, and Healthy and Safety absenteeism, and number of work- 2016 related fatalities 403-2 Types of injury and rates of injury, 142, 147 occupational diseases, lost days, and absenteeism, and number of work- related fatalities 403-3 Workers with high incidence or high risk 142 of diseases related to their occupation 403-4 Health and safety topics covered in 142 formal agreements with trade unions GRI 103: 103-1 Explanation of the material topic and 17 Management its Boundary Approach 2016 103-2 The management approach and its 142 component 103-3 Evaluation of the management 142 approach Animal GRI 103: 103-1 Explanation of the material topic and 17 Welfare Management its Boundary Approach 2016 103-2 The management approach and its 148 component 103-3 Evaluation of the management 148 approach Water GRI 303: Water 303-1 Water withdrawal by source 168 2016 303-3 Water recycled and reused 166, 169, 170 GRI 306: Effluents 306-1 Water discharge by quality and 170 and Waste 2016 destination GRI 103: 103-1 Explanation of the material topic and 17 Management its Boundary Approach 2016 103-2 The management approach and its 164 component 103-3 Evaluation of the management 164 approach Product GRI 304: 304-2 Significant impacts of activities, 178, 185 Integrity Biodiversity 2016 products, and services on biodiversity GRI 308 - Supplier 308-1 New suppliers that were screened using 172, 181, 183 Environmental environmental criteria Assessment 2016 308-2 Negative environmental impacts in the 172, 181, 183, supply chain and actions taken 185 GRI 409: Forced 409-1 Operations and suppliers at significant 178, 183, 185 and Compulsory risk for incidents of forced or Labor 2016 compulsory labor
208 Material GRI Page/ Topic GRI Standards Topic Disclosure Response Product GRI 414: 414-1 New suppliers that were screened using 178, 181, 183, Integrity Supplier Social social criteria 185 Assessmment 414-2 Negative social impacts in the supply 181, 183, 185 2016 chain and actions taken GRI 416: Customer 416-1 Assessment of the health and safety 58, 64 Healthy and Safety impacts of product and service categories GRI 103: 103-1 Explanation of the material topic and 17 Management its Boundary Approach 2016 103-2 The management approach and its 172, 181, 183, component 185 103-3 Evaluation of the management 172, 181, 183, approach 185 Climate Economic 201-2 Financial implications and other risks 48 Changes Performance 2016 and opportunities due to climate change GRI 302: Energy 302-1 Energy consumption within the 193 2016 organization 302-4 Reduction of energy consumption 193 GRI 305: Emissions 305-1 Direct (Scope 1) GHG emissions 188 2016 305-2 Energy indirect (Scope 2) GHG 188 emissions 305-3 Other indirect (Scope 3) GHG emissions 188 305-4 GHG emissions intensity 188 305-5 Reduction of GHG emissions 190 GRI 306: Effluents 306-2 Waste by type and disposal method 199 and Waste 2016 306-4 Transport of hazardous waste 198 GRI 103: 103-1 Explanation of the material topic and 17 Management its Boundary Approach 2016 103-2 The management approach and its 188 component 103-3 Evaluation of the management 188 approach
209 Credits
Coordination JBS Sustainability, JBS Investor Relations and JBS Corporate Communications
Texts and GRI Consulting Orbis Consulting
Design Dragon Rouge
Photos JBS Images
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