Annual and Sustainability Report 2018
Annual and Sustainability Report 2018 Annual and Sustainability Report • 2018 • JBS TO READ page. 6 THIS REPORT
MESSAGE FROM MANAGEMENT page. 8 THIS YEAR’S HIGHLIGHTS
page. 16 THIS IS JBS Profile Values Governance Ethics and Compliance Risk management Associations and partnerships
OUR page. 36 BUSINESS Global business strategy Food quality and safety Innovation Business lines · Beef · Poultry · Pork · Leather · Related Business Suppliers Clients
page. 80 OUR PEOPLE Team Members Community
OUR page. 94 SUSTAINABILITY Sustainability Governance Materiality and stakeholder engagement Priority issues: · Team Member health and safety · Animal welfare · Product integrity · Water Management · Climate change
OUR page. 160 PERFORMANCE Financial results Non-financial achievements: • Awards • Certifications Outlook
ADDITIONAL INFORMATION page. 170 AND GRI CONTENT INDEX
4 SUMMARY
5 Annual and Sustainability Report • 2018 • JBS
TO READ THIS REPORT GRI 102-45, GRI 102-46 GRI 102-48 GRI 102-50, GRI 102-51, GRI 102-52, GRI 102-53, GRI 102-54
BS, because of its business is structured. This report The JBS materiality matrix is the businesses, geographies has been prepared in accordance basis of the Our Sustainability Jand the people who help with Global Reporting Initiative chapter. This details how the build the business every single (GRI) Standards: Core option. Company manages its business’s day, is a highly diversified food Our financial statements comply five priority sustainability issues Company. The Company’s with the International Financial and the results it has achieved identity is built around its Reporting Standards (IFRS) throughout 2018. Culture, which represents the issued by the International mission, beliefs and values which Accounting Standards Board Finally, Our Performance are shared by its Team Members (IASB) and are produced presents JBS’s financial results in all 15 countries where the by Grant Thornton and the recognition JBS has Company does business. Auditores Independentes. received, both of which help understand the scope of the As part of its mission to The report has also been Company’s activities and provide the best products and structured to focus primarily the level of excellence it has services to its clients, building on sustainability and the achieved, particularly in terms of solid relationships with its Company’s stakeholders. There value creation, reducing impacts suppliers, creating value for are four chapters: Our Business, and maximizing the positive its shareholders and offering Our People, Our Sustainability outcomes from the business. each of its Team Members and Our Performance, as well as an opportunity for a better a Company profile in the “This is The results and information future, the Company believes JBS” chapter. in this report cover operations nurturing respect for the entire from all JBS S.A. business production chain is essential In Our Business, JBS presents its platforms, divided into JBS for its continued success. As governance and management South America (Seara, Friboi1, part of this commitment, model, its commitment to JBS Couros and JBS Novos every year JBS publishes its ethics and compliance as well Negócios) and JBS USA (JBS Annual and Sustainability as its risk management and USA Beef - which includes the Report. This, the 10th edition value creation strategies. operations in the US, Canada, of the Report, describes Australia and New Zealand, - JBS the Company’s economic, Our People presents JBS’s USA Pork and Pilgrim’s Pride social and environmental relationship with its two main Corporation - with Pilgrim’s performance throughout 2018, its stakeholders: Team Members operations in the US, Puerto management and governance and the communities closest to Rico, Mexico and Europe). practices and the way the its operations.
IF YOU HAVE ANY COMMENTS, SUGGESTIONS, QUESTIONS OR CRITICISM ABOUT THIS DOCUMENT, PLEASE EMAIL THEM TO [email protected], SEND THEM TO THE INVESTOR RELATIONS AREA AT +55 (11) 3144-4224 OR [email protected] OR EMAIL THE SUSTAINABILITY AREA AT 1 Prior to December 2018, this business [email protected]. unit was called JBS Carnes.
6 To read this report
7 Annual and Sustainability Report • 2018 • JBS
MESSAGE FROM MANAGEMENT GRI 102-14
A MESSAGE TO OUR STAKEHOLDERS
am excited to be able to share JBS has an extensive footprint – global sustainability strategy, JBS’s 2018 results with you with businesses in North, Central for which we have received a Iand discuss the progress and South America, Europe number of awards from various we have made. Executing our and Oceania – allowing it to organizations worldwide. mission – which is to be the maximize global opportunities. best at whatever we put our This global strategy, alongside a We have also set a number of minds to and fully focus on our unique and diversified portfolio new records with net revenues businesses - we have produced of proteins, solutions, value- of R$ 181.7 billion, EBITDA of R$ outstanding results which will added products and recognized 14.8 billion and free cash flow allow the Company to continue brands, is one that increases of R$ 5.7 billion, equivalent to creating opportunities for our the Company’s competitive around US$ 1.5 billion. The free Team Members and generating advantages worldwide and cash we generated was used value for all our stakeholders. helps reduce possible impacts to reduce the Company’s net from market volatility. debt and reduce our financial For the past 65 years, JBS leverage to a factor of 3.01 times has been a synonym for hard As such, our strategy is based in the dollar-denominated net work, innovation, growth and around operational excellence. debt/EBITDA ratio. operational excellence. The In 2018, we strengthened our passion and commitment of global team and invested in in- Alongside these very positive more than 230 thousand house talent as we continued results, we have created new Team Members worldwide have to leverage opportunities and opportunities for our livestock transformed a Brazilian beef realize the Company’s potential breeders and integrated Company into one of the in many of our markets. We suppliers, customers, consumers global food industry leaders have refined our processes and our team and their families. with interests in practically and taken great strides in our every consumer market Compliance and Ethics program Based on the quality of our in the world. while also accelerating our products and our determination
8 Message from management
to innovate while continuing In essence, we are a food to focus on customers’ and Company that is passionate consumers’ requirements, we about its role in families’ meals, have a track record of building supplying sustainable food valuable and highly recognizable solutions that our customers brands. This is all supported by and consumers are proud to our global innovation framework share and serve. that focuses on understanding and anticipating consumers Through teamwork, demands in many different commitment and humility, markets, which in turn helps the we believe the best is yet Company develop and improve to come for JBS and all our sales channels and solutions stakeholders. Backed by our that build consumer preference, teams’ extraordinary efforts, generating value for all our the Company is poised to make related parties. further progress, take on any challenges the future brings I am proud to be leading JBS and help build a better world through this new growth cycle for us all. and helping improve the quality of life for millions of people On behalf of our global team, I around the world every single would like to thank you all for day. It is our responsibility to your continued support and I produce safe, high quality believe there is much we can and sustainable food and still achieve together. it is a mission that we have passionately embraced. GILBERTO TOMAZONI Global CEO
JBS IS A SYNONYM FOR HARD WORK, INNOVATION, GROWTH AND OPERATIONAL EXCELLENCE. THE PASSION “AND COMMITMENT OF MORE THAN 230,000 TEAM MEMBERS HAVE TRANSFORMED A BRAZILIAN COMPANY INTO ONE OF THE GLOBAL FOOD INDUSTRY LEADERS. “ 9 Annual and Sustainability Report • 2018 • JBS
MESSAGE FROM MANAGEMENT
018 was one of JBS’s The Board is supported by a In its approach to sustainability, most important years number of advisory committees JBS has progressed in several 2ever. The Company addressing strategic business areas that have helped improve celebrated its 65th anniversary issues such as Sustainability, the economic, environmental and consolidated its position Audits, Finance and Risk and social aspects of food as one of the world’s largest Management, Governance and production. As a result, our food industry companies with Related Parties. product quality and safety are operations in 15 countries and generating additional value more than 275,000 customers in JBS has achieved planned and for customers and consumers. 190 countries. consistent growth in every The Company is also being business area and has been recognized for its ongoing Gilberto Tomazoni was elected expanding its markets and efforts to reduce environmental our global, clearly signalling winning over customers with impacts and increase resource how the Company’s governance its wide-ranging product usage efficiency. framework has evolved. One of portfolio, all of which is part his first steps was to announce of the Company’s coherent We would like to be profitable, Guilherme Cavalcanti as the strategy to create value and but also, and more importantly, Company’s global CFO. increase margins. we would like to create value for society. In the Compliance The Board also continues to The Company has fulfilled area, the JBS Compliance focus on the best interests its commitments to the department reports directly to of the Company and its market through consistent the Board and the Company has shareholders, setting out strategic planning and been recognized for its efforts guidelines and policies to disciplined financial and inbuilding a Compliance culture. support the Company’s growth. operational management. The Company has a range of
10 Message from management
consistent programs that are Underpinned by a solid culture applied globally and it is now that unites all of our worldwide one of the most transparent operations in pursuing a single organizations in Brazil and, strategy and backed by a based on the Transparency team of trained and motivated International ranking, a food people, it is our firm belief JBS industry compliance leader. will maintain its leadership and make significant progress JBS has made incredible towards its goal of being progress in 2018 and we will an industry benchmark as focus on ensuring that it it continues to deliver solid continues to present solid results and make strides in and consistent growth over fundamental areas such as the years ahead. One of the sustainability, governance and Company’s great strengths and compliance. differentials is the quality of its management team. We have a team of highly professional and JERRY O’CALLAGHAN experienced executives who Chairman of the Board of Directors are committed to our strategy and are executing it confidently while continuing to improve the Company’s relationships with its stakeholders.
JBS HAS PROGRESSED IN SEVERAL PRACTICES THAT HAVE HELPED IMPROVE ITS ECONOMIC, “ENVIRONMENTAL AND SOCIAL OUTCOMES. AS A RESULT, OUR PRODUCT QUALITY AND SAFETY IS GENERATING ADDITIONAL VALUE FOR CUSTOMERS AND CONSUMERS. THE COMPANY IS ALSO BEING RECOGNIZED FOR ITS ONGOING EFFORTS TO REDUCE ENVIRONMENTAL IMPACTS AND INCREASE RESOURCE USAGE EFFICIENCY. “ 11 Annual and Sustainability Report • 2018 • JBS
THIS YEAR’S HIGHLIGHTS
NET INCOME GROSS PROFIT R$ 181.7BN R$ 26.3BN Up 11.3% compared with 2017 In 2018, the gross margin was 14.5%
14.6% 14.5% 181,680.2 163,170.0 26,340.2 11.3% 23,722.2 10.8%
2017 2018 2017 2018
ADJUSTED NET INCOME ADJUSTED EBITDA R$ 1.6BN R$ 14.8BN Earnings per share (R$) EBITDA margin was 8.2%
0.19 0.60 0.01 8.2% 8.2% 1,606.3 13,415.9 14,849.8 534.2 201% 25.2 10.7% 2017 20181 2018 2017 2018
1 Excluding the impact of the adherance to Rural Tax Regularization Program (PRR-Funrural)
Note: graphs are in R$ million
12 This year’s highlights
OPERATIONAL CASH FLOW R$ 11.5BN Up 31.8% compared with 2017
11,466.6
8,698.4
31.8%
2017 2018
FREE CASH FLOW R$ 5.7BN Up 105.2% compared with 2017
5,699.8
2,777.6 105.2% 2017 2018
13 Annual and Sustainability Report • 2018 • JBS
MAIN INDICATORS
INDICATOR 2018 2017 2016 2015 2014
ECONOMIC/FINANCIAL INDICATORS – R$ MILLIONS
NET OPERATING REVENUE 181,680.24 163,170.00 170,380.53 162,914.53 120,469.70
COST OF GOODS SOLD -155,340.05 -139,397.70 -149,066.70 -140,324.20 -101,796.30
GROSS PROFIT 26,340.19 23,772.20 21,313.83 22,590.30 18,673.40
GROSS MARGIN 14.5% 14.6% 12.5% 13.% 15.5%
ADJUSTED EBITDA 14,849.76 13,415.90 11,286.90 13,300.40 11,090.00
EBITDA MARGIN 8.2% 8.2% 6.6% 8.2% 9.2%
NET INCOME 25.2 534.20 233,60 4,640.1 2,035.9
NET MARGIN 0% 0.3% 0.1% 2.8% 1.7%
CASH FLOW USEDIN INVESTING 1,742.74 2,426.42 3,539.40 21,603.87 4,276.85 ACTIVITIES
NET DEBT 47,217.75 45,283.34 46,904.79 47,038.74 25,168.71
OPERATIONAL CASH FLOW 11,466.60 8,698.43 3,667.40 21,206.40 8,987.00
FREE CASH FLOW 5,699.75 2,777.55 128.00 -397.47 4,710.16
SOCIAL AND ENVIRONMENTAL INDICATORS
NUMBER OF TEAM MEMBERS 230,086 233,797 237,061 227,168 208,503
TOTAL GHG EMISSIONS, BY WEIGHT 4,363,800.82 6,051,350.26 6,553,358.36³ 4,445,098.00 4,411,977.13 (tCO2e) - SCOPE 1
TOTAL GHG EMISSIONS, BY WEIGHT 1,536,269.49 1,780,144.14 1,814,793.76³ 1,779,980.77 1,457,679.79 (tCO2e) - SCOPE 2
VOLUME OF WATER CONSUMED 180,728.61 180,438.23 190,961.16³ 165,606.00³ 66,709.00² (THOUSAND M³) INVESTMENTS IN ENVIRONMENTAL MANAGEMENT AND IMPROVEMENTS 721,10 806,50 855,20 716,60 N/D¹ (R$ MILLIONS)
1 Not available. 2 Information regarding JBS operations in Brazil. 3 Numbers reviewed.
14 This year’s highlights
The Company invested around Globally, over 99% R$ 300 R$ 62.5 of Brazilian Team Members received ethics and MILLION MILLION in the safety of its Team was invested in waste compliance training. Members worldwide. water treatment.
81% 1ST PLACE of the water captured and used JBS tops the transparency ranking for food sector companies with in the Company’s industrial international operations in the 2018 Transparency International processes is treated and safely Brazil report. The Company came 9th on the overall ranking. returned to the environment.
Over More than Globally, more than R$ 230 135,000 TEAM R$ 160 MILLION has been invested in food MEMBERS MILLION received Occupational Health has been invested in energy quality and safety across & Safety training worldwide. efficiency projects. all operations.
There was a 29% 18% reduction in the number of of the energy used by the accidents resulting in lost Company’s production GLOBAL time and processes was renewable INNOVATION 55% energy. TEAM reduction in the number of (GIT) was created in October lost days JBS worldwide. 2018 to increase information sharing, accelerate innovation The Company reused through cross-border Over exchanges and create 1.2 MILLION tons of waste in 2018 for global platforms to support 13.3 composting, recycling, innovative practices. THOUSAND energy reuse and energy Team Members and producers cogeneration, equivalent to worldwide received animal 53.58% of all waste generated. welfare training.
JBS invested The Company recycled the equivalent of JBS continued to invest R$ 88.2 in training, particularly for MILLION 3.36% people in leadership positions to improve animal welfare of all the water captured – more than practices across all its global globally. 80,000 operations. staff across all the Company’s operations received career JBS invested more than development training. R$ 27 MILLION on management and measurement and initiatives to reduce water usage and reuse water worldwide.
15
THIS IS JBS
JBS plant in Campo Grande - MS Annual and Sustainability Report • 2018 • JBS
PROFILE GRI 102-1, GRI 102-3
BS S.A. is a Brazilian JBS operates in three major multinational and a business areas on both the B2B Jrecognized leader in the and B2C markets, offering a global food industry. Based diverse portfolio of brands and in the city of São Paulo, JBS products including everything has a global production and from fresh and frozen meats distribution platform that to prepared foods sold under stretches across 15 countries market-leading brands such and manages more than 400 as Friboi, Seara, Swift, Pilgrim’s offices and plants on five Pride, Plumrose and Primo, continents – the Americas, among others. Africa, Asia, Europe and Oceania. We serve around 275 The Company also operates a thousand customers in more number of related businesses than 190 countries, including through its JBS Couros and JBS major regional chains to Novos Negócios units. These small-scale retailers, as well operations focus on innovation as wholesale clubs and food and use material from the service companies. food production process that would otherwise be classified Everywhere the Company as waste for the production of operates, its more than 230,000 leather and other products, Team Members follow the same including biodiesel, collagen, Company guidelines on issues pharmaceutical inputs, personal including economic, social and hygiene and cleaning items, environmental sustainability, animal nutrition ingredients, innovation and food quality natural casings and many others. and safety and implement best practices throughout the value JBS Novos Negócios also chain, all of which is backed by provides products and services the same Culture and Values. that supplement the Company’s In all of its business and every own value chain, including region, the Company is focused metal packaging, environmental on operational excellence. management solutions and shipping services. However, JBS ensures its local operations retain sufficient flexibility to adapt to local markets and consumer requirements.
18 Chapter 1 • JBS
19 Annual and Sustainability Report • 2018 • JBS
GLOBAL ACTIVITIES GRI 102-4, GRI 102-6, GRI 102-7 The Company has over 400 production units in 15 countries and commercial offices in 20 countries.
CANADA = 3%
ESTADOSUS UNIDOS = 51% = 51%
MEXICO = 4%
Beef
Pork BRAZIL = 13% Poultry
Lamb
Leather
Commercial offices SOUTH AMERICA = 1%
Prepared foods
% of Consolidated Revenue - domestic sales and imports
20 Chapter 1 • JBS
EUROPE= 6%
ASIA = 15%
AFRICA AND THE MIDDLE EAST = 3%
AUSTRALIA AND = 4% NEW ZEALAND
21 Annual and Sustainability Report • 2018 • JBS
OUR CULTURE GRI 102-16
OUR MISSION To be the best in all that we do completely focused on our business ensuring the best products and services to our customers, a relationship of trust with our suppliers, profit for our shareholders and the opportunity of a better future for all of your Team Members.
OUR BELIEFS
• Focus on details
• Take a hands-on approach S
I • Our achievements are based N on hard work C E • The right person in the right place R I • Passion for what we do TY • Attitude is more important than knowledge • Leaders must win their subordinates’ trust • Lead by example • Focus on results • Work with people better than us • Belief makes the difference • Product quality
22 Chapter 1 • JBS
D E T E R OWNERSHIP M I N A T I O N Y IT IL
M E U N H I L OUR IP C IS VALUES D
S
I
N
C
E R IT Y Y AVAILABILIT
S IM P LICITY
23 Annual and Sustainability Report • 2018 • JBS
GOVERNANCE GRI 102-10, GRI 102-18
BS is constantly improving Safety and Quality further Prior to becoming CEO, its corporate governance information see page 40 Tomazoni was COO at JBS and Jpractices in order to and more information about was directly involved in the create value, build trust with Innovation, see page 44). global business strategy. shareholders, investors and other stakeholders and generate The Board of Directors - the All members of the Board and sustainable results across the Company’s highest-ranking the Company’s committees, value chain. governance body - ended 2018 including the Fiscal with eight members, including Committee, receive fixed, JBS’s corporate governance three independent directors, monthly, performance-based structure has been developed as per the Company Bylaws. compensation. This means and improved with a view to Members of the Board are they do not receive any direct guaranteeing transparency elected at an annual general or indirect benefits nor do in all its relationships. The shareholders meeting for a they receive a share in the governance structure includes unified, two-year term; their Company profits. Compensation the Board of Directors, the many responsibilities include for other JBS management Global Compliance Department, defining business policies and personnel is performance- a permanent Fiscal Council and guidelines as well as economic, based, encouraging sustainable advisory committees focusing social and environmental targets. medium and long-term growth on strategic areas, including: at JBS while incentivizing efforts Sustainability; Auditing; The chairman of the Board of to reach short-term targets. Financial and Risk Management; Directors and the Company CEO Surveys are used to periodically Governance; and Related Parties are separate positions held by compare compensation (further information on JBS different professionals. The Board packages with the general committees is available on the of Directors elected Gilberto market practices and all JBS Investor Relations website: Tomazoni to take up the position compensation is aligned with
BOARD OF DIRECTORS
Jeremiah O’Callaghan* Aguinaldo Gomes Ramos Filho Cledorvino Belini** Further information on the committees is available Gilberto Meirelles Xandó Baptista on the JBS Investor José Batista Sobrinho Relations website: Roberto Penteado de Camargo Ticoulat**
* Board Chairman | ** Board independent members
24 Chapter 1 • JBS
GLOBAL MANAGEMENT STRUCTURE (As of 12/31/2018)
Gilberto Tomazoni Global CEO
André Nogueira Guilherme Cavalcanti Wesley Batista Filho CEO JBS USA GLOBAL CFO JBS S.A. President of South American Operations
Joanita Renato Nelson Roberto Karoleski Costa Dalcanale Motta President President President President of Seara of Friboi¹ of JBS of JBS Novos Couros Negócios
Martin Tim Brent David Thomas Rodrigo Brian Bill Lovette Al Byers Dooley Schellpeper Eastwood Colwell Lopez Horvath Piedmonte CEO CEO CEO JBS CEO JBS CEO JBS CEO JBS CEO CEO JBS CEO JBS Pilgrim’s JBS USA USA Pork USA Fed Australia Canada Plumrose Carriers Case Ready Pride² Regional Beef Beef
1 Prior to January 2019, this unit was called JBS Carnes 2 Bill Lovette was replaced by Jayson Penn in March 2019
25 Annual and Sustainability Report • 2018 • JBS
SHAREHOLDER STRUCTURE GRI 102-5
BS stock is traded on the At the end of 2018, JBS S.A. had B3’s Novo Mercado in the following equity position: JBrazil. The Novo Mercado is a listing segment made up of companies that are committed Controlling to voluntarily complying with group1 corporate governance practices over and above those required by 40.64% law. JBS has gone even further on a number of issues. Out of the total number of issued shares, 35.64% were held by minority shareholders, exceeding the 25% requirement under Novo Mercado regulations.
Within the Company’s board of directors, 37.5% of the SHAREHOLDER Treasury members are independent, AND CORPORATE Shares compared with the 20% required 2.41% under Novo Mercado rules. STRUCTURE Additionally, the Company only issues common stock, granting equal rights to all shareholders, while all shareholders enjoy tagalong rights in the event of changes in JBS’s control. 35.64% 21.32% BNDESPAR2 Minority shareholders
56.95% Free float
1 J&F Investimentos S&A e Formosa 2 BNDES Participações S.A
26 Chapter 1 • JBS
JBS STOCK IS ALSO INCLUDED IN THEORETICAL PORTFOLIOS BY THE FOLLOWING B3 INDEXES:
∙∙Differentiated Corporate ∙∙BM&FBovespa Value Index In the US, JBS stock is also Governance Stock Index (IGC) (IVBX-2) traded as Level 1 ADRs (American Depositary Receipts) on the ∙∙Differentiated Tag Along ∙∙Mid-Large Cap Index (MLCX) OTCQX over-the-counter market. Stock Index (ITAG) ∙∙Trade Corporate Governance The Investor Relations area is ∙∙Brazil Index 100 (IBrX 100) Index (IGCT) responsible for communicating with shareholders and ∙∙Brazil Index 50 (IBrX -50) ∙∙Governance Index Corporate investors; this department has – New Market (IGC-NM) a website (https://ir.jbs.com. ∙∙Expanded Brazil Index (IBrA) br) and it frequently releases ∙∙Industrial Sector Index (INDX) the Company’s results through ∙∙Carbon Efficiency Index conference calls and events (ICO2) ∙∙Ibovespa Index attended by capital market agents and specialist ∙∙BM&FBovespa Consumer media outlets. Index (ICON)
27 Annual and Sustainability Report • 2018 • JBS
ETHICS AND COMPLIANCE
BS has been reinforcing its business units in Brazil as Special attention has also been its Compliance structures well as an exclusive committee, paid to communicating the Jsince 2017 and is taking called the Institutional Ethics issues addressed in the Code steps to become a Compliance Committee, staffed by Company of Ethics and Conduct, how the benchmark, given the critical executives. These committees Ethics Hotline works and the role compliance plays in discuss how to investigate new policies and procedures business sustainability. JBS reports submitted via the JBS that were implemented in 2017 is constantly improving its Ethics Hotline and monitor and apply to everyone who existing control mechanisms progress of the Always Do the works at JBS. In addition to over and activities and is developing Right Thing program. 20 in-house communication new policies and procedures in campaigns, JBS organized line with best global practices. The JBS Ethics Hotline can be 25,000 hours of on-site and These initiatives, alongside the accessed from any country remote training courses JBS Code of Ethics and Conduct where the Company does throughout the year, reaching and the JBS Ethics Hotline, are business and is available in 11 practically every single Company part of the organization’s global languages, 24 hours a day, seven Team Member. Approximately compliance program, called days a week. 98.8% of Brazilian Team “Always Do the Right Thing”. Members received training. In the first half of 2018, the In 2017, the Company created a Board of Directors approved Leadership courses were also global department headed up a new Code of Ethics and organized for staff managing by José Marcelo Proença, who Conduct as well as a Business the Company’s international is responsible for developing Partner Code of Conduct - these operations in 2018. In 2019, the program. The department are both global documents, JBS will continue its strategy reports directly to the Board of which means there is just one of training every single team Directors in order to guarantee version of these documents member and will extend its its independence. JBS also has which are used by every training courses to include its Ethics Committees for each of Company unit globally. international and third parties. Additionally, around 1.5 thousand Team Members received on-site training on specific issues not ETHICS AND COMPLIANCE PROGRAM DISCLOSURE addressed in the Code of Ethics and Conduct - for example, • More than 20 in-house • Around 1,500 staff from the commercial team received communication specific groups received training on cartel-related issues. campaigns on-site training for issues not addressed by the Code • 25,000 hours of on-site At JBS’s international of Ethics and Conduct - for and distance training operations, the Company hired example, the commercial courses were organized Lance Kotschwar in 2018 as team was trained on cartel- in Brazil, reaching 99% of Compliance area director and related issues and plant local Team Members. All he is responsible for organizing managers received training Brazil staff will undergo initiatives that are aligned with on moral and sexual training in 2019. harassment. the Company’s global strategy and guarantee integrity at all JBS international operations.
