Sustainability Report 2017

ECONOMIC • Sales record: 7% increase in volume • 19 patents placed

SOCIAL • 29 new products launched to assist and improve people's lives • Fostering the education of children and teenagers

ENVIRONMENTAL • 15% of industrial water used come from reutilization • Target of CO2 emission reduction until 2020 reached in 2017

SUSTAINABILITY REPORT 2017

Summary

Messages from the leadership About the 04 report 08

11 2017 highlights OXITENO 20 Management of excellence 10 22 Awards and Recognitions

Governance 28 CORPORATIVE Sustainability GOVERNANCE Ethics and 34 24 40 Agrochemicals transparency 42 Personal care & Home care PRODUCTS AND and I&I (HPC) SERVICES 43 Paints and coatings 36 44 Oil and gas 45 Performance products Training 54 PEOPLE Attracting talents 57 46

61 Energy ENVIRONMENT 62 Water and effluents 58 65 Emissions 67 Wastes Occupational health 71 and work safety SAFETY Safety and process 73 70 Product safety 73

74 Customers VALUE 75 Distributors CHAIN 74 76 Suppliers 78 Social development

GRI content summary 80

Assurance Statement 84 SUSTAINABILITY REPORT 2017 The Pasadena plant in Texas strengthens Oxiteno's presence in the world's largest surfactant market.

Oxiteno contributed to the good performance of Ultra with a record growth of 7% in sales and net revenue.

Part of the Ultra Group, Oxiteno prioritizes safety, the environment, quality and excellence in its operations.

04 OXITENO · SUSTAINABILITY REPORT 2017 Ultra celebrates

80 years G4-1

Ultra's CEO

Our trajectory is marked by our com- new Pasadena plant in the state of Oxiteno helps mitment to safety, the environment, Texas expected to occur in 2018. The quality and excellence, as well as our new site will allow us to compete with to design our passion for our customers - charac- even more effectiveness in the country, teristics that Oxiteno and other Ultra today the largest market for surfactants business globally, businesses have helped to consolidate in the world. over time. With 80 years of recently reaching markets completed history, Ultra has a manage- We are sure that innovation is the ment model focused on value genera- recipe for Oxiteno's success. This focus in Latin America, tion, which seeks to constantly engage makes it possible to identify and offer our employees and has in sustainability specific solutions for each customer, the United States, one of the main guiding elements of improves the performance of the final our strategic and operational actions. products and guarantees the highest Europe, Africa and level of safety and the lowest socio-en- The year 2017 was marked by a slow vironmental impact. In 2017, of the Asia. recovery of economic activity in Brazil, US$ 145 million invested in Oxiteno, after two years of deep recession, a US$ 16 million was directed to research context that affected not only Ultra and development. but other Brazilian companies from the most different sectors of the econo- In this Sustainability Report, we invite my. Still, we achieved another year of you to know these and other high- consistent results, with revenue growth lights of Oxiteno, a company whose across our business. Ultra's consolidat- portfolio is employed in items of ed revenue increased 3% to US$ 25 the most distinct segments, all of billion. which are present in the daily lives of people, who are the customers of Oxiteno contributed to the good our clients and with whom we are performance of Ultra with a record equally committed. growth of 7% in sales and net revenue. Part of this result is due to the premar- keting movement in the United States Frederico Curado in preparation for the start-up of the CEO of Ultra

MESSAGES FROM THE LEADERSHIP 05 More efficiency and generation of socio-

-environmental value G4-1

We achieved important results in 2017, (Mexico), responsible for the supply of essential to evolve our strategies for products marketed in the region. internationalization and strengthening our operations in Brazil, in line with We have also conducted a restructur- the main objective of making Oxiteno ing of our operational model, Project a leader in the manufacture of surfac- Evolution, which covers Oxiteno's tants and their applications. international and regional governance. The reorganization of our governance In 2017, we celebrate ten years of the structure aims to increase the regional operation in the United States. Serving focus of the operations, not compro- the customers of this market has been mising global optimizations, adding 10 a challenge that has already resulted value to the relationship with custom- years of operation in the in new partnerships in North America. ers and the innovation process, topics To leverage our operations on the relevant to us and fundamental for the United States continent, we have focused efforts to future we design for the business. complete the construction and instal- lation of the new alkoxylation plant Attention to innovation resulted in 19 in Pasadena, Texas, with a production patents deposited and 29 products capacity of 170,000 tons per year. The launched in 2017 - Oxiteno's current site has started its operation in 2018, portfolio brings together 530 products, and manufactures products that began all of them developed from safety, to be sold in 2017 in the region, thanks quality and performance assumptions. to a pre-marketing action, which Our research and development (R & D) sought to ensure the structuring of process is also focused on the adop- sales channels and the conquest of the tion of raw materials from renewable market. The strategy was supported sources, care for the environment and by the operations of Camaçari (Brazil), the promotion of health and well-be- Mauá (Brazil), Santa Rita (Venezuela), ing, guidelines that integrate Greenfor- Tremembé (Brazil), Suzano (Brazil), Gua- mance – our concept of sustainability. dalajara (Mexico) and Coatzacoalcos (Mexico).

06 OXITENO · SUSTAINABILITY REPORT 2017 We recognize the leading role of our employees in the good performance of the company. 80% of the new management positions were occupied by professionals who were already part of Oxiteno.

Superintendent Director of Oxiteno

In the productive process, the initia- We recognize the leading role of our Our results and initiatives are regularly tives sought to combine efficiency team for the good performance of disseminated among our employees, gains, cost reduction and environ- the company. No wonder, 80% of the suppliers, clients, communities and mental impacts. We continue to invest management positions created in 2017 other publics, as part of a process that in certifications for all oursites, which were occupied by professionals who aims to add transparency to the rela- contribute to the maintenance and were already part of Oxiteno. Equally tionship we maintain with all of them improvement of the quality of the fundamental are our suppliers and and of which the Sustainability Report management processes of our opera- business partners, with whom we have is an essential part. In the following tions, as well as to promote safe behav- built our value chain over the years. pages, we share with you, the reader, ior among all employees, continually The distributors' management plan, for the main advances and challenges of engaging them in important aspects of example, has been adding improve- our company in 2017. the environment, health and safety. ments in the distribution of products, consolidating sales channels and sup- We broaden our engagement with the porting our customers in their business Good reading! global agenda each year to increase strategies with agility and quality. our contribution to the generation of João Benjamin Parolin value to society. We correlate our rel- We have remained committed to Oxiteno's Superintendent evant sustainability topics (also called establishing partnerships for the Director material topics) to the Sustainable development of the regions where we Development Goals (SDG) (see pages are present. In addition to contributing 30 and 31). Our practices to promote to the growth of other industries, we water efficiency and management of want to boost the local market and greenhouse gas emissions have been generate value to the community. recognized by the Carbon Disclosure Project (CDP) in the past two years. All these initiatives contributed to the About 15% of the water consumed results achieved in 2017. Sales volume in the processes of our plants in Brazil grew 7%, a record volume in com- comes from reuse and we avoid the modities as well as the volume sold emission of almost 71 thousand tons of in pre-marketing to the United States

CO2 equivalent in 2017 with practices due to the new site and growth in the to reduce emissions and transform domestic market. On the other hand, these gases into an energy source. the average price of the Real, 9% more appreciated, mitigated, in parts, these effects.

MESSAGES FROM THE LEADERSHIP 07 About the report

The Sustainability Report 2017 brings governance structure, performed as together the main results of the year part of the internationalization strategy. related to the nine topics relevant to The financial amounts originally given Oxiteno and its stakeholders, pointed in Reais (R$), Brazilian currency, were out during the materiality process translated into US Dollars (US$), consid- carried out in 2015 by the company. In ering a conversion rate of 3.19. G4-18, the process, the perceptions of more G4-23, G4-24, G4-25, G4-26 and G4-27 than 300 employees, suppliers, customers and communities were collect- Oxiteno thanks all the employees who ed, as well as the analysis of strategic contributed to the preparation of the documents of Oxiteno and its industry. Sustainability Report. The content also brings information pertinent to updating the company's

More than

300 people were heard during the materialization process.

Employees, suppliers, customers and communities supported Oxiteno in identifying its strategic topics.

08 OXITENO · SUSTAINABILITY REPORT 2017 MATRIX OF MATERIALITY G4-19

Oxiteno presents in its matrix of materiality nine important topics for its action, with a look at the economic, social and environmental impact of its activity.

Technological innovation

Valorization of the workforce

Use of natural resources

Health and safety

Supplier management

Communication

Product safety

Local development and development of other industries

Eco-efficient products

This is the fourth consecutive year that Know more Oxiteno publishes its Sustainability Re- port, according to the Essential option Learn how each material - G4 version, of the Global Reporting issue impacts Oxiteno's Initiative (GRI) methodology. Every year, the publication maintains the relationship public with the record in the period between January SDG on pages 30 and 31. 1 and December 31, 2017. Questions and inquiries about the document should be sent to the email [email protected] G4-28, G4-29, G4-30, G4-31, G4-32

ABOUT THE REPORT 09 Oxiteno

Oxiteno products contribute to increasing productivity in several sectors, improving the quality of life, hygiene, well-being and health of society.

