( SUSTAINABILITY REPORT 2011 ) BA – Bahia state ES – Espírito Santo state MG – Minas Gerais state MS – Mato Grosso do Sul state RJ – Rio de Janeiro state RS – Rio Grande do Sul state SP – São Paulo state Fibria Sustainability Report 2011 – This Report is published Reporters: Anna Costa, Letícia Tavares and Luiz Maciel by Fibria Celulose S.A. (Quintal 22) General Coordination: Sustainability and Corporate Proofreaders: Ana Neiva, Isis Stelmokas and Rachel Reis Relations Area Graphic design: Sarau Coordinators: Cristiano Resende de Oliveira, Mara Pinheiro Online graphic design and online report: Tau Virtual and Tiago Nogueira de Noronha Graphic design and print version: Textual Editor: Luiz Fernando Brandão iPad App: Tau Virtual Reporting Areas: Fibria’s Board of Directors, CEO, Materiality Matrix: Atitude Sustentável Human and Organizational Development, Commercial and International Logistics, Industrial Operations, Interviews with members of neighboring communities: Engineering and Procurement, Forestry, Finance and Adriana M. Imperador, Giselle P. Sancinetti and Gunther Brucha Investor Relations, and Internal Audit Reporting English translation: Bruce Lister Rodger, Cristiano Resende Departments: Corporate Communications, Development de Oliveira, João Roberto Moris, Marcos Barboza, Steve Yolen and Funding, Corporate Human and Organizational and Wayne Santos Development, Occupational Health, Safety and Medicine English revision: Maya Forstater and Peter Raynard (HSMT), Forest Environment, Governance, Risks and Compliance, Budget and Performance, Compensation Photos: Fibria archives, Flávio Guarnieri, Ricardo Teles, and Benefits, Corporate Safety, Commercial and Global Roberta Dabdab, Vitor Nogueira Logistics, Controllership, Legal, Industrial Environment, Circulation: 100 copies Operational Human and Organizational Development, Strategic Planning, Investor Relations, Supplies, Additional information, suggestions or comments about this Sustainability and Corporate Relations, Technology, Report can be sent to Fibria Corporate Communications: Fibria Forestry Units in Espirito Santo, Bahia, Minas Gerais, Alameda Santos, 1357 – 10º andar – CEP 01419-908 Mato Grosso do Sul, São Paulo and Rio Grande do Sul States, – São Paulo – SP – Brazil – Phone: (+5511) 2138-4000 Ombudsman Office, Board Compensation and Benefits, E-mail: [email protected] FUNSEJEM, and Votorantim Participações (VPAR) March 2012 6 48 4 Strategic planning 48 Management systems 48 Integrated management policy 50 Certifications 50 Fibria’s certifications 50 Introduction SmartStep 51 Forthcoming challenges 52 Sustainability 52 Sustainability context 52 Opening: The value of the forests 6 Sustainability strategy 53 Message from the management 9 Long-term commitment 53 Management and strategies About this report 13 Short-term goals and targets 55 External views 18 Main commitments 61 Main results 21 Intangible assets 62 About Fibria 29 Image assessment 63 Media exposure 63 Advertising 64 Innovation 65 i9 Program – stimulus to and recognition for innovation 65 Technological innovation 66 2011 Pulp sales 68 Pulp logistics 68 Product 68 Expansion of the Três Lagoas Unit 70 | Sustainability Report | Fibria 1 2 3 4 Introduction 71 Communication with stakeholders 71 Communities 74 Relationship with communities 74 Relationship model 76 Governance Impacts on communities 78 Management 35 Relationship with specific communities 80 Code of Conduct 40 Relationship with indigenous communities 81 Ombudsman services 40 Relationship with landless movements 82 Social performance Internal Audit 41 Relationship with black communities 83 Anti-corruption practices 41 Relationship with fishing communities 85 Risk management 42 Theft of wood 86 Governance, Risks and Compliance 42 Consultation with communities 88 Risk management 42 Socioenvironmental education 99 Internal controls 42 Dialogue with NGOs and participation in forums 101 Enterprise Risk Management (ERM) 43 Suppliers 102 Fines and legal claims 44 Government 106 Lawsuits regarding Aracruz Celulose losses 46 Contributions to political campaigns 106 Lawsuits in São Paulo state 47 Public policies 106 Personnel management 108 Workforce 108 Recruitment and development 112 Health and safety 117 Quality of life 120 Relationship with labor unions 121 35 71 123 169 5 Introduction 123 Forest management 123 Wood production and supply 124 Wood supplies by third parties 125 Conduct Adjustment Agreement in the South of Bahia 127 Wood logistics 127 Water resource management 131 Forest protection 133 Soil management 134 Agroforestry 135 Environmental performance Biodiversity 137 Portocel 169 Ecosystem services 144 Independent assurance 170 Energy 145 Awards and recognitions in 2011 173 Waste 146 Content Index 175 Investments 