28 Chapter 1 • JBS
2019 COMPLIANCE TARGETS
A number of internal controls guidelines, such as its gifts • Increase the number were implemented in 2018, and entertainment policy. of due diligence including guidelines on product Although JBS has a single Code investigations into third donations, sponsorship, offering of Ethics and Conduct for all its parties that pose a risk and/or receiving gifts and operations, policies may vary on • Train third parties on the entertainment and progress was a country by country basis. JBS Business Partner made on the project to create Code of Conduct a specific, automated third- JBS is a member of several major • Development of global party reputational analysis (due organizations, including the policies diligence) tool as part of efforts Ethos Institute; the Company to improve the process the signed the Business Integrity • Improve team member Company began the previous and Anticorruption Pact which training worldwide year. Today, the tool is available the Institute has developed • Create controls and for higher risk third parties and to disseminate best business evaluate the effectiveness the list of third parties who will practices and help build a more of existing controls undergo due diligence will be ethical and responsible market. • Launch the global expanded throughout 2019. The JBS is also involved in Ethos compliance website, Company will continue to work Institute working groups looking making program with international partners who at a number of ethics and initiatives available to will assist in the due diligence integrity issues. the public process in regions that face higher risks and lower levels of As a result, Transparency • Improve and expand information transparency. International ranked JBS as the effectiveness one of Brazil’s most transparent of compliance JBS has also created a number companies in its most recent communications and include materials in of policies to address specific report (for more information, see other languages, such issues and reviewed existing page 166). as English, Italian and Spanish
29 Annual and Sustainability Report • 2018 • JBS
JBS COMPLIANCE PROGRAM INSTRUMENTS
CODE OF CONDUCT AND ETHICS POLICIES AND PROCEDURES
This document provides Team to consolidate and unify existing Documents addressing Members with guidelines on guidelines at JBS’s various global specific issues to support Team how they are expected to act in operations. The organization Members during their day-to- any given situation, describing also has a mandatory Business day activities, in line with the conduct and behavior that is Associate Code of Conduct for organization’s compliance rules. acceptable to and required by third parties doing business They are: JBS. The Code’s current version, with JBS, including customers published in the beginning and suppliers. Both documents • Sponsorship Policies of 2018 and now available in can be accessed through the • Product Donation Policy Portuguese, English, Italian and Company’s website. • Gifts and Entertainment Spanish, was produced in order Policy • Related Party Transactions Policy • Consequences Policy • Reporting Investigation Policy • Ethics Committees’ Charters
All documents, not including access restricted The Code of Conduct and The Business Associate documents, are available on Ethics is available on the Code of Conduct is available the Company’s website. Company’s website. on the Company’s website.
30 Chapter 1 • JBS
JBS ETHICS HOTLINE
The Hotline is available to all Company stakeholders (Team Members, suppliers, customers, investors and others). Anyone can use it to report wrongdoing or behavior that violates the JBS Code of Conduct and Ethics or the Business Associate Code of Conduct.
The hotline is currently available in three languages – Portuguese, English and Spanish – serving the many different nationalities doing business with the Company worldwide. The Ethics Hotline is managed by a specialist provider from outside the Company to guarantee whistleblower safety and confidentiality. Anyone wishing to file a report may do so anonymously. The Company responsible for the JBS Ethics Hotline registers the report, classifies it based on the issues involved and incident severity, and submits the information to the JBS Compliance area for appropriate action.
31 Annual and Sustainability Report • 2018 • JBS
RISK MANAGEMENT GRI 102-11
he Risk Control THE MAIN FINANCIAL, SOCIAL AND ENVIRONMENTAL RISKS* Department is responsible INDENTIFIED AND MONITORED Tfor identifying, assessing, mitigating and monitoring CATEGORY TYPES financial risks inherent to JBS’s operations. Risk controls are FINANCIAL RISKS Market based on the Financial Risks and Commodities Management Policy, approved by the Board of Directors. The department also helps operational units identify Credit and monitor financial risk specific to their own activities, supported by specialist staff and specific systems.
The table below lists the risks JBS has identified by category Liquidity and severity level, as well as the efforts made to mitigate them.
SOCIAL AND ENVIRONMENTAL Raw Material Procurement RISKS
Climate change
32 Chapter 1 • JBS
DEFINITION MITIGATION METHOD
Currency, interest rate and Exposure is mapped in real time. commodity price risks when price fluctuations could affect JBS Hedging instruments, including derivatives, are used, subject to approval from businesses. the Board of Directors.
The risk of default on accounts Accounts receivable: portfolio is diluted and secure credit parameters are receivable, financial investments set (based on proportional limits, financial and operational ratios and credit and hedge contracts. agency queries) to reduce risks.
Financial transactions with financial institution counterparties: exposure thresholds are defined by the Risk Management Committee and approved by the Board of Directors, based on rating agency classifications.
The possibility of imbalances Capital structure management focuses on immediate, modified liquidity appearing between negotiable metrics - i.e. cash on hand and financial investments, divided by short-term assets and enforceable liabilities that debt - and working capital, to maintain natural leverage for the Company and could affect the Company’s ability to its subsidiaries. fulfill future financial obligations.
The risk of purchasing raw Cattle purchases: Notify the market of the social and environmental criteria materials from suppliers involved adopted for cattle purchases and support for the use of best farming in deforestation of native forests, practices. In Brazil, JBS monitors supplier farms located in the Legal Amazon invasion of protected areas such - as States using a geospatial system capable of identifying non-conformities and indigenous land or environmental barring raw material purchases from non-compliant suppliers (http://jbs.com. conservation units -, use of child or br/sustentabilidade/dialogo-transparencia-e-comunicacao/). forced labor or products that could pose a risk to consumer health. Poultry: the Company’s relationship with animal breeders 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-ecomunicacao/).
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 change could have a We monitor the environmental impacts from direct (industrial, logistics negative impact on the Company’s and shipping) operations and taking steps to minimize the impact of the businesses. Resources like water, Company’s own and its suppliers’ operations. Monitoring involves taking a electricity and animal feed (which is global inventory of direct and indirect GHG emissions using the international dependent on farming) are critical GHG Protocol methodology. The results of the inventory are published for production of raw materials annually on the CDP platform. JBS also monitors indicators representing the (cattle, poultry, pork and lamb). volume of water and electricity used by its operations in order to optimize production processes and gradually reduce consumption. To reduce the Businesses could also be affected impact from JBS operations and create opportunities, the Company has an by new legislation and regulation in annual plan to invest in environmental improvements to optimize use of this area. natural resources, water and waste energy recycling and address other issues.
*All potential risk factors the Company is aware of are detailed in sections 4 and 5 of the JBS S/A Reference Form, available at http://jbss. infoinvest.com.br/ptb/4896/80775.pdf
33 Annual and Sustainability Report • 2018 • JBS
ASSOCIATIONS AND PARTNERSHIPS GRI 102-12, GRI 102-13
BS is a member of various food industry groups and associations and a member of some of the largest industry and sustainability Jorganizations in each of the countries where it operates.
GLOBAL UNITED STATES ∙∙Global Roundtable for ∙∙American Fats and Oils Sustainable Beef (GRSB) Association ∙∙International Meat Trade ∙∙American Feed Industry Association Association ∙∙Leather Naturally ∙∙American Meat Science BRAZIL ∙∙Leather Working Group Association ∙∙Brazilian Food Industry (LWG) ∙∙Arizona Cattle Feeders’ Association (ABIA) ∙∙Sustainable Agriculture Association ∙∙Brazilian Association of Meat Initiative ∙∙Beef Industry Food Safety ∙∙Exporters (ABIEC) Council ∙∙Brazilian Animal Protein ∙∙Colorado Livestock Association (ABPA) Association ∙∙Brazilian Tanning Industry ∙∙Environmental Protection Center (CICB) Agency Animal Ag ∙∙Sustainable Livestock Discussion Group Working Group (GTPS) ∙∙Idaho Cattlemen’s ∙∙Ethos Institute Association ∙∙National Pact Institute to ∙∙Kansas Livestock Association Eradicate Slave Labor ∙∙National Cattlemen’s Beef Association ∙∙National Chicken Council ∙∙National Pork Board ∙∙National Pork Producers Council ∙∙National Renderers Association ∙∙North American Meat Institute ∙∙Oklahoma Cattlemen’s Association ∙∙Texas Cattle Feeders Association ∙∙U.S. Poultry and Egg Association
34 Chapter 1 • JBS
AUSTRALIA EUROPEAN UNION CANADA ∙∙Australian Beef Sustainability ∙∙British Frozen Food ∙∙Canadian Cattlemen’s Framework Federation Association ∙∙Australian Environmental ∙∙British Poultry Council ∙∙Canadian Roundtable for Business Network (AEBN) ∙∙Campden BRI Food and Sustainable Beef (CRSB) ∙∙Australian Food and Grocery Drink Initiative Council (AFGC) ∙∙Chilled Food Association ∙∙Australian Government ∙∙European Federation for Beef National Traceability Project and Pork Meat ∙∙Australian Lot Feeders ∙∙French Meat Federation Association (ALFA) ∙∙French Meat ∙∙Australian Meat Industry Interprofessional Federation Council ∙∙French Poultry Federation ∙∙Australian Meat Processor ∙∙Institute of Livestock or INRA Corporation (AMPC) (French National Institute of ∙∙Cattle Council of Australia Agricultural Research) ∙∙Meat and Livestock Australia ∙∙Northern Ireland Food and Drink Association ∙∙Northern Ireland Poultry Federation
35
Our Business
JBS plant in Itumbiara - GO Annual and Sustainability Report • 2018 • JBS
GLOBAL BUSINESS STRATEGY GRI 102-2
or JBS, providing families In this context, JBS, a global through its business activities around the world with Company capable of addressing or its brands, products and Fquality food is not just a emerging consumer needs markets. The Company operates challenge: it is a commitment. and requirements, is constantly on four continents, managing People who previously had little focused on improving food processing units, distribution or no access to higher protein quality, transparency and centers and commercial offices diets can now enjoy more sustainability. As a result, JBS’s serving approximately 275 appropriate nutrition. The world business model is unique in thousand customers in 190 has a population of 7.6 billion the food industry. It manages countries. This breadth gives JBS and this figure is expected to a platform made up of various a global competitive edge and reach 9 billion in 2050. Providing different yet independent minimizes exposure to health, the world’s population with operational units that have business, economic or policy high quality food means we the autonomy to implement risks in any given region. need to improve and will have regional strategies aligned to increase food production by with the Company’s overall The Company’s operational 60%. This will only be possible global strategy. This model structure is based on five main through innovation to increase speeds up the decision-making businesses: beef, poultry, pork, productivity and efficiency process, improves our resilience leather and new business. across the production chain. in the event of economical commercial challenges and In 2018, the Company continued In addition to the challenge ensures JBS has a foothold to prioritize food safety and of increasing food quality, in all of the world’s most quality, enforce compliance with dietary habits are also affected competitive markets through high standards and support by ethical and cultural companies recognized for their innovation, putting it in a standards. Issues such as management and operational position to adopt best industry product sourcing and integrity, excellence, best practices and practices and develop new value chain transparency and commercial brands. projects across the globe. environmental and social footprints are increasingly One of JBS’s most important important to people all around business guidelines is the world. diversification, which it pursues
38 Chapter 2 • Our business
JBS SEARA COUROS
JBS NOVOS FRIBOI BRAZIL
NEGÓCIOS
A
U S
JBS USA T R
BEEF A GLOBAL JBS USA L
I BEEF A BUSINESS
E STRUCTURE D U S R E T E O I T P N A E U T S C E A N PILGRIM’S PILGRIM’S M T RA PRIDE ER L PRIDE IC A CANADA
JBS USA PILGRIM’S PORK PRIDE JBS USA BEEF
CASE: 1953 FRIBOI Producers who farm different European breeds of beef cattle can produce high-quality meat, Friboi launched the 1953 Friboi brand in 2018 increasing the supply of premium beef and to celebrate JBS’s 65th anniversary. The range making it more accessible to consumers. In its first includes over 50 premium beef cuts from animals year, the brand joined forces with 500 livestock bred by crossing various European breeds. The raw breeders and processed 100,000 animals. material is controlled and selected at source in line with stringent quality standards. Demanding consumers are increasingly looking for cuts of meat that are tender, tasty and In order to develop the brand, the Company has succulent. As a result, the new brand has gained invested in advanced technology and carried a foothold on a growing market based around out on-site and the laboratory testing, with its signature attribute: “The evolution of taste”. support from the State University of Campinas Previously, the premium meat sector was only (Unicamp). 1953 Friboi is the first Brazilian meat open to the food service industry, but after the brand to employ a multibreed protocol, which was 1953 Friboi retail launch, it is now open to end implemented after tests revealed that high-quality consumers. The brand is now available through meat is not produced only by one specific breed of 5400 points of sale in 15 Brazilian states and cattle or production system. delivered 5000 tons of meat in 2018.
39 Annual and Sustainability Report • 2018 • JBS
FOOD QUALITY AND SAFETY GRI 416-2
BS’s business strategy procedures at all its business MANAGEMENT AND CONTROL is based around its units. Created in 2017 and based At JBS, food safety and quality Jcommitment to out of the USA, its goal is to assurance means monitoring producing safe, nutritional, transform JBS into a global food the value chain, financial results tasty and high-quality food. quality and safety benchmark and customer satisfaction and The Company therefore and continue opening up new relationship indicators. The focuses much of its efforts global markets. process covers several phases, on continuously improving from raw material procurement operational, manufacturing and Each business unit has a controls to auditing point-of-sale supply standards across all its specialist Food Quality and product presentation standards businesses. This includes efforts Safety team responsible for and includes tightly controlling to fully comply with regulatory implementing guidelines and production and distribution and certification requirements policies at local level. In the US, activities (for more information in over 190 markets. The Food Quality and Safety leaders about raw material procurement, Company also implements supervise food safety and quality see page 124). Factory teams policies and procedures to assurance programs at each and customers receive annual manage the value chain unit, working hand-in-hand with training and annual refresher (which includes responsible the Global Department. courses, as well as opportunities raw material procurement), to exchange experiences on best partnerships with suppliers, In 2018, the Global Food practices to support each stage Team Member health and Safety and Quality Assurance of the process. safety, training courses and any Department worked with teams number of other activities that at each of the business units To ensure that products sold are part of the Company’s day- to better understand their under JBS’s various brands to-day activities (for more about individual reporting processes, comply with the highest safety Product Integrity, see page 124). technologies and resources, and quality standards when they after which it began a process reach consumers, the Company QUALITY GOVERNANCE of streamlining and improving has adopted food-related risk JBS has a responsibility to policies and practices management and assessment continue setting the bar worldwide. The goal is to draw systems and set up committees across the food industry and up a strategic plan and set and forums to discuss quality its Global Food Safety and all JBS units around the world issues with area specialists. The Quality Assurance Department, on a single path towards Company has also adopted which reports directly to the a single global standard certification procedures and Global CEO, is responsible for that exceeds all mapped accurate labeling systems and implementing quality programs requirements, while complying health missions and customers and procedures at a global level with all region-specific regularly carry out internal and and improving operational, regulations and meeting external audits and inspections manufacturing and supply customers’ requirements. of Company facilities.
40 Chapter 2 • Our business
EACH BUSINESS UNIT HAS A SPECIALIST FOOD QUALITY AND
CASE: SAFETY SUPPLY CHAIN PROTOCOL TEAM At the beginning of 2018, Friboi launched its Supply Chain Protocol to certify compliance with stringent customer and consumer requirements. JBS holds a number of The certificate includes a number of strict certificates, including BRC protocols addressing issues such as animal (British Retail Consortium) welfare, traceability, sustainability, operations, certification, which is a global production, quality, processing and marketing. benchmark for protein quality, and complies with ISO 9001 The Seal’s parameters are based on globally quality management and other recognized standards from the BRC (British Retail standards (for more information Consortium), European Union Regulation 1099 about the Company’s on Animal Welfare, the AMI Animal Welfare certificates, see pages 166 and Protocol (USA) and the European Union 167). These certificates help Traceability Regulations. the Company access additional markets and Units undergo a five-phase process, including a serve international clients. gap analysis carried out by outside consultants and specific training courses, to achieve JBS also has a Supply Chain certification. Today, all units in Brazil comply Protocol to certify product with the Seal’s protocols and undergo three sourcing. The certification annual external audits carried out by the Brazilian system has further improved Certification Service (SBC), one of which is quality controls across the unannounced. The initiative was a major step for production chain. The seal the Company and will support its commitment addresses issues that go beyond to quality, innovation and improving processes current regulations and includes throughout the production chain. some of the most stringent global certificates and protocols.
41 Annual and Sustainability Report • 2018 • JBS
EUROPE DIFFERENT CONTROLS IN EACH MARKET Production facilities are inspected and audited by third parties under European Food Hygiene regulations, in addition to other customer UNITED quality requirements, to CANADA STATES verify compliance. Pilgrim’s Moy Park supports the Food Standards Agency’s All units are inspected by The Canadian Food Inspection campaign to reduce the the U.S. Department of Agency (CFIA) inspects spread of Campylobacter Agriculture’s Food Safety and facilities to guarantee and has invested more than Inspection Service (FSIS). compliance with federal food 1 million pounds in research safety standards. and cutting edge practices to help the poultry industry battle the bacteria.
MEXICO
Pilgrim’s plants comply with guidelines published by the Secretariat for Agriculture, Livestock, Rule Development, Fishing and Food (SAGARPA) and the national Agriculture and Food Health, Safety and Quality Service (SENASICA). AUSTRALIA Additionally, each Mexican BRAZIL plant holds a TIF (Federal Inspection Certificate) which Representatives from the is issued by the government All JBS units are inspected Department of Agriculture to certify that foodstuffs by the Federal Inspection and Water Resources (DAWR) comply with World Animal Service (FIS), which inspect export facilities on Health Organization standards represents the Brazilian a daily basis to ensure the and the Codex Alimentarius of government’s Ministry of unit complies with all federal the United Nations’ Food and Agriculture, Livestock and and international food Agriculture Organization. Supply (MAPA) certifying the safety requirements. Company to sell its products at home and abroad.
42 Chapter 2 • Our business
INNOVATION AND TRAINING meat sciences and animal LABELING (GRI 417-1) INVESTMENTS welfare practices. The Center will Globally, JBS products need to JBS also invests to modernize also provide training and help comply with a wide variety of and continuously improve its develop testing equipment. It labeling regulations, based on food quality and safety area. was unveiled on April 9, 2019. local legislation and best market Much of these efforts are practices. Labeling information focused on improving and In Europe, Pilgrim’s Moy Park such as food composition, expanding its infrastructure. has a number of accredited nutritional tables, net weight, laboratories capable of best by dates and other The Company has several providing fast, high-quality information helps consumers laboratories specialized microbiological tests required evaluate product quality. in microbiological and to monitor production. This biotechnology analysis at several process is fully documented In Brazil, food products of its units worldwide. These to guarantee its results are must carry the Ministry of laboratories provide food safety accurate and verified. All Moy Agriculture’s Federal Inspection indicators for the Company’s Park operations are assessed on Service (SIF) seal and comply various brands, to guarantee criteria including product and with Health Regulator (Anvisa) product quality. By modernizing service health and safety. regulations, such as listing any its infrastructure and allergenic content. equipment, JBS has been able JBS is also committed to to achieve increasingly accurate ongoing team training to ensure In the US, certification is provided analyses in shorter time frames. all Team Members follow best by the United States Department At Seara, for example, analysis food quality and safety practices of Agriculture’s Food Safety and results are put on the Laboratory across the Company. Inspection Service (USDA, FSIS) Information Management seal. Labeling information varies System (LIMS), which generates CONSUMER SATISFACTION by product and geography, a periodically updated database Customer and consumer but includes everything from of performance and standards satisfaction indicators are used how to prepare the food up to compliance information for the to verify whether food quality ingredients, dietary supplements entire Company. and safety management is like vitamins, minerals and fiber generating effective results. and allergen warnings. As part of these efforts, JBS These indicators are produced by partnered with the Colorado customer service channels and State University (CSU) in 2018 to other custom equivocation tools build the Global Food Innovation used by the Company’s business Center, a teaching and research units (for more information unit that will help the Company on customer and consumer further improve food safety, relations, see page 78).
43 Annual and Sustainability Report • 2018 • JBS
INNOVATION
BS works tirelessly to set The Company has also created markets, including the Seara itself apart from the rest a methodology to monitor 100% Natural chicken range, Jof the market, making regional innovation processes developed especially for the innovative products that meet and ensure that the lessons United Arab Emirates, which customer and consumer learned are made globally was also highlighted at the SIAL expectations. This is reflected by available, particularly for the Innovation Selection Paris 2018. the significant number of new prepared food ranges and to products it unveils – in 2018, it improve brand value creation. Pilgrim’s Pride has developed created nearly 85% of new fresh This project is being developed the first industrial scale organics meat products that boosted by the Global Innovation Team plant, which was unveiled in sales and margins in line with (GIT) since October 2018 in 2017, to meet growing demand the Company’s other value- order to increase information for organic products. In 2018, the added products. sharing, accelerate information plant reached full production through cross-border exchanges capacity, processing more than The Company also works hard and create global platforms to 900,000 birds a week. Last to understand nascent market support innovative practices. year, Pilgrim’s invested and consumer requirements. We expect to conclude the US$ 4 million in R&D. Research and development communication and program areas at each of the food acceleration phases in 2019. Pilgrim’s Mexican operation business units focus on two launched 30 products as part different sectors, fresh and Seara invested more than R$ 16 of the portfolio diversification prepared foods, because million in R&D. This resulted in strategy, subject to the usual they each serve different the Company winning a number strict quality controls. In 2018, it channels that have their of awards at Food Ingredients launched a number of innovative own requirements and serve South America 2018, where the products in Europe including a customers with widely Company came first and third gluten-free breaded chicken and differing needs. in the Most Innovative Product vegetarian snacks range. category, and Major Packaging Management tools will be Cases, highlighting two of its At the start of 2018, Friboi implemented in 2019 to optimize products: Lasagna Seara and also launched its 1953 Friboi development efforts for the Seara Rotisserie. In 2018 alone, brand celebrating JBS’s 65th products in highest demand. Seara was running 990 product anniversary. The range offers The Company also assesses innovation projects for the over 50 premium beef cuts major global food trends, such domestic and export markets. from animals bred by crossing as the tendency to reduce fat various European and Zebu and sodium content, reduce The special chicken ranges breeds. The raw material is portion sizes, and so on. are also well-known on export controlled and selected at
44 CapítuloChapter 2 •2 Nosso • Our business negócio
source in accordance with the highest possible quality standards. Distribution of this type of product used to be restricted to food service channels, but the Company is now distributing to major retail chains as well, expanding its premium beef offerings to consumers. The Company has invested in advanced technology and carried out on-site and the laboratory testing, with support from the State University of Campinas (Unicamp), to further develop the brand. 1953 Friboi is already available through 5,400 points of sale across 15 Brazilian states.
R$ 38.5 MILLION INVESTED IN INNOVATION THROUGHOUT 2018
45 Annual and Sustainability Report • 2018 • JBS
FOOD INNOVATION PLATFORMS Globally, JBS innovates across four main food product platforms:
HEALTHY AND NATURAL FAMILY AND CHOICES CONNECTIONS PLEASERS Functional products Easy to cook food for with high standards of eating with family traceability and low social and friends; and environmental impact;
COOK, INDULGENCE AND PREPARE AND EATING SENSORY Products that are quick High-quality foods that and easy to make and enchant the senses offer high nutritional and provide unique performance; experiences.
46 Chapter 2 • Our business
Other areas of the business are also involved in ongoing efforts to innovate. For example, JBS Novos Negócios has a number of ongoing investments. JBS Biodiesel has invested R$ 5.5 million to adapt one of its plants so it is able to use alternative oils. In the beef collagen and ingredients area, NovaProm invested R$ 1 million to set up its R&D area, train its team and provide additional infrastructure in order to better serve its domestic and international customers. This also resulted in CASE: the Company obtaining USDA PARTNERING WITH COLORADO STATE certification, allowing it to export UNIVERSITY to the USA. As part of a strategic partnership that began in Investments at JBS Couros 2017, JBS USA contributed US$ 12.5 million (R$ 45.6 have helped create new articles million) to the Colorado State University (CSU) to for the furniture, footwear support education and research. US$ 7.5 million and leather goods sectors; was used to build the JBS Global Food Innovation develop projects to use low Center, which was unveiled on the University toxicity chemical products campus on April 9, 2019. with a reduced environmental impact in the automotive and The new facility will offer a number of benefits, furniture sectors; optimize such as advanced study opportunities and research chemical usage; reduce water into food safety, meat sciences and animal welfare. consumption by about 30%; For students, this will be an opportunity to put and reduce processing time their academic knowledge to practical use. One for automotive articles by of the venues at the center was designed by Prof. around 40%. Temple Grandin, one of the world’s leading experts in animal welfare, to provide opportunities to study the issue interactively.
JBS USA’s partnership with the University will also benefit the Company’s Team Members. A US$ 5 million investment in education means that more than 100 Team Members will be able to enroll on MBA courses, take part in distance- learning agribusiness courses and obtain professional certification.
47 Annual and Sustainability Report • 2018 • JBS
BUSINESS LINES GRI 102-9
BS is the world’s largest BREEDING AND FEEDING beef and poultry processing JCompany and second Animals are bred largest pork and lamb processor. intensively or It is also a leading leather extensively by producer and a major force partner farmers. in many related businesses. The Company is always aware of market trends and is continuously investing in its 1 already varied portfolio, which includes many types of product from fresh and frozen meats to prepared foods. In recent years, the Company has focused on developing high quality and higher value-added products to meet customers’ ever more POINTS OF SALE complex requirements and consumers’ changing demands. JBS products are available in 190 countries at BEEF everything from JBS has two business units small markets to that produce and sell beef major retail chains. 7 protein: Friboi, in Brazil, and JBS USA Beef, in the US, Canada and Australia. VALUE
Although there are some differences based on the CHAIN specific regions where their respective plants are located – in Brazil, most livestock breeding is extensive while in other countries it is usually based on feedlot systems – the JBS beef value chain at both DOMESTIC AND business units is much the EXPORT MARKETS same (see the description). JBS´s global structure produces 6 food to serve 275,000 costumers in internal and external markets.
48 Chapter 2 • Our business
RAW MATERIAL PROCUREMENT JBS buys animals from livestock breeders and encourages its suppliers to implement best practices (for more about Product Integrity, see page 124).
2 JBS
TRANSPORT
JBS uses specially adapted 3 vehicles to transport animals from farms to factories, based on animal welfare guidelines.
PROCESSING AND INDUSTRIALIZATION BEEF 4 Production is in accordance with the strict quality (page 40) and animal welfare (pages 110 to 123) standards.
5
WAREHOUSING AND DISTRIBUTION JBS uses a special system to properly warehouse and distribute its products to ensure their quality remains unaffected.