Oxiteno is a leader in the production or influence the contact surface be- of surfactants and specialty chemicals tween two liquids, between liquid and in Latin America. Oxiteno develops solid or between liquid and gas that, solutions for Agrochemicals, Personal when used in formulations of Oxite- Care, Home Care and I&I, Oil and Gas no customers, contribute to increase and Paints and Coatings. productivity in several sectors, quality life, hygiene, well-being and health of The surfactants are used in a wide society. G4-3 and G4-4 range of products, such as detergents, wetting agents, emulsifiers, cosmetic foam formers or dispersants, agricultural defenses or paint additives. These are products that reduce surface tension

10 OXITENO · SUSTAINABILITY REPORT 2017 2017 highlights

OXITENO G4-8 G4 9 Global chemical company, leader in the production of surfactants and specialty chemicals in Latin America

10 years The US unit will have a of presence in the North productive capacity of American market: Oxiteno's internationalization plan involves the expansion of the 170 Pasadena (Texas) plant that will thousand tons a year start operations in 2018

Management of results: Oxiteno's relevant sustainability topics are correlated to the Sustainable Development Objectives (SDG)

See the infographic about the material topics on pages 30 and 31

OXITENO 11 Financial results G4-9

US$ 93 mill. US$ of EBITDA US$ 145 US$ 16 mill. mill. invested in 2017 1.25 bi were directed to research of net revenue, growth of 7% and development

Innovation in the portfolio 26% 19 of raw materials from renewable patents placed in sources. In volume, 12% of the 2017 raw materials used by Oxiteno are of renewable origin 29 launched products 530 products available on the market

12 OXITENO · SUSTAINABILITY REPORT 2017 Good environmental practices 15% of all used water come from reuse 71 thousand tons of CO2 were not released into the atmosphere thanks to partnerships made for energy efficiency

ZERO LANDFILL FOR INDUSTRIAL WASTE IN BRAZIL: 98% 2% energy recovery incineration and recycling

OXITENO 13 Organizational management

Evolution of the organizational model to support Oxiteno's strategy, broadening its focus on regional operations, without losing sight of global optimizations

Leadership of the units divided into three blocks: Mercosur, MAC (Mexico, Andean and the Caribbean) and United 1,991 States employees in Brazil and eight other countries

Safe environment and processes 40% reduction of process accidents with hazardous Management dedicated products in relation to the to process security previous year

Review and implementation of global emergency care guidelines

14 OXITENO · SUSTAINABILITY REPORT 2017 Safe products

Restructuring of product safety management for global service

Start-up of the new system for managing product safety information

Responsible purchase Value chain program with environmental and social requirements 98.6% traceability for palm oil derivatives

90% of acquisition costs at local suppliers in Brazil

OXITENO 15 Operations in Latin America and the United States, and commercial offices in Europe and Asia G4-5, G4-6 and G4-8

UNITED STATES

HOUSTON

1 HATTIESBURG PASADENA MEXICO

GUADALAJARA 2 MEXICO CITY SAN JUAN DEL RÍO 3 4 COATZACOALCOS

SANTA RITA 5 CARACAS VENEZUELA BOGOTÁ COLOMBIA

BRAZIL 6 7 CAMAÇARI

SUZANO TREMEMBÉ 9 8 SÃO PAULO 10 MAUÁ (HEADQUARTERS)

11 TRIUNFO

12 MONTEVIDEO BUENOS AIRES URUGUAY ARGENTINA

12 9 Industrial units: 3 Offices Research and development centers (R & D)

16 OXITENO · SUSTAINABILITY REPORT 2017 BELGIUM BRUXELLES

CHINA SHANGHAI Oxiteno will strengthen its presence in the world's largest surfactant market with the Pasadena (Texas) plant.

1 PASADENA 4. COATZACOALCOS (MEXICO) and cleaning industries and paints and (UNITED STATES) Located near the port, the unit is a coatings, as well as esters and chem- Located in one of the main industrial reference in efficiency in the logistics ical specialties for agrochemicals and centers of the world, the Alkoxylation operation, mixing the rail and maritime performance products. plant in Texas will begin operation in transport. Produces nonionic surfac- 2018. There is also an R&D center in tants. 9. TREMEMBÉ (BRAZIL) Hattiesburg, Mississippi, in partnership Located near the city of São Paulo and with the University of Southern Missis- 5. SANTA RITA (VENEZUELA) also in the city of Rio de Janeiro (RJ), it sippi (USM), which seeks to encourage It produces non-ionic surfactants and produces anionic surfactants, cosurfac- innovation and development of solu- polyols, which serve the local market, tants, esters and chemical specialties tions for local customers. Central America, the Caribbean and for the agrochemical, functional fluids other countries in the Andean region. and hygiene and cleaning industries. 2 GUADALAJARA (MEXICO) It also has the Polyurethane Applica- It has a R & D center focused on prod- tions Laboratory, responsible for the 10. MAUÁ (BRAZIL) uct portfolio innovation and technical testing of polyols used in the mattress, Located near the largest consumer support for customers in the Nafta re- household appliance and auto parts markets in South America, the unit pro- gion. It produces nonionic ethoxylated industries. duces non-ionic surfactants, ethylene and propoxylated surfactants, as well oxide, glycols, oxygenated solvents as fatty esters, which serve the food, 6. CAMAÇARI (BRAZIL) (glycol ethers and acetates), solvents pharmaceutical, cosmetic, agrochemi- Located in the Industrial Complex of from renewable sources from sug- cal, textile and oil industries. Camaçari (BA), with two plants, it is the arcane (isobutanol and isopentanol) largest industrial unit of ethylene oxide and functional fluids. The unit is also 3. SAN JUAN DEL RÍO (MEXICO) and derivatives in Latin America. It also the first and most robust Oxiteno R&D It is located in the region with the produces ethylene glycols, ethanol- Center. highest commercial concentration amines, glycol ethers, nonionic surfac- of chemical products in Mexico. It tants (Oxiteno), alcohols and fatty acids 11. TRIUNFO (BRAZIL) produces anionic surfactants, solvents (oleochemistry). Located in the South Petrochemical and sulphated products. There is also a Complex (RS), it is the only Brazilian distribution center for Oxiteno prod- 7. CAMAÇARI (BRAZIL) producer of the oxygenated solvents ucts for the Northern Hemisphere - Also located in the Industrial Complex methyl ethyl ketone (MEK) and sec-bu- strategically positioned near the Pacific of Camaçari, it produces white mineral tanol, used in the paint and coatings and Atlantic oceans. oils and vaseline. industry.

8. SUZANO (BRAZIL) 12. MONTEVIDEO (URUGUAY) Installed near the city of São Paulo (SP), Installed near the port of Montevideo, it produces sulphated and sulphonat- the plant manufactures sulphated and ed anionic surfactants for the hygiene sulphonated surfactants.

OXITENO 17 Advances in 2017 support future plan G4-DMA

Strengthening the Throughout 2017, Oxiteno performed market. The investments in capacity several actions that contributed to the increase that Oxiteno has made in the international presencel achievement of its objectives, such as last 10 years, mainly in plants in Brazil is part of strategic the consolidation of its international and Mexico, were fundamental to the presence, the basis of its strategic pre-marketing success for the USA. planning. planning. The internationalization process in- The internationalization plan contem- volved the reorganization of the com- plated the expansion of the plant in pany's operating structure (read more Texas (USA), which starts operations in Corporate Governance, page 24) in 2018 with a productive capacity of and the development of partnerships 170 thousand tons. As a preliminary with US research centers to develop move, in 2017, Oxiteno implement- appropriate solutions for local clients. ed a pre-marketing strategy, which With the presence of a strengthened enabled the sales of the products that market, the plant begins its operations will be manufactured in the new site, in 2018 with guaranteed demand and anticipating the structuring of the can generate immediate effect on the sales channels and the presence of the company's revenue.

Part of the internationalization process is the reorganization of the company's governance structure that has created new areas, such as Innovation Management.

18 OXITENO · SUSTAINABILITY REPORT 2017 Oxiteno's net revenue was US$ 1.25 billion in 2017.

The year of 2017 registered a 7% In a transversal way, it was also the year growth in Oxiteno's sales volume, a in which Oxiteno followed initiatives to positive effect despite the increase in improve efficiency, but also prioritized operating costs. The result reflects the product quality, safety of the produc- global economic recovery, especially tion process and care for the environ- in Europe and Asia. Net revenue for the ment, including projects focused on year totaled US$ 1.25 billion. EBITDA reducing consumption of energy, in reached US$ 93 million, down from the treatment of effluents and waste, US$ 144 million in 2016, affected by and reduction of greenhouse gas factors such as the appreciation of the (GHG) emissions. Actions were also real against the US dollar, commodity organized to strengthen the culture of price volatility, pre-operational costs health promotion and safety of Oxite- and expenses due to construction of no's professionals and the relationship the new North American plant. Invest- and partnership with the company's ments continued strong in the period, value chain. with US$ 145 million – especially with the construction of the plant in Pasade- na (Texas). 7% in sales growth in the year.

OXITENO 19 Management of excellence G4-DMA Oxiteno's certifications attest to the year, all units in Brazil were awarded management capacity of the opera- the Responsible Performance certification, follow an international manage- tion. ment standard and comply with all legal requirements. This has repercus- In the coming years, the goal is to sions in the conduct of the process- obtain certification in the new version es, guaranteeing safety, quality and of standard 14.001: 2015, environmen- efficiency, always in accordance with tal management, for all national and the best practices of the international international units. In Brazil, since 2002, market. the company's Environmental Man- agement System has been certified by Certifications attest to In 2017, Oxiteno achieved ISO 9.001: ISO 14.001, and in 2016, Guadalajara, 2015 quality management certification Mexico, was the first international processes such as safety, for its operations in the United States plant to achieve certification. The two protection of the (Houston office, Pasadena industrial other plants in Mexico (Coatzacoalcos plant and Hattiesburg Research and and San Juan del Río), as well as the environment, quality and Development Center). Also in 2017, Montevideo plant in Uruguay, are be- efficiency. the Suzano (Brazil) unit was awarded ing prepared for certification in 2018. OHSAS 18001 certification; in the same G4-EN27

CERTIFICATIONS ISO9001 ISO/ TS 16949 ISO 22716 Safety BRC Food ISO 14001 OHSAS 18001 Responsible Care RSPO

Camaçari Petrochemical Mineral Oils Brazil Mauá

Mercosur Suzano Tremembé Triunfo Uruguay Montevideo Coatzacoalcos Mexico Guadalajara

MAC San Juan del Río Venezuela Santa Rita U.S. Pasadena U.S.

20 OXITENO · SUSTAINABILITY REPORT 2017 Oxiteno has achieved ISO 9.001: 2015 quality management certification for operations in the United States.

The Camaçari (BA) Oleoquímica plant to boost the use of palm oil in a has renewed the SPIE (Self Inspection sustainable manner through a series of Since 2002, of Equipment) certification, granted by actions, such as the adoption of stan- the Environmental the Brazilian Institute of Petroleum, Gas dards. The certification demonstrates and Biofuels (IBP), valid for boiler and compliance with the demands of the Management System pressure vessel inspections, required consumer markets and is aligned with of the company, by Regulatory Norm 13 (NR-13), of the the company's commercial strategy in Ministry of Labor, which ensures the the Mexican, Andean and Caribbean in Brazil, has been availability of equipment, integrating (MAC) region and also in the United certified by ISO 14.001. the select group of 14 companies in States. The four plants were RSPO SCC Brazil that are certified. certified in Mass Balance. In Brazil, five In 2016, Guadalajara, units are already RSPO-certified: Oxite- Mexico, was the first Oxiteno's three units in Mexico - Coa- no Camaçari, Oleoquímica, Tremembé, tzacoalcos, Guadalajara and San Juan Mauá and Suzano. international plant del Río plants - and the Uruguayan to achieve certification. plant have been awarded the Roundta- ble on Sustainable Palm Oil (RSPO),certification, an organization that works

The Camaçari (BA) oleochemical plant has renewed the SPIE (Self Inspection of Equipment) certification. It is part of the select group of 14 certified companies in Brazil.

