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SUSTAINABILITY Report 2018 SUSTAINABILITY report 2018 report SUSTAINABILITY SUSTAINABILITY report 2018 4 1 2018 report ABOUT US GLOBALIZATION AND PEOPLE OF 1 2 EFFICIENCY 3 EXCELLENCE 04 CHAIRMAN’S STATEMENT 24 OUR BUSINESSES 60 OUR TEAM 08 ABOUT ARAUCO 44 FINANCIAL PERFORMANCE 70 COMPREHENSIVE DEVELOPMENT 12 SUSTAINABILITY STRATEGY 48 INNOVATION 74 IDENTITY, COMMITMENT AND CLIMATE SUSTAINABILITY 14 CORPORATE GOVERNANCE 54 OUR PRODUCTS 78 CONTRACTS AND COLLECTIVE AGREEMENTS 18 CORPORATE BEST PRACTICES MANAGEMENT 20 RISKS AND CHALLENGES OCCUPATIONAL COMMUNITY ENVIRONMENTAL 4 HEALTH AND SAFETY 5 6 MANAGEMENT CONTENTS 82 SAFETY 102 COMMUNITY, PARTICIPATION AND DIALOGUE 126 ENVIRONMENTAL MANAGEMENT IN THE FORESTRY BUSINESS 92 OCCUPATIONAL HEALTH 106 COMMUNITY PROGRAMS 144 ENVIRONMENTAL MANAGEMENT IN INDUSTRIAL FACILITIES 96 JOINT COMMITTEES 112 PARTICIPATION PROCESSES AND DIALOGUE 7 SCOPE 8 APPENDICES 162 SCOPE 166 ARAUCO SUBSIDIARIES AND SHARES 168 MEMBERSHIP AND NETWORKS 174 GLOBAL GRI INDEX 2 3 2018 report SUSTAINABILITY CHAIRMAN`S STATEMENT For ARAUCO, 2018 was a special year, during which we le; the purchase of two Masisa industrial complexes in deepened commitments and projects, contributing to the Mexico, Durango and Zitacuaro at the beginning of 2019, development of the industry and the communities of which and the process of voluntary citizen participation and we are part. This has allowed us to continue to position presentation of the environmental impact study to the ourselves. We are a global player, thanks to work carried Environmental Impact Assessment Service of the Wind out with high standards by an exceptional workforce. Viento Sur wind farm, located in Arauco commune, Chile. Promoting the use of a renewable resource such as wood We have developed all these advances with a long- is at the heart of our strategic development. Thus, special term vision, generating products of excellence based emphasis was placed this year on the implementation on forest resources; working for an efficient inte- of several initiatives that point in that direction. One of gration among the different countries in which we them is the approval of the Modernization and Expan- operate and with the communities we relate to, whi- sion Project of Arauco Mill (MAPA). MAPA, which is the le deepening our commitment to sustainability. largest investment in the history of the company, is now At ARAUCO we are certain that the company is made by moving forward in Arauco commune, in Chile, where its people, who have been a fundamental pillar to reach the there is a close relationship and sense of belonging, achievements that allow us to be recognized in the world, since the company bears the same name and Arauco so I deeply appreciate the commitment and participation of Mill is the industrial facility where the company began. all the people who are members of the company, through In addition, we started a dissolving pulp initiative in which we can project ourselves into the future, while ba- Valdivia, which provides a different use for cellulose and lancing the requirements of shareholders, employees and will allow us to produce sustainable raw material for communities from our position as a renewable industry. the textile industry. Construction continues at the par- I invite you to explore this report, where you will ticleboard Mill in Grayling, Michigan, United States, and find more information about the company’s projects will begin operations in the first quarter of 2019. We are and advances during 2018, aimed toward impro- incorporating two Mills in Brazil: Ponta Grossa (MDF) ving people’s lives and developing forest products and Montenegro (PB), acquired in December 2017. We to meet the challenges of a sustainable world. have also enacted the expansion project of Teno, Chi- Manuel Enrique Bezanilla ARAUCO Chairman 4 5 2018 report SUSTAINABILITY 01 about ARAUCO 2018 report Over about 4,446 CUSTOMERS SUSTAINABILITY ARAUCO in 5 continents. Production facilities in We are a global, diversified forestry company offering a wide variety OVER of sustainable, quality products for the paper, construction, packa- COUNTRIES. ging, furniture and energy industries. 11 Along with our work and innovation, we develop products based on renewable forest resources, which inspire us to create solutions aimed at improving the quality of life of millions of people around the EMPLOYEES world, with presence in the forestry, pulp, wood, panels and clean guided by one vision and renewable energy businesses. 