49 Annual and Sustainability Report • 2018 • JBS
Friboi The Friboi business unit owns with the Alibaba group, a global includes everything from animal some of Brazil’s best known beef e-commerce giant, to sell animal welfare through to end product brands, such as the Friboi brand protein in China. delivery. The Top Grade Butcher itself – Brazil’s market leader program ended 2018 with over – Reserva Friboi, Maturatta JBS’s growth strategy in China 800 participating stores and is Friboi, Do Chef Friboi, Swift is focused on serving specific intended to develop a special Black and the recently launched requirements of local customers, sales channel that builds loyalty 1953 Friboi, offering premium focusing especially on channel among retailers and offers products directly to retailers (for segmentation, such as B2B, food solutions for supermarket more information, see page 39). service, retail and e-commerce, butchers. Participating chains as well as packaging and gain access to an exclusive range Throughout 2018 the business portioning. In addition to its of products – Reserva Friboi - continued to execute its wide-ranging portfolio of produced using selected cattle strategy of producing high value-added products based and special trimming methods. value-added products and it on different animal proteins, When a client chooses to sell increased its share of the food Friboi also understands the exclusively Friboi products, in service market, significantly complexities of the Chinese exchange, they receive butcher improving sales to major market and it has large-scale management support, which restaurant chains across Brazil. production facilities capable of guarantees the correct inventory meeting local demand. volumes at competitive prices, Friboi improved revenues from helping them avoid losses while international sales compared The Company continues to improving business results. with 2017, particularly in Asia improve the level of services (China), South America (Chile) offered to its customers. This Another area the Company and Europe. The Asian market includes offering retailers focused on was its relationship is expected to grow further prepared foods for sale in with livestock breeders. JBS into 2019 based on a number of PAT (Protected Atmosphere) made significant progress deals JBS has signed and rising packaging, such as minced signing term and predefined demand for animal protein. meat, hamburgers, steaks, agreements with the Company’s meat strips and medallions, main suppliers, which meant For example, in November 2018, and it has expanded the Top production planning improved, the Company signed a US$ 1.5 Grade Butcher program to increasing efficiency. billion, three-year agreement improve beef quality, which
50 Chapter 2 • Our business
EXPORT GROWTH RESULTS BOOSTED BY THREE-YEAR, US$ 1.5 BILLION DEAL WITH THE ALIBABA GROUP
51 Annual and Sustainability Report • 2018 • JBS
Throughout the year, Friboi also invested in improvements for its production processes, particularly increasing automation and using technology in several of its processes to further increase product quality.
One example of the benefits of automation comes from Brazil’s 2018 national truck drivers’ strike. During the strike, the logistics tracking system meant the business unit was able to map the location of around 1000 trucks that were on the road at the time and offer assistance to ensure refrigerated cargoes were not affected and could still be delivered with a level of quality for which the brand is now known.
Because of the level of segmentation across Friboi sales channels, the fleet has trucks capable of shipping 800 kg up to tractor-trailers that can carry up to 30 tons of refrigerated cargo, which illustrates just how important the logistics tracking system is.
52 Chapter 2 • Our business
FRIBOI OPERATIONS MAP
PA CE
PE
AC TO RO BA MT
GO
MG
MS
SP RJ
PR 35 beef processing units
3 feedlots
RS 26 distribution centers
7 processed food units
MAIN BRANDS
53 Annual and Sustainability Report • 2018 • JBS
JBS USA Beef The JBS USA Beef business unit In line with the organization’s Other critical factors include is responsible for beef and lamb global strategy, JBS USA Beef the quality of the Company’s operations in the US, Canada focuses on product and service teams and its strategic focus and Australia. The Company quality and it is always looking on quality, service, customer offers a wide and varied portfolio to add value for its business partnerships and investment in of fresh products under well- partners. In 2018, the unit higher value-added and higher- known, leading brands for both repeated its standout 2017 results margin products. Its results local and export markets. and increased market share. also benefited from a jump in exports to a number of global In Australia, JBS is the biggest Decisive growth factors remain markets to serve rising global animal protein processor and the increase in US and Canadian demand for animal protein, exports beef and lamb to cattle supply and high demand particularly in Asia. more than 80 countries. It also for protein in both countries, has a significant share of the as well as the Company’s domestic market. increasing operational efficiency.
JBS USA BEEF OPERATIONS MAP UNITED STATES AND CANADA
CANADA
WI MI
PA UT NE CO
AZ
GA TX
54 Chapter 2 • Our business
MAIN US BRANDS
®
® ®
AUSTRALIA AND NEW ZEALAND
18 beef processing units
6 feedlots
2 leather units Queensland 9 logistics units
Western 8 processed food units South 8 distribution centers New South Wales 2 lamb units
1 pork unit Victoria
Tazmania New Zeland
MAIN AUSTRALIAN BRANDS Beef Lamb
Processed foods
55 Annual and Sustainability Report • 2018 • JBS
POULTRY Two JBS units focus on poultry production and sales: they are FARMS AND Seara Alimentos, in Brazil, and HATCHERY the Pilgrim’s Pride Corporation, Poultry grow up on the which markets its products to Company’s own farms the US, Central America (Puerto or on integrated farms Rico and Mexico) and Europe. where they go through several genetic The poultry used by JBS units selection, incubation are produced at its own farms and reproduction or by integrated producers. processes. Integrated farmers receive all the consumables, technical support and training required to help them implement best 1 safety, quality and sustainability practices, in accordance with Company principles. The same principles apply to other links in the value chain (see infographic).
POINTS OF SALE PILGRIM’S IS THE JBS products are available in WORLD’S almost every consumer market in the world at LEADING everything from 7 CHICKEN PRODUCER small markets to AND PROCESSOR AND major retail chains. THE LARGEST PRODUCER VALUE OF ORGANIC CHICKEN IN THE WORLD CHAIN
SEARA SERVES MORE THAN 100 MILLION CONSUMERS IN OVER DOMESTIC AND EXPORT MARKETS 130 JBS’s global structure produces food sold 6 COUNTRIES in Brazil and another 190 countries.
56 Chapter 2 • Our business
FOOD AND NUTRITION
Animal feed is produced at the Company’s own factories and tailored to meet animal health and growth requirements at each stage of their lives.
2
TRANSPORT
JBS uses specially adapted 3 vehicles to transport animals from farms to factories, based on animal welfare guidelines.
PROCESSING AND INDUSTRIALIZATION POULTRY 4 Production is in accordance with the strict quality (page 40) and animal welfare (pages 110 to 123) standards.
5
WAREHOUSING AND DISTRIBUTION JBS uses a special system to properly warehouse and distribute its products to ensure their quality remains unaffected.
57 Annual and Sustainability Report • 2018 • JBS
Seara Alimentos Seara has an extensive portfolio Examples include the lasagna the FI Innovation of fresh poultry, prepared food, that uses the “Heats evenly” Awards, organized by processed and frozen products technology, the Gourmet FiSA (Foodingredients and leading brands. It supplies chicken range and the Breaded South America). the Brazilian and international Chicken Hamburger. The unit markets, particularly Europe, has also invested in efforts The Seara Rotisserie range the Middle East and Asia, to strengthen Seara brand offers day-to-day convenience where it serves the retail, food quality and develop exclusive alongside preservative free service, B2B, cash and carry regional products as well as meals, following the trend and e-commerce channels. regional brands, in order to for clean label products. The Poultry represents 87% of all unit serve demand in Brazil’s many range is made using fresh exports. Chicken is one of the different regions and markets food, employs the PowerVac most popular proteins in Brazil: across the world. technology and includes it is present in 97% of homes and options that use Seara DaGranja appears in 2-3 meals per week. Altogether, the Company has chickens, which are bred developed 90 options for the without using antibiotics and The Company has offices in Brazilian market, including have a 100% vegetable diet. China, Japan, South Korea, tender, succulent cuts of chicken Singapore, Holland, London, bred without using hormones, This helped Seara achieve United Arab Emirates, North as required by Brazilian law. positive results throughout the Africa and South Africa in The Company’s main chicken year, despite challenges on a order to better serve its 100 ranges are Seara DaGranja, Nhô number of markets. One of its million consumers in over 130 Bento, Assa Fácil, Congelados & achievements was taking top countries. Alongside JBS’s other Soltinhos and fresh chicken cuts spot in the Brazilian frozen foods business units, Seara also has a ready for seasoning. category in June and July. strategy to diversified product portfolio, prioritizing higher In 2018, Seara also expanded its value-added products. Seara has 100% Natural Seara DaGranja made significant investments range as consumer demand in innovation, research and for healthier and more natural development not just to create products increased. Seara products, but also to improve DaGranja dishes were selected its current portfolio and as one of the three most customer service. innovative products in 2018 at
58 Chapter 2 • Our business
SEARA POULTRY OPERATIONS MAP
CE
PE
BA MT
DF
MG MS
SP RJ PR
30 poultry processing units
SC 14 distribution centers RS 21 processed food units
MAIN SEARA POULTRY BRANDS OTHER SEARA BRANDS
59 Annual and Sustainability Report • 2018 • JBS
Pilgrim’s Pride Corporation meat, prepared and ready-to- 2018 was a very challenging Pilgrim’s, which has plants in cook foods and, through its year for Pilgrim’s in the the US, Puerto Rico, Mexico, Moy Park subsidiary, vegetarian, United States as demand for the UK and continental Europe, beef and pork products and chicken decreased, however, is a global leader in chicken desserts. Its strategy is based the Company managed to production and processing and on continuously improving sustain its good results by the world’s largest producer of its performance, customer moving ahead with internal organic chicken. partnerships, geographic and improvements and focusing on portfolio diversification and customer service quality. The Company produces and innovation. Pilgrim’s is listed on markets high value-added fresh the NASDAQ.
PILGRIM’S OPERATIONS MAP UNITED STATES, MEXICO AND PUERTO RICO
MN
WI
WA VA KY NC TN AR SC AL GA TX LA
FL
PUERTO RICO MEXICO
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EUROPE
UNITED KINGDOM
NETHERLANDS
FRANCE
36 poultry processing units 16 case ready product units
23 distribution centers
MAIN GLOBAL BRANDS
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Pigs are bred on the PORK Company’s own farms As in the beef and poultry or on integrated and sectors, JBS has three business third-party farms units that focus on pork and its where they undergo derivatives: Seara Alimentos, genetic selection and in Brazil, JBS USA Pork, which reproduction processes. includes Plumrose operations in the US, and JBS USA Beef. JBS USA Beef owns the Primo Smallgoods brand - a leading 1 manufacturer of processed products including ham, sausage and bacon, with an operational structure split between Australia and New Zealand.
The animals used by JBS units come from the Company’s POINTS OF SALE own or integrated farms - which receive all consumables, JBS products feed families worldwide technical support and training and are available required to help them everywhere, from implement best safety, quality small markets to and sustainability practices, major retail chains. 7 in accordance with Company principles. VALUE IN 2018, THE COMPANY INVESTED TO EXPAND ITS CHAIN INTERNATIONAL MARKET SHARE, ADDING MORE
REFINED DOMESTIC AND EXPORT MARKETS AND HIGHER JBS’s global structure produces food sold 6 VALUE- in Brazil and another ADDED 190 countries. PRODUCTS TO ITS PORTFOLIO
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FOOD AND NUTRITION Pig feed is produced at the Company’s own plants and provides everything the animals need to grow and remain healthy.
2
TRANSPORT
JBS uses specially adapted 3 vehicles to transport animals from farms to factories, based on animal welfare guidelines.
PROCESSING AND INDUSTRIALIZATION PORK 4 Production is in accordance with the strict quality (page 40) and animal welfare (pages 110 to 123) standards.
5
WAREHOUSING AND DISTRIBUTION JBS uses a special system to properly warehouse and distribute its products to ensure their quality remains unaffected.
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Seara Alimentos The Seara pork portfolio In Brazil, Seara’s portfolio now includes fresh and processed includes the Seara Pork Frozen foods for the domestic and & Loose range including IQF export markets to meet pork cuts (individually frozen growing demand for this and kept loose inside Resealable protein. Although per capita packaging) expanding the mix pork consumption is not as of more functional and easy to high in Brazil as it is in other prepare products, and the Seara countries, Seara has invested Rotisserie range. Initial results in new, higher value-added show better-than-expected products. They include the acceptance among consumers Seara Gourmet range, such (for more information about as Pork Ribs with Barbecue Seara’s strategy and results, see Sauce, Sliced Capocollo, page 164). special German Sausages and Bolognese Mortadella. Underlining its commitment to quality, Seara ran a campaign In 2018, the Company invested to last year explaining what expand its international market goes into one of Brazil’s most share, adding more refined and popular cold cuts, Seara ham, higher value-added products to which is made using 100% its portfolio across various sales pork leg. In parallel, the Seara channels. For example, in Japan, Rotisserie line took 1st place in addition to offering pork cuts, in the Most Innovative Food Seara has started marketing Product category 2018, part products tailored for local of the FI InnovationAwards by preferences. Mirroring its poultry FiSA (Foodingredients South business, China is one of the America), South America’s main export destinations for the biggest awards in the food Company’s pork-based products ingredients, products and through both retail and food supplements industry. service channels.
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SEARA PORK OPERATIONS MAP
CE
PE
BA MT
DF
MG MS
SP RJ PR
8 pork production units
SC 14 distribution centers RS 21 processed food units
MAIN SEARA PORK BRANDS
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JBS USA Pork based products and consistent The unit has invested in team JBS USA Pork is the world’s improvements in operational training focusing on research, second-largest pork producer, performance, outperforming its development and innovation, making high value-added fresh US competitors by significant particularly for fresh pork, and and ready-to-cook products margins. The highlight of the has focused on quality and safety. available under its market- year was bacon, which posted The goal is to identify and adopt leading brands such as Swift® a 15.3% margin, compared with new processing technologies and Swift Premium®, as well just 9% in 2017. at its production units and to as innovative products like develop higher value-added Plumrose - the range offers The unit also concluded products. One example is bacon, ham, sliced meats and integration of a number of packaging: products can now be pork cuts. The unit’s strategy recent acquisitions, reporting shipped straight from the factory focuses on product and service a substantial improvement to retailers, avoiding the need to quality, building partnership in performance through cost handle food before it is sold to with customers and increasing reductions and production the end customer. operational efficiency. optimization. For example, Plumrose reported much In 2018, JBS USA Pork repeated improved results – EBITDA rose the positive results it reported 58.5% compared with 2017. Pork the previous year on the back exports, particularly to China, of growing demand for pork- also rose significantly.
JBS PORK OPERATIONS MAP UNITED STATES
VT
MN
IA
IL IN CA KY NC
OK AR
MS 5 pork production units
2 genetics units
2 distribution centers
7 case ready product units
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MAIN US BRANDS
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JBS COUROS Through JBS Couros, JBS is the world’s largest producer of wet blue, semi-finished and finished leather. The Company operates a number of production units, distribution centers and commercial offices in North Sustainable raw America, South America, material procurement, Europe and Asia, serving several respecting social, markets around the world with environmental and products for the automotive, animal welfare practices furniture, footwear and leather goods sectors.
To address the challenges of the global leather market, 1 the Company has invested in innovation and technology to develop higher value-added products such as semi-finished and finished products, which offer greater versatility and improve efficiency. The unit focuses on developing items that meet or exceed rising customer expectations; creating pioneering sustainable production concepts; and expanding its portfolio in every segment (footwear and leather goods, furniture Footwear, and automotive). automotive, furniture and other 6 BASED ON TREND good sales RESEARCH, THE UNIT to domestic VALUE and export HAS customers CHAIN LAUNCHED ITS OWN BRANDS, ONE OF WHICH IS CALLED AUTHENTIC, SEMI ACABADO PRODUCING LEATHER 5 FOR THE FURNITURE Wetblue INDUSTRY; CAMBRÉ, manufacturing FOR FOOTWEAR AND process for LEATHER GOODS; semi-finished products AND VIRGUS, FOR THE AUTOMOTIVE SECTOR
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Leather is separated at the JBS beef processing plant for use as a raw material.
2
TRANSPORT
The raw material is transported 3 with special care
LEATHER WET BLUE 4 A processing plant then transforms it into “wetblue” leather
Wetblue: leather which has undergone an initial chrome tanning process; wet white: leather which has been pre-tanned using aldehyde or synthetic phenolic tannin, which is why it acquires a lighter color; semi-finished: the leather is retanned, dyed, waxed and the dried; finished: leather that is ready to use after undergoing a number of processes to standardize its softness, color and shine.
Wetblue sales to domestic and export customers
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JBS COUROS OPERATIONS MAP UNITED STATES AND BRAZIL
UNITED STATES
MEXICO
BRAZIL
20 production units
2 distribution centers
2 showrooms
4 commercial offices URUGUAY ARGENTINA
3 cutting plants
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Based on trend research, the unit has launched its own brands, one of which is called Authentic, producing leather for GERMANY the furniture industry; Cambré, for footwear and leather CHINA goods; and Virgus, for the automotive sector, to maintain its prominent position on the ITALY global market. JBS Couros has also focused on the luxury and VIETNAM premium markets through Conceria Priante, its Italy-based production unit and research and development center. In 2018, Priante launched the Absolute Freshness range for MAIN LEATHER BRANDS the leather goods sector.
In 2018, JBS Couros invested in machinery, parts, equipment, accessories and improvements at its production plants in order to maintain product quality, team member welfare and prospect for new business. JBS Couros currently operates 17 units that have been certified by the Leather Working Group (LWG), all receiving top marks for traceability. The LWG is an international initiative involving companies, retail chains, tanneries and suppliers to debate and promote efficient and sustainable farming practices across the global leather industry – and has been directly involved with the Group in developing protocols and organizing discussion forums to debate best practices.
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JBS NOVOS NEGÓCIOS By recycling these products factory will produce fertilizers JBS Novos Negócios operates into the market using a closed using organic waste generated 11 business units that are active cycle – one of the pillars of the by other JBS operations. The in various industries in Brazil. circular economy – it generates project has been approved It includes operations that value for JBS and supports the by the relevant government transform beef, pork and poultry organization’s sustainability agencies and is now in the byproducts and waste material strategy, which means all of environmental licensing phase. into high value-added products the raw materials used by its The unit has also obtained such as biodiesel, collection, operations can be recycled. approval to build two factories natural casings, animal feed, This provides the organization making consumables for the pharmaceutical consumables, with significant financial gains pharmaceutical industry and it hygiene and cleaning products and encourages adoption of has started operating a business and many others sold in sustainable practices across the that produces high value-added Brazil and exported to over 20 production chain, in addition animal feed ingredients. countries. It also runs a number to boosting innovation within of companies that provide JBS the Company. In Brazil, JBS Transportadora with strategic services such has its own fleet of 1.1 thousand as metal packaging, trading, In 2018, JBS Novos Negócios trucks, all of which are tracked shipping, recycling and continued its fertilizer factory and controlled using real- waste management. construction project. The time telemetry.
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MT Environmental
Biodiesel GO
Collagen MG MS Novos Negócios Complex (Orygina and Feed Solutions) SP
Casings
Can plant
Hygiene and cleaning RS Transport
BUSINESS UNITS
73 Annual and Sustainability Report • 2018 • JBS
JBS NOVOS NEGÓCIOS UNITS
JBS AMBIENTAL JBS NATURAL CASINGS
This Company supplies products and The world’s largest producer of natural solutions for industrial waste such as plastic, cattle-based casings in the world operates wood and metal. Some of these inputs are two processing units in Brazil, in Goiânia recycled and return to JBS industrial plants (GO) and Ituiutaba (MG), serving the world’s as trash bags, tarpaulins, bags or plastic largest food companies. Internationally coverings. It also manages and processes recognized for its supply capabilities as post-industrial solid waste that cannot be well as product quality and traceability, its recycled, ensuring it is correctly disposed products are used to manufacture casing of. This involves using a system to track products like salami and sausages and all these materials from their source up to final material is controlled from source. Part of disposal. JBS Ambiental has eight waste its output is also used to make strings for collection centers in Andradina (SP), Barretos musical instruments, tennis rackets and (SP), Ituiutaba (MG), Campo Grande (MS), surgical sutures, among other items. Naviraí (MS), Goiânia (GO) and Lins (SP). The Lins unit alone processes 260 tons of various types of plastics every month and transforms it into recycled plastic resins, a raw material that can be used to manufacture new plastic products. In 2018, it produced around 3,000 tons of recyclable plastic resins and handled around 14 thousand tons of solid waste, including plastics, metals, paper and JBS EMBALAGENS hazardous and non-recyclable materials. (for more information on waste management, METÁLICAS see page 149). With two factories in the interior of São Paulo, in Lins and Barretos, this business unit produces steel cans for products - including food - that need protection from physical, chemical and biological interactions. It is one of Latin America’s largest manufacturers JBS BIODIESEL of metal packaging and is capable of producing approximately 1 billion cans a year. In recent years, it has invested in expanding With two factories in Campo Verde (MT) its portfolio which now includes items such and Lins (SP), JBS Biodiesel is the world’s as cans for luncheon meats, sardines and largest vertically integrated manufacturer of tuna (extruded) and increased its current biodiesel using beef tallow. As the business capacity for the vegetable and tomato has evolved, other types of waste are starting segment, among others. The Company also to be used as raw materials, including used, produces aerosol packaging, an area where recycled cooking oil. much of its growth has come from.
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NOVAPROM JBS HIGIENE & LIMPEZA
A pioneer and global leader in beef This business unit is the biggest collagen production, NovaProm is capable manufacturer of soaps and bar soaps in the of producing 5,000 tons of collagen and B2B segment, serving the main beauty and 4,000 tons of functional ingredients for hygiene markets in Brazil and customers in industrialized products at its plant in Nigeria, Cape Verde, Angola, Cuba, Argentina, Guaiçara (SP). The business unit supplies Peru, Colombia, Paraguay, Venezuela and a number of industries, such as fresh Uruguay. With a production unit in Lins (SP), processed meat products, baking, cosmetics it also produces base mass for vegetable or and pharmaceutical sectors. Much of its animal and glycerin based soaps. revenues come from exports and in recent years the Company has managed to gain a foothold in new markets in the Americas, Asia, Africa, Oceania and Europe. JBS TRADING
This unit is responsible for sales of raw materials to the food, hygiene, cleaning ORYGINA and biodiesel industries. It manages products such as vegetables oils, animal fats and chemicals. This unit produces consumables for the pharmaceutical industry and develops raw materials for research centers, molecular development, gene therapies and vaccines. The state-of-the-art unit is located in Campo JBS JBS Grande (MS). It obtains its supplies from JBS and all products are traceable from source. TRANSPORTADORA
This unit has its own fleet of 1.1 thousand trucks which are fully tracked and provide real-time telemetry controls. It serves JBS and outside customers through its 35 affiliates across the country. JBS FEED SOLUTIONS This unit is based in Campo Grande (MS) TRP CAMINHÕES where it produces plasma and blood products made from chilled adult bovine SEMINOVOS blood, serving 100% of demand from JBS’s own units. These highly nutritional materials This unit is responsible for negotiating new are used as ingredients to make pig and vehicle purchases for JBS companies and poultry feed. selling an average of 2,000 used trucks and trailers a year.
75 Annual and Sustainability Report • 2018 • JBS
SUPPLIERS GRI 102-9, GRI 308-2, GRI 414-2
BS focuses on achieving procurement policies are and poultry and guidance a balance between applied across all Company on production processes and Jcompetitive costs, high units. JBS therefore looks to environmental practices. quality, respectful sustainable maximize the potential of its practices and supply supplier partnerships at all of JBS USA carries out a rigorous consistency. As suppliers are an its business and guarantee assessment of all input suppliers integral and important part of standardization and consistency who come into direct contact the value chain, the Company across its diverse supply chain. with foodstuffs before they has developed a number of partner with the Company. initiatives to build even closer In 2018, Friboi made significant They also undergo IS Networld ties with them based on trust, progress with its Brazilian and Global Food Safety respect, ethics and transparency. supplier partnerships when it Initiative (GFSI) audits. When adopted long-term contracts selecting new suppliers, JBS Given the nature of its business, with some of Brazil’s biggest prefers local companies that JBS depends on a diverse livestock breeders. As raw offer competitive costs and range of suppliers including materials represent a significant are capable of meeting JBS everything from small-scale proportion of production standards and requirements. family farmers and rural partners costs, this type of partnership This also helps to boost who supply animals up to major will not only improve price economies in local communities. multinational companies who management, also it will also manufacture and supply a range increase quality and profitability. In 2018, JBS Australia began of materials, such as packaging, Supply consistency means the a Supplier Relationship ingredients and services, as Company is able to manage its Management Program focusing well as food safety, information factories in a way that achieves on its biggest direct materials technology and recycling maximum efficiency. suppliers. The program services. JBS operates an addresses issues such as safety, ongoing Supplier Qualification The Company’s Brazilian beef collaborative business updates, and Assessment program which operations have been using the demand forecasting, services includes annual audits based Supply Chain Seal since 2017 to and quality, sustainability, on Global Food Safety Initiative assess and certify compliance innovation and other issues. (GFSI) criteria. The Company with stringent international believes its suppliers contribute standards and common Seara has a robust quality to its overall sustainability and, customer requirements. This audit process for certifying as such, it focuses on building certificate is wider in scope than new suppliers and monitoring partnerships that share the other certificates currently on the current suppliers. This process Company’s mission and values market because it goes above verifies the food safety culture, in order to achieve a more and beyond existing protocols. maintenance and training and sustainable approach and adoption of best manufacturing guarantee supplies of higher- In order to guarantee the practices. The Company quality inputs. origin of pork and poultry registered a 31% increase in raw materials, Seara has been audits compared with 2017. The Company has a global implementing producer Seara also assesses its suppliers supplies department which is integration systems. This based on the quality of service responsible for guaranteeing involves offering producers all provided to its business units, that all supplier relationship the consumables they need punctuality and a range of and responsible raw material to rear safe and healthy pork other criteria.
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CASE: FAMILY FARMING AT PILGRIM’S
Jamey Burns and his wife started their family For years I was doing a job that went well beyond chicken farm in 2010. With the help of the 9-to-5”, said Jamey. spreadsheet and much attention to detail, they planned each phase of their future chicken farm, Throughout his life, Jamey has always believed in breeding poultry for Pilgrim’s in the city of Carroll the importance of a strong code of ethics whether County, which is located in the state of Georgia, in it was during his time at Mercer University, where the USA. Military veterans with more than 40 years he studied on an ROTC scholarship, during his service in the US Armed Forces and Air Force, the time with the Armed Forces or today, on the couple found themselves running their own day- poultry farm. He recently used this approach to to-day lives for the first time in two decades. improve the farm’s energy efficiency. He applied for and received a loan from the National Resource Today, after 52 breeding cycles, they are proud to Conservation Service (NRCS) in the USA to build be breeding poultry and raising their two children a warehouse for the aviary bed. This means he is on the farm. Jamey’s day always begins at 6 AM able to stock material for long enough to only use when he checks the birds and the digital devices it when the weather is good, which means it is not that monitor the weather at the farm while he washed away in the rain. prepares breakfast for the family. At 8 AM, he is already in the battery house where he spends In 2018, he innovated again, in an attempt to between three and eight hours, depending on the reduce electricity costs and improve operations. animals’ phase of development. In May, he installed solar panels capable of generating enough electricity to supply his farm Jamey is also heavily involved with the community (and a little bit more). Since then, the Burns where he teaches football, supports the local farm has saved 196,687 pounds (85 tons) of CO2, recreation department and recently helped equivalent to annual emissions from around 10 manage a campaign for a local community homes or planting 4,702 trees. Although he is very representative. Julie is a school volunteer. The proud of this achievement, Jamey continues to couple believes that the most significant part of look at ways of improving the farm. He hopes that their work is being able to focus most important this will serve as an example to his children and to them – their children, aged nine and 11. “I now encourage them to adopt the same work ethic he have the freedom to spend time on other things. and his wife defend.