OXITENO 21 Awards and Recognitions

AMONG THE BEST CDP Best Practices Best & Largest COMPANIES (Exame) Oxiteno was highlighted by its water For the second consecutive year, the management practices in the CDP Oxiteno Northeast Unit is among the (Carbon Disclosure Project) Latin best and largest companies in the America Supply Chain program ranking. It occupies the second place report. The study gathered data from between the chemical and petro- 500 companies across Latin America chemical ones. in the management of GHG emissions and water resources. Exame's Sustainability Guide Greater Exporter (Exame) Award (Union Ultra, the controlling company of of Exporters of Oxiteno, was once again present in the ranking of companies with better Uruguay) management of sustainability, with For the second consecutive year, Ox- emphasis on its compliance practic- iteno Uruguay received the Greater es, and Oxiteno contributed with its Exporter award in the sector of Mis- practices in sustainability. cellaneous Products of the Chemical Industry.

INNOVATION AND PRODUCT QUALITY

Kurt Politzer Award Oxygenated (Abiquim) Solvents Award Prêmio Valor For the fifth time, Oxiteno was rec- (magazines Tintas & Inovação 2017 ognized with the Kurt Politzer Award Vernizes and Paint & (Valor Econômico + from the Brazilian Chemical Industry Pintura) Association (Abiquim). In this edition, PWC) the project "Development of contin- Oxiteno has been recognized by the For the third consecutive year, Oxite- uous phase for drilling fluids of low two main publications of the paint no is among the 150 most innovative toxicity and high biodegradability", sector in the category of oxygenated companies in the country, according Oil and Gas technology, was high- solvents, which indicates the prefer- to the newspaper Valor Econômico. lighted. ence of professionals of the industry and of readers for the quality of the product.

22 OXITENO · SUSTAINABILITY REPORT 2017 FEATURED IN BUSI- No Hard Times (Anjo Axalta Supplier of NESS PARTNERSHIP Tintas) the year (Axalta) Oxiteno was recognized in 2017 for The company was awarded in 2017 its partnership in 2016, the year of ad- for being among the top ten global verse economic scenario in Brazil, as suppliers of Axalta in 2016. a partner supplier of the Anjo Tintas company.

Great Place to Work – Mexico BEST FOR EMPLOYEES Great Place to Work, international reference in analysis and evaluation of work environments, recognized Oxiteno among the best companies Oxiteno is to work for. Recognition is the result of policies and practices that improve Top Employer the organization's internal ambiance and engage its leaders, reflecting of Brazil the quality of the relationship with the teams. It was the first time that Oxiteno Mexico participated in the ranking.

COMMUNICATION Caio Award, category event or stand held abroad (Revista Eventos) Oxiteno Music Lounge 2017, held in Orlando, United States, which marked the opening of the Annual Meeting & Industry Convention, organized by the American Cleaning Institute (ACI) for cleaning industry companies, was recognized by one of the most important awards of events, the Caio Award. The event was held with the objective of strengthening Oxiteno's presence in the sector and strengthening its relationship with customers, suppliers, global partners and the region.

OXITENO 23 Corporate

GovernanceG4-34

MATERIAL TOPIC To support the vision of the future that Global structures have come to sup- intends to make Oxiteno a world refer- port all regions with unique strategy, ence in surfacing and its applications, vision and policies. They are also COMMUNICATION the need to evolve the company's responsible for activities capable of operational model was identified. The generating scope or scale advantages, Evolution Project was then designed to as well as managing risk and protect- increase regional focus without losing ing the company from major threats. sight of global optimizations, acceler- The regions, in turn, have gained more See the infographic on Oxiteno's ating growth in Mexico and the United autonomy in decision making and can material topics on pages 30 and 31. States; leverage strategic management make the necessary customizations to and institutional representation in the their context of operation. regions; to prepare the company for the future keeping the focus focused The restructuring added new concepts on innovation and customer relation- for the organization, widely discussed ships; and develop succession plan- in various forums throughout the year, ning, including training future leaders involving a clearer definition of roles at various levels of the company. and responsibilities. It also included the formalization of new processes, In February 2017, the boards that the change of mindset and a new way made up the new structure of Oxiteno of working. The process has given rise - Administration and Control, Tech- to opportunities in a number of areas nology and Operational Excellence, - some have been reorganized, others Marketing and Innovation, Human have gained new responsibilities or Resources, USA, MAC (Mexico, Andean scope, and about 80% of new posi- and Caribbean) and Mercosur - were tions have been taken over by Oxiteno created, created and adjusted to meet employees. There was also a review of the company's strategic challenges. some functions and the structuring of new positions.

24 OXITENO · SUSTAINABILITY REPORT 2017 Ultra's Board of Directors

PRESIDENT Pedro Wongtschowski1

VICE-PRESIDENT Lucio de Castro Andrade Filho1

BOARD MEMBERS

Alexandre Lucio de Castro Carlos Tadeu Nildemar Jorge Marques Olavo Egydio José Maurício Gonçalves Andrade Filho da Costa Secches* de Toledo Monteiro de Pereira Silva* Fraga* Camargo* Carvalho* Coelho*

Fiscal Board

PRESIDENT Flavio César Maia Luz

BOARD MEMBERS

Geraldo Toffanello Nilson Martiniano Moreira

CORPORATIVE GOVERNANCE 25 Ultra

DIRECTOR PRESIDENT Frederico Curado

DIRECTORS

Rodrigo André Pires de João Benjamin Leocadio de Pedro Jorge Ricardo Isaac Pizzinatto Oliveira Dias Parolin Almeida Antunes Filho Catran Filho

RISKS DIRECTOR, COMPLIANCE AND AUDITING CORPORATE DIRECTOR OF HUMAN CAPITAL Denis Celso Marques Cuenca Luciana Domagala

CORPORATE CENTER **

FINANCE AND IR SUPERINTENDENT DIRECTOR André Pires de Oliveira Dias

DIRECTOR OF IT DIRECTOR IR AND DIRECTOR OF TREASURY AND ADMINISTRATION Fredson Carlos COMMUNICATION STRATEGY PLANNING DIRECTOR AND CONTROL Javurek de Oliveira DIRECTOR AND BUSINESS Maristela Akemi José Manuel A. Marcello De Simone DEVELOPMENT Utumi Seiler Borges Roberto Kutschat Neto

26 OXITENO · SUSTAINABILITY REPORT 2017 Oxiteno Executive Board

CEO João Benjamin Parolin

GLOBAL DIRECTOR GLOBAL DIRECTOR OF GLOBAL DIRECTOR GLOBAL DIRECTOR OF ADMINISTRATION MARKETING AND OF TECHNOLOGY OF HUMAN AND CONTROL INNOVATION AND OPERATIONAL RESOURCES Ana Paula Santoro Andréa Campos EXCELLENCE Simone Torres Cavalcanti Coria Soares Flávio do Couto de Albuquerque Bezerra Cavalcanti

MERCOSUL REGIONAL DIRECTOR OF REGIONAL REGIONAL MEXICO, ANDEAN AND DIRFECTOR, UNITED DIRECTOR CARIBBEAN STATES Alberto Slikta*** Gerson Secomandi (acting) Timothy Madden

* Independent directors. ** New structure in force since February 2018. *** Took the position in January 2018. 1 On May 2, 2018, Ultra announced succession to the chairmanship of the Board of Directors. Pedro Wongtschowski took over as Chairman of the Board succeeding Paulo Guilherme Aguiar Cunha, who became Chairman Emeritus of the Council. Lucio de Castro Andrade Filho took the position of vice-chairman of the Board of Directors.

In the market since 1973, Oxiteno is Oxiteno reports quarterly its perfor- a privately held corporation, part of mance to the members of Ultra's Board the multinational company Ultrapar of Directors. The Managing Director of Participações S.A., which operates in Oxiteno is a member of the Executive retail, specialized distribution (Ipiranga Board, composed of the Superinten- / Ultragaz / Extrafarma) and storage for dents of Finance and Investor Relations liquid bulk (Ultracargo). G4-7 and other Ultra businesses (Extrafarma, Ipiranga, Ultracargo and Ultragaz), the Ultra is a publicly traded company with Human Capital Board and the Risks shares traded on B3 (Brasil, Bolsa, Bal- Board, Compliance and Auditing. cão) and the New York Stock Exchange (NYSE). The holding is listed in the New Market segment, for voluntarily adopting benchmark corporate governance standards, and also integrates B3's Carbon Efficient Index (ICO2).

CORPORATIVE GOVERNANCE 27 Ultra's Leadership Renewal The planned succession process is performed regularly in the management of Ultra and its business. In October 2017, the new CEO of the company, Frederico Curado, took over. With solid executive experience, he replaced Thilo Mannhardt, who was responsible for strategic moves to strengthen and expand the company.

In the first half of 2018, Paulo Guilherme Aguiar Cunha continued the process of his succession on the Board of Directors after serving as president of the company until 2006 and chairman of the Board of Directors since 1998. In recognition of his dedication and contribution over 50 years in Ultra, Paulo G. A. Aguiar was elected President Emeritus of the Board.

To occupy the position of chairman of the Board of Directors at Ultra, Pedro Wongtschowski was appointed, who until then occupied the position of vice-chairman of the collegiate and who has been at Ultra since 1985. The position of vice-chairman was then occupied by Lucio de Castro Andrade Filho.