1.8 17,252 and shared values. Part of our growth is based on the creation of economies of sca- MILLION le and sustainable competitive advantages over time, to develop hectares of forestland products that are called to innovate, with new solutions that deliver Products sold through added value, the highest sustainability standards and a focus on in South America. representatives, sales quality, so that our products are always the superior choice. agents and sales offices in ARAUCO’s forestland and industrial facilities are certified to national and international standards related to the management of aspects COUNTRIES. of corporate governance, environment, quality, health and safety protection and responsible forest management. 28 Logistics chain and distribution management, supply to distribution centers and points of sale through 208 PORTS. 8 9 2018 GERMANY 2 report • 4 Panel Mills CANADA SPAIN 2 • 2 Panel Mills • 2 Panel Mills • 1 Resin Mill • 1 Sawmill SUSTAINABILITY PORTUGAL 2 • 2 Panel Mills • 1 Resin Mill USA • 7 Panel Mills URUGUAY 1 • 125,842 ha (310,962 acres) of forestland MÉXICO 3 • 1 Pulp Mill • 2 Panel Mills • 1 Power Mill SOUTH AFRICA • 2 Resin Mills • 2 Panel Mills BRAZIL • 249,324 ha (616,093 acres) CHILE of forestland • 1,130,618 ha (2,793,817 acres) of forestland • 4 Panel Mills • 5 Pulp Mills • 1 Resin Mill • 4 Panel Mills • 7 Sawmills including 4 remanufacturing SALES OFFICES SALES REPRESENTATIVES facilities ARGENTINA • 10 Power Mills • USA • South Korea • Thailand • 263,213 hha (650,413 acres) • Canada • Australia • Vietnam of forestland • Holland • Japan • Philippines • 1 Pulp Mill • Peru • China • 2 Panel Mills • Chile • United Arab Emirates • 1 Resin Mill • Mexico • Saudi Arabia • 1 Sawmill that includes • Colombia • Malaysia 1 remanufacturing facility • Brazil • Turkey • 2 Power Mills • Argentina • India • Costa Rica • Pakistan • Middle East • Bangladesh • Australia • Indonesia 1) Considers 50% of operations, land and plantations. • China 2) SONAE ARAUCO operations. 10 3) Acquired in early 2019. 11 2018 report sustainability our our STRATEGY VISION VALUES SUSTAINABILITY We work to build an economy based on renewable To contribute to improve people’s lives resources, which are the foundation to develop by developing forest products for the products that improve the quality of life of millions challenges of a sustainable world. of people around the world, through the sustainable SAFETY management of our operations and by creating always a priority maximum value from our forestland. Combining science, technology and innovation to We produce and manage COMMITMENT 1. unfold the full potential of our plantations. renewable forest resources. we work with passion TEAMWORK Responsibly managing our operations using the best We are a global company that together we are more environmental practices and promoting the safety and embraces the challenges of 2. development of the people who work at ARAUCO. participating in global markets. EXCELLENCE AND INNOVATION we want to be better Developing high standard, quality-oriented products and We create products that materials that always aim to be the superior choice for improve people’s lives. 3. our customers. GOOD CITIZENSHIP we respect the environment and create value Being a virtuous actor in the areas where we maintain operations, to become an active agent for their social 4. and economic development. 12 13 2018 report corporate GOVERNANCE SHAREHOLDERS SUSTAINABILITY ARAUCO is a closely held corporation that is subject to certain information and disclosure requirements which apply to publicly traded companies. While the company’s initial foundation dates EMPRESAS COPEC S.A. MANUEL ENRIQUE BEZANILLA back to October 28, 1970, when it was constituted by a public deed registered before Santiago Public Notary Ramón Valdivieso Chairman of the Board Sánchez, the corporation Celulosa Arauco y Constitución S.A., as it is known today, was established in September 1979, through the 113,134,814 ROBERTO ANGELINI merger of companies Celulosa Arauco S.A. and Celulosa Consti- SHARES: 99.98% First Vice Chairman tución S.A., which were founded by Corfo, the Chilean Economic Development Agency. JORGE ANDUEZA CHILUR S.A. Second Vice Chairman Since then, the company operates under the legal name Celulosa Arauco y Constitucion S.A. Today, 99.98% of ARAUCO is owned JORGE BUNSTER by Empresas Copec S.A., a holding company with primary inte- 24,746 ALBERTO ETCHEGARAY rests in the forestry sector, in fuel distribution businesses, and in the fishing and mining sectors. SHARES: 0.02% JUAN IGNACIO LANGLOIS The key mission of the Board of Directors of Celulosa Arauco y FRANCO MELLAFE Constitución S.A. is to maximize the company’s value through ANTARCHILE S.A. EDUARDO NAVARRO social, environmental and economically responsible management. TIMOTHY C. PURCELL The Board is comprised of nine members who hold office for three years and can be reelected. No Board Member holds an executive position within the company. 95 SHARES: 0.00% The Board regularly meets
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