77 Annual and Sustainability Report • 2018 • JBS
CUSTOMERS
BS operates in both the The Company takes the same Company plants also receive B2B (business-to-business) approach and its relationship frequent visits from client and Jand B2C (business to with end consumers. In this certification agency auditors consumer) segments, which case, the Company uses market to verify that its products, means it deals with three research and surveys applied processes and customer service different types of customer: through direct channels, such comply with specific customer companies that purchase raw as the Customer Service Center and local market requirements. materials to produce or market and the Friboi and Seara social food service products, retail media outlets in Brazil. US chains, which are points of sale consumers have at their disposal for the Company’s brands, and a range of tools including the end consumers. Consumer Hotline (for more information about stakeholder JBS always works closely with communication, see pages 102 its customers to understand and 103) their requirements. The Company develops high- For example, the Seara customer quality, customized products service center received over for its business customers and 57,000 comments on its offer services to help them products, processes and services improve profitability. This is from Brazil and abroad in based on information collected 2018. Providing the Company’s by its sales representatives, factories with online information from technical and industrial on a daily basis helps to team visits to customers and continuously improve services customer satisfaction and other and maintain customer and relationship surveys. consumer satisfaction.
2018 HIGHLIGHTS
According to surveys of in the Food – Perishables, domestic and international Frozen and Dairy Category. customers, 78% of customers are satisfied JBS Couros reported a with Friboi, taking into 43% drop in the number account only those ranking of customer complaints the Company an 8 on a compared with 2017. It also scale of 0 to 10. reduced discounts and product returns caused In the Época-Reclame by quality problems by Aqui Awards, for the first 10% compared with the time Seara and Friboi were previous year. Customer Service finalists
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79
Our People
Team members of the Ituiutaba Plant - MG Annual and Sustainability Report • 2018 • JBS
TEAM MEMBERS GRI 102-41, GRI 103-2, GRI 103-3, GRI 404-1
eople are key to JBS’s hired, through training and up to as Roundtable, Townhalls success all around to performance assessments. and Safety and Production Pthe world. This is why However, because laws, Meetings. If critical issues are the Company is constantly regulations and job markets are identified, the Company draws focused on being a responsible different in every region, each up an action plan and the employer and ensuring its business implements specific Team Members who raised Team Members are proud to initiatives at its units to reflect the issue are kept informed of be a part of the organization. local circumstances and each developments. This includes efforts to hire, business’s requirements. retain and develop Team JBS USA also has an Open Members who are dedicated All Company management Door Policy which encourages to operational excellence and policies and programs are Team Members to present any identify with the JBS Mission revised on an annual basis, problems affecting the overall and Values. The Company is alongside the main health and work environment to their also committed to supporting safety, turnover, absenteeism supervisors or the HR area. workplace health, safety and and overtime indicators. As Through the discussions and welfare for its entire team, a result, the Company can debates this policy generates, offering equal opportunities to make any adjustments that the Company is able to identify all and continuously investing to are required and guarantee how Team Members view develop its talent and leadership. that team member health, work-related issues, such as safety and working conditions compensation and benefits, The Human Resources areas comply with the Company’s working hours, safety and at the Company’s various units high standards. In 2018, JBS satisfaction with management. are responsible for all JBS invested in a number of artificial In Brazil, the Company’s in-house team member hiring, intelligence tools in Brazil to Ombudsman is responsible for retention and professional support HR practices. One of the mapping these issues. development worldwide. most successful cases helped identify opportunities to reduce Another way of evaluating team This is a significant challenge absenteeism at JBS Couros. member satisfaction is to use for a Company that has over engagement surveys. Managers 230,000 Team Members around Managers have an open door also speak regularly with Team the world, with a wide range policy for all Team Members Members to ensure everyone’s of cultures, languages and who wish to discuss any issues, expectations remain in experience. JBS’s success in reinforcing the culture of respect alignment. In the second half of this area is thanks to the fact the Company has for its staff. 2018, the Company carried out a that everybody adheres to The Company values dialogue Culture survey in Brazil to assess its corporate Culture. JBS's and focuses on building trust, team member engagement Human Resources areas are which includes offering every with the organization’s values. the guardians of this Culture. team member the opportunity The results will guide training All of their strategies focus to put forward their ideas and and communication activities on communicating the suggestions. For example, over the next several years. Company’s corporate values, JBS USA organizes a number from the time new staff are of periodic meetings referred
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CASE: JBS WITHOUT FRONTIERS
This program was created in 2015 to support half of 2018. Living abroad is a dream come true for specialist Team Members, offering Friboi deboners Janaína. Even before she was accepted, she had and meat cutters the opportunity to work at the started taking English classes to get used to the JBS Food Canada unit in Brooks. The project offered new language. multiple advantages: it reinforced the Company’s global position, created opportunities, offered Team “I’m flattered. This is a massive reward for me. It is Members international experience, helped retain a big step forward in my career and my personal talent and was an opportunity for Team Members life. I have a lot of support from my family and, to share their experiences. 180 people applied more importantly, the Company”, she said. for the 15 places available in the first year of the program. 200 people applied in 2018. JBS supports those accepted into the program throughout the immigration process and offers a After analyzing CVs and holding one-to-one package of benefits including accommodation and interviews, Janaina Jesus dos Santos celebrated English classes. The program has been a success the fact she was the first woman to be accepted and has been expanded in recent years. In 2017, by JBS Without Frontiers. After spending 12 years management personnel have been taking up at the Lins (SP) unit working as a deboner and positions at US units and from 2019, JBS Without meat cutter, she traveled to Canada in the second Frontiers will also be open to Seara Team Members.
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DIVERSITY and dialects addressing a wide At JBS USA, this created a very JBS is also committed to hiring variety of issues, such as benefits, stable management team in people independent of race, safety and training. Each facility 2018. The Leadership Warehouse religion, color, nationality, also offers unlimited access program alone trained over gender, sexual orientation, to Language Lines, which is 9,000 Team Members, who gender identity or age, available in over 200 languages attended more than 180,000 including the disabled, at all its and provides immediate access hours of training. units.The same principle applies to clear communications. to team member training and In 2018, one of the areas career development. Diversity At a number of units, local focused on Brazil was adapting is an important issue with the leaders from a variety of Company processes to the Company, which believes that different ethnic groups are e-social program, a system success is based on the unique identified and promoted to help implemented by the Brazilian and diverse skills, origins and other team members adapt to federal government to centralize experiences of its workforce. the community and Company employment information from JBS supports diversity and facilities. Additionally, as a US every privately owned company inclusion at all its facilities federal government contractor, in the country. Through and offices and works hard to JBS USA has a number of good planning, controlling create a trusting and productive affirmative action programs as communication, JBS was able to workplace environment. part of its Equal Employment fully implement the system at all Opportunity Policy. its units, despite the challenge JBS has people and operations of being Brazil’s largest private at a wide range of locations In 2018, JBS continued to invest sector employer. and around 60 different heavily in training, particularly languages are spoken at its for its leaders – more than facilities. To ensure that all team 80,000 staff across all the members are able to express Company’s operations attended and understand the Company’s career development courses, main messages, JBS supplies which offered hundreds of materials in various languages thousands of hours of training.
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TOTAL TEAM MEMBERS GRI 102-8
JBS SEARA BRASIL¹
72.2% 27.8% 54.8% 45.2% men women men women 50,163 71,097 (includes Friboi, JBS Couros and JBS Novos Negócios)
PILGRIM’S 2 JBS USA PRIDE3
66.3% 33.7% 56.6% 43.4% men women men women 46,173 60,295
TOTAL4
62.6% 37.4% men women
230,086
1 Includes JBS Couros operations abroad 2 Includes operations in the US, Canada, Australia and New Zealand, except poultry-only factories 3 Includes factories in the US, Europe, Mexico and Puerto Rico 4 Includes 2358 Team Members at other Company operations
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PERFORMANCE Another new initiative implemented this year was a merit cycle, which is used to assess and review all team member compensation. Previously, this process only included people who underwent JBS performance assessment (everybody working at the JBS head office in Brazil and production unit leaders – coordinators, supervisors, managers and directors).
At Brazilian units, performance assessment uses the 360° methodology to analyze team member attitudes and interpersonal relationships.
All JBS USA Team Members receive regular performance assessments. In 2018, the unit also mapped the salaries paid all of its units to increase the competitiveness of its compensation policy in every region where it operates. Alongside leadership training, this is intended to reduce or stabilize team member turnover rates which, in some locations, have been a challenge for the organization because of the job market landscape.
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JBS TRAINING PROGRAMS
LEADERSHIP TRAINING
Leadership Academy Corporate Leadership Forum Summit The Academy helps to develop This program helps to train This one-year JBS USA program leaders in Brazil address people management level staff brings together the groups 27 management issues, based in Brazil to better address executives to provide intensive around the challenges JBS people management issues. education on leadership faces. The modules are provided The program began in the issues. It is an opportunity for by the in-house multiplier second half of 2018 and was executives and leaders at JBS’s team, using the synergy of the attended by 106 business and various businesses to exchange business HR departments. All management area coordinators. best practices and resolve real- supervisors at the Couros unit life problems at their facilities. were trained in 2018, covering JBS Without Frontiers As a result, participants 1,034 managers at 17 units. 1,796 This program offers in-house gain greater insight into the management level staff were opportunities to Friboi staff Company’s business units. trained at Seara. willing to work in Canada as meat cutters or deboners. 200 In-house Talent Team Members enrolled for the This program offers professional 20 places available in 2018. JBS growth and development supports those accepted into opportunities for Team the program throughout the Members at all JBS businesses Canadian immigration process in Brazil in the production, and offers a package of benefits maintenance, logistics and including accommodation and shipping areas. The goal is to English classes. The program identify talent and develop it, will be extended to include transforming participants into Seara staff in 2019. production supervisors. 273 Team Members were trained as part of the program in 2018.
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TECHNICAL TRAINING
Seara University to improve correct execution Valued Youth The distance learning of operational activities. Over This program distributes platform offers various career 1,320 leaders have been trained information about JBS to development tracks and looks as part of the project. young Brazilian university at operational, leadership students and includes the and administrative activities. More and better sales Valued Youth Internet platform It is available to all Seara This program offers training (jovensdevalorjbs.com.br) and a Team Members. and development for everyone Facebook profile. in the Commercial area, from Quality Academy sales personnel to directors, JBS Internship Program This is a development program to transform knowledge into This is a JBS USA intern for Quality personnel at Seara, business outcomes. The issues program in the US which which aims to: update technical covered include Self-knowledge, offers university students an knowledge; train multipliers to Coach Leader, Sales Routine, opportunity to gain practical standardize fundamentals and Negotiations and Structured experience and develop their attitudes; reduce non-quality Mentoring. Altogether, 16,376 leadership skills. This is a 10 costs; and provide professional hours of training were provided. week summer program that has training to support Quality around 150 participants who are assurance - "Understand what JBS USA Trainee Program involved in practical learning you do and doing what you This is a 12 month program projects that provide relevant really need to”. Over 200 Team to identify and develop workplace experience and help Members have already future leaders rotating recent identify future JBS leaders. been trained. graduates through Company operations in the US, Canada JBS Internal Talent Program Labor Lawyer and Mexico. The program helps This program was created This program selects and people develop their leadership, to identify members of the develops lawyers to work in process management production team who have JBS’s labor area. Lawyers who and people management leadership skills and offers them have graduated within the knowledge and skills. the tools they need to accelerate previous two years can enroll. their JBS careers. The program The 90-day course is held at Trainee includes a four-month training JBS headquarters, in São Paulo, This program focuses on the rotation at a JBS USA facility, and addresses theory and industrial area, selecting young teaching leadership skill training practice and looks at behavioral, people with potential (who and offering the opportunity to technical and legal issues. Eight have graduated from University learn more from other leaders lawyers were hired in 2018. The within the previous two years) across the Company. program is currently available at to train leaders capable of 11 group units. managing teams and processes JBS Leadership Warehouse at JBS’s various units across Program Giro Brazil. The selection process This includes six different The is a Seara program is run by factories to attract programs for JBS USA managers, focusing on operational people from local communities. who are grouped by profile, excellence. 20 technical In 2018, the one-year program for leaders with high potential, subjects have been catalogued attracted over 5,000 candidates, mid-level managers, production and revised using modern from whom nine people supervisors and recently techniques and methodologies were selected. promoted or hired managers.
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JBS Way of Leading People First the JBS USA Values, Mission This is a professional This program provides specific and Beliefs. It also offers development program to training for all frontline JBS basic leadership skills, provide Team Members with USA supervises; there are such as effective team leadership skills. After Team four sessions throughout the communication, delegating and Members have been mapped, year that focus on practical performance management. they spend six months on a leadership techniques and training rotation at a JBS USA team management tools. Topics Development Workshops plant being prepared to take up include building trust and This program was created management positions. respect, the cost of turnover, in 2018 for Team Members responsibility, delegation and holding corporate positions Elective Learnings prioritization, communication at JBS USA as part of efforts These are supplementary, and information sharing. to meet their personal and online training courses professional requirements. offered by JBS USA to any Leadership Fundamentals Altogether, 400 hours of team member interested in Leadership Fundamentals is a development workshops were improving their skills. The new manager training program held this year. course addresses issues for Team Members who been such as Cross-Generational recently promoted or hired by Communication, Responsibility the Company. This is a one-day and Ownership and Creating program held eight times a year Engaged Teams. which exposes new leaders to
89 Annual and Sustainability Report • 2018 • JBS
COMMUNITY
BS's operations have a JBS USA has a long history of community and decide how significant social impact partnering the wide variety best to better use their funding. Jin the regions where it of nonprofit organizations. JBS USA prioritizes organizations operates. There are several To ensure its voluntary that support vulnerable groups, reasons for this. One of them initiatives, sponsorships and support youth development and is that many units are located donations have the biggest welfare, encourage agriculture, some distance away from major possible impact, the Company support its own Team Members, urban centers, which means the supports initiatives in all of its promote diversity and help organization is responsible for communities, many of which local communities. Based many of the direct and indirect support schools, hospitals and on these criteria, the human jobs created locally. Another welfare organizations. resources director and general is that the organization is able manager of each facility have to offer opportunities to many Each JBS USA facility has an the freedom to contribute to the people who have no specific annual budget to support local organizations they believe will educational skills and who are communities and initiatives. have the biggest impact on their able to learn a profession at the Each unit independently community, balancing financial Company’s production units. For manages its own activities, support with volunteering hours. example, in the US, Canada and which means they can be Brazil, JBS plants are a gateway adapted to meet the needs of In the US and Canada, JBS to the job market for immigrants local communities adjacent USA supports United Way, the from many different countries. to each plant and increase American Cancer Society, March team member engagement of Dimes, a Relay for Life, the Additionally, the organization in the initiatives the Company American Red Cross and local continuously supports organizes or supports. For teaching institutions, including community development example, some units choose to state-run schools, universities providing education and support initiatives that focus and colleges. training courses for children and on children and adolescents by youngsters, professional training sponsoring school sports events. courses for teenagers and adults Others prefer to support projects and training and social inclusion to combat hunger. Many raise for the disabled. Each business funds for Team Members and platform has the authority their families and implement to decide how it will support volunteer programs. its local community – through sponsorship, team member However, every unit must follow volunteering or a number of basic guidelines direct investment. when they partner with the local
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CASE: SUPPORT FOR THE MARSHALLTOWN COMMUNITY
JBS’s commitment to local communities Fund. Alongside individual donations from intensifies in times of crisis. In the small city of JBS and Pilgrim’s Pride Team Members, the Marshalltown, in the state of Iowa, JBS USA did Company provided over US$ 600,000 to help the much to support the local population after a Marshalltown team and the local community. tornado damaged or destroyed 700 homes and injured 17 people in July of last year. Supporting its Team Members, JBS USA committed to paying around US$ 275,000 to cover As a major local employer, JBS USA took an active working days lost and reduced working hours role in efforts to rebuild the city. Teams as a result of the plant’s closure. It also invested of Team Members helped remove rubble, an additional US$ 350,000 to provide financial rebuild homes and distribute food. In August, assistance for Team Members directly affected by the Company earmarked US$ 1 million the tornado and distributed food coupons people for community rebuilding efforts, including could spend at local supermarkets. This natural US$ 200,000 for Mid-Iowa Community Action disaster changed the lives of local residents, (MICA), a nonprofit organization that helps but also showcased the immense amount of vulnerable children and families, as well as community spirit. US$ 200,000 for the Rebuild Marshalltown
91 Annual and Sustainability Report • 2018 • JBS
JBS COMMUNITY ACTIONS to attract and retain talent. Support for the Hospital of AND PROGRAMS JBS currently has a number of Love disabled people on it staff in Friboi supports the Hospital Special Chefs various areas and businesses of Love (formerly the Barretos Sponsored by Friboi since 2013, across Brazil. Cancer Hospital) as part of this initiative uses gastronomy the “Farming against Cancer” to improve social inclusion for Experimental Workshops campaign which encourages people with Down Syndrome. JBS organizes these workshops livestock breeders and Projects include free workshops partnering with public and farmers, who are part of one with well-known chefs, who private sector institutions to of Brazil’s strongest sectors teach youngsters recipes and improve job market inclusion of the economy, to cover the how to use ingredients, as for the disabled. The project institution’s monthly costs. JBS part of an effort to transform currently offers 14 workshops cattle suppliers are encouraged cooking into a tool to increase in Andradina (SP), Barra to donate R$ 1 to the Hospital their independence, self-esteem do Garças (MT), Barretos of Love for each animal they and motor coordination. The (SP), Campo Grande (MS), sell to JBS. The institution program is free and serves 300 Itapetininga (SP), Ituiutaba provides free healthcare to students every year. (MG), Itumbiara (GO), Iturama around 170 cancer patients (MG), Lins (SP), Marabá (PA), across Brazil every year, based Inclusion Program for the Mozarlândia (GO), Redenção on 2017 figures. The healthcare Disabled (PA), Santana do Araguaia (PA) it provides costs R$ 37 million a This program was created in and Vilhena (RO). 215 people month, however the institution 2018 to increase awareness, have already concluded the only receives R$ 15 million from integration and adaptation for workshops and 147 have found Brazil’s Unified Health System – the disabled focusing on the jobs at JBS or other companies. SUS and the balance is covered workplace, local teams and The Company has invested more by private sector contributions common areas, it has helped than R$ 1 million in the project and donations. improve the Company’s ability since it began.
CASE: JBS CANADA CENTRE
JBS Food Canada sealed a partnership in 2017 with the government of Brooks, which is located in the province of Alberta, to refurbish a local community facility. The Company donated US$ 1 million to expand the JBS Canada Center and build a multisport arena, football center and area for children, as well as make improvements to the gym and curling facilities. Curling is an Olympic sport and very popular in Canada.
Maybe even more important was the work done to double the size of the local library. Many of the 14,000 residents are new Canadian citizens who have immigrated from other countries, which means Brooks is a multicultural town where over 100 languages are spoken. The library will help these new residents become more familiar with local history and feel they are an active part of the community.
92 TOTALChapter GLOBAL4 3 • Our people
CASE: GERMINARE INSTITUTE
JBS is the largest backer of the Germinare Institute, The program focuses on the commercial area a nonprofit organization that provides free, high and sales and helps youngsters with potential quality, full-time education to students from the to take leadership positions at JBS, working as a sixth grade of lower school to the third grade of career accelerator. One of the program highlights middle school. Its methodology supplements the is the partnership with Colorado State University traditional curriculum, with activities that focus on in the USA, which helps students increase their encouraging entrepreneurship. The project helps to knowledge through short-term programs. “I spent train business leaders supported by JBS volunteers 12 days studying management material and use who bring their own practical experience into the that knowledge during university projects. I met classroom. When the students finish middle school students from several other countries and we had and the second track professional training, they a lot to exchange”, said Victor. receive a Business Management technical diploma. Students from the Institute were monitored in 2018 Victor Salvatore, now a sales supervisor at Seara, to guide them towards opportunities at JBS. 26 graduated from the Germinare Institute In 2018 youngsters were identified for leadership positions and believes the program played an important and 25 for technical and administrative posts. The role in him finding a job so quickly. “The students Institute graduated 47 students in 2018 – and it has go through a two-year internship, which is graduated 229 since it was founded in 2010. something other schools do not offer. From the outset, we come into contact with management material and we can bring together theory and practice, offering a macro view of the corporate environment”, he said.
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Our Sustainability
Effluent treatment plant in Jaguariúna (Sao Paulo) Annual and Sustainability Report • 2018 • JBS
SUSTAINABILITY GOVERNANCE
BS’s commitment to well as engaging business JBS INVESTED OVER sustainability underpins units across the value chain in Jall Company areas and sustainability management. businesses in every country The Brazilian department R$ 1.92 where it does business. monitors operations in Brazil Sustainability is based on and repercussions in other BILLION the Company’s ethical and countries, while the US team IN SUSTAINABILITY transparent approach to focuses on the North American, business, as well as building Canadian, Australian, New PROGRAMS, PROJECT constructive relationships Zealand, Mexican, Puerto Rican MANAGEMENT with stakeholders and taking and European markets. WORLDWIDE IN 2018 a responsible approach to its interactions with people, The sustainability areas also animals and the environment. liaise between JBS and its main stakeholders – the market, The Company has a number customers, suppliers and of well-defined goals for consumers, etc. – building sustainability: improving risk a constant dialogue between management (principally all stakeholders. risks and the supplier chain); reducing the business’s In terms of governance, the environmental footprint (water, Company also has the JBS emissions, energy and waste), Sustainability Committee, which improving its eco-efficiency is responsible for addressing and relationships with society; global and strategic issues. This and encouraging innovation. committee reports directly to JBS’s target is to be a leader in the Board of Directors. Jerry sustainable natural resource O’Callaghan, Board Chairman, use, minimizing its demand also became a member of and reducing the amount of the Sustainability Committee waste it generates in order to in 2019. increasingly improve the quality of its output. All of the main sustainability leaders at JBS met in 2018 at the At corporate level, the Company JBS USA head office in Greeley has two departments, one in (CO) to discuss and identify Brazil and another in the USA, strategic global guidelines the responsible for managing and Company should implement communicating this area, as from 2020 onwards.
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97 Annual and Sustainability Report • 2018 • JBS
MATERIALITY AND STAKEHOLDER ENGAGEMENT
GRI 102-40, GRI 102-42, GRI 102-43, GRI 102-44, GRI 102-47, GRI 103-1, GRI 103-2
ecause of the Company’s is the Company’s values, and organized civil society), wide range of operations, the precautionary principle to produce an outcome in Bits businesses and and the materiality matrix, line with the Company’s high areas define their own targets which presents the five main sustainability requirements. and procedures to achieve sustainability priorities for JBS more sustainable production, and its stakeholders. Materiality matrices were then which includes developing developed for each business environmental and safety As part of the process of based on this diagnosis. These policies that comply with developing the sustainability were used at a forum involving country and industry standards. materiality matrix, the Company sustainability teams from all took into account its operational regions to map the five issues The same process applies methodologies and conditions that best represented the to stakeholder dialogue and worldwide, based on interviews Company’s global challenges. engagement, where the with JBS’s top executives. The As a result of this consensus- Company builds relationships result of these conversations was based methodology, JBS focused on sustainable cross-referenced with interviews materiality does not include development at local level. involving representatives any weighting or prioritization. from the Company’s main These five themes are of great However, this wide range of stakeholders (investors, significance when formulating situations and approaches suppliers, domestic and foreign Company strategy and help to has a common thread, which customers, governments guide its activities.
JBS’S 5 GLOBALLY MATERIAL SUSTAINABILITY PRIORITIES
TEAM MEMBER ANIMAL PRODUCT WATER CLIMATE HEALTH AND SAFETY WELFARE INTEGRITY MANAGEMENT CHANGE
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99 Annual and Sustainability Report • 2018 • JBS
MATERIALITY AND SDGS
In 2015, the United Nations launched its 2030 agenda, an action plan to make the planet more sustainable, as well as its Sustainable Development Goals (SDGs), which includes 17 objectives and 169 targets underpinning the agenda’s main issues. Although it has not officially signed up to the SDGs, JBS uses this platform as a point of reference for sustainability initiatives. The Company believes that its strategic issues have a strong connection with some of the SDGs.
RELATIONSHIP BETWEEN STRATEGIC ISSUES AND SDGS
PRODUCT INTEGRITY
CLIMATE CHANGE
TEAM MEMBER HEALTH AND SAFETY
ANIMAL WELFARE
WATER MANAGEMENT This correlation also extends to the GRI indicators and is included in the summary of indicators, beginning on page 172.
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TARGETS FOR 2020
In 2016, the JBS USA Sustainability Department Based on guidelines the Company drew up at a implemented a Sustainability Program with a meeting of its global teams in September 2018, number of targets for the US, Canada and Puerto JBS will be setting up a program of long-term Rico businesses to achieve by 2020. The program targets for the entire Company. defines 30 performance indicators that are based on the results achieved between 2013 and 2015 at over 60 factories.