Governance Sustainability Sustainability is one of the key foun- participates in the research of the dations of Ultra and its business. On Carbon Disclosure Program (CDP), an Oxiteno's controlling a day-to-day basis, this commitment international organization that en- shareholder, materializes thanks to a culture that courages and provides a global system values information transparency, finan- for companies and cities to manage, Ultra is part of the Carbon cial soundness, business ethics and disclose and share information about Efficient Index portfolio the value of citizenship. Ultra defines the environment, and also participates the general guidelines that must be in Guia Exame de Sustentabilidade, in (ICO2), of B3. observed by all businesses, and each the Top ranking Melhores da Dinheiro company, among them Oxiteno, main- and in the Bovespa business index, tains its own policies, according to the since 2007. specificities of its markets. In 2017, the global sustainability area The Ultra Sustainability Model covers linked to the Technology and Op- five pillars - Safety, Environment, Peo- erational Excellence Board was also ple, Products and Services and Value restructured. Working in a horizontal Chain - and has 28 performance and manner, involving all areas of Oxiteno, management indicators, in line with the department has the mission of corporate sustainability guidelines. meeting stakeholders' demands, as The KPIs (monitoring and performance well as leverage, together with other indicators) monitor actions, and the areas, the management of material data is part of Ultra's decision matrix. issues for the company, considering A sustainability committee brings the risks and opportunities, and best together managers from all businesses, practices. Oxiteno's material topics, including Oxiteno, and is responsible also called priority ones, include nine for periodically monitoring and pro- issues related to innovation, safety, moting business sustainably. people management and environmental management, among others - are As part of the continuous improve- also correlated to the five pillars of the ment of sustainability actions, Ultra is Ultra Sustainability Model (read more in part of the B3 Efficient Carbon Index Oxiteno's Material Topics, pages 30 and (ICO2) portfolio, composed of public 31). companies that have accepted the invitation to adopt transparent practices regarding their emissions. It also

28 OXITENO · SUSTAINABILITY REPORT 2017 Ultra's Sustainability Guidelines

To value the culture of To value the employees by citizenship and business stimulating the professional growth ethics. and the quality of life, improving the conditions and the work environment. Ensure the integrity of the corporate governance model, To act, selectively, as an agent especially the treatment and transparency of evolution of the neighboring of relevant information and the continuous communities and society, through management of risks and opportunities. initiatives of dissemination of culture,education and social inclusion. Maintain and improve financial capacity, flexibility and operation- Adopt policies to maintain al excellence, in order to minimize excellence in health, safety vulnerability to economic variations, and environmentalstandards. seeking growth opportunities in each of our segments. Identify, control and mitigate the risks inherent Guide the offer of products to the business, continuously, and services to the needs and through policies and practices expectations of customers and of risk management and crisis consumers. management, in the operational, regulatory, environmental, fiscal, judicial and social fields. Maintain active representation in the class associations and a transparent relationship with the public agencies, Promote the management of in order to improve and strengthen the greenhouse gases of companies, business. aiming to mitigate our effects on climate change. Maintain state of readiness, awareness and education for the permanent Prepare periodic sustainability valuation of economic, environmental reports, considering their and social sustainability. economic, environmental and social dimensions. Support, disseminate, promote and integrate into the organizational culture the principles of the UN Global Compact, related to Human Rights, Labor Rights, Protection of the Environment and Combating Corruption in all its forms.

CORPORATIVE GOVERNANCE 29 HOW TO READ THIS INFOGRAPHIC Each Oxiteno material topic is related to one or more Oxiteno's audiences, to the SDG and respective goals, identified in the legend below.

INFORMATION ON THE SUBJECT MATTER material topics G4-19, G4-20 and G4-21 Ac OXITENO'S AUDIENCE The following infographic presents the material topics SDG of Oxiteno, important aspects for the management of SDG GOALS sustainability in the organization. In each topic its public, the SUBJECT MATTER Objects of Sustainable Development (SDG) and the goals of the SDG are identified.

Oxiteno is recognized for developing A cross-cutting tool for sustainability issues, it eco-efficient products and faces the includes the dissemination of initiatives and dialogue challenge of launching products with with employees, suppliers, customers and other high performance, less impact and stakeholders. It is an attitude of transparency to cost equivalent to traditional materials. provide qualified information about products, impacts, benefits and challenges.

Cl CP CF Ac CF Cl Co CP Fo Fu Go Im ON Si Te Tr Ul

12.A 12.6 12.8

ECO-EFFICIENT PRODUCT USE OF NATURAL SAFETY INNOVATION PRODUCTS COMMUNICATION RESOURCES GRI CUSTOMER'S GRI ECONOMIC GRI ENERGY, WATER, DEVELOPMENT GRI PRODUCTS AND HEALTH AND SAFETY SERVICES RESIDUES AND EMISSIONS

Research and development investments Many products present risks during The chemical industry uses natural are at the heart of Oxiteno's strategy. A manufacturing or use, so Oxiteno has resources, so Oxiteno seeks to constant search for solutions aligned to the daily commitment to add safety reduce its impacts and promote the macro trends, that attend to clients, to the production process and guide reuse and recycling, priority issues of involving initiatives of co-creation, employees and customers to the environmental management of the and with the objective of reducing the correct handling of these products. company. Priority is also given to the socio-environmental impact. use of renewable or biodegradable materials.

Go Cl CF Cl CP CF Ul Ac Co ON Tr Cl

9.4 9.5 9.B 12.4 7.3 6.4

12.2 12.5 13.2

30 OXITENO · SUSTAINABILITY REPORT 2017 OXITENO'S AUDIENCE SDG

Ac Shareholders Go Government

CF End Customer Im Press

Cl Customers ON NGOs

Co Communities Si Unions

CP Potential Customers Te Outsourcing

Fo Suppliers Tr Haulers

Fu Employees Ul Ultra

Oxiteno guarantees and promotes a safe work The chemical sector is present in most environment. It invests in risk management segments, acting as a lever for other and behavioral aspects, reinforcing the culture industries. Oxiteno also prioritizes the of safe attitude and responsible behavior, and development of local companies and ensuring the health and safety of employees suppliers. and industrial processes. Fo Co Fu Te Cl Fo

3.9 8.8 8.3 9.2

LOCAL DEVELOPMENT VALUATION OF SUPPLIER AND DEVELOPMENT WORKFORCE HEATH AND SAFETY MANAGEMENT OF OTHER INDUSTRIES GRIEMPLOYMENT, TRAIN- GRI ENVIRONMENTAL GRI INDIRECT ECONOMIC ING AND EDUCATION, GRI HEALTH AND SAFETY EVALUATION OF SUPPLIERS IMPACTS AND PURCHASING DIVERSITY AND EQUAL PRACTICES OPPORTUNITIES

Oxiteno promotes, among suppliers, The workforce is essential for compliance with legal requirements and the differentiation of Oxiteno, so good practices that guarantee protection investments are made in qualification of human and labor rights, ethics, and career management, attraction health and safety - of people and the and retention, as well as the granting environment. of benefits. Fo Fu Si Cl

16.10 17.16 4.3 4.4 8.5 8.B

16.5 16.6 16.10

CORPORATIVE GOVERNANCE 31 In the path of sustainability

Product Certification – ECOCERT

Greenformance Platform

Participation of ISE's Ultra integrates the ISE, portfolio from B3

Beginning of the Greenhouse Effect (GHG) Gas Program

Beginning of Life Cycle Assessments (LCA)

Responsible performance 2009 2011

2002 2008

Participation in Carbon 1992 Disclosure Project (CDP)

Life Cycle Assessments (LCA) Studies

Member of Roundtable on Sustainable Palm Oil ISO 14001 certifica- (RSPO) tion in the units of Brazil

32 OXITENO · SUSTAINABILITY REPORT 2017 Oxiteno receives RSPO certification

ACI Report (American Cleaning Institute)

Entry into the Brazilian Business 9 completed LCA studies Network of Life Cycle Assess- of finished products ment (LCA) Responsible Sourcing Defining the pillars of the Ultra Sustainability Model Restructuring of GRI 2017 indicators Platform of indicators

Launch of Ultra Guidelines

2014 2016

2012 2013 ABIQUIM Committee 13 completed LCA studies ACI Sustainability Committee (American Cleaning Institute) Area structuring

Oxiteno undergoes customer RSPO certification in audit the units of Mexico Ecovadis Evaluation and Uruguay Oxiteno's First Sustainability TfS Auditing (Together for Report Responsible Sustainability) Performance Definition of the materiality Certification in the Customer Demands matrix 2015 units of Brazil

Goal Setting for 2020

Creation of the Ultra Sus- tainability Committee

Ultra defines the general guidelines that must be observed by all businesses, and its companies maintain their own policies, according to the specificities of their markets.

CORPORATIVE GOVERNANCE 33 Ethics and transparency G4-56 Oxiteno adopts Ultra's Ethics and Com- Also in 2017 Compliance Culture Diag- Committee and the Board of Directors pliance Program, one of the tools used nosis was started, which aims to verify to exchange information and initia- to disseminate its ethical values, raise the progress of the management of tives, thus strengthening Ultra's control awareness and educate employees the topic in the Organization, to evalu- environment. about corruption, nonconformities in ate its business units and corporate ar- business and unethical behavior. eas, as well as to identify the activators Training is also part of the Ethics and of risk behaviors in its employees. With Compliance Program. Tenders with Ultra's corporate policies go through the results obtained, the Company is Public Agents, Relations with Public constant updates and improvements, able to develop new tools and thus Agents and Competitive Compliance with new regulatory and legal ap- keep the program always consistent were the topics of the training carried proaches. In 2017, the Code of Ethics with its corporate principles, guidelines out during the year. and Anti-Corruption Policy (which and ethical responsibilities. guides and regulates the guidelines of the so-called Clean Company Law, No. The governance of the Ethics and Com- 12,846, published in 2013, and other in- pliance Program is the responsibility of ternational anti-corruption guidelines) the Conduct Committee, which direct- has been revised and all employees ly reports to the Board of Directors. The occurred in the first quarter of 2018. committee is formed by an indepen- Ultra also implemented a new Com- dent president and the Superintenden- pliance, governance structure, which cy of Finance and IR, Controllership, started to have specific management Corporate Legal and Risk, Compliance in all businesses, with the purpose of and Audit, which also coordinates the ensuring compliance with the guide- program activities. In order to integrate lines of its Ethics and Compliance Pro- the various governance bodies, repre- gram, strengthening internal controls, sentatives of the Conduct Committee communication and trainings. meet with the president, the Audit

All complaints and guidelines are treated confidentially.

Ultra's open channel Available to all audiences, the Ultra Complaints Channel can be accessed through the portal www.canalabertoultra.com.br or by calling 0800-7017172, accessi- ble only for calls originated in Brazil. Operated by an outside and independent company, in the course of 2017, 238 reports were received, of which 51% were considered relevant. All complaints and guidelines are treated confidentially and cleared by the Compliance team with reporting to the Conduct Committee - a body linked to Ultra's Board of Directors.