147 GRI Application Level 186 Industrial operations 147 Creation, development and management Pulp production 148 Fibria's Sustainability Report 187 Maintenance shutdowns 148 Glossary 188 Internal benchmarking 148 Recovery and Utilities 149 Energy 150 2011 Water 151 Emissions 153 Effluents 156 Waste 156 Investments 158 Climate governance 159 | Sustainability Report | Fibria 5 6 7 Market context 164 Performance analysis 164 CAPEX 166 Debt management 166 Topics related to Sustainability Dividends 167 Goals and Targets Capital market 167 Synergies 167 Financial-economic performance Relationship with independent auditors 168 Topics related to Materiality Matrix Public financing 168 164 6 1 The value of forests As a contribution to the initiative of the United Nations International Year of Forests, we invited two experts from organizations that are involved with the forestry sector to present their views on forests and their value 2011 Forests – too precious to lose WWF aspires to a future where humanity’s global foot- Achieving ZNDD by 2020 would halt the depletion of print stays within the Earth’s ecological limits and the forest-based biodiversity and ecosystem services, includ- planet’s natural resources are shared more equitably. ing critical habitats for iconic species such as tigers and gorillas. In advocating this target, WWF stresses the | Sustainability Report | Forests are vital to this vision.2 They pulse with life, har- need to urgently reduce loss of natural forests to near Fibria bouring an enormous wealth of biological diversity. zero. Thus in the net accounting for the target, planta- They sequester carbon from the atmosphere. Forests tions do not offset natural forest losses, as many values provide subsistence foods, medicine and materials for are diminished when plantations replace natural forests. an estimated 1.6 billion people who live in and around them. They are intrinsic to the cultural identity of many ZNDD by 2020 would also see the world’s forests con- indigenous peoples. Forests protect us from floods and tributing to an early peak and decline in greenhouse gas soil erosion. They also provide us with natural resources, emissions, transforming them from a net source of emis- such as timber for furniture and construction, fuelwood sions to a net carbon sink. If we do not move quickly to for heating and cooking and paper fibre for packag- eliminate emissions from forests, and cap industrial emis- ing, learning and hygiene. Forest products are renew- sions, we face the prospect of runaway climate change. able and, when sourced from well-managed forests and In that scenario, many forests will not survive and the plantations, tend to have a smaller footprint than fossil carbon they store will be released into the atmosphere, fuel-intensive alternatives like steel, concrete, and plastic. further accelerating climate change in a disastrous downward spiral. Halting forest loss to maintain forest values Can we stop forest loss and meet global demand According to the United3 Nations Food and Agriculture for food, fuel and fibre? Organisation’s most recent statistics, every minute an area of forest is lost equal to the size of 36 football fields. WWF’s Living Forests Report1 explores opportunities to WWF advocates “Zero Net Deforestation and Forest shift to a new model of sustainable forestry, farming, Degradation (ZNDD) by 2020” as a target that reflects and consumption that will enable the human population the scale and urgency with which threats to the world’s to live within the earth’s carrying capacity. The report forests and climate need to be tackled. concludes that, with better governance, the world would 7 have enough productive forest and land available for ag- natural capital. Commercial plantation forestry can riculture to meet current demand for food, fuel and fibre also support conservation and restoration of natural without further conversion of forests. forests within multi-functional land-use mosaics. In Brazil, for example, several plantation companies are However, as we get closer to 2050, maintaining a near supporting natural forest restoration and the creation zero deforestation rate will require forestry and farm- of ecological corridors in highly fragmented remnants ing practices that produce more with less land, water of the Atlantic Rainforest. and pollution, and new consumption patterns that meet the needs of the poor while eliminating waste The premise that plantations can contribute positively to and over-consumption. sustainable development is the cornerstone of the New Generation Plantations Project, a platform for WWF, A role for plantations companies and government agencies to work together to define pathways to better plantations. The term “new The forest sector