ENVIRONMENT TEAM MEMBER HEALTH & SAFETY
Reduce electricity use intensity by
Reduce water use Reduce intensity by 10% 12% greenhouse gas 10% emissions intensity by * 20% 20% Reduce severe incidents by 10% year over year companywide
Reduce natural gas use intensity by
ANIMAL SUPPLY WELFARE CHAIN
90% OR BETTER 100% on our JBS USA animal health and of the Company’s manufacturing suppliers welfare scorecard in compliance with the Supplier Code of Business Ethics and Conduct
*Scopes 1 and 2 do not include animal generated emissions 101 Annual and Sustainability Report • 2018 • JBS
STAKEHOLDER COMMUNICATION CHANNELS JBS and group companies have a number of communication channels including:
AUDIENCE CHANNELS
WIDER SOCIETY www.jbs.com.br (Brazil) www.jbssa.com (USA) www.jbssa.com.au/ (Australia) jbsfoodcanada.ca/ (Canada) www.pilgrims.com/ https://www.moypark.com/en (Pilgrim’s Moy Park) br.linkedin.com/company/jbs
INTERNAL JBS Intranet: publishes news and information about the Company and HR-related information. Find Out More: a newsletter distributed twice weekly to Brazilian Team Members Heads-up: a management newsletter Communicating Results: a quarterly management meeting in Brazil to discuss Company results HR Reports, Always Do The Right Thing News, Releases, e-mail marketing, JBS TV, among others - keeping people informed about events involving JBS businesses. JBS News Roundup: a daily newsletter with the main events involving JBS USA, competitors and the market Pilgrim’s Moy Park Magazine: a quarterly magazine Ombudsman: welcomes criticism, questions and suggestions about internal processing operations and other day-to-day work- related issues Hotlines to anonymously report work-related or ethical issues: JBS USA: Best Work Environment Hotline Pilgrim’s: Prideline JBS Australia: Complaints Hotline Pilgrim’s Moy Park: Support Assistance Helpline Engagement Surveys Open Door Policy: a program to communicate directly with Company leaders where Team Members can present issues affecting their performance or the workplace environment
CUSTOMERS AND CONSUMERS Customer Service 2.0: Friboi, including the toll-free number (0800 11 5057) and online channel (available at http://www.friboi.com.br) Customer Service: Seara, available via a toll-free number (0800 47 2425), e-mail and social media. • 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 • The website of each business and brand JBS NEWS: a monthly newsletter reporting on JBS sustainability initiatives in Brazil and at its leather operations worldwide. Sustainability Spotlight: a weekly report highlighting business sustainability issues
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AUDIENCE CHANNELS
MEDIA Specialized support services in each business Media Room (http://jbs.com.br/imprensa/)
SHAREHOLDERS IR areas in Brazil and the US AND INVESTORS IR website Quarterly results telephone conferences JBS Day United States customer service areas (Pilgrim’s) IR website (Pilgrim’s)
SUPPLIERS JBS Connection (http://www.conexaofriboi.com.br/) Website for each business
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 IN BRAZIL CAN BE MADE CALLING 0800 377 8055. FOR FURTHER INFORMATION, VISIT WWW.LINHAETICAJBS.COM.BR
103 Annual and Sustainability Report • 2018 • JBS
PRIORITY ISSUES: TEAM MEMBERS HEALTH AND SAFETY
BS is committed to the injuries, diseases and fatalities. divisions. These teams also integrity and well-being This helps the Company receive intensive training. Jof its direct and indirect implement more effective All units have an Team Members. Globally, the corrective action plans. emergency brigade. Company understands it needs to take both preventative and All JBS facilities comply with JBS corrective measures in order local Occupational Health & JBS monitors the main safety to eliminate accidents and Safety laws and regulations. indicators on a daily, weekly and provide safe working conditions, monthly basis, prioritizing fast which includes equipping MANAGEMENT responses to health and staff with individual and JBS has specialist teams working safety issues. collective protective equipment, globally on Occupational improving workplace conditions Health & Safety. These teams Health and safety targets are and implementing economic are responsible for mapping checked monthly at all units and quality-of-life programs. risks, assessing investment and business divisions, reporting requirements and putting any changes in frequency In 2018, the Company invested corrective action plans into place and severity indicators and around R$ 300 million globally at their respective business improvement initiatives. to improve structures as well as purchase and adapt equipment and physical infrastructure. JBS HEALTH AND SAFETY PRINCIPLES • Motivate, inform, develop, • Guarantee compliance POLICIES train and qualify Team with legal regulations, the As in other areas, health and Members, making them Self-Management Health safety management follows the responsible for ensuring and Safety Program and Company’s global principles and the Company offers other health and safety is based on regional programs a safe and healthy requirements; and local action plans. working environment; • Build and support a Our health and safety policies • Anticipate and prevent Health and Safety culture accidents, in the belief through leading by are mainly disclosed via training that every accident could example, individually and education programs. These be avoided; taking responsibility and initiatives provide guidance in monitoring health and various languages with training • Take steps to safety as a team. on specific tasks and include continuously improve departmental safety meetings processes, machinery and monthly updates. There and equipment and take are also incident investigation steps to control, eliminate procedures to help prevent, or minimize incidents; reduce, mitigate and eliminate
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Similarly, the Company also member health. Two nationwide incidents occur, which includes monitors accident action plans campaigns are run every year training and education and any outstanding legal addressing health and welfare programs for teams in the nonconformities raised during issues that are relevant to the US and Puerto Rico, in line ISS safety inspections, in addition Company’s teams, as well as ad with Occupational Safety and to the mandatory training hoc campaigns at each plant. Health Administration (OSHA). indicators for each position. Health and safety issues Teams in Mexico monitored In Brazil, all of these issues are JBS USA operations are data from the government’s managed at each production addressed through a culture of Labor Department and unit in line with the Self- prevention and team member local health and safety Management Health and engagement. Each unit has regulations, which comply Safety Program (PSSAG), which a safety committee whose with OSHA standards. The brings together the rules and members are drawn from local Company Health and Safety principles used to standardize staff. The committee meets Management System in occupational health and safety on a regular basis to analyze Canada is aligned with procedures, internal processes, workplace risks and propose Alberta’s Occupational Health programs and legislation. innovative strategies to & Safety Act. The program is intended to mitigate them. encourage preventive action and monitor team member Safety data are shared health by carrying out internally and there are R$ 300 occupational health exams. specific annual safety targets The program also encourages for the Company and each people to adopt healthier facility. There are also constant MILLION habits as part of corporate effort to identify risks and INVESTED IN SAFETY campaigns focusing on team correct deficiencies before WORLDWIDE
105 Annual and Sustainability Report • 2018 • JBS
Additionally, JBS USA Beef, ensure that all Team Members Engineering teams also JBS USA Pork and Pilgrim’s comply with Occupational carry out regular, planned also have occupational health Health & Safety policies and preventive maintenance using medical services, discovered systems and minimize risk. computerized systems. There by experts who support is also a mandatory health ongoing improvement in All JBS USA plants undergo oversight system at all units to the Company’s practices; three different annual audits ensure team member welfare is they also support programs focusing on safety management monitored and protected. at each individual facility to systems, fleet safety and reduce risks to Team Members. occupational health. Each External audits take a deeper One example is the JBS USA Pilgrim’s unit undergoes daily look at every part of the Ergonomic Improvement safety assessments (five times business, however they Program, which was created to a week) based on the DuPont have a particular focus on control or eliminate conditions Behavior Based Observation industrial facilities to ensure or activities posing ergonomic (BBS) process. full compliance with all risks in any particular location. Occupational Health & Safety In Brazil, JBS carries out audits requirements. Factories In Europe, health and safety based on local legislation regularly invite specialists to are also critical factors in any and internal procedures. Any address issues such as noise, business decisions taken nonconformity is monitored dust, lighting etc. by Pilgrim’s Moy Park. The by the safety committees Company involves its workforce locally and by the corporate PERFORMANCE in its health and safety programs committee (which is made up JBS trained more than 135,000 and encourages leaders to take of all business HR directors and Team Members in 2018 to an active role in identifying managers from the Specialist guarantee compliance with its and managing risks as well Occupational Medicine and policies and practices. as analyzing performance. Safety Engineering Service Programs comply with RIDDOR - SESMTO, which analyze (Reporting of Incidents Diseases information from all of the JBS TRAINED and Dangerous Occurrences) divisions, Ministry of Labor regulations issued by the Health audits and independent Safety Executive. customer audits. MORE
CORRECTIVE ACTIONS AND Pilgrim’s Moy Park carries out THAN CONTROLS regular internal and external JBS has a number of control, audits. Internally, safety teams 135,000 monitoring and corrective visit operational areas every TEAM MEMBERS IN programs and initiatives for any week and carry out monthly non-compliance dis-covered at audits to analyze any problems 2018 TO GUARANTY any of its global operations to detected during their visits. COMPLIANCE WITH ITS POLICIES AND PRACTICES
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In Brazil, JBS registered a able to accurately identify risks taken steps to improve 80% of consistent reduction in the and nonconformities in the its workplace equipment and number of accidents with lost workplace. This process can be implement a monitoring and time (50%) and the rate of lost used to collect and analyze data oversight system. days (73.5%) in 2018. This is and implement training plans to the result of improved health avoid future problems. In Europe, Pilgrim’s Moy Park and safety management at has developed a Safety Index, the Company and additional The goal is to set up additional a key indicator revealing safety investment in this area. key performance indicators (KPIs) performance at each of the including preventive indicators Company’s operations. The Safety Steps the Company took to to strengthen the accident Index is based on the frequency strengthen its safety culture prevention culture and eliminate that injuries occur, the number of include week-long bimonthly unsafe activities. In parallel, accidents with lost time and the corporate awareness the Company will increase number of lost days. campaigns at all plants its investment in robotics to and business divisions. eliminate situations and tasks Since 2012, the Pilgrim’s Moy that pose a significant risk of Park SI has dropped from The campaigns are planned to accidental occupational diseases. 11.5 to 0.70, which represents reinforce the links between work The goal is to reduce the rate of an impressive improvement and family, friends and leisure, incidents by 10% by 2020. in operational safety. The and an attempt to engage Team highlights are the plants in Members in looking out for In 2018, the Company’s Mexico Danwick and Dungannon, themselves and those around operations developed a National which have achieved 4.9 million them and convince them to take Safety Plan which includes and 1 million hours without care of and be taken care of by the Health and Safety System accidents, respectively. their workplace colleagues. and is intended to protect team member integrity with In 2018, JBS USA implemented a the ultimate goal of reaching new Safety Observation Process zero accidents. According to to ensure Team Members are the plan, the Company has
107 Annual and Sustainability Report • 2018 • JBS
TYPES OF INJURIES, INJURY RATES, OCCUPATIONAL DISEASES, DAYS LOST, ABSENTEEISM AND NUMBER OF WORK-RELATED DEATHS GRI 403-2
2018
Pilgrim’s Brazil/ JBS South Australia Canada USA Pilgrim’s Pilgrim’s Pilgrim’s America¹ US/PR Mexico Moy Park
Lost time 455 283 114 29 25 273 29
Without lost 3,806 1,792 797 257 97 437 N.A. ACCIDENTS time
Number of total 4,261 2,075 911 286 122 710 N.A accidents
Lost time 2.12 0.81 0.36 0.38 0.21 13.29 1.07
INJURIES (FREQUENCY Without lost 17.77 5.14 2.53 2.46 0.85 24.62 N.A. RATE) time
Total Injuries 19.89 5.95 2.89 2.73 1.07 37.91 N.A.
Lost days with 4,261 6,169.21 2,410.75 398 193 N.A. 830 LOST DAYS accidents (SEVERITY RATE) Lost days rate 95 17.70 7.66 0.01 1.69 N.A. 30.50 (LDR)
Days away, DART RATE restricted or job N.A. 4.15 1.56 0.2 0.11 N.A. N.A. transfer rate
Typical accidents 1 0 0 2 0 0 0
FATALITIES Commuting 0 0 0 0 N.A. 0 N.A. accidents
Total 1 0 0 2 0 0 0
1 Friboi, JBS Couros, Seara and Novos Negócios N.A. - Not applicable N.A. - Not available
108 Chapter 4 • Our sustainability
2017
Brazil/ South JBS USA Pilgrim’s Australia Canada America
Lost time 885 260 276 279 8
ACCIDENTS Without lost time 3,138 1,412 816 426 245
Number of total 4,028 2,290 1,092 705 253 accidents
Lost time 4.23 0.75 0.58 14.6 0.32
INJURIES (FREQUENCY Without lost time 15 N.A. N.A. 22.22 N.A. RATE)
Total Injuries 19.23 6.6 - 33.77 N.A.
Lost days with 22,191 6,973 2,296 N.A. N.A. LOST DAYS accidents (SEVERITY RATE) Lost days rate 359 20.11 9.91 N.A. 26.95 (LDR)
Days away, DART RATE restricted or job N.A. 4.82 2.46 N.A. N.A. transfer rate
Typical accidents 3 0 1 1 0
FATALITIES Commuting 5 N.A. 0 N.A. N.A. accidents
Total 8 0 1 1 0
109 Annual and Sustainability Report • 2018 • JBS
PRIORITY ISSUES: ANIMAL WELFARE
BS has a basic JBS has animal welfare Best practices in animal commitment to programs at all of its business welfare are closely related Jensuring animal welfare, units, which prioritize the to JBS’s success. This is which is why it is one of the issue from birth to slaughter. why work routines at all Company’s five strategic global These programs involve the operations include production sustainability issues and is adoption of appropriate techniques and policies that one of the Company’s basic policies and practices and comply with humanitarian values. JBS product quality include monitoring, training slaughter principles. This is a is intimately linked with the and documentation across non-negotiable issue for the health and welfare of all the all phases of the Company’s Company, which it handles Company’s animals. The extensive value chain. All of very strictly. Company therefore focuses on the Company’s actions and ensuring that animals receive initiatives are fully implemented In 2018, the Company invested appropriate care and at all JBS operations and R$ 88.2 million worldwide in treatment throughout aligned with the five order to improve animal welfare their lifecycle. fundamental animal freedoms. practices across the organization.
FIVE FUNDAMENTAL FREEDOMS
1 2 3 4 5
FREEDOM FROM FREEDOM FROM FREEDOM FROM PAIN, FREEDOM TO EXPRESS FREEDOM FROM FEAR HUNGER AND THIRST DISCOMFORT INJURY OR DISEASE NORMAL BEHAVIOR OR DISTRESS
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MANAGEMENT AND JBS has Quality Assurance Inspection Agency (CFIA) GOVERNANCE staff at each of its production and Australian units comply All JBS business units have units and corporate teams with the Australian Standard multidisciplinary teams responsible for supervising for Hygienic Production and managing animal welfare issues and implementing the Transport of Meat Products and each team is specialized animal welfare policy – which for Human Consumption. In in a particular animal species. includes assessing facilities and Mexico, production complies There are also corporate equipment, training programs with the government’s Buenas animal welfare teams which and providing ongoing Prácticas Pecuarias en la are responsible for ensuring monitoring. All staff who have Producción de Pollo en Engorda, everyone complies with the contact with animals receive program, which is published by procedures and policies set out animal welfare training. At beef the Secretariat for Agriculture, in the Company’s animal welfare processing operations in the Livestock, Rule Development, programs. They also produce US, Canada and Brazil, these Fishing and Food (SAGARPA) and improve Company practices Team Members are specialists and the National Agriculture and and help develop technical in humane treatment and are Food Health, Safety and Quality specifications suppliers are certified by the Professional Service (SENASICA). In Europe, all required to adopt. Animal Auditor Certification Pilgrim’s Moy Park chicken farms Organization (PAACO). In are approved by Red Tractor. Australia, the Quality Assurance managers also receive animal In addition to complying IN ORDER TO ENSURE THAT welfare training and are certified with the animal freedom ALL RECOMMENDATIONS ARE by the Australian Animal Welfare and humanitarian slaughter FOLLOWED, JBS HAS THE Certification System (AAWCS). principles as well as local FOLLOWING PROCEDURES: regulations in each country Additionally, all Company where it operates, JBS also • Internal and external training operations comply with local complies with the number courses for Company Team technical standards and of religious guidelines. It Members and suppliers; legislation. In Brazil, Seara and does so because it exports to • Frequent internal audits Friboi comply rigorously with many different markets. The guarantee best practices all Brazilian legislation. Units in Company’s different approaches are in place and identify any the US comply with regulations comply with its customers’ corrective action required; from the US Department of religious requirements. • There is a target dashboard Agriculture (USDA), the Food which is monitored by animal Safety Inspection Services Importantly, JBS is not welfare supervisors; (FSIS) and the National Chicken involved in any type of genetic • And the Company is constantly Council (NCC) and National Pork engineering or cloning practices. reviewing the need for any Board regulations. additional investments or changes to its processes. Canadian units comply with the Meat Inspection Regulations issued by the Canadian Food
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INTENSIVE TRAINING CONTROL AND ASSESSMENT JBS carries out routine training JBS animal welfare programs are for all producers and Team constantly evaluated using key Members to guarantee full performance indicators (KPIs) compliance with all animal and are verified by internal welfare guidelines. In 2018, audits as well as independent these training courses were consultants and domestic and attended by over 13.3 thousand foreign customers. people globally. Most of the items that are Internally, on-site teams, verified involve practices that go factory staff and drivers all beyond what is legally required, received training. For example, reinforcing JBS’s commitment all Friboi Team Members sign to pursuing best practices in a document stating they are this area. JBS operations also aware of the Animal Welfare undergo certification audits Policy and animal treatment by organizations such as the guidelines and responsibilities Global GAP, at Seara units, the – as well as the sanctions National Feedlot Accreditation that may be applied if those Scheme (NFAS) in Australia, guidelines are infringed. There and PAACO, at JBS USA and is also an e-learning platform Friboi operations (for more with courses on animal welfare information about certification, best practices, which includes see pages 166 and 167). videos on related techniques. Friboi has developed a Supply The Company’s integrated Chain Seal (jbs.com.br/ producers and cattle suppliers sustentabilidade/bemestar- also receive technical guidance, animal) certifying Guarantee of training and support for all Origin which includes animal of its animal welfare policies, welfare, streamlining the procedures and guidelines. process of verifying customer Any breach of Animal Welfare and consumer requirements. Program policies by Team Program audits are carried out Members or suppliers will attract by the Brazilian Certification disciplinary action and may lead Service (SBC). For more to termination of employment information, see page 41. or the relevant raw material supply agreement. Furthermore, all Friboi cattle transport trucks are routinely audited – and must be classified as ‘very good’ to continue OVER operating – and drivers receive animal welfare training from 13.3 an outside consultant. Factory teams also receive training. THOUSAND A standard procedure, Friboi TEAM MEMBERS AND operates daily and weekly PRODUCERS RECEIVED checklists and monthly internal audits. This data is used to ANIMAL WELFARE establish annual targets for TRAINING IN 2018 this area.
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JBS USA addresses adequate This data is periodically and humane treatment monitored by the Company’s of animals in its Standard technical team, which also Operating Procedures (SOPs). verifies the checklists and An Animal Health and Welfare other control documents scorecard effectively measures used by producers. Animal and monitors 19 indicators welfare supervisors also carry across all the Company’s out quarterly inspections at facilities. These items are Company plants. Quality teams weighted using a 100 point carry out monthly and annual avoid the issue being repeated. scale based on the eight most audits. Compliance targets Producers also have a financial important areas which include are set based on performance bonus system based on their compliance, annual (internal outcomes. In 2018, results were performance in relation to the and external) audits, investment, not only above average, they main animal welfare indicators. transportation, management showed progress compared with and health and losses. Failure the preceding year. All beef processing facilities and to comply with any priority many poultry factories worldwide indicators will automatically At Pilgrim’s Moy Park, managers have installed cameras to visually result in an audit failure. supervise implementation monitor animal welfare practices of the animal welfare policy and indicators. The process identifies best across the integrated supply practices and opportunities chain, frequently analyzing JBS USA has implemented a for ongoing improvement. the audit system as well as the video auditing system at most of This data is used as a basis for results and trends from the its facilities to provide staff with setting animal welfare targets. main indicators in this area, immediate feedback; the videos Each facility in the US and which are recorded daily. These are audited by Arrowsight, an Canada sets an individual and indicators are determined in independent company, based on an aggregate target for animal consultation with customers NAMI guidelines. health and welfare at every and are used to set targets business unit. These targets and objectives. The standards Images recorded in Australia are themselves are then aggregated meet Red Tractor or equivalent routinely verified by the Food to establish an overall animal requirements. Furthermore, Quality and Safety team welfare target for JBS USA. some customers have more and by the Department of rigorous specifications that Agriculture Vet. Animal welfare and handling exceed industry standards. practices during the pork and Animal welfare teams in Brazil poultry breeding phase at Seara The board revises the animal also monitor recordings and live are defined in the Technical welfare policy monthly and every images, which are included in Guidelines (OTs) and address farm undergoes audits carried the animal welfare audit. zootechnical parameters – out by independent certification such as housing density, the bodies. An outside auditor checks number of feed and drinking each plant for compliance with troughs, the heating and Red Tractor standards to verify cooling system, water quality, Assured Chicken Production nutritional levels, compliance (ACP) certification. with the five fundamental freedoms and environmental Any noncompliance is addressed controls (temperature, humidity, using standardized operational ventilation, lighting and procedures within a specific “bed” quality). timeframe and steps are taken to
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ANIMAL WELFARE IN The poultry units also use Almost all pork at JBS in Brazil PRACTICE a specific animal welfare is produced on the Company’s Routines at all operations dashboard to monitor own or on integrated farms. In include production techniques team training, handling, other regions, pork is supplied and policies that comply aviary infrastructure and by own, integrated or third-party with humanitarian transportation, among others. suppliers. The same procedure slaughter principles. This data is used to monitor adopted for poultry also applies practices and implement to the Company’s own and Breeding continuous improvements integrated pork production: JBS has implemented a number to ensure that the five farms receive technical of animal transport and handling fundamental animal freedoms guidelines and every farm procedures with guidelines are respected (for further undergoes technical monitoring for day-to-day operations details of the five fundamental and receives consumables from and emergencies. To ensure animal freedoms, see page 110). the Company. compliance with all guidelines, Indicators such as temperature, the Company has implemented mortality, feed conversion, JBS provides production mandatory checklists and density, bed quality, foot calluses manuals to third-party suppliers reports and carries out regular and other items are used to in the US to ensure they audits. Any nonconformities are monitor the treatment the implement best practices. addressed through corrective animals receive. Production indicators are action plans, which are also monitored to identify implemented immediately. All Over 90% of Pilgrim’s chicken compliance with the five Team Members are required farms provide electronic climate fundamental freedoms. to undergo training to learn control to maximize comfort appropriate animal handling and and protect birds from poor Cattle are regularly inspected to delivery techniques. weather and disease. All facilities avoid the tip or any other part undergo internal and external of the horn coming into contact All Company raw materials audits on a routine basis to with the faces of other animals. (chickens and turkeys) are from guarantee compliance with JBS USA Live Pork implements its own chicken farms or are the Animal Welfare Program, procedures to protect against provided by integrated farmers, which includes appropriate possible injury and to improve which means the Company is transportation, handling and meat quality, such as tail able to monitor every detail of capture verification. docking and castration. the entire process. JBS produces and supplies all consumables All Pilgrim’s Moy Park poultry Pilgrim’s does not make that farmers require, such as farms have windows that any physical changes to its chicks, feed and medication, as provide natural lighting and chickens, it simply purchases well as the technical knowledge at many of them animals birds from breeders who they require and veterinary have access to toys like straw comply with rigorous protocols assistance, which is provided by balls and perches to provide a intended to minimize stress. area specialists. A team of farm richer environment. The birds At JBS Australia, castration management specialists and are also free range and have and dehorning comply with veterinary surgeons periodically access to outside areas during rules issued by the National visit all poultry farms to ensure the day. Poultry farms are Animal Welfare Standards and that the correct practices are naturally vented and have lower Guidelines and all procedures being adopted. population densities. must be carried out by a
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veterinary surgeon using local anesthetic.
There is no debeaking on Seara broiler farms in Brazil. On poultry farms, the laser process only affects males, to avoid injury to the female during copulation – the procedure also complies with best global animal welfare practices.
Teeth cutting has been abolished at farms producing Seara piglets. Tail docking is still employed in order to avoid cannibalism among adult hogs.
This is internationally recognized as the best procedure for ensuring that production complies with modern Animal Welfare standards. Surgical castration has also been abolished. The CASE: Company currently employs BOVIWELL DIAGNOSTIC TOOL immunological castration, which is more comfortable and less Developed by Pilgrim’s Moy Park Beef Orleans stressful for piglets. in 2013 as an animal welfare assessment tool, BoviWell is a group of 10 indicators used to assess Cattle are supplied to the and certify best animal breeding practices on Company in many different cattle farms. Inspired by the European Welfare ways, depending on the Quality® protocol and the five fundamental practices adopted in each animal welfare freedoms, BoviWell has already region. Approximately 25% of the carried out 1,643 diagnoses on French milk and cattle JBS purchases in Brazil dairy farms. spend between 90 and 120 days in feedlots, but spend the rest The tool assesses animal welfare in each of their time, until they are 2.5 operation based on 60 factors that are grouped to 3 years old, on pasture. The together into 10 indicators. Based on the results, remaining animals, or 75% of farmers receive a quality certificate and are able purchase, spend their entire lives to identify potential areas for improvement. Each on pasture. diagnosis helps to improve the Pilgrim’s Moy Park Beef Orleans Database and create a better reference point for future tool updates.
Over 100,000 animals have been observed since BoviWell’s adoption. The results from February 2019 show that 88% of farms were classified as “Excellent” or “Superior”.
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Friboi has a number of its suppliers to comply with farmer initiatives to ensure government regulations cattle suppliers comply with and state or national animal appropriate animal welfare welfare and quality certification practices. The main 2018 programs and it monitors initiatives were: and assesses all its suppliers to ensure compliance with all • Ongoing verification of requirements (for information attendance at the four see page 76). editions of the National Association of Intensive JBS owns six feedlots in Livestock Breeding (Assocon) Australia. Reading risks of livestock school; these units – such as nutrition, disease and extreme weather • Events with Dr. Temple – are managed by identifying Grandin (see the table on and implementing mitigation page 121); practices such as biosafety procedures, providing shelter • Delivering 5,000 animal and provisioning food welfare kits; and water.
• Releasing the International Animals are inspected and Livestock Breeder Conference treated on a daily basis. All Manual (Interconf); activities are recorded so that results can be reviewed • Social Fuel Seal talks and kit frequently. Animal welfare distribution; indicators are internally audited on a six-month basis • Organizing the “Success and audited by an outside, Leaves Tracks” panel and independent auditor every year, distributing animal welfare in accordance with the National material at the event. Feedlot Accreditation Scheme (NFAS). In 2018, the unit invested In the US and Canada, cattle is in the specialist veterinary bred on feedlots and purchased hospitals at Beef City Feedlot from third-party farms and and Caroona Feedlot to improve at auction. JBS requires all animal welfare outcomes.
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Organic farming automated deboning, among In the US and Australia, JBS also JBS is always looking to provide others. All products carry the produces organic beef. In 2017, its customers and consumers American Humane Certified JBS Australia began processing with options that meet their seal, which certifies the animals its first certified organic herd, requirements and expectations, were bred humanely. sold under the Acres brand. while maintaining its standard Organic beef is produced on of excellence to guarantee Pilgrim’s Moy Park is the UK certified farms that comply with the safety and quality of all and Ireland’s largest producer strict environmental and animal its products. The Company of free-range, organic poultry handling regulations. The new therefore invests continuously and has 110 small poultry farms product will help JBS Australia to ensure its product portfolio producing organic chicken. serve rising demand in this reflects wider consumer Apart from being the biggest niche market and increase its requirements and trends. organic chicken producer, it international competitiveness. As part of these efforts, JBS was also the first to deploy this offers antibiotic free, organic, breeding method in the UK vegetarian and natural as well as in the 1980s. The following JBS IS NOW THE traditional foods. decade it started breeding WORLD’S organic chicken. What all of these product ranges have in common is the priority JBS markets similar products in LARGEST focus on animal health and Brazil, which are called country safety. At JBS, ethical values, or “natural” chickens. The Seara ORGANIC which are inherent to animal DaGranja range - which carries breeding, require adoption of international animal welfare CHICKEN best animal welfare practices certification - supplies products because as far as the Company made using chickens bred on PRODUCER is concerned, this is simply doing exclusive farms without the use the right thing. of antibiotics or anticoccidians (drugs used to combat avian One of Pilgrim’s brands is Just coccidiosis). The animals also Bare, which focuses on organic receive 100% vegetable feed chicken. In the US, the Company to guarantee traceability pioneered the use of high throughout the production technology chicken production chain. Seara also has a special techniques, with processes that breed of free range chicken: include gas-based stunning and Frango Caipira Nhô Bento.