34 OXITENO · SUSTAINABILITY REPORT 2017 RISK MANAGEMENT Ultra has continuously evolved its risk scenarios and plans. It is then consoli- management and has specific gover- dated with the business director and, Management teams nance to conduct the topic in all its later, with Ultra's Board of Directors discuss toidentify businesses. Based on an Integrated and Board of Directors, thus reinforcing Risk Matrix, approved by the Board of the culture of transparency and shared mitigation scenarios Directors in 2016, the discussion in the responsibility. and plans. top management is carried out in a systemic and standardized way among The Corporate Risks area also aims to all businesses, broadening its vision permeate and develop the risk man- and understanding of Ultra's main risks. agement culture at all levels of the Company and, therefore, seeks to pres- Since 2017, the systematization of ent the results obtained in the various risk analysis has been ongoing with operational and administrative forums a detailed discussion with the man- of each business, as well as in the Fiscal agement teams to identify mitigation Council.

Ultra's risk management evolves continually.

Ultra's Complaint Channel can be accessed through the portal www.canalabertoultra.com.br and through telephone 0800-7017172, available for calls originated in Brazil.

CORPORATIVE GOVERNANCE 35 Products and services

MATERIAL TOPIC THE ROLE OF INNOVATION The sale of new products (those with Oxiteno has a net worth of 219 patents up to four years since its launch) placed throughout its history, a num- corresponded to 13.5% of the gross PRODUCTS AND SERVICES ber that has grown considerably in the margin. Historically, a significant result last ten years, an indicator of relevant for the company. There was also a 53% innovation that demonstrates the com- increase in the innovation rate when INNOVATION pany's efforts to reach and exceed the compared to 2016. expectations and needs of the market ECO-EFFICIENT and the final consumer resolution of By 2018, the main growth projects PRODUCTS key customer challenges. should prioritize products for the agrochemicals market in Asia, Europe and PRODUCT SAFETY In the last decade, the company's Argentina; of oil and gas to Argentina, patent placement jumped from 7 to with the development of a portfolio 19 each year, increasing the protected that meets the demands of the region; technology base and enabling the and the Agrochemical, HPC and Oil See the infographic on development of innovative solutions. and Gas segments in the United States. Oxiteno's material topics on These are medium- to long-term pages 30 and 31. investments that look at the next five years.

36 OXITENO · SUSTAINABILITY REPORT 2017 NEW STRUCTURE who act as Project Management Officer Aiming at making the innovation (PMO) in the area, responding to the strategy even more robust, continu- management of innovation projects, ing to offer quality and high perfor- including tasks such as defining the mance products and developing new structure and resources needed to solutions, in 2017, the Marketing and execute the pipeline projects and the Innovation Board was created, which management of systems and tools to integrates the company's new organi- support innovation. zational structure. In 2017, the process of developing new A Oxiteno has implemented a series products was updated, making its stag- of new guidelines and governance es simpler and more agile. Oxiteno's rules for short-, medium- and long- innovation governance was also ap- term priorities, harmonizing processes proved, which established the project 19 with the strategy, adding robustness committees, executive committee and patents in 2017 to project management. The changes innovation committee. included the presence of professionals

Oxiteno has laboratories for the development and testing of products that support the innovation strategy and collaborate to control the quality and performance of the processes.

Partnerships to generate new ideas G4-DMA Oxiteno's presence in the innovation ecosystem is highly relevant as it provides 530 interaction with the entities that make up the sector and can enable future part- products available for nerships, as well as sharing experiences and knowledge. It is also fundamental, since it allows the monitoring of emerging agendas in favor of innovation in Brazil the market and the interaction with government bodies.

Among the partnerships, Oxiteno is part of the committees of the National Asso- ciation of Research and Development of Innovative Companies (Anpei).

The company has more than R $ 140 million in contracts repayable with Finep (Fi- nanciera de Estudos e Projetos) for application in its own research, development and innovation projects. Projects have also started in partnership with universities via Fapesp (Foundation for Research Support of the State of São Paulo) and IEL 29 (InovaTec Program). In 2017, three projects were active in the Embrapii (Brazilian products launched Association for Research and Industrial Innovation) program, in partnership with ICTs (Scientific and Technological Research Institutions) of São Paulo and Rio de in 2017 Janeiro. The dialogs for new projects in this modality have already begun.

PRODUCTS AND SERVICES 37 Oxiteno is part of the INVESTMENTS IN R&D1 % Variation in Net Revenue committees of the National Association of Research and 1.2% 1.1% Development of Innovative 0.9% Companies (Anpei).

2015 2016 2017

1 Percentage in relation to the net revenue of Oxiteno.

FINANCING FOR INNOVATION G4-EC4 (IN THOUSANDS OF R$):

2015 2016 2017

Finep BNDES Finep BNDES Finep BNDES

Oxiteno S/A1 2.970 10.720 24.575 2.817 - 17.753

Oxiteno NE2 - 7.280 - 88.065 - 7.590

Oleochemical - 2.470 - 93 - 1.206

Mineral Oils3 - 180 - - - -

TOTAL 2.970 20.650 24.575 90.975 - 26.549

1 The units of Tremembé, Suzano and Mauá are part of Oxiteno S/A. 2 The units of Camaçari (except Oleoquímica) and Triunfo are part of Oxiteno NE. 3 The Mineral Oils unit, also known as EMCA, is located in Camaçari.

38 OXITENO · SUSTAINABILITY REPORT 2017 Eco-efficient products

GREENFORMANCE The pursuit of the development of Promoting health and well-being innovative, sustainable products that through high performance formu- meet the needs of society is the mo- lations, minimal by-products and tivating line for Oxiteno's R&D area. To softness. support this process, there is the permanent support of the Greenformance LIFE CYCLE ASSESSMENT (LCA) Platform, which guides the develop- OF PRODUCTS Oxiteno seeks to develop ment of products based on raw mate- Connected to the Greenformance rials from renewable sources, respect platform, Oxiteno has since 2009 used products and solutions for the environment and promotion of Life Cycle Assessment (LCA) tools to that are innovative, health and well-being. help manage its eco-efficient products. The methodology, standardized by ISO sustainable and meet The Greenformance guidelines consid- 14040 and 14044, allows to quantify the needs of society. er: the environmental performance of a product considering all its cycle of Use of raw materials from renewable existence. In practice, with the adop- sources, replacing, wherever possible, tion of the tool, it is possible to identify synthetic inputs and petrochemi- in which stages (extraction of the raw cal derivatives from inputs of plant material, distribution, manufacture, origin. use or final destination) are the main environmental impacts of that prod- Care of the environment, which is uct and, from this survey, to simulate reflected in concentrated and biode- changes in processes that maximize its gradable products, allied to reducing benefits. energy use, water consumption and packaging.

Oxiteno integrates reference-group companies for product impact analysis.

During nine years, Oxiteno accumulat- addition to actively participating in the ed a bank of 60 mapped products and sixth edition of the Brazilian Congress 13 finished studies for the various seg- on Life Cycle Management, in Brasília ments of the company. In 2017, three (DF). reports were delivered for the Personal Care and Home Care and I&I segment and one for the Paints and Coatings NEW RENEWABLE segment. Another important advance PRODUCT CERTIFICATION for Oxiteno's leading position when it In 2017, Oxiteno obtained the Cosmos comes to the ACV methodology was Referential certification (for natural and formalization as a member of the Board organic cosmetics) for its OXISMOOTH® of the Brazilian Entrepreneurial Net- product line, which integrates the work of the Life Cycle, now composed company's HPC portfolio. The seal was of the main companies in the most di- awarded by the specialized certifier verse segments. For 2018, the expecta- Ecocert, and the expectation is to con- tion is to carry out three new studies, in quer the renewal in 2018.

PRODUCTS AND SERVICES 39 Agrochemicals Oxiteno develops products that meet As part of the infrastructure implemen- the challenges of its customers, as well tation strategy in 2017, investments as guarantee quality support with tech- were made that added even more nical capacity. Its products increase the quality and efficiency to the portfolio. performance of the agrochemical assets and, mainly, the use of surfactants in The Hattiesburg R & D Center in Missis- agrochemical formulations, reducing sippi (USA) develops solutions for the the volume of active ingredients ap- North American market and collabo- plied to the environment. In this way, rates with Oxiteno's expansion efforts its portfolio contributes to increased in the region. With a trained team of productivity in agriculture and food masters and doctors, the laboratory availability in a world that is expected enables the development of various to reach 9.2 billion people by 2050. types of solutions and formulations for agrochemicals and adjuvants in the In synergy with the areas of R&D, United States. Marketing and Innovation, and Sustain- ability, Oxiteno analyzes the adoption of new technologies and the entry of new products, and monitors the performance of products considered old in the market, verifying factors such as production volume, product and regulatory context. This process supports decisions about how the company's portfolio will adapt to future changes.

Highlights

BIOSOLUTIONS CROP PRODUCTION In partnership with one of its custom- Developed in an initial prototype in ers, Oxiteno contributed to the devel- previous years, two innovations were opment of a biopesticide that combats commissioned and approved on a pilot the helicoverpa in cotton, soybean scale in 2017. Both are part of the com- and corn, through the formulation pany's strategy to provide high-per- of the microorganism with Oxiteno formance components for challenging surfactants. There was progress in the formulations: the green solvent made validation of the final formulation and from vegetable acid with favorable the field and industrial scale tests were toxicological profile and the polymer started. The product will be launched dispersant developed in an innovative in 2018. A partnership with the Senai and more sustainable process. Solutions for crop Institute of Innovation also began to evaluate the compatibility of Oxiteno protection support the surfactants with common micro-or- productive process of ganisms in biopesticides. The data will make it possible to create the knowl- agricultural activities. edge base necessary to formulate and innovate in biopesticides of regular use and in seed treatment.

40 OXITENO · SUSTAINABILITY REPORT 2017

SURFOM® MIX 8251 TANK MIX ADJUVANTS More safety and less In 2018, a blend will be launched for There have been advances in solutions environmental impact the adjuvant market that combines in adhesive spreaders identified as properties that ensure flexibility and performance enhancers for fungicidal in the application of reliability in the combined application herbicides and insecticides. Develop- pesticides and fertilizers. of pesticides and fertilizers. The prod- ment is in the prototype phase, under uct solves a very common problem evaluation, but tests started in 2017 at the time the farmer prepares the have already shown the potential for tank mix, as it is called the product the US-focused segment. mix carried out before spraying in the field, ensuring safety and efficacy of the application. The differentials of the product technology further promote better scattering and less foaming during stirring.

PRODUCTS AND SERVICES 41 Personal care & Home care and I&I (HPC) The increase in the performance of with a briefing, meeting, in which the formulations and the reduction of the customer exposes his challenges, giv- environmental impacts of its ingredi- ing rise to research and development ents are two of the main guidelines projects carried out by the Oxiteno that guide the performance of the researchers. segments of personal care, domestic and institutional cleaning. By 2017, There is also a growing number of these goals have gained even more companies requesting data on the raw room in the company's innovation materials used in Oxiteno products, process, which has worked to add val- reinforcing the weight that traceability ue to products and especially develop has for the company and its customers. solutions to customer challenges. It is worth mentioning that Oxiteno is the only company in Brazil that Each year, there is an increase in the produces fatty and sulphated alcohol percentage of co-generation experi- derived from vegetable base, differen- ences with customers, which recognize tials that already revert in market gains in Oxiteno a reliable partner for the for the company. development of innovative or tay- lor-made solutions. This model begins

Highlights

JUST RIGHT FOR THE CUSTOMERS OXISENSE® F 1100 is a solution devel- In one of the co-creation projects, car- oped by Oxiteno based on polyalkox- ried out in conjunction with a strategic ylates and non-ionic surfactants for client, it was possible to reformulate formulations of regular and concentrat- its product line, enhancing the perfor- ed fabric softeners. mance of the items, while maintaining the same concentration of ingredients. The technology of OXISENSE® F 1100 In this way, the customer obtained enhances the action of cationic quality gains and reduced production actives, favoring the substantivity of costs. Another action developed in these ingredients in the textile fibers, partnership with a client of interna- making the fabrics softer, smoother, tional action allowed the simplification easier to iron and protected from the of formulations, reducing the mix of wear caused by day-to-day washing, ingredients, helping to optimize costs extending its life. The product is from Co-creation: customers and facilitating their geographical renewable source. support Oxiteno in the expansion, since the standardization facilitated the access of these products development of solutions in countries with different legislations. that enhance the value of It was also possible to increase the use of raw materials of renewable origin, products. increasing the gain in relation to the environmental impact.

42 OXITENO · SUSTAINABILITY REPORT 2017 Paints and coatings As a consolidated supplier of chemical with low toxicity, with low impact on solutions in the paint, adhesives and classification and labeling according to coatings market, Oxiteno has diversi- the GHS (Global Harmonized System), fied its portfolio with the introduction offering high performance and excel- of technological platforms for additives, lent competitiveness. building blocks, coalescents, emulsifiers and oxygenated solvents, in which In 2017, researchers at Oxiteno devel- Oxiteno is a benchmark in the Brazilian oped the book Manual Descomplicado market. The expansion of the portfolio, de Tecnologia de Tintas (Uncomplicated through new technological platforms, Paint Technology Handbook), to share allows the company to meet the needs knowledge in a didactic and objective of the paint market, being the basis for way. The handbook addresses topics its growth in this segment. such as formulation, life cycle assessment and good practice and safety in A constant concern in product devel- laboratories, among others The book, opment is the reduction in toxicity published by Editora Blucher, was and volatile organic compound (VOC) launched at the congress of the Brazil- emissions, ensuring more safety during ian Association of Paint Manufacturers the application of the products. High- (Abrafati), the main fair of the sector lighting the ULTRASOLVE® H product in Brazil, and reinforces the position of line, developed from the new market Oxiteno as a reference in this segment. requirements for paints and varnishes

The Handbook addresses topics such as formulation, life cycle assessment and good practice and safety in laboratories.

Highlights OXITIVE® 7000 significant reduction in the environmen- The Oxiteno line of additives consists tal impact of chemical inputs, which of NPE free products (nonylphenol is a global need. Among the reduced ethoxylate). With excellent wetting impacts, we can mention: odor, toxicity properties, fundamental to assist in and volatile organic compounds (VOCs). the dispersion step of the pigment in Additives the medium, the OXITIVE® 7000 line ULTRASOLVE® H was developed for applications in With a new generation of molecules de- water-based and pigment concentrate rived from propanol, this line of oxygen- Buildingblocks paints. ated solvents is made up of products with different chemical functions and OXIMULSION® 9800/9900 varied evaporation rates, which enables Coalescents An innovation for paints and coatings, it to serve different segments such as the OXIMULSION® 9000 line allows automotive paints, industrial paint, the processing of resins, generating wood paint and printing inks. Emulsifiers oil-in-water emulsions used in paints

for wood, metal and masonry painting. Because it is HSE-friendly, the ULTRA- This line of surfactants enables the SOLVE® H line enables the formulator Oxygenated Solvents conversion of solvent-based enamel to obtain paints and coatings with high technology to water based, through performance and excellent competi- a simple process that guarantees the tiveness, as well as low toxicity and low same properties and quality of the final impact on classification and labeling product, with a significant reduction according to the GHS (Global Harmo- of environmental impact. The effects nized System). of this innovation also generate a

PRODUCTS AND SERVICES 43 Oil and gas In view of the trends in this market development and small-scale produc- characterized by extreme conditions tion of these new solutions as well as such as high and low temperatures, support for local customers. Previously, high pressure and critical salinity levels, the molecules were only tested and Oxiteno also invested in the diversifica- produced in the Brazilian laboratory. tion of its Oil and Gas portfolio through technological platforms. With solutions In addition to commercial partnerships, for Drilling, Stimulation, Production proximity to major global research Optimization, Asset Integrity and centers and universities allows for Flow Assurance, the portfolio delivers the analysis of specific scenarios and precision chemistry, helping customers accelerates the product development cope with critical conditions with high and approval process. In the national performance and low environmental market, one of the partners is the Fed- impact products. eral University of Rio de Janeiro (UFRJ), which studies the use of computer In pursuit of a more robust perfor- simulation to improve the selection mance in the United States, due to the process of the ingredients applied in commencement of operation of the the formulations and solutions. This Texas alkaloxing unit scheduled for partnership was the topic of a presen- 2018, R&D and business teams have tation held during the Abiquim Sem- intensified customer relationships and inar on Technology and Innovation, product benefits in the region. West sponsored by the Brazilian Chemical Texas oil emulsion tests were also con- Industry Association (Abiquim). ducted to enable the launch of specific products that serve the North Amer- ican oil. Oxiteno's new lab and pilot plant in Mississippi have enabled the

Highlights

LINE OF FLOWBACK AIDS FOR STIM- contributing to guarantee the efficien- ULATION FLUIDS cy of oil production and the quality of Composed of NPE-free surfactants (free the water separated. of ethoxylated nonylphenol), the line provides reduced interfacial tension AWARD and optimizes both acidic and wa- For the development of a synthetic ter-based fracturing systems. solution for drilling fluids with high biodegradability and low toxicity, LINE OF EMULSION PREVENTERS Oxiteno received the Kurt Politzer prize, FOR STIMULATION promoted by Abiquim. The product is It brings together Oxiteno's leading intended for offshore oil prospecting Precision chemistry products to act in the prevention of applications, while offering greater for extreme emulsion formation, promoting the in- safety to the marine ecosystem and stant separation between oil and fluids excellent performance. conditions. used in the stimulation activity, guaranteeing the integrity of the reservoir, avoiding damage to the formation and

44 OXITENO · SUSTAINABILITY REPORT 2017 Performance products With an eye on the main international Another product of the line, the sol- trends and attentive to develop prod- vent OXIPURITY 2170, is responsible for ucts tailored to the needs of customers, giving a characteristic banana odor to Oxiteno is enhancing the OXIPURITY the final product and has its improved line. The objective is to achieve more formula, making it smoother and more purity in the products and to assure pleasant. This process of improvement the service to more demanding was also highlighted by involving applications in the European market. several areas of Oxiteno in a multidisci- One of the products, OXIPURITY 1410, plinary and synergic team focused on 1410, is used in cosmetic, perfume and meeting the needs of the customer. fragrance and pharmaceutical applications and has a low content of mono- ethylene glycol (MEG) – a by-product Diversified and of the manufacture of ethyldiglycol. A new guideline of the European Union versatile portfolio determines the reduction of the use of for diverse applications. this substance.

PRODUCTS AND SERVICES 45 The 2017 climate survey has a fovorable rate of 73%.

People G4-DMA

MATERIAL TOPIC With Oxiteno's new governance struc- year in Brazil, of the certification Top ture, the people management strategy Employer, for the attention and dedica- adds force to the regional operations, tion in the professional development PEOPLE centralizing governance in corpo- to its collaborators. For the first time, rate areas. The great challenge of the Mexico's operation was awarded the process is the cultural change and the Great Place to Work. VALUATION OF adoption of a more global look for a WORKFORCE company with an increasingly expres- In 2017, a new climate survey was sive presence abroad. carried out, which pointed to a 1% increase in the favorability index – total- See the infographic on Oxiteno employs approximately 2,000 ing 73% –, a positive percentage that Oxiteno's material topics on employees, most of them in Brazilian reflects the characteristic impact of the pages 30 and 31. units, but there are also professionals in organizational change scenario. eight other countries. Although with a majority of men in total staff – a feature of the industry – the gender distribution shows balance in the global board, consisting of three women and two men.

Oxiteno works to continually evolve its management model, seeking to keep 60% of global board Human Resources practices in line with the best practices in the sector. positions are filled by The union of the efforts resulted in the women. obtaining, for the fourth consecutive

46 OXITENO · SUSTAINABILITY REPORT 2017 EMPLOYEE PROFILE G4-10

EMPLOYEES BY FUNCTIONAL LEVEL 20151 20161 2017

AND GENDER - BRAZIL Men Women Men Women Men Women Director level2 3 2 3 2 3 3 Management 58 22 59 21 71 38 Coordination/Supervision 62 21 65 25 55 11 Administrative 108 181 147 189 188 207 Operational 551 76 554 83 586 110 Young learners 18 14 13 12 16 13 Intern 61 38 45 38 54 62 Total by gender3 800 316 841 332 919 382 TOTAL3 1,116 1,173 1,301

1 The total values for 2015 and 2016 were revised in 2017 and diverge from values published in previous years because they now consider directors and do not include intern. The need for adjustment is due to the fact that Ultra has published an organization chart with data after 12/31/2017, reflecting the updating of Oxiteno's data. 2 The data in the table consider the number of directors in Brazil. Considering international operations, Oxiteno has eight directors in total (five global and three regional). Of the five global directors, three are women and two are men. All three regional directors are men. See Oxiteno's chart on page 27. 3 The total numbers do not consider intern.