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Transport At JBS animal transportation embarkation, transportation and The entire JBS Transportadora is an important phase for disembarkation. Drivers receive cattle fleet in Brazil is equipped animal welfare and is carried instruction on safety procedures with a tracking system. This is out by specialist, trained teams and how to react in the event of used to detect brusque braking using the Company’s own or an emergency. Maximum driving and acceleration, vehicle speed, contract vehicles that have times and distances are also maneuvering around curves been specially developed to specified in advance and drivers and door blocking to directly ensure animal welfare and avoid are required to comply with rest, improve animal welfare. It also injury during transportation meal and hydration procedures. improves animal comfort while, and minimize stress during at the same time, reduce the risk of accident or injury while in transit. A large part of the fleet is equipped with hydraulic HOW ARE ANIMALS TRANSPORTED? elevators to make it easier to onboard the animals.
Animal transportation from farms to The entire cattle fleet undergoes meatpacking units complies with the following at least 1 6-monthly audit to practices: assess (in-house and third-party) driver training. Maximum distances between farms and In the USA, JBS USA Carriers meatpacking units are defined to guarantee is responsible for safely animal comfort. transporting over 1.5 million cattle a year. The Company Transport routines are managed using offers driver training on animal indicators, such as cage density and weight handling and safety. The training during loading to guarantee appropriate material is based on the Beef practices are adopted. Quality Assurance Transportation (BQAT) program, a widely Trained teams are used to load and unload recognized industry standard for trucks, using techniques that minimize animals truck driver training. stress. Cattle shipping companies are audited on a daily basis to ensure they comply with JBS In both Brazil and the USA, JBS elevator to better organize the USA humanitarian handling uses its own and third-party animals’ entry and departure. standards and, depending fleets for animal transportation. These features help to improve on the country, with NAMI The JBS fleet is constantly being animal welfare, facilitating Team Transport Guidelines, the renewed with more modern Members’ jobs, reducing the CFIA Health of Animal and efficient vehicles, which are number of animal injuries and Regulations Livestock built to provide better space and thereby ensuring better quality Transport Requirements and accommodation, with a hydraulic products for consumers. the Australian Standard for
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the Hygienic Production and kept in cages, but only for the JBS USA CARRIERS Transportation of Meat and shortest possible time in order to SHIPS OVER Meat Products for ensure poultry comfort. Human Consumption. At JBS Australia, third-party 1.5 All shipping companies must transportation of animals also provide a document suffering from any type of MILLION certifying that they understand condition or injury that could and abide by JBS USA guidelines. cause stress or pain during a trip Pork teams in the USA check is considered one of the main CATTLE shipping Company compliance animal welfare risks. This is why A YEAR USING VEHICLES with the National Pork Board’s the Company inspects every SPECIALLY DESIGNED Transport Quality Assurance animal delivered to its facilities. TO GUARANTEE ANIMAL (TQA) program. Inappropriate With guidance from a local WELFARE animal handling results in government veterinarian, JBS immediate corrective action and uses humanitarian euthanasia may lead to contract termination. procedures if animals are suffering serious injury. If At Pilgrim’s, chickens are the Company determines an protected against extreme animal should not have been temperature and receive transported, it will prepare adequate ventilation during a report and work with local transportation. Food and government to address the issue water are removed during with the shipping Company and/ transportation as a matter of or supplier. food safety, and the chickens are
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Slaughter Program compliance is verified Standard - Livestock Processing JBS operations all comply daily by third-party auditors. Establishments and The with humanitarian slaughter All facilities have voluntarily Australian Standard for Hygienic principles to guarantee instituted the “Systematic Production and Transportation appropriate handling from Approach to Humane Handling of Meat and Meat Products for the time the animals arrive at and Slaughter” program, which Human Consumption, which meatpacking units, including is recommended by the US address six factors: animal stunning. JBS uses the Department of Agriculture best equipment available on (USDA) for animal handling and 1. Planning and management the global market and its plants covers four areas: procedures; are staffed by trained teams 2. Equipment and facility responsible for monitoring 1. An initial site assesses the design and maintenance; the receiving of animals and circumstances in which 3. Team skills; ensuring their welfare up to the cattle may face excessive 4. Humanitarian management point of slaughter, in order to emotion, discomfort or and disposal of sick or injured avoid any type of suffering. accidental injury during animals; transportation, containment 5. Management to minimize Audits and checks of Company or slaughter; stress and injury; facilities provide metrics that 2. Adoption of facilities, training 6. Humanitarian slaughter assess performance across each courses and practices procedures. stage of the procedure, from the based on rules intended to time animals are received until minimize the risk of undue UNIVERSITY PARTNERSHIPS they are slaughtered. At JBS USA excitement, discomfort or JBS partners with universities and Friboi, independent auditors accidental injury; and well-known research also carry out video audits. 3. Periodic audits of facilities centers and researchers to and practices to ensure cattle develop projects aimed at Poultry are kept in a holding are treated humanely; generating new solutions and/ warehouse at appropriate 4. Ongoing process or improving current animal temperatures where they are improvements, based on welfare practices. constantly monitored. The internal and external audits, same procedure applies to adoption of regulatory A technical cooperation hogs, which are allowed to rest changes, performance agreement was signed in 2014 in their bays. US pork facilities trends and improvement with the Animal Ecology and use controlled atmosphere opportunities identified Etiology Study and Research stunning technology. during weekly animal Group (ETCO Group) at the welfare meetings. Paulista State University In the US and Canada, beef and (UNESP) in Jaboticabal and pork facilities have implemented Production facilities in Australia with world-renowned animal animal welfare programs in line have adopted animal welfare welfare specialist Dr. Temple with guidelines from the North programs that comply with Grandin, in order to intensify American Meat Institute (NAMI) guidelines from the AMIC and expand efforts to improve and local regulations. Industry Animal Welfare animal welfare. This work is
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based on research that helps to solve animal welfare issues for cattle during all stages of the production process (breeding, transportation and slaughter).
Pilgrim’s Mexico has partnered with the National Association of Federal Establishments Inspection (ACETIF) and National Association of Poultry Science Specialists (ANECA). Both organizations offer animal welfare refresher courses and assess farm performance. Pilgrim’s Mexico helped the UAQ (Autonomous University of Queretaro) setup and run an Experimental Poultry Farm in 2017, as part of an initiative that continued to be developed and improved in 2018.
Our animal welfare programs are also frequently reviewed by Dr. Temple Grandin and other animal welfare specialists from INTERNATIONAL Colorado State University (see table), who work closely with SPECIALIST JBS USA. Temple Grandin is a researcher who is globally renowned for her work in animal welfare and regularly partners with JBS. She visited Brazil in 2018 as a guest of the Company to organize discussions about the best practices across the animal protein production chain.
JBS also sponsored an event where she met with more than 1,200 people in Brazil, including farmers, producers, industry experts, specialists, academics and journalists. Grandin and other specialists spoke at these meetings where the main goal was to educate people about the best animal welfare practices and emphasize the importance of this issue for the Company’s business.
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COMMITMENTS Use of antibiotics JBS is committed to reducing usage. Given the growing about antimicrobial resistance antibiotics throughout its concerns about resistance and adopting best practices to supply chain every year. This to antibiotics, US units have reduce the use of antimicrobial means antibiotics are only produced antibiotic usage products. It also collects a wide administered when strictly statements for their cattle and range of data to give the poultry required and on veterinary pork supply chain partners to industry and regulators recommendation, to avoid guarantee compliance with the a clear understanding compromising animal welfare Company’s principles. of antimicrobial trends. and food safety. The Company does not use antibiotics on a Some businesses have Pilgrim’s Moy Park also has preventive basis. It also records developed specific antibiotic a Food Safety Forum and an and tracks any type of antibiotic policies. For example, Pilgrim’s Antibiotics Management Forum usage and trains its teams to has eliminated antibiotics at all to implement practices that ensure compliance with disease its hatcheries since 2016 and is protect chicken and turkey prevention, hygiene, monitoring in full compliance with the FDA health and support food safety. and vaccination programs. 209 and VFD 213 guidelines. These forms are staffed by Antibiotics are only used under outside specialists who provide At JBS USA, all antibiotics are strict supervision by USDA the Company with the latest used under veterinary medical certified veterinary doctors and scientific developments. supervision and only to prevent, only to prevent, control or treat control or treat diseases, never disease. The unit’s antibiotics At JBS Australia, the approach to promote growth or food policy is reviewed annually. varies depending on the efficiency. The antibiotics market where the product is policy also requires written Pilgrim’s Moy Park complies fully being processed. For example, permission from a veterinarian with industry regulations and cattle used by the Great before antibiotics can be used, requires authorization from the Southern brand must be free registration of any and all veterinarians who care for the of antibiotics and any other antibiotics that are administered birds before antibiotics can be substances. Even if there are no and training programs to administered. All drugs used are regulations in place, antibiotics guarantee compliance with the licensed by the UK Veterinary are only administered when Company’s health and disease Medicines Department and are recommended by veterinarian. prevention programs. subject to an intensive set of tests prior to being approved for As part of its commitment to JBS also supports research use. Approvals for drugs used at animal welfare, JBS USA treats that focuses on reducing poultry farms are inspected by all sick animals with antibiotics, the outbreak of disease and auditors from the Red Tractor as and when required, and identifying products that can Scheme and local animal health then removes them from its replace antibiotics in order to inspectors, as required by law. antibiotic free, natural and further reduce the use of this organic programs. type of drug. Pilgrim’s Moy Park also maintains an Antimicrobial JBS has always adopted a Handling Forum focused on careful approach to antibiotic educating poultry farmers
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ALL PILGRIM’S Collective gestation JBS USA 2020 Program HATCHERIES HAVE BEEN In 2014, Seara committed to As part of JBS USA’s 2020 Goals using collective gestation program, operations in the US, for all its pork production in Puerto Rico and Canada will ANTIBIOTIC Brazil, completely eliminating commit to achieving 90% or gestation in individual bays. better on their animal FREE The goal is to have all farmers welfare scorecards. SINCE 2016 using the system by 2025. The Company is therefore Use of cage-free eggs supporting its integrated By 2020, all eggs used as suppliers as they go through this ingredients in Seara products transition. 50% of its hog breed will be purchased exclusively stock is currently produced from egg-laying chickens cage-free. bred outside cages. In 2017, JBS committed to suspending JBS USA Live Pork was also purchases of eggs from chickens committed to eliminating bred in cages in Brazil, in line collective gestation by 2018, with the Company’s animal which was fully accomplished by welfare guidelines. Seara is the end of the year. From 2019, the Company’s only business all pork will be produced using a division that purchases eggs to cage free system. use as ingredients.
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PRIORITY ISSUES: PRODUCT INTEGRITY
t JBS, product integrity as helping to improve their to carcass quality. This program means respecting the management processes sets JBS apart on the market Ahighest food safety, and develop best social and and encourages a higher quality and sustainability environmental practices percentage of higher quality standards. This is why the across the value chain, which raw material, with a lower Company is constantly subsequently improve the incidence of animals classified investing to improve its quality of the raw material they as undesirable. operational, manufacturing supply to the Company. and supply procedures to Connection Management guarantee product integrity. One of the highlights in this area The Connection Management This includes the adoption of is the Company’s commitment initiative was launched in social environmental practices, to eliminating slave labor: Brazil to improve management such as responsible raw JBS has been a signatory of capabilities of mid-size livestock material procurement and the National Pact Institute to breeders supplying between building closer relationships Eradicate Slave Labor since 2007 300 and 2,000 animals annually. with suppliers, in addition to and a member of the National It offers a range of tools that third-party certification for best Pact Institute to Eradicate help increase efficiency in every practices in the Company’s Slave Labor (InPACTO) in 2014, link of the beef production processes and routines. as part of efforts to identify chain, from breeders to the end and eradicate slave labor in consumer. Implemented in 2018 JBS sets the bar for value chain Brazil. Below is a list of some in partnership with the Inttegra management and has taken a of the initiatives we have been Institute, the program includes unique approach to responsible implementing with suppliers. 30 strategic livestock breeders in raw material procurement. the states of Mato Grosso, Mato Cattle breeders Grosso do Sul and São Paulo. As its raw material suppliers Quality Ranking have adopted best sustainability This is a tool used in Brazil Friboi Connection Website practices, this had a direct that brings together raw The Friboi Connection Website impact on the quality of JBS material quality management (www.conexaofriboi.com.br) products and the Company and livestock breeder helps improve the Company’s plays a role as an agent for communications, linking raw relationships with livestock change and innovation in every material technical parameters breeders, whether or not they production chain it is involved – animal weight and age, fat are JBS suppliers in Brazil. The with. This involves developing finishing and gender – with a website supports discussion, initiatives that help improve quality bonus policy. Animals distributes relevant information management processes obtain either a green light and helps producers generally and develop best social and (desired standard), yellow light improve their businesses. It also environmental practices among (admissible standard) or red provides easier access to JBS, its suppliers, basing its approach light (undesirable standard), providing livestock breeders on supply relationships and making it easier for breeders to interested in partnering with guarantee of origin. understand the importance of the Company with information improving the quality of cattle on JBS’s culture and working SUPPLIER RELATIONSHIPS supplied to the Company. methods. The website is divided JBS organizes a number of into three main areas: initiatives to transform suppliers Following classification, JBS into business partners, such offers breeders bonuses linked
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• I Want to Sell – a channel answers to frequently carcass grading is transparent for contacting JBS in order asked questions. and auditable. to sell cattle which provides information on selling options Friboi Connection also provides Giro do Boi Platform as well as the livestock access to the Cattle Breeder This platform includes a website improvement projects Website (pecuarista.jbs.com. for livestock breeders with a implemented by the Company. br), where farmers can consult social media profile and daily • I Want to Find Out More - in all previous data on animals TV program. Broadcast on the this section, livestock breeders from their farms that have Rural Channel, the Giro do can find information, news, been slaughtered and their Boi program is an important daily prices and technical status in terms of JBS social source of information for people information they can save, and environmental criteria. JBS across the industry. The main share or print. also provides photographic highlight is the Brazil Tour, with • I Want to Connect - here, information on finishing classes information on daily prices JBS visitors to the website with validation from academics, practices throughout can contact their nearest industry associations and the country. meatpacking plant and find specialists to ensure that
SOCIAL FUEL SEAL
This is a federal government Small-scale livestock breeders In 2018, 11,000 head of cattle program that JBS has been were also invited to join the were purchased in São Miguel supporting for over 10 years project in 2017 as part of a do Guaporé, Rondônia, to guarantee that small, joint initiative by JBS Biodiesel generating more than R$ family farmers will be able to and Friboi. The Company 27 million in income for 259 sell their output to biodiesel has a team of agricultural families, which was eight times manufacturers, helping to engineers, farming technicians more than they received in support family farming. and veterinarians that offers 2017. The Company expects to livestock breeders free technical purchase more than 27,000 This initiative, which is executed support, financial planning head of cattle in 2019 and 2020 by JBS Biodiesel, a JBS Novos guidance, preset sales options, and, as production increases, Negócios Company, will further bonuses for cattle quality and the target is to extend the support social and economic guarantees to buy 100% of all initiative to include other development in farming contracted cattle. families, reaching 470 breeders communities throughout the across the region by the end country and create additional The team also analyzes potential of next year. opportunities for the Company, cattle producers who might as beef tallow is the second most join the program to ensure they important source of raw material comply with environmental and for the Brazilian biodiesel industry. employment legislation.
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Poultry suppliers All JBS units operate on an In Mexico, Pilgrim’s runs a slaughter certification as well integrated basis, partnering program to develop and monitor as Global Food Safety Initiative with families who breed suppliers, which includes several (GFSI) for any processing and poultry in order to guarantee audits. Pilgrim’s also recently deboning facilities. Suppliers raw material sourcing. The implemented an Electronic must also comply with the companies offer producers all Market System, through Company’s internal policy, the the consumables they need to which the Company is able Meat Technical Guidance and rear safe and healthy pork and to procure raw material other specifications as well poultry and providing guidance and build more efficient as attend monthly supplier on production processes, relationships with suppliers, meetings by telephone and environmental practices and increasing transparency quarterly site meetings. animal welfare. and creating additional business opportunities. Pork suppliers JBS tightly manages every stage JBS units use one of two of the production process, from In Europe, Pilgrim’s Moy Park formats: integration, which genetic selection of breeding poultry suppliers also require is the same system used animals and animal processing independent feed, breeding and for poultry, or independent to point-of-sale delivery. This affords the Company greater control over sanitary and nutritional issues – minimizing the risk of contamination and JBS HAS STRICT epidemics – and guarantees CONTROLS FOR product quality, food safety and cost efficiency. ANIMAL HEALTH AND NUTRITION AND In Brazil, Seara has a group of PROVIDES GUIDANCE over 300 external technical staff and veterinarians who carry out ON BEST ANIMAL technical and health visits before WELFARE PRACTICES and during any purchases or supplier certification procedures. They carry out all necessary on-site verifications to check compliance with supplier contracts and the requisite environmental licensing.
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suppliers. In both cases, the practices and structures All JBS pork producers Company has strict controls for and hold the requisite in Australia sign formal animal health and nutrition to environmental licenses. agreements detailing the ensure food quality and safety animal quality and welfare and comply with internal and In the USA, JBS Pork USA also requirements they are expected customer requirements. takes steps to ensure all supply to meet to continue supplying chain producers take the utmost the Company. In Brazil, Seara guidance and care with their animals. This training for poultry farmers is involves farm visits to check also made available to pork best management practices producers. The Company are being implemented and has external technical staff Team Members are being and veterinarians who carry properly trained. Based on out technical visits to ensure the information they collect, all suppliers have adopted feedback is provided to support appropriate production continuous improvement.
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GUARANTEE OF ORIGIN IN ITS MOST RECENT At JBS, all raw materials areas or areas embargoed AUDIT, IN 2017, THE purchases comply with federal by the Brazilian Institute for COMPANY OBTAINED and local regulations and adhere the Environment and Natural to responsible procurement Resources (IBAMA), to ensuring principles. If any wrongdoing suppliers do not employ child or THE BEST arises or any service fails to slave labor. comply with best practices, the RESULT supplier’s contract is terminated. Around 80 thousand registered Brazilian cattle suppliers are In addition to complying with assessed daily using satellite SINCE relevant regulations, JBS has imagery, farm geo-referencing a number of mechanisms data and information from AUDITING to ensure raw material from government agencies. This across the production chain exclusive JBS monitoring system BEGAN is transformed into products covers over 59 million ha in the IN 2014, WITH 99.99% offering guaranteed integrity. Amazon region and 437 Brazilian cities - an area equivalent to the OF PURCHASES IN Beef size of France. COMPLIANCE* In Brazil, JBS has a robust social and environmental monitoring If it detects farms that system to verify whether its fail to comply with any of For greater transparency, the cattle suppliers comply with the the Company’s social and audit reports can be viewed on social and environmental criteria environmental criteria of the the Company website set out in its Raw Material Public Livestock Commitment, and are available in English Responsible Procurement Policy, the system suspends trading and Portuguese. to guarantee supply chain with the supplier and blocks sustainability. purchases until the situation Every year, a representative has been corrected. The entire sample of all beef raw material The system monitors a cattle procurement process and purchases is taken during the wide range of issues, from the Social and Environmental audit. The analysis is based on deforestation of native Monitoring System are audited an average sample of 10,000 forest on indigenous land, in annually by independent, third- cattle purchases from suppliers environmental conservation party auditors. located in the Amazon Biome.
* the full report is available at https://jbs.com.br/wp-content/uploads/2018/11/JBS_Relat%C3%B3rio-Compromisso-Publico-da-Pecuaria-2018-DNVGL_PT.pdf
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In Brazil, Friboi employs a expressing their compliance The Australian unit also runs the satellite monitoring system with government regulations Farm Assurance Program which to certify sustainable supplier and national animal welfare and involves JBS buyers visiting and management and that it quality certification programs. inspecting suppliers as well as sources meat from farms In the US, cattle supplier external audits carried out by that are operating legally and relationships are regulated by the independent certification body comply with relevant labor and U.S. Department of Agriculture’s to verify raw material quality. environmental legislation. Grain Inspection, Packers and Before the cattle leave the Stockyards Administration. property, they are marked using In Brazil, the Company also a NLIS device so the animals has the Supply Chain Seal, In Australia, all animal suppliers can be tracked from the farm which is audited by third-party must provide the National where they were bred. This and verifies animal welfare, Vendor Declaration (NVD), a information is also recorded on sustainability quality criteria document allowing product a nationwide database. during all phases of the process tracking. When the NVD is (further information, see signed, the producer declares it page 41). is compliant with the Livestock Production Assurance (LPA) The United States and Canada program, certifying the food units require all cattle suppliers safety practices adopted by the to provide a statement farm, independent of auditing.
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Poultry Pork In Brazil, Seara employs modern In Brazil, the Seara guidelines traceability systems to quickly that apply to poultry breeding identify and isolate any farm also apply to pork. that might pose a quality or health risk. It also monitors In the US, JBS USA Pork units poultry treatment at every stage require all family-based pork of their lives and throughout the suppliers to obtain certification production process and provides and evaluation from Pork a structure for each phase in the Quality Assurance (PQA) Plus, production chain supporting which is managed by the sustainable development National Pork Board. Random throughout the process. audits are also carried out by an independent third-party under In Europe, all suppliers must the “Common Food Industry supply a statement from the Audit” principles, a PAACO- British Retail Consortium (BRC) certified pork industry platform guaranteeing they undergo aimed at producers, packers and annual safety and quality audits. processors. These guidelines Suppliers are also required to offer greater well-being and food comply with product quality safety guarantees to consumers. and occupational safety criteria provided by the ISNetworld At JBS Australia, hogs, like cattle, assessment system. Pilgrim’s receive a NLIS device when Moy Park also has a tracking they leave the farm so they system for animal feed and can be tracked from source. A raw materials covering the quality certificate must also be production, processing and obtained from Australian Pork distribution phases. These tools Industry Quality Assurance help the Company guarantee (APIQ), which includes a food quality and safety. The number of animal welfare and new supplier approval process environmental requirements. includes prequalification, where all companies must All poultry suppliers are audited comply with the Company’s annually by an independent environmental requirements third-party and poultry farms and receive approval from may be visited without notice. the Quality Department. For Animals are expected before example, all poultry suppliers being slaughtered and there must be certified by the British are random checks for drugs or Retail Consortium (BRC) or an chemical residues in the meat. equivalent organization, such as APIQ certification is verified prior IFS or FSSC 22000, approved by to any pork being processed. Red Tractor. Poultry farms are audited by independent and approved certification bodies.
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Wood Forestry biomass used to generate and obtain thermal energy is only purchased from suppliers who been certified by federal, state or municipal agencies or environmental departments. In doing so, JBS operations in Brazil are able to ensure compliance with the companies Responsible Raw Material Procurement Policy, which prohibits timber purchases from illegal sources. Audits are also conducted annually and when the raw material is received for the duration of the supplier’s agreement with the Company.
Wood suppliers who do not comply with the JBS responsible procurement policy are excluded and prohibited from selling their products to any group business or unit.
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PRIORITY ISSUES: WATER MANAGEMENT
ater management challenge for the Company operations. This was intended is not just a critical but also an opportunity to put to identify units at greatest risk, Wissue for JBS and food positive initiatives into practice. mitigate the chance of water industry sustainability: it is a shortages and increase basic element of the production This means building usage efficiency. chain and essential for animal partnerships at various levels of and vegetable development government, with hydrographic The study resulted in the and for ensuring product and basing committees, Sustainable Water Management process sanitary standards as communities and other actors in Program which mapped internal well as facility, equipment and territories where the Company (qualitative and quantitative) utensil cleaning. is present, in addition to information and external developing mechanisms and (hydrographic micro basin) As such, sustainable water usage programs to increase water information which was used to is a priority at all Company monitoring efficiency, boost develop a water criticality map units and also the development sustainable and conscientious to identify the hydrological risk of projects and strategies to usage and encourage reuse. profile for each unit in Brazil. maximize efficient water usage The program was managed and reuse and minimize the JBS’s approach to water by the JBS Sustainability need to develop new water management is, like many other Committee with support from sources. In 2018, the Company issues, decided at corporate a Technical Committee, which invested more than R$ 26.8 level, however specific targets helped to manage business unit million on management and and procedures are decided by governance processes. measurement initiatives to each business area. A number reduce water usage and reuse of indicators are used including As a result, Brazil has identified water worldwide. control over water sources and the Brazilian units facing the effluent disposal, wastewater greatest hydrological risk and Extreme environmental events treatment programs and reuse has undertaken projects to that increase water scarcity in and recycling strategies. minimize the risk of water regions where diverse actors shortages, increase water reuse use water for a wide variety In the past several years, JBS and usage efficiency and set of reasons – in industry, for has carried out a detailed targets for all its plants. An agriculture or for human global diagnosis to measure ongoing awareness program consumption – are a major hydrological risk across its has also been developed for factory Team Members. Every production unit also controls water used based on production TOTAL ENVIRONMENTAL INVESTMENT intensity in line with annual water usage guidelines. R$ 721 MILLION A priority water issue at Seara, for example, is the focus on
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increasing reuse, identifying areas where water is being wasted, replacing equipment and changing some of its processes and all of these initiatives have focused on increasing water usage efficiency.
JBS USA not only has a corporate target of reducing water consumption intensity by 10%, a goal to be reached by 2020 as part of the Sustainability Program, it also has a number of programs at individual units. Each unit is expected to achieve specific goals by managing critical issues, resources and other variables. This requires adoption of the Environmental Management System (EMS), continuous auditing and mapping opportunities to implement best practices, as well as monitoring changes in overall water usage and water intensity (the water used per ton of product or water used per animal).