PERCENTAGE OF EMPLOYEES BY AGE GROUP (2017) – BRAZIL G4-LA12

Under 30 years of age Between 30 and 50 years of age Over 50 years of age

BOARD OF 50% 50% DIRECTORS

MANAGEMENT 2% 73% 25%

COORDINATION/ 3% 71% 26% SUPERVISION ADMINISTRATIVE 35% 55% 10%

OPERATIONAL 24% 62% 15%

APPRENTICES 93% 7%

INTERN 97% 3%

PEOPLE 47 EMPLOYEES BY TYPE OF EMPLOYMENT CONTRACT – BRAZIL G4-10

DETERMINED TIME UNDETERMINED TIME 27 892 825 21 361 19 781 16 14 14 302 318

2015 2016 2017 2015 2016 2017

TOTAL BY GENDER TOTAL1

2015 1,116 2015 2016 1,173 800 316

2016 2017 841 332 1,301

2017 919 382

1 Values in 2017 do not consider intern; values in 2015 and 2016 do not consider the board level.

48 OXITENO · SUSTAINABILITY REPORT 2017 2015 2016 2017 EMPLOYEES BY REGION – BRAZIL G4-10 MEN WOMEN MEN WOMEN MEN WOMEN

South 37 4 34 4 43 5 Southeast 470 246 505 265 556 309 Northeast 293 66 302 63 320 68 Total by gender 800 316 841 332 919 382 TOTAL1 1.116 1.173 1.301

1 Values in 2017 do not consider intern; values in 2015 and 2016 do not consider the board level.

EMPLOYEE BY AGE GROUP – BRAZIL G4-LA12 2015 2016 2017

Below 30 years of age 317 306 389 Between 31 and 50 years of age 632 700 726 Below 50 years of age 167 167 186 TOTAL1 1.116 1.173 1.301

1All figures exclude intern and include directors.

EMPLOYEES IN INTERNATIONAL UNITS G4-10 2015 2016 2017

Mexico 355 365 374 Uruguay 128 127 126 Belgium 4 4 4 China 4 4 5 Colombia 4 4 4 Argentina 6 6 5 United States 63 98 116 Venezuela 64 69 56

PEOPLE 49 PERCENTAGE OF LOCAL LABOR – 2017 G4-10

BELGIUM 100%

USA CHINA 98.3% 60%

MEXICO

98.4% VENEZUELA 100%

COLOMBIA BRAZIL 75% 100%

URUGUAY 99.2%

ARGENTINA 100%

COMPOSITION OF GROUPS RESPONSIBLE FOR GOVERNANCE AND DISCRIMINATION OF EMPLOYEES BY FUNCTIONAL CATEGORY G4-LA12

BOARD MEMBERS¹, BY GENDER (%) 2015 2016 2017

Male 60 60 62.5 Female 40 40 37.5

¹ Scope: CEO and the directors of all units.

Oxiteno employs approximately 2 thousand employees considering operations in Brazil and abroad.

50 OXITENO · SUSTAINABILITY REPORT 2017 TOTAL NUMBER AND RATES OF NEW HIRES AND EMPLOYEE TURNOVER – BRAZIL G4-LA1

NUMBER OF LAYOFFS BY GENDER 2015 2016 2017

Male 105 61 81 Female 41 40 48

NUMBER OF LAYOFFS BY AGE GROUP 2015 2016 2017

Below 30 years of age 44 44 50 Between 31 and 50 years of age 39 35 66 Below 50 years of age 25 22 13

NUMBER OF LAYOFFS BY AGE GROUP 2015 2016 2017

South 0 2 1 Southeast 88 58 106 Northeast 20 41 22

TURNOVER RATE BY GENDER1 (%) 2015 2016 2017

Male 11.36 7.64 10.28 Female 27.70 18.34 13.48

1 The turnover rate is calculated considering: (total severances + total number of employees / 2) / (total number of employees in the category) * 100. Intern are not accounted for in this calculation.

TURNOVER RATE BY AGE GROUP1 (%) 2015 2016 2017

Below 30 years of age 17.42 15.20 18.89 Between 30 and 50 years 6.35 6.25 8.88 Below 50 years of age 7.06 7.45 4.30

PEOPLE 51 TURNOVER RATE BY REGION1 (%) 2015 2016 2017

South 5.00 3.19 3.13 Southeast 12.99 9.08 13.87 Northeast 5.19 10.83 6.31

NUMBER OF HIRES BY GENDER 2015 2016 2017

Male 90 74 108 Female 55 50 55

NUMBER OF LAYOFFS BY AGE GROUP 2015 2016 2017

Below 30 years of age 102 70 97 Between 31 and 50 years 43 52 63 Below 50 years of age 0 2 3

NUMBER OF LAYOFFS BY AGE GROUP 2015 2016 2017

South 5 1 2 Southeast 119 88 134 Northeast 21 35 27

RATE OF NEW HIRES BY GENDER (%)1 2015 2016 2017

Male 10.16 8.48 11.75 Female 15.45 13.93 14.40

1 The rate of new hires is calculated considering: (number of employees in the category / total number of employees in the category)*100. Intern are not accounted for in this calculation.

52 OXITENO · SUSTAINABILITY REPORT 2017 RATE OF NEW HIRES BY REGION (%)1 2015 2016 2017

South 10.00 2.13 4.17 Southeast 14.93 10.95 15.49 Northeast 5.32 9.19 6.96

1 The rate of new hires is calculated considering: (number of employees in the category / total number of employees in the category)*100. Intern are not accounted for in this calculation.

RATE OF NEW HIRES BY AGE GROUP (%)1 2015 2016 2017

Below 30 years of age 24.34 18.67 24.94 Between 30 and 50 years of age 6.66 7.47 8.68 Below 50 years of age 0 1.24 1.61

1 The rate of new hires is calculated considering: (number of employees in the category / total number of employees in the category)*100. Intern are not accounted for in this calculation.

Compensation Oxiteno's Remuneration Policy is aligned with the business strategy, with the definition of internal rules, methodologies, concepts and procedures that guarantee a level of competitiveness suitable for attracting and retaining its professionals, without making any gender distinction. G4-LA13

PROPORTION OF AVERAGE REMUNERATION FOR WOMEN 2015 2016 2017 AND MEN BY FUNCTIONAL CATEGORY (BRAZIL)1 G4-LA13 Management 0.98 1.04 0.90 Coordination/Supervision 1.09 1.05 1.03 Administrative 0.90 0.95 0.91 Operational 0.99 1.03 0.88 Young learners 1.04 0.95 0.99 Interns 1.02 1.04 1.05

1 The historical values of this indicator were revised from the reorganization of the functional categories.

PEOPLE 53 Training G4-DMA, G4-LA9, LA10 Oxiteno adopts a global competen- providing more flexibility to the com- cy management model, used as a pany and promoting synergy among guideline for employee development the group's companies, the training and career management processes. opens up new career opportunities for The competency assessment allows managers, who have a broader look at the mapping of development for the all Ultra's business. whole company and the creation of development plans that unite the Oxiteno also maintains a policy of needs of each professional to the de- granting scholarships and languages mands of the company. for graduation, post-graduation (lato sensu or stricto sensu) and university Looking at the medium and long term, extension program, continuing or ex- % leadership training is one of the main ecutive, of short or medium duration. objectives when it comes to people There is also the possibility of unpaid 50 management. In line with the inter- leave for employees wishing to study nationalization process of Oxiteno abroad. of the actions of the and the approximation of all of Ultra's businesses, the Essência Ultra Program development plans was again carried out in 2017. In it, are carried out through group leaders broaden their knowledge and multi-business perspective Portal DNA, an online in decision-making, with a focus on education tool. the market and trends. In addition to

Evaluation by competences enables the elaboration of a development plan aligned to the needs of each professional and of Oxiteno.

In 2017, the company did not perform The employees also have at their dis- the evaluation cycle of the teams due posal Portal DNA, an online education to the implementation of the Evolution tool used in 50% of the actions of the Project. During the year, only managers development plans, in which training participated in the competency assess- modules aligned with the training de- ment. Training was given to support mands are published. R&D teams also the sales and brand positioning strate- go through a lengthy training process gies, which provide process efficiency on strategic business issues. and reinforce Oxiteno's health and safety culture.

54 OXITENO · SUSTAINABILITY REPORT 2017 Skills management programs create To assist employees near retirement, a dynamic of continuous learning in the company provides support with which professionals share experiences, a transition plan for replacement and create perspectives for new ideas and removal of the professional. Regard- take on challenges of self-developing the recycling of employees who ment and professional evolution. intend to continue working, there is no pre-established program. The cases are In 2017, the internship program was evaluated on a timely basis and moni- adapted to the format of the trainee tored by the HR consultants. development model, a process of men- toring being part of the process, which will contribute to the entry of young people into the organizational world.

In all, more than 47,500 hours of training were offered in 2017, a volume almost 15% higher than the previous year. On average, more than 33 hours of training per employee per year were spent.

90.2 thousand hours of training in 2017. 63.7 hours per employee in Brazil.

The competency management programs create a dynamic of continuous learning, sharing experiences among Oxiteno professionals.

PEOPLE 55 TOTAL HOURS OF TRAINING BY 2015 2016 2017 FUNCTIONAL CATEGORY AND GENDER – BRAZIL G4-LA9 Men Women Men Women Men Women

Director level1 36 76 8 0 144 144

Management1 3.409 1.990 2.079 964 22.541 11.762

Coordination/Supervision1 1.292 549 2.491 374 10.555 1.912

Administrative 3.445 4.763 4.891 5.729 5.590 5.187

Operational 10.058 1.127 22.227 2.955 23.727 2.899

Apprentices 0 0 0 0 0 0

Interns 0 0 6 60 3.399 902

Total by gender 18,240 8,505 31,702 10,082 65,956 22,806

TOTAL 26,745 41,784 90,202

1 Starting in 2017, the indicator began to consider corporate training conducted by Ultra for these audiences.

Oxiteno's competency management model is global and guides the development and career management processes of employees.

AVERAGE HOURS OF TRAINING BY FUNCTIONAL CATEGORY – BRAZIL G4-LA9 2015 2016 2017

Director level1 22.4 1.6 288.0

Management1 67.5 38.0 314.7

Coordination/Supervision1 22.2 31.8 188.9

Administrative 28.4 31.6 27.3

Operational 17.8 39.5 38.3

Apprentices 0.0 0.0 0.0

Interns 0.0 0.8 37.1

Total average (women) 24.0 27.3 51.4

Total average (men) 21.2 35.8 67.8

Total Mean 22.0 33.3 63.7

1 Starting in 2017, the indicator began to consider corporate training conducted by Ultra for these audiences.

56 OXITENO · SUSTAINABILITY REPORT 2017 160 professionals have been hired since the beginning of the Trainee Program. 29% of these hold management positions. Attracting talents

Oxiteno has developed the Trainee Program in Brazil since 1989. The initiative aims to attract talents that bring results and contribute to the growth of the organization. Since 2015, the company has expanded the program to Mexico, including a period of integration in Brazil. Since the beginning of the program, 160 professionals have been hired. Of these, 29% currently hold management positions.