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PERFORMANCE REUSE All JBS operations around (GRI 303-3) This success resulted in the the world are increasing their Water reuse and recycling are initiative being adopted at monitoring efforts, capturing two of the biggest water-saving other regional units. The rainwater and investing to reuse opportunities. This is why the Green Bay (Wisconsin) and water at various stages of their Company is working hard to Tolleson (Arizona) units have respective production processes. reuse water at all JBS facilities. also implemented this system Reused water is mainly used for and saved 59.2 thousand and JBS USA is committed to outside cleaning and equipment 56.8 thousand cubic meters improving its environmental cooling, based on current health of water respectively in 2018. indicators by 2020 and reducing standards. Importantly, local The system was also adopted water usage by 10% and its units legislation at country level limits at the Plainwell facility at the are taking steps to improve the number of operations where beginning of 2019. their practices. Some of these water can be reused. initiatives include new water One of the biggest initiatives in meters (Louisville) and plant In Brazil, leather operations Australia was to recycle water efficiency updates (Beardstown). are developing initiatives to used to clean cattle. Water reuse At the Cactus tanning plant recycle the water used during reached 35% at the Dinmore in Texas, a Company team their industrial processes, such facility. Longford & Scone identified an opportunity to as rewetting leather, cleaning reported 10% reuse. reuse water in the leather gases, cooling machinery and cooling and washing process, filtering water – to eliminate In Europe, the use of reverse saving around 300 thousand waste. These efforts have saved osmosis technology has liters of water a day. more than 15,000 m³ of water reduced the amount of water every month in 2018. used by boilers. New cooling In 2018, JBS captured 180,700,000 systems have also helped m³ of water, mainly from A 2017 JBS USA initiative at the reduce the number of cooling surface sources (e.g. river) and Omaha beef production plant in towers, which has cut water underground sources (wells). Nebraska reuses water from the usage and effluent discharge. food safety assurance process after it has been filtered, helping As a result of all these efforts, JBS save over 115 thousand cubic recycled the equivalent of 3.36% meters per year. of all water captured globally.
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THE JBS WATER CYCLE
7 DISPOSAL
WATER 1
6 TREATMENT
TREATMENT 2 REUSE 5
USAGE 3 4
MONITORING
MANAGEMENT
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WATER CAPTURED BY SOURCE - JBS GLOBAL GRI 303-1
2018 2017 2016
Volume Volume Volume % % % (in m3) (in m3) (in m3)
SURFACE 53,606,088.20 29.66 53,363,792.28 29.57 91,403,560.00 47.87
UNDERGROUND 60,090,783.29 33.24 47,410,504.62 26.28 68,147,158.88 35.69
PUBLIC AND THIRD- 10,669,079.54 5.90 16,886,962.75 9.36 31,202,680.86 16.34 PARTY SUPPLIERS
RAINWATER 158,451.27 0.08 172,538.48 0.10 128,790.84 0.07
OTHER SOURCES 56,204,208.47 31.09 62,604,435.54 34.70 78,966.00 0.04
TOTAL 180,728,610.78 180,438,233.66 190,961,156.58
WATER REUSE INCREASED IN 2018. WORLDWIDE, THE COMPANY CURRENTLY REUSES 3.36% OF ITS WATER, EQUIVALENT TO MORE THAN 6 BILLION LITERS
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EFFLUENTS Plants have modern station performance and IN 2018, THE COMPANY treatment stations to collect local government agencies INVESTED OVER and appropriately treat the constantly monitor compliance effluent liquid produced by with legally required physical its production processes, and chemical standards. R$ 63.7 complying with legal regulations. In 2018, the Globally, JBS generated 146.6 MILLION Company invested over R$ million m³ of effluent, up 25.4% 63.7 million modernizing and in 2017. MODERNIZING AND improving effluent efficiency. IMPROVING EFFICIENCY 81% of the water captured OF WASTEWATER All of the wastewater from JBS and used in JBS’s industrial operations is transported to processes is treated and safely TREATMENT the Company’s own treatment returned to the environment. stations or public treatment The only exception is the systems. The Company effluent sent for treatment by is constantly monitoring the public network. wastewater treatment
GLOBAL VOLUME OF EFFLUENT GENERATED AND TREATED BY JBS GRI 306-1
2018 2017 2016
Volume Volume Volune % % % (in m3) (in m3) (in m3)
VOLUME DISCARDED – 71,791,122.65 48.97 59,887,054.39 51.24 63,754,353.85 43.68 BODY OF WATER VOLUME DISCARDED – 19,827,579.71 13.53 19,010,574.02 16.27 12,401,476.06 8.50 FERTIRRIGATION
VOLUME DISCARDED – 49,505,829.21 33.77 22,917,222.07 9.36 23,862,252.40 16.35 PUBLIC SUPPLY NETWORK
VOLUME DISCARDED – 454,819.74 0.31 714,499.03 12.88 656,105.54 31.48 OTHER TYPE OF DISPOSAL
TOTAL 146,599,140.71 116,867,242.00 145,965,651.83
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JBS ENVIRONMENTAL MANAGEMENT
Resource management and the top 20 Brazilian companies greenhouse gas emission out of a total of 150 that were (GHG) reductions are part of evaluated, and one of the 55 top JBS’s wider environmental food companies in the world, out management efforts, which of a total of 273 that have joined also involve treating waste and the program. focusing on improving eco- efficiency through the adoption The data survey used by the of innovative and efficient study is collected using a solutions. In 2018, JBS invested theme-based questionnaire that more than R$ 721 million in assesses risks and opportunities, environmental improvements, governance, strategies, including environmental compliance, traceability, management at its factories and procurement policies, chain investment in other projects. engagement and target-setting. Companies are classified in The results of the Company’s 8 categories (A to D-), with A ongoing improvements can considered the “Leadership” be seen in the results and category and D the “Disclosure” assessments on the Driving category. JBS is also a member Sustainable Economies (CDP) of CDP Forest Supply Chain, a platform, which monitors and program which encourages the supports corporate sustainability value chain to take part in the policies at major companies. program’s assessments.
JBS adopted the CDP program All of this work is based on the in 2015, including the Water Environmental Management program – focusing on water Policy and Environmental resource management –; the Management Systems at the Carbon program – for GGE Company’s various business, management -; and CDP Forests which provide guidelines - which assesses corporate and indicators guiding the initiatives and policies to prevent Company’s activities in all of deforestation usually linked these areas. The corporate with the main agricultural environmental teams supervise commodities – such as cattle, operational environmental soybeans, wood and palm oil. performance and provide assistance to address specific In CDP Forests, JBS received a problems, as and when they B for cattle and timber and a B- arise. Cases producing the most for wood and soybeans. In CDP significant results are shared Carbon, the Company received and replicated when possible at a B, which means it is one of both regional and global level.
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PRIORITY ISSUES: CLIMATE CHANGE
BS is taking a number of the Paraná Climate Seal and the In the US, emissions are steps to reduce its carbon Sao Paulo State Climate Protocol, reported to the Environmental Jfootprint and deliver managed by the two states’ Protection Agency (EPA) as part products that generate less Environment Secretariats. JBS of the SmartWay program for of an environmental impact. produces an annual greenhouse Shipping companies and via This includes joining initiatives gas emissions inventory for all 40 CFR 98 (the Greenhouse to measure and reduce these initiatives. This information Gas Reporting Rule) for beef, greenhouse gas emissions from is critical for understanding the pork and poultry facilities. JBS the Company’s production challenges in the Company’s USA operations have a public processes, the energy mix and carbon chain and for defining commitment to reducing transport logistics. emissions management greenhouse gas emissions and strategies, as well as other natural gas consumption by 20% JBS has produced an annual initiatives that need to be taken and reducing electricity usage inventory of greenhouse gas throughout the value chain. by 12% by 2020. emissions in Brazil since 2009, based on the international GHG Friboi has increased energy In Europe, Pilgrim’s Moy Park Protocol methodology. It is also efficiency by automating its is part of the European Union published an annual inventory machine room (in Goiânia -GO, Emissions Trading System since 2012, which can be viewed Alta Floresta-MT and Lins-SP), (ETS) and complies with the on the Public Emissions Records increasing productivity and protocols that are part of the Platform maintained by the reducing greenhouse gas Energy Savings Opportunities Brazil GHG Protocol Program. emissions by cutting power and Climate Change Agreement This inventory was increased consumption by 11 million kWh. for the agricultural and in scope to include all global The R$ 4.2 million the Company industrial sectors, and is also operations the same year. has invested in recent years a signatory to the Federation Greenhouse gas emissions will generate R$ 4.9 million in House Commitment emissions produced directly – by Company savings in 2019, and reduce agreement. The Company takes operations (scope 1) – and emissions by 824.92 tCO2e. an active role in discussions and indirect energy emissions – as outside activities with a view to a result of energy consumption At the JBS Couros unit based influencing public policy in this and steam purchases (scope 2) – in Mato Grosso, treating area. Internally, the Company indirect supply chain emissions wastewater from skin takes steps to engage its Team (scope 3) are measured annually processing and reusing it for Members and value chain in (for further information, see fertirrigation has also reduced carbon footprint management. page 142). greenhouse gas emissions by
45.69 tCO2e. The process treated GREENHOUSE GAS The Company is also a member 23.3% of the 700,000 liters of MANAGEMENT EFFORTS of other global and local effluent generated every day. As it works to improve its platforms, such as the CDP, the Each liter of waterwaste that is greenhouse gas emissions B3 (Sao Paulo Stock Exchange) treated is equivalent to a kilo measurements, the Company Carbon Efficiency Index (ICO2), of fertilizer. is also working hard in other
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business related areas. The Company’s notable efforts to avoid deforestation throughout the value chain are focused mainly on its Brazilian cattle suppliers.
With support from a social and environmental monitoring system that uses satellite imagery of supplier farms, JBS is able to control its cattle suppliers in the Legal Amazon, where the total area of the Amazon Forest is located (for further information, see page 33). The program helps to reduce the Company’s carbon footprint and domestic greenhouse gas emissions – the result of deforestation caused by opening up new areas for agriculture.
The Company is also focused on other stages of the production process that represent the bulk of its submissions. Here, the Company has initiatives to reduce its dependence on fossil fuels; improve energy consumption awareness; change the Company’s energy mix to focus more on renewable energy; increase efficiency of industrial wastewater treatment; and improve logistics for its own and third-party fleets in order to reduce distances and increase efficiency.
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PERFORMANCE JBS measures the greenhouse Scopes 2 and 3 refer to indirect Although the significant gas emissions from its energy emissions and other reduction in scope 1 and 2 operations every year and indirect emissions that come emissions is mainly the result of reports them as part of scopes from sources the Company selling the Company’s US feedlot 1, 2 and 3. In scope 1, it reports is not responsible for, or is operations, JBS continues to direct omissions, i.e., emissions only indirectly responsible move ahead with the adoption for which the organization for. Examples of scope 2 of best practices in order to is directly responsible. This emissions are electrical energy reduce its carbon footprint. includes emissions from the emissions. Scope three includes Initiatives to reduce JBS’s direct Company’s own fleets, the fuel emissions from third-party emissions focus mainly on the used to generate heat or energy, fleets, commercial travel, waste volume of fossil fuels it uses and the lakes used for wastewater decomposing on third-party overall power consumption. It treatment and enteric properties etc. is also taking steps to obtain fermentation from animals on a cleaner energy mix, use Company feedlots etc. waste to generate energy, improve efficiency of industrial wastewater treatment and EMISSION BY OPERATION IN tCO2e increase logistics efficiency for (JBS GLOBAL) its own and third-party fleets. GRI 305-1 JBS Transportadora and JBS USA Carriers, as well as the pork, poultry and beef businesses, are 2018 2017 2016 focusing heavily on distribution route optimization in order SCOPE 1 4,363,800.82 5,516,869.14 (*) 6,084,483.08 to reduce greenhouse gas emissions. For example, Seara SCOPE 2 1,536,269.49 1,780,515.80 (*) 1,814,793.76 has a team of routing specialists who have been trained to use a SCOPE 3 652,048.41 580,081.37 (*) 613,885.64 (*) specific software program that creates more intelligent routes, which helps reduce costs and (*) Data revised since the Company’s previous report. increase productivity. Correct routing can reduce the number of vehicles, the distance traveled, fuel spending, labor and freight by up to 40%.
The biggest effort in the supply chain comes from the Company’s engagement with its suppliers, particularly cattle suppliers, and efforts to protect forestry areas adjacent to pasture and farmland.
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ENERGY JBS believes its biggest is backed by a well-defined GLOBALLY, JBS INVESTED contribution to reducing strategy and funding for MORE THAN emissions across its value chain implementation. Globally, the comes from its adoption of best Company invested over R$ 160 practices related to increasing million in energy efficiency R$ 160 the use of renewable energy projects in 2018. and improving energy efficiency. MILLION This is a priority issue for both In Brazil, the Company IN ENERGY-EFFICIENT emissions management and reuses waste material to overall eco-efficiency and generate energy. PROJECTS
REUSE AND CIRCULAR ECONOMY
RENEWABLE ENERGY 88% from renewable energy sources POULTRY FAT PIG SKIN SLUDGE RUMEN SUGARCANE BAGASSE Energy (biomass) management
1 JBS AMBIENTAL Waste JBS PLASTIC WASTE management BRASIL
RECYCLED PLASTIC 2 BAGS
BEEF TALLOW 4 3 WASTE JBS HIGIENE JBS RECYCLING & LIMPEZA BIOLINS Soaps Renewable 1 REUSING WASTE TO GENERATE Soap bases energy THERMAL ENERGY management USING WASTE TO PRODUCE 2 MATERIALS
USING WASTE TO PRODUCE NEW 3 PRODUCTS JBS BIODIESEL
REUSING WASTE TO GENERATE Biodiesel 4 ELECTRICITY
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STRATEGY
A major energy management trend at JBS’s Brazilian operations is to migrate to the Free Energy market - which offers lower costs and improved performance; automation - which cuts costs using more efficient equipment; replacing convention lights with LEDs; and reducing natural gas consumption to replace it with cleaner fuels.
1 2
COGENERATION SOCIAL FUEL
JBS has a cogeneration unit JBS Biodiesel also buys beef in the interior of the state of tallow from small-scale São Paulo. Biolins, which is livestock breeders in the São located in the Lins Industrial Miguel do Guaporé region Park, produces steam and in Rondônia. This product thermal energy from biomass has been bought as part of (sugarcane bagasse and the Federal Government’s eucalyptus chips). Biolins runs Social Fuel Seal program. JBS a thermal plant capable of has a technical team that generating around 45 MW provides livestock breeders of energy per hour, sufficient with information about the to supply a city of program, technical support, 300,000 habitants. financial planning guidance, preset sales options, bonuses Around 33% of this electricity for cattle quality and is used to supply the Meat, guarantees to buy 100% of Leather and Novos Negócios all contracted cattle. In 2018, plants based at the Lins the project generated around industrial complex. The R$ 27 million in income for remainder is distributed to the 259 families involved in JBS units and sold on the the project, or an average of free energy market. The around R$ 104 thousand steam produced by the plant per family. supplies the adjacent JBS units. Biolins alone generates the equivalent of 22.5% of all energy used by every JBS plant in Brazil.
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BIOLINS, A JBS COGENERATION UNIT, ALONE GENERATES 22.5% OF ALL THE ENERGY USED BY EVERY JBS PLANT IN BRAZIL
3 4
MONITORING LED LIGHTING
At JBS USA, energy efficiency The Grand Island beef improvements also have production unit has replaced a significant impact on air all its lighting with an LED quality and help reduce system and installed more greenhouse gas emissions. than 1,500 movement In 2018, JBS USA selected sensors. The process, which two facilities to implement a was concluded at the end complete energy efficiency of 2018, should cut power measurement and use by 3%. Similar projects monitoring program for the have been implemented at rendering process. As these the pork production areas in were relatively new plants, Marshalltown and Ottumwa. there was no track record Also in 2018, Pilgrim’s Sumter for energy improvement replaced its boilers with efforts, however performance more efficient units and analyses of new technologies resized the equipment to could lead to their adoption minimize thermal losses. at other factories, including Pilgrim’s Guntersville took a older ones. similar path.
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PROJECTS
AUTOMATION TIRE RECYCLING
In 2017, Friboi invested to JBS Transportadora sends automate machine rooms it used tires to cement and at three of its units in Lins asphalt companies where (SP), Goiânia (GO) and they are used as an alternate Alta Floresta (MT), which fuel or to make rubber-based improved productivity and materials instead of sending operational control and them to landfills. In 2018, this increased energy efficiency. helped reduce emissions by This helped reduce emissions 123.95 tCO2e. by 824.92 tCO2e in 2018.
RECYCLED FERTIRRIGATION COOKING OIL
Around 700 thousand JBS Biodiesel partners with liters of water are used JBS Ambiental in the Friendly per day to process cattle Oil project, which collects skins in the city of Collider cooking oil from over 300 (MT). The waste, which collection points in 20 cities contains nutrients that around the state of São Paulo. can be used as fertilizer, 3.5 million liters of cooking oil undergoes chemical and were recovered in 2018 and biological treatment and reused to make biofuel. This is subsequently used for could reduce emissions by up
pasture fertirrigation instead to 4313.94 tCO2e compared with of being disposed of. This the volume of biodiesel used fertilizer replacement with the volume of traditional helped reduce emissions by diesel used by machinery
45.69 tCO2e in 2018. and vehicles.
PACKAGING CHANGES
In 2018, Friboi launched a new packaging format for its Fiambre Kitut (Luncheon Meat) product, which now comes in cylindrical cans as well as the traditional pyramid format. The new format uses less raw material, helping to
reduce emission by 89.14 tCO2e annually.
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PERFORMANCE JBS USA plans to switch all In Brazil, 91% of all direct energy In 2018, Friboi met and exceeded its beef and pork production consumption comes from it Kwh target for each head of facilities to LED lighting systems. renewable sources, compared cattle processed. It achieved with 88% in 2017. Including this with greater control over its In Australia, a group of boiler fuel as an energy source, operational processes, such as production units invested in this figure rises to 98.6%. the economic value-added (EVA) biogas capture systems, helping project and efforts to monitor them improve energy efficiency. energy consumption and improve productivity. JBS increased its use of renewable energy in 2018, This helped the Company which now represents 18% of all achieve its goal of cutting power the energy the Company uses usage by 12% and increasing directly, underlining the trend eco-efficiency. detected in 2017.
ENERGY MIX (IN GJ) GRI 302-1
TOTAL GJ* - DIRECT ENERGY 2018 2017 2016
TOTAL GJ 170,378,507.35 177,659,805.16 224,892,963.81
NON-RENEWABLE GJ 139,743,639.54 82% 148,787,882.85 83% 194,292,090.82 86%
RENEWABLE GJ 30,634,867.82 18% 28,871,922.31 17% 30,600,873.00 14%
* Including electricity generation, fuel used to generate steam, thermal heating (stationary combustion) and fuel used to operate the Company fleet (mobile combustion) as direct energy.
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SOLID WASTE IN 2018, THE COMPANY As part of its efforts to The Company is therefore reduce emissions, JBS has committed to recycling or using INVESTED OVER also been managing the as much waste as possible in solid waste generated by its order to avoid using landfills or R$ 8.3 production processes and other disposal methods and to post-consumption packaging. supporting efforts to increase The main goal is to correctly post-consumption packaging MILLION dispose of and properly treat recycling across the country TO IMPROVE WASTE this type of waste. This avoids using reverse logistics programs. MANAGEMENT environmental impacts such as methane (CH4) emissions from decomposition, creating one of the greenhouse gases.
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PACKAGING JBS is committed to reducing by 15%. Resizing product bags The new cans made on a or recycling materials and and boxes also helps to optimize production line in Brazil require increasing the waste usage or truck space. less water, electricity, LPG and recycling system to reduce the natural gas to be produced. amount of waste sent to landfills JBS Ambiental is also working The unit in Lins (SP) makes and encourages reuse in the to increase the amount of 907.8 tons or 20.4 million units production chain. plastic produced by JBS annually but by reducing the operations that is recycled. In weight from 65.1 g to 44.5 g, it Packaging is a critically 2018, this figure rose to 6,041 has cut energy usage by 32%. important item for food tons compared with 5,233 tons Water, LPG and natural gas costs protection and safety from the in 2017. This figure is expected fell approximately the same. moment it leaves the factory to jump to over 14.5 thousand until it arrives on the consumer’s tons in 2019. Based on can production table. When packaging is thrown volumes, the Company away, this generates waste that JBS USA not only has product estimates that this will eliminate needs to be properly disposed of. packaging reduction targets, 89.14 tons of carbon dioxide but also researches alternative equivalent (CO2e), which is the All JBS operations invest in materials that can be recycled equivalent to a small gasoline research and development to and adopts technology powered car circling the world 16 discover ways of reducing and to reduce the amount of times or 624 trees being planted. optimizing packaging usage, packaging while maintaining Packaging innovation has also particularly packaging that does product safety. In 2018, one had a significant environmental not come into direct contact pork unit reduced the amount impact by helping to reduce the with food, thereby reducing the of packaging it was using CO2 emissions produced by amount of waste produced and and increased conservation each shipment. associated costs. of cardboard boxes used to ship products by replacing the In Europe, Pilgrim’s Moy Park For example, there are annual shelves used to transport them was the first company to packaging waste reduction – in some cases, the shelving commit to reducing domestic targets in Brazil. Many paths are would damage the boxes. food and packaging waste taken to identify opportunities, across the supply chain. Its either on a daily basis with ad In order to stop disposing efforts reduced the volume hoc efforts to reduce waste or by of boxes with plastic linings of cardboard and plastic used developing new technologies. – which are needed to stop by 46% and 43% respectively. One of these initiatives is products coming into contact The amount of metal (2%) and automatic assembly for boxes with the cardboard – the unit other materials (9%) used by used to package poultry based replaces the lining and the packaging was also reduced. products. Compared with a boxes can now be reused several manual process, this reduces times a day. This has saved an the amount of cardboard used average of 200 boxes a day.
150 Chapter 4 • Our sustainability
ENVIRONMENTAL LABELING ON PRODUCT PACKAGING The R&D teams in Brazil have been working on changing packaging to comply with Environmental Labeling regulations issued by the Brazilian Association of Technical Standards – ABNT (ABNT NBR 16182) since 2014. The regulations standardize the symbols used to instruct people how to properly dispose of post-consumption packaging. This includes separating wet and dry waste for selective collection and subsequent triage. This supports ongoing improvements to the recycling chains for various materials.
151 Annual and Sustainability Report • 2018 • JBS
REVERSE LOGISTICS
JBS believes that the closed cycle, i.e., reusing and recycling waste, is critical for sustainability. As a result, the Company has a number of ongoing initiatives to identify such opportunities.
At Seara, the pallet center manages a number The tires used on trucks that transport JBS of processes, including collection, procurement, products are also disposed of responsibly. JBS shipping and plant supplies, among others. Transportadora currently refurbishes around 1,100 As a result, the level of wood being reused has tires every month and sends around 500 and risen 41%. This was achieved by adapting the usable tires to a nonprofit organization created by pallet collection targets; changes to the logistics the Araraquara (SP) tire industry which disposes network to reduce pallet shipping; a factory of the tires correctly. In Brazil, unusable tires are supply study; collecting pallets from customers in used as an alternative fuel in the cement industry, various regions across the country; and improving to manufacture shoe soles, asphalt, rubber sealant, shipping Company accountability. The team of vehicle mats, rainwater ducts, sports flooring and controllers also organized a number of training industrial flooring. courses and adapted several processes. 80% of the 500 tires collected every month are sent for co-processing at cement or asphalt factories. In addition to not sending 420 tons of rubber to landfills, this initiative generates revenue for the Company and reduces the equivalent of 123.95 tons of greenhouse gas emissions, based on an average weight of 70 kg per truck tire. JBS Biodiesel recovered millions of liters of cooking oil to produce biofuels. JBS Biodiesel partners with JBS Ambiental in the Friendly Oil project, which runs programs to raise people’s awareness about the importance of properly disposing of cooking oil and collects cooking oil from over 300 collection points in 20 cities around the state of São Paulo. Throughout the year, the initiative collected around 3.5 millions of cooking oil. JBS USA has also taken steps to recycle as much as possible at its units. The Company recycles As each liter of cooking oil can produce 0.8 liter 80% of lean paper, which is sent to recycling of biodiesel, reverse logistics for this material centers of paper manufacturers; 95% of pallets, will represent a 4,313.94 ton reduction in carbon which are returned to suppliers for reuse; 95% dockside equivalent from using 100% green of all metal used; 95% of clean plastics, which biodiesel in machines and vehicles. are shipped to a recycling center or reused to make new products; and 95% of high density polyethylene plastic bags, which are sold to their original manufacturer and reused to package the Company’s subsequent orders.
152 Chapter 4 • Our sustainability
REDUCTION IN BRAZILIAN OVER PACKAGING VOLUMES The R&D areas also focus on reducing the amount of primary 73% OF packaging (which comes into direct contact with product) as COMPANY well as secondary and tertiary packaging. These efforts have PACKAGING already improved the Company’s 2018 results. There was a 8.4% reduction in packaging weight MATERIAL per product last year. COMES FROM RENEWABLE SOURCES
PACKAGING MATERIALS – BRAZIL
BY TYPE OF WASTE (TON)
PLASTIC 18.30% non-renewable 32.55% PRIMARY AND ROLE 0.51% renewable SECONDARY
CARDBOARD 72.16% renewable PACKAGING
METAL 9.01% non-renewable
POLYSTYRENE 0.01% non-renewable 67.45% TERTIARY CELLULOSE/WOOD 0.01% renewable PACKAGING
CASE: REVERSE LOGISTICS PROGRAM
In Brazil, JBS has a nationwide program to support in five regions of the country. Prolata works in reverse logistics for packaging, which aims to three areas: centers to receive large volumes reduce the amount of waste sent to landfills and of waste, cooperatives for recyclable material increase recycling in Brazil. Some of the steps collection – for social inclusion – and voluntary that have been taken include training courses delivery points for consumers. for people who collect recyclable materials and investment in equipment and facilities for related Among other initiatives taken as part of the cooperatives and associations. Industry Packaging Accord, in 2018 JBS also became a member of the City+ Program which JBS is a member of the Industry Packaging Accord supports selective waste collection and collection and the Prolata Program, an initiative run by the cooperatives in seven Brazilian cities. Brazilian Association of Steel Packaging (Abeaco)
153 Annual and Sustainability Report • 2018 • JBS
PROLATA
In Brazil, JBS has a nationwide program to support Prolata is managed by the Brazilian Association of reverse packaging logistics which aims to reduce Steel Packaging (Abeaco) and works in three areas: the amount of waste sent to landfills and increase • Distribution/collection centers which can receive recycling in Brazil. In accordance with Law 12.305, large volumes of waste; which created the National Solid Waste Policy in • Recyclable material collection cooperatives: 2014, JBS is a member of the Industry Packaging which involves social inclusion efforts; Accord and the Prolata Program. • Voluntary Delivery Points: for the end consumer.
According to figures from Abeaco, the program recycled more than 15,000 tons of steel.
PROGRAM AREA:
AM CE RN
PE
BA MT
DF GO
MG
MS
SP RJ PR
RS
initiatives
154 Chapter 4 • Our sustainability
PACKAGING SECTORIAL ACCORD
JBS is taking the following steps to comply with recyclable materials through 2017. The Program the Industry Packaging Accord: includes training courses for people who 1) In 2015 it joined the ILOG to support creation of collect recyclable materials and investment in the Center for Recyclable Material Processing equipment and facilities for related cooperatives in Maringá, in the state of Paraná. The Maringá and associations. Center, alongside other centers involved in the 4) It supports the Separate Don’t Stop Program, program, have collected approximately 9,500 an initiative managed by the Coalition for tons of waste. Environmental Awareness and Education that 2) It supports the National Association of uses social media and initiatives in São Paulo to Collectors (ANCAT) which, between 2015 and educate people about correct waste disposal. 2017, was responsible for selling around 90,000 5) In 2018 JBS also became a member of the tons of recyclable materials with support from Cidade+ Program which supports selective collection cooperatives. waste collection and collection cooperatives in 3) It created the JBS Reverse Logistics Program: seven cities. The program is currently running at cooperatives in the states of São Paulo and the following locations: Mato Grosso do Sul sold more than 650 tons of
PROGRAM CIDADE+ AREA:
Jijoca de Jericoacoara
CE
Naviraí MS Casimiro de Abreu SP RJ
Piracaia
Bom Jesus dos Perdões
in operation
In development
155 Annual and Sustainability Report • 2018 • JBS
INDUSTRIAL WASTE JBS AMBIENTAL All JBS units worldwide manage JBS Ambiental is a unit that materials that were previously waste on a day-to-day basis and manages solid waste, recycling disposed of to create have the following targets: solutions and the circular new products. economy for the business. • To reduce the volume of waste JBS Ambiental manages the generated during production. Concepts like the circular waste from its own business and • To support material recycling. economy, where waste from provides services to a number of • To ensure waste is correctly one production chain becomes JBS plants around the country. disposed of and reduce the raw material for others, is not It also develops products and amount of waste sent to just a part of JBS’s day-to- solutions using industrial waste. landfills. day business, it is central to Part of this material is reused • Reduce costs and generate the business model at JBS in JBS operations as trash bags, income. Novos Negócios. Several of shrinkwrap, pallet protectors the Company’s operations use and trays. The practices the Company has adopted reflect current legislation in each country where JBS AMBIENTAL it operates. VOLUMES MANAGED
In Brazil, recyclable materials 2018 are separated and collected by recycling companies. JBS PRODUCTS TOTAL also partners with composting companies which transform Cardboard (Kg) 3,060,700 organics into compounds that can be used as fertilizer. Non- RECYCLABLES Recycled Plastics (Kg) 2,841,358 recyclable and hazardous waste is separated and disposed Metal (Kg) 6,101,052 of correctly. Others (Kg) 2,271,239 The Company has a Solid Waste Management Plan that TOTAL 14,274,349 provides guidelines on correct waste disposal. JBS AMBIENTAL PRODUCTS JBS Ambiental correctly disposes of some of the post industrial 2018 waste produced by a number of group factories, assessing PRODUCTS QUANTITY the legal background of each customer or service provider. Trash bags 5,012,200
AMB Shrinkwrap 742,000 PRODUCTION
Pallet protectors 247,975
Trays 212,070
TOTAL 5,472,245
156 Chapter 4 • Our sustainability
Between 2017 and 2018, JBS Ambiental’s trash bag output rose by 300,000 units and the bags are used by all JBS factories in Brazil.
This business model generates value for the production chain, increases profit and reduces the environmental impact from JBS operations.
JBS USA has a long-standing strategy to continuously improve waste management which has helped increase recycling and reduce the amount of waste disposed of in landfills. In Europe, waste management has been outsourced where it is subject to local regulations and monitored by government agencies.
2,906 TONS OF RECYCLED RESIN WERE ALSO PRODUCED AND WILL BECOME NEW PRODUCTS
157 Annual and Sustainability Report • 2018 • JBS
PERFORMANCE VOLUME OF OPERATIONAL WASTE GENERATED GRI 102-48, GRI 306-2
2018 2017 2016
WASTE VOLUME - 2,161,726.18 98.65% 1,868,472.41* 99.50% 2,074,680.96* 92.27% NON-HAZARDOUS
WASTE VOLUME - 29,542.03 1.35% 9,356.68 0.50% 173,718.63 * 7.73% HAZARDOUS
TOTAL VOLUME 2,191,268.21 1,874,553.2 2,248,399.59
1. LANDFILL/ 23,533.82 1.07% 22,828.2 1.22% 34,474.01 1.53% INDUSTRIAL - OWN
2. LANDFILL/ INDUSTRIAL - THIRD 304,171.29 13.88% 245,691.31 13.11% 418,800.36* 18.63% PARTIES
3. COMPOSTING 645,828.42 29.47% 637,852.68 34.03% 713,883.12* 31.75%
4. INCINERATION 14,273.75 0.65% 10,732.44 * 0.4% 11,328.59 0.50%
5. RECYCLING 377,462.21 17.23% 399,072.37 21.29% 325,037.78* 14.46%
6. ENERGY REUSE 111,986.3 5.11% 57,438.97 3.06% 51,765.57* 2.30%
7. COGENERATION 38,834.48 1.77% 28,277.42 1.51% 7,371.52 0.33%
8. FERTIRRIGATION 584,400.37 26.67% 387,726.4 20.68% 465,224.22 20.69% (LAND FARM)
9. OTHERS 90,777.59 4.14% 88,209.4 4.71% 220,514.43 9.81%
*Data adjusted since the 2017 Sustainability Report.
There was a 17% increase in the volume of post-industrial waste. The main reasons for this are the increasing volume of waste used for fertirrigation at the US and Australia beef units and the 95% increase in waste reused to produce energy at Pilgrim’s Moy Park. Altogether, approximately 112,000 tons of waste were reused to generate electricity.
1.2 million tons of waste were reused, representing 53.58% of all waste generated. This waste was used for composting, recycling, energy reuse and cogeneration.
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JBS USA RESULTS PILGRIM’S MOY PARK IS COMMITTED TO NOT 80% 95% SENDING of clean cardboard was recycled of clean and non-compensated and sent to recycling centers or plastics were collected and WASTE TO paper manufacturers for reuse shipped to a recycling center or reused to make new products LANDFILLS
A large proportion of the 200,000 tons of organic waste produced in 2018 was used to 95% 95% generate energy at anaerobic digestion plants and at a of pallets were returned to their of high density polyethylene traditional renewable electricity suppliers for reuse (HDPE) plastic bags were plant. The remainder was returned to manufacturers for recycled or used for circular reuse, creating a closed cycle economy initiatives. 95% of all metal was sent to the salvage patio
159 Annual and Sustainability Report • 2018 • JBS Our Performance
160 Our Performance
JBS plant in Amparo - SP
161 Annual and Sustainability Report • 2018 • JBS
FINANCIAL RESULTS GRI 102-48
n 2018, JBS repeated the excellent results it delivered in 2017, with significant achievements in various areas. This performance underlines the Company’s ongoing focus on operational efficiency and its Iinvestments in innovation and quality. The deleveraging process was one of the year’s highlights. NET INCOME GROSS PROFIT Net revenue was R$ 181.7 billion, equivalent to Gross profit rose to R$ 26.3 billion, a 10.8% US$ 49.7 billion. This is 11.3% higher than 2017 – increase compared to 2017. Gross margin the highest in the Company’s history. was stable at 14.5%. R$ 181.7BN R$ 26.3BN
Up 11.3% compared with 2017 In 2018, the gross margin was 14.5%
14.6% 14.5% 181,680.2 163,170.0 26,340.2 11,3% 23,722.2 10.8%
2017 2018 2017 2018
ADJUSTED NET INCOME ADJUSTED EBITDA JBS ended 2018 with adjusted net income of Adjusted EBITDA rose to R$ 14.8 billion, an 10.7% R$ 1.6 billion and net profit of R$ 25.2 billion. increase on last year’s figure. EBITDA margin Profit per share was R$ 0.01. was stable at 8.2%. R$ 1.6BN R$ 14.8BN Earnings per share EBITDA margin was 8.2% of net revenue
0.19 0.60 0.01 8.2% 8.2% 1,606.3 13,415.9 14,849.8 534.2 201% 25.2 10.7% 2017 20181 2018 2017 2018
1 Excluding the effect of signing up to the Farm Tax Regularization Program (PRR - Funrural), net of tax effects. Note: graphs are in R$ millions.
162 Chapter 5 • Our performance
OPERATIONAL CASH FLOW FREE CASH FLOW In 2018, the Company generated R$ 11.5 billion in cash Free cash flow was R$ 5.7 billion, a 105.2% improvement from operations, up 31.8% year on year. on 2017.
R$ 11.5BN R$ 5.7BN
Up 31.8% compared with 2017 Up 105.2% compared with 2017
11,466.6
8,698.4 5,699.8 31.8% 2,777.6 105.2% 2017 2018 2017 2018
NET DEBT AND LEVERAGE Net debt in BRL rose from R$ 45.2 billion to R$ 47.2 billion in 2018, while leverage dropped from 3.38x to 3.18x during the year. In dollars, net debt fell from US$ 13.7 billion to US$ 12.2 billion by the end of 2018, and leverage fell from 3.26x to 3.01x. 3.38 3.18 3.26 3.01 Leverage in US$ at the end of 2018 was 45,283.30 47,217.70 3.01x 13,689.0 12,185.9 Leverage in R$ at the 2017 2017 2018 2018 end of 2018 was
3.18x Net Debt (R$) Net Debt (US$) Leverage (R$) Leverage (US$)
163 Annual and Sustainability Report • 2018 • JBS
BUSINESS UNITS RESULTS
SEARA key customers, adopting tailored available and rising exports to In 2018, Seara’s net revenue initiatives to more efficiently China and other Asian countries. reached R$ 17.7 billion, 1.1% meet their needs. The Company higher than 2017. Seara reported also organized a number of JBS USA PORK an EBITDA of R$ 1.5 billion, down special programs involving JBS USA Pork posted net 1.6%, and an EBITDA margin of its cattle suppliers in order to revenues of R$ 20.8 billion in 8.7%, compared with 9.0% in improve standardization and 2018, a 4.8% increase compared 2017. Operational performance raw material quality. with 2017, and an EBITDA of was affected by rising soy meal R$ 2.0 billion, with a 9.6% margin. and corn costs and by events JBS USA BEEF (INCLUDING These figures include the impact such as the truck drivers’ strike, AUSTRALIA AND CANADA) from the BRL’s depreciation. In which reduced the housing JBS USA Beef registered net dollar terms, net revenues were volume of animals for slaughter. revenues of R$ 78.6 billion in $ 5.7 billion and EBITDA and was 2018, a 13.7% increase compared $ 536.8 million. Throughout 2018, Seara focused with 2017, and an EBITDA of on business profitability, R$ 6.3 billion, a 53.6% Pork production capacity increasing consumer preference, improvement on 2017, with increased significantly in the expanding its customer base an 8.0% margin. These results United States in 2018, which had and continuing its investment include the impact of a 12.7% an impact on domestic prices. in new product development depreciation of the Brazilian Falling pork prices partially and innovation – many of which real, which rose from R$ 3.19 per offset the impact on industry received important recognition dollar in 2017 to R$ 3.65 in 2018. margins. On the other hand, US in Brazil and abroad. As a result, In dollar terms, net revenues pork exports rose 4% compared the repurchase rate reached were $ 21.5 billion and EBITDA with 2017, despite Mexican and 75% in 2018, while the brand’s was $ 1.72 billion. Chinese/Hong Kong tariffs on presence in Brazilian homes US products. increased to 77%. The landscape was positive in North America with rising cattle Plumrose ended the year JBS BRASIL availability and stable processing posting record figures and In 2018, JBS Brazil, including capacity, as well as increasing continues to focus its efforts on the Novos Negócios and leather demand for beef, which helped increasing production capacity, operations, posted revenues support prices at higher levels. growing sales and developing of R$ 27.6 billion, up 17.1% on 2018 exports were better than new products. 2017. EBITDA was R$ 1.2 billion, 2017, setting a new record. a recovery of 3,128.9%. EBITDA PILGRIM’S PRIDE margin reached 4.5%. JBS USA Beef continues to CORPORATION focus on increasing its export Pilgrim’s Pride registered net The Company continues to market share and profitability revenues of R$ 39.9 billion in focus on improving the channel with a better mix of products. 2018, a 16.2% increase compared and product mix in order to The Company’s performance with 2017, and an EBITDA of maximize profitability and in Australia was better than in R$ 3.7 billion, with a 9.4% margin. strengthen partnerships with previous years with more animals These figures include the impact
164 Chapter 5 • Our performance
from the BRL’s depreciation. In dollar terms, net revenues were $ 10.9 billion and EBITDA and was $ 798.2 million.
In the US, Pilgrim’s faced significant challenges in the commodities area, as well as a slower recovery from climate events affecting some of its units, which was partially offset by an improvement in results from the prepared foods segment, where sales posted a significant 15% increase. In Europe, results were affected by rising poultry feed costs and the European drought.
In Mexico, domestic sales of prepared foods increased by 33%, following the Company’s investments in additional capacity and to develop the Pilgrim’s brand, as well as its strategy to serve key customers more effectively. R$ 78.6 BILLION (US$ 21.5 BILLION) NET REVENUES POSTED BY JBS USA BEEF
165 Annual and Sustainability Report • 2018 • JBS
ACHIEVEMENTS
BS received a number of awards in various areas throughout 2018, reflecting the Company’s commitment to continuous improvement and operational Jsustainability as well as its interactions with associations, companies, governments and academics as well as other actors able to contribute to the Company’s knowledge and growth.
AWARDS
Transparency International Época-Reclame Aqui Award RoSPA OHS Silver Award 2018 Brazil For the first time Seara and Friboi e RoSPA OHS Transport Safety JBS was top of all food sector were Customer Service finalists Award (for the fifth consecutive companies in the organization’s in the Food – Perishables, Frozen year) 2018 report, classified as and Dairy Category, where they This is an award from The Royal the company with the most took 5th spot. Society for the Prevention of transparent international Accidents, based in London. operations. The Company came 9th on the overall ranking.
CERTIFICATION In addition to operational certificates, several JBS units also hold additional certificates that guarantee process and product quality and thereby guarantee access to additional markets.
Global and regional workers and legislation that • GFSI - Global Food Safety • Global Gap – This is an audit applies to each business and Initiative - Certifies the focusing on the farming contracted hours. Company meets the production chain (breeders/ organizations food safety hatcheries/broiler chicken Food safety standards. The initiative’s farms). • Alo Free - C- Certifies controls members include many of • AUSMEAT – Certificate of for medications and chemical the major players in global Accreditation. products use to breed food safety. • AUSMEAT – Certificate chickens. • Global Gap – This is an audit of Attainment (Animal • British Retail Consortium focusing on the farming Welfare, HACCP GMP, (BRC) – A prerequisite in production chain (breeders/ Specified Risk Material). order to supply European hatcheries/broiler chicken • AUS-QUAL BRC Global customers, this certificate is farms). Standard. one of the toughest in the • Meat Standards Australia. industry covering 326 criteria Production practices • SWA (Social Workplace that look at factory safety and • Halal Slaughter- This means Accountability) – Focuses quality programs. products are produced in line on Social Responsibility and • CFM – Certification for food with the religious and cultural Sustainability and verifies component standards to standards of Muslim countries. working conditions, hired guarantee product safety. • Vegetable Chicken – Certifies
166 Chapter 5 • Our Performanceperformance
that chickens are given • ISO 50001 – Certifies the Animal Welfare 100% vegetable feed and no Company adopts best energy • PAACO - Professional growth promoters, antibiotics efficiency practices. Animal Auditor Certification or anticoccidians are used • OHSAS 18001 – Team Organization – Certifies that and guarantees traceability Member Health and Safety audits meet the requirements throughout the production Management System of the Association, whose chain. • IATF 16949:2016 (at Couros) – members are animal welfare Quality Management System audit specialists in the US. Customer - Specific requirements for the • NFAS - The National Feedlot • McDonald’s – Certification automotive industry. Accreditation Scheme (NFAS) monitors animal welfare, ) is a certificate issued by food safety and best Social Responsibiliy a committee of industry manufacturing practices, • SMETA – This is a social representatives in Australia, among other criteria. responsibility and attesting that product audit • YUM! – This audit is carried sustainability audit required practices and documentation out by the Company that by European customers which comply with the association’s owns the KFC, Pizza Hut and verifies working conditions standards. Taco Bell Brands, focusing on (hours worked, special • ACP - Assured Chicken three areas: quality system, equipment, health and safety Production – Certification food safety and farming etc.) and business specific from Red Tractor, the largest (management, best practices legislation. platform assessing UK farm and animal welfare). and food Company practices. Environmental • Council Regulation ISOs • ISCC – This seal attests that N˚1099/2009 – European • ISO 9001 – Refers to set companies are taking a Union regulations for animal of technical guidelines responsible approach to slaughter. that establish a quality reducing greenhouse gas management model for affects, sustainable soil usage, organizations in general, protecting natural biospheres whatever their size or and increasing social business. sustainability. • ISO 14001 – Environmental • Leather Working Group (LWG) management quality – A British organization which standards. certifies companies that have • ISO 17025 – This standard is adopted best environmental used to standardize laboratory practices at tanning plants testing and calibration. worldwide.
167 Annual and Sustainability Report • 2018 • JBS
JBS’S OUTLOOK
BS’s objective over the JBS will continue to invest increase reuse, recycling and next several years is to in initiatives to increase packaging optimization. Jensure that the Company transparency, sustainability, continues to grow through an efficiency and close relationships Animal welfare will continue to ethical and responsible approach with its suppliers. Technology be a JBS priority in the future. As to business in every area. JBS is an important aspect of in other areas, the Company will is strongly committed to its achieving this goal, because it continue to focus on innovation value chain and will continue to helps the Company manage and technology to improve its support efforts to offer safe, high- more data and information animal welfare performance, quality and innovative foods in more quickly and safely and in order to comply with local each of its markets. encourages the development legislation and customer and of alternative solutions that consumer requirements. It will To this end, JBS will continue to increase shared values and also expand its partnerships increase investment in diversity improve cost controls. with universities and industry at all of its units, including both associations to obtain its production facilities and A number of environmental certificates and share best corporate offices, and it will issues will be critical over the practices across the value chain. continue to share best practices years ahead and will receive to provide each of its facilities special attention. One of them JBS will continue to improve its with the flexibility they need is water management, as governance and compliance so they are able to implement water is expected to become in line with its commitment specific inclusion plans increasingly scarce in a number to be an increasingly ethical, supporting their Team Members of regions where the Company responsible and transparent and their local communities. operates. There will also be company, in line with the best new regulations governing business practices, and to set Constant team training is one of the way water is used and the bar in this field. the tools available to guarantee treated and how effluent and an attractive, supportive waste are managed. Another is In the business area, the and motivating workplace energy consumption, where the Company will continue to environment and JBS will Company needs to take steps focus on operational efficiency continue to focus on training, in to reduce consumption and and development of high- addition to occupational health adopt clean technologies and quality, safe products that & safety. JBS will continue to renewable sources. offer significant added value support its planning, monitoring, and which better meet the control and audit activities Here, the Company will be requirements of our customers and will invest in technology to increasing its investment in and consumers, all of which will increase safety at its facilities innovation in order to identify require additional investment in in addition to strengthening a opportunities for improvement innovation and technology. culture of prevention in order to and to develop even more avoid workplace accidents efficient solutions that will JBS’s strategy is to increase cash and incidents. help reduce consumption and generation and reduce debt,
168 Chapter 5 • Our performance
both of which are important to support the Company’s growth over the next several years. The Company will also continue to assess which capital structure best represents the Company’s business model and is able to generate further value for shareholders.
Through these and many other initiatives, JBS believes it will be in a position to manage the risks that may arise in the coming years and will be able to further improve its environmental, social and financial performance, generating additional value for all Company stakeholders.
JBS CONTINUES TO INVEST IN INITIATIVES TO INCREASE TRANSPARENCY, SUSTAINABILITY, EFFICIENCY AND CLOSER RELATIONSHIPS
169
Additional information and GRI content index Annual and Sustainability Report • 2018 • JBS
ADDITIONAL INFORMATION
MATERIALITY AND ITS BOUNDARIES
MATERIAL TOPICS DESCRIPTION
WATER Usage Reduction Targets; Management and Governance; Capture Sources: Eco-Efficient Practices; Reuse; Wastewater Treatment; Educational Activities
ANIMAL WELFARE Management and Governance; Best practices for Animal Breeding, Transport and Slaughter; Certification; Audits
PRODUCT INTEGRITY Responsible Social and Environmental Practices; Responsible Raw Material Procurement Supplier Environmental Assessment; Supplier Employment Practices 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; Supplier and Producer Engagement; Logistics Efficiency; Energy Efficiency; Renewable Energy Investments; Energy Usage Reduction Targets; Solid Waste Collection; Materials Reuse and Recycling; Volume Reduction
TEAM MEMBER HEALTH AND Occupational Health and Safety; Culture of Prevention and SAFETY Engagement; Legal Compliance; Training
172 Additional information and GRI content index
RELATED TOPICS WHERE THEY OCCUR
Water (303) Inside and outside the Company Effluents and waste (306)
Inside and outside the Company
Supplier environmental assessment (308) Inside and outside the Company Supplier social assessment (414) Customer health and safety (416) Marketing and labeling (417)
Materials (301) Outside the Company Energy (302) Emissions (305) Effluents and waste (306) Supplier environmental assessment (308)
Occupational health and safety (403) Mostly inside the Company
173 Annual and Sustainability Report • 2018 • JBS
GRI CONTENT INDEX
GRI PAGE NUMBER RELATED DISCLOSURE STANDARDS RESPONSE SDGS
GRI 101: GRI 101: Foundation 2016 Throughout the FOUNDATION report 2016
GRI 102: 102-1 Name of the organization 18 GENERAL DISCLOSURES 102-2 Activities, brands, products, and services 38 2016 102-3 Location of headquarters 18
102-4 Location of operations 20
102-5 Ownership and legal form 26
102-6 Markets served 20
102-7 Scale of the organization 20
102-8 Information on employees and other workers 82
102-9 Supply chain 48 - 77
102-10 Significant changes to the organization and its 24 - 25 supply chain
102-11 Precautionary principle or approach 32 12
102-12 External initiatives 34 17
102-13 Membership of associations 34 17
102-14 Statement from senior decision-maker 8
For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly presented and the references for Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report. The service was performed on the Portuguese version of the report.
174 Additional information and GRI content index
GRI PAGE NUMBER RELATED DISCLOSURE STANDARDS RESPONSE SDGS
GRI 102: Ethics and integrity GENERAL DISCLOSURES 102-16 Values, principles, standards, and norms 22 16 2016 of behavior
Governance
102-18 Governance structure 24
Stakeholder engagement
102-40 List of stakeholder groups 98
102-41 Collective bargaining agreements 82 8
102-42 Identifying and selecting stakeholders 98
102-43 Approach to stakeholder engagement 98
102-44 Key topics and concerns raised 98
Reporting practice
102-45 Entities included in the consolidated financial 6 statements
102-46 Defining report content and topic boundaries 6
102-47 List of material topics 98
102-48 Restatements of information 158, 162
102-49 Changes in reporting -
102-50 Reporting period 1/1/2018 to 12/31/2018
102-51 Date of most recent report 2017
102-52 Reporting cycle Annual
102-53 Contact point for questions regarding the report 6
102-54 Claims of reporting in accordance with the GRI 6 Standards
102-55 GRI content index 172
102-56 External assurance Not applicable
175 Annual and Sustainability Report • 2018 • JBS
GRI CONTENT INDEX
GRI PAGE NUMBER RELATED ITEMDISCLOSURE DISCLOSURE STANDARDS RESPONSE SDGS
GRI 302: 103-1 Explanation of the material topic and its 140 - 148 7, 13 ENERGY 2016 boundary
103-2 The management approach and its components 140 - 148 7, 13
103-3 Evaluation of the management approach 140 - 148 7, 13
302-1 Energy consumption within the organization 148 7, 13
GRI 303: 103-1 Explanation of the material topic and its 132 - 135 6 WATER 2016 boundary
103-2 The management approach and its components 132 - 135 6
103-3 Evaluation of the management approach 132 - 135 6
303-1 Water withdrawal by source 136 6
303-3 Water recycled and reused 134 - 136 6
GRI 305: 103-1 Explanation of the material topic and its 140 - 142 13 EMISSIONS boundary 2016 103-2 The management approach and its components 140 - 142 13
103-3 Evaluation of the management approach 140 - 142 13
305-1 Direct (Scope 1) GHG emissions 142 13
GRI 306: 103-1 Explanation of the material topic and its 138; 149 - 157 EFFLUENTS AND boundary WASTE 2016 103-2 The management approach and its components 138; 149 - 157
103-3 Evaluation of the management approach 138; 149 - 157
306-1 Water discharge by quality and destination 138 6, 12
306-2 Waste by type and disposal method 158 12
GRI 308: 103-1 Explanation of the material topic and its 124 - 131 12 SUPPLIER boundary ENVIRONMENTAL ASSESSMENT 103-2 The management approach and its components 124 - 131 12 2016
176 Additional information and GRI content index
GRI PAGE NUMBER RELATED DISCLOSURE STANDARDS RESPONSE SDGS
GRI 308: 103-3 Evaluation of the management approach 124 - 131 12 SUPPLIER ENVIRONMENTAL 308-2 Negative environmental impacts in the supply 76 12 ASSESSMENT chain and actions taken 2016
GRI 403: 103-1 Explanation of the material topic and its 104 - 107 3 OCCUPATIONAL boundary HEALTH AND SAFETY 103-2 The management approach and its components 104 - 107 3 2018 103-3 Evaluation of the management approach 104 - 107 3
403-2 Types of injury and rates of injury, occupational 108 - 109 3 diseases, lost days, and absenteeism, and number of work-related fatalities
GRI 414: 103-1 Explanation of the material topic and its 28 - 29 8 SUPPLIER boundary SOCIAL ASSESSMENT 103-2 The management approach and its components 28 - 29 8 2016 103-3 Evaluation of the management approach 28 - 29 8
414-2 Negative social impacts in the supply chain and 32 - 33 8 actions taken
GRI 416: 103-1 Explanation of the material topic and its 40 - 43 3, 12 CUSTOMER boundary HEALTH AND SAFETY 2016 103-2 The management approach and its components 40 - 43 3, 12
103-3 Evaluation of the management approach 40 - 43 3, 12
416-1 Assessment of the health and safety impacts of 40 - 43 3, 12 productand service categoriess
GRI 417: 103-1 Explanation of the material topic and its 43 3, 12 MARKETING AND boundary LABELING 2016 103-2 The management approach and its components 43 3, 12
103-3 Evaluation of the management approach 43 3, 12
417-1 Requirements for product and service 43 3, 12 information and labeling
177 Annual and Sustainability Report • 2018 • JBS
CREDITS
COORDINATOR
JBS Sustainability, Investor Relations and Corporate Communications areas.
GRI TEXTS AND GRI CONSULTING
Approach Comunicação
DESIGN
Approach Comunicação
PHOTOS
JBS Brasil and JBS USA Image Bank Julio Bittencourt Gladstone Campos / Realphotos
178 Annual and Sustainability Report 2018
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