Youth training is recognized by the Ministry of Education.

TRAINING OF YOUNG PEOPLE

FOR THE MARKET Held by the Instituto Ultra in partner- The training is recognized by the ship with the Iochpe Foundation, the Ministry of Education and is offered Ultra Formare Program focuses on at Ultra's headquarters in São Paulo education and the insertion of young (SP) for young people who are in Instituto Ultra offers people in the job market. For this, high school. In addition to classroom courses for the training of it offers a professional course of ad- study, the course also provides visits ministrative and commercial services to Ultra and internships in any of its Administrative and Sales assistant, with a workload of 25 hours businesses for eight weeks. Agents. per week in 14 subjects.

PEOPLE 57 In 2017, the company reviewed the management of environmental aspects and impacts related to Oxiteno products, processes, projects, services and activities. Environment

MATERIAL TOPIC With the ISO 14001 certified environ- In 2017, there was a significant ad- mental management, committed to vance in environmental management, the responsible performance of the with a review on the management of ENVIRONMENT chemical industry and in line with the environmental aspects and impacts business strategy aimed at process ex- related to Oxiteno's products, pro- cellence, Oxiteno invests continuously cesses, projects, services and activities, USE OF NATURAL RESOURCES in the improvement of its facilities, also considering a life cycle approach, processes and controls to improve which includes everything the com- efficiency levels, avoid waste and envi- pany controls and what the company See the infographic on ronmental impacts and, consequent- influences along its value chain (see ly, reduce costs. For the company, figure below). Oxiteno's material topics efficient environmental management on pages 30 and 31. contributes directly to business results, All environmental aspects are identi- optimizing resources and reducing fied and classified for their significance. losses. For those mapped as significant, there are a number of controls, which include the adoption of equipment and instruments and the implementation of procedures and training - all moni- tored periodically. G4-EN27

58 OXITENO · SUSTAINABILITY REPORT 2017 Environmental management: a life cycle approach

Industrialization Storage at third parties

EO Transport Project

R&D Use of the product After-use at the customer's transport facilities

MP Acquisition

Production

External storage Industrialization for third parties Final destination Wastes

Auxiliary processes

Influenced by Oxiteno Acquisition Controlled by Oxiteno of utilities Transport

ENVIRONMENT 59 It is also important to highlight that, mental management, for all units out- in the stage of developing products side Brazil. In the country, since 2002, and solutions for customers and their the company's Environmental Man- consumers, the premise adopted is the agement System has been certified by search for innovative and sustainable ISO 14.001 and, in 2016, Guadalajara, solutions from the Greenformance plat- Mexico, was the first international plant form (read more on page 39). to achieve certification. The other two plants in Mexico (Coatzacoalcos and Among the investments in environ- San Juan del Río), as well as the plant mental management during 2017, the in Montevideo, Uruguay, are being contributions in automation, such as prepared for certification.G4-EN27 the one made in Camaçari (BA), with the implementation of the factory's Oxiteno's three units in Mexico and the advanced production control system, Uruguayan plant have been awarded and the improvements of the facili- the Roundtable on Sustainable Palm Oil ties in the Brazilian units , such as the (RSPO) certification, an organization elevation of the effluent network from that works to boost the use of palm oil a new configuration that allows to per- in a sustainable way through a series of 100% of Oxiteno's form visual inspections and periodic actions, such as the adoption of stan- preventive maintenance, among other dards. In Brazil, five units are already processes and activities advances. RSPO-certified: Oxiteno Camaçari, have their controlled Oleoquímica, Tremembé, Mauá and It is also worth mentioning that Oxite- Suzano (read more about certifications environmental aspects no works to obtain certification in the on page 20). and impacts. new version of 14.001: 2015, environ-

Seeking efficiency OXITENO SET TARGETS FOR THE MANAGEMENT OF THE MAIN ENVIRONMENTAL IMPACTS OF ITS OPERATION

COMMITMENTS FOR 20201 Status 2017 Context

There were a number of projects that reduced emissions, however, Oxiteno stopped marketing the Reduction of 25% in relative 2% reduction CO produced in Mauá, impacting the index. There emissions, based on 2008 data achieved 2 are other projects underway in the search for this Greenhouse Gases reduction. (GHG) Reduction of global absolute Target reached Emissions avoided from the use of residual gas for emissions by 70,000 tCO e/ 2 (71,086 tonnes) energy generation through partnership. year

19% of the reuse water Increase by 25% in water in Brazil's Other feasibility studies for the reuse of the industrial Water reuse, 2008 base operations and effluent are in progress. 15% in the global index

98% is recycled and only 2% of industrial waste Zero landfill for industrial Wastes Hit target that can not be reused and incinerated. There is no waste shipment to landfills.

1 Targets only consider operations in Brazil.

60 OXITENO · SUSTAINABILITY REPORT 2017 Energy G4-DMA, G4-EN5 Oxiteno had a slight increase in relative mal origin, so initiatives that involve generation (32.5 GWH), a volume energy consumption to 6.6 gigajoules improvements in energy efficiency also corresponding to 20% of the energy per ton of product. In relation to abso- contribute to the reduction of emis- consumption of the site. This was the lute consumption, there was a pro- sions and costs. In the consumption of highest absolute annual result in the portional increase to the production electric energy with lighting, the use history of this operation - 40% more growth, especially due to the expan- of LED bulbs is increasing, especially in than in 2016 - and represented an sion in the glycol manufacture and the the units of Tremembé and Mauá. economy of R$ 9.7 million, equivalent ethylene oxide catalyst exchange in to the internal energy bill. For 2018, the Camaçari (BA), which improves reac- When it comes to the energy con- objective is to perpetuate the operat- tion efficiency, but, on the other hand, sumption of steam by the units, the ing gains of Camaçari. requires increased steam production. initiatives to exploit the waste gas of The replacement caused a 15% in- partner companies and neighboring crease in steam consumption in 2017. plants of Mauá and Camaçari, currently with the highest levels of consump- Energy optimization is a permanent tion, are highlighted. Also noteworthy agenda in Oxiteno's management is the process that allows the use of the and operating meetings. Part of the hydrogen generated in the production investment made by the company is in Triunfo (RS). In Tremembé, the proj- also aimed at improving energy perfor- ect to replace fuel oil with natural gas, mance, especially optimizing the steam the most used fuel in Oxiteno's plants, grid, boilers, furnaces, turbines and the is underway. search for cleaner energy alternatives that prove viable for the business. It In 2017, the Camaçari unit (BA), which should be noted that energy con- is the company's largest plant, record- sumption is predominantly of ther- ed a record of turbo generator power

ENERGY INTENSITY¹ G4-EN5 ENERGY CONSUMPTION WITHIN THE OR- GANIZATION (tJ)¹ G4-EN3 Total energy in processes/production (GJ/t product)

9.170 7.957 6.6 6.2 6.2 7.890

2015 2016 2017 2015 2016 2017

¹ Scope: Brazil, Mexico, Venezuela e Uruguay ¹ Scope: Brazil, Mexico, Venezuela e Uruguay

ENVIRONMENT 61 Water and effluentsG4-DMA, G4-EN8 The supply area surveyed the water risk (Brazil) unit reduced water use by of Oxiteno's plants in Brazil, mapping 10% in the period. At the Mauá (Brazil) possible measures and actions to en- operation, 97% of the water used in the sure the operational continuity of the production process comes from reuse. units. In addition, the area of environment led, together with the process In Coatzacoalcos (Mexico), US $ 2,631 engineering teams of the industrial was invested in a rainwater harvesting units, the evaluation of the water project, with a storage capacity of balance of each plant, also defining 5 thousand m3 of water used in the actions for reduction, recovery and cooling tower and with the possibility Water risks of Oxiteno plants direct reuse. There were also studies of reducing water consumption in the to evaluate the feasibility of adopting rainy season by up to 230 m3 - 3.38% of in Brazil were identified, the reuse of industrial effluent after the unit's monthly consumption. The with respective mapping treatment. operation can save up to US$ 2.421 between January and September, when of actions to ensure Due to a water crisis in the state of the rains are heavier. operational continuity. Bahia in 2017, all companies were en- couraged to reduce consumption. The eco-efficiency efforts of the Camaçari

TOTAL WATER WITHDRAWAL BY SOURCE (m³) G4-EN8

SOURCE 2015 2016 2017

Brazil1 0 0 13,333 Mexico 69,077 69,314 54,981 Uruguay 53,078 54,761 57,739 Andean 0 0 0 Groundwater 122,155 124,075 126,053 Rainwater2 55,892 29,131 22,011 Effluents from another organization3 774,950 814,139 818,0793 Brazil 4,457,807 4,273,356 4,384,112 Mexico 75,383 91,599 100,424 Uruguay 34,652 26,641 26,849 Andean 45,770 35,068 23,414 Municipal water supply or outsourced companies 4,613,612 4,426,664 4,534,799 TOTAL WATER WITHDRAWN 5,566,609 5,394,009 5,500,942

1 In 2017, the use of groundwater in the Tremembé unit (SP) was resumed, in processes that do not have microbiology problems, such as in the cooling tower. 2 Oleoquímica (Camaçari-BA) only. 3 Aquapolo (Mauá-SP) only.

62 OXITENO · SUSTAINABILITY REPORT 2017 98% of the water abstracted is returned to the environment – 37% effluent and 61% evaporation

UNDERGROUND In Oleoquímica, 2.3% equivalent to Mexico, Uruguay and 9 Olympic Tremembé units swimming pools

REUSE RAIN COLLECTING 15.2% Enough to supply a 0.4% city of 14 thousand inhabitants The remainder was abstracted from groundwater, 80.1% municipal or other The Mauá unit Other supply companies companies uses 97% of water become treated from the sewage effluents treatment, through 2.0% the Aquapolo Project municipal supply

WHERE DOES IT COME FROM?

12 manufacturing AND WHERE units DOES IT GO TO? 100% of these effluents are treated in Oxiteno treatment plants or in specialized industrial service providers 61% 2% Evaporate are incorporated 37% into the products They become treated effluents

ENVIRONMENT 63 On a consolidated basis, there was an specific cleaning for the sanitization of increase in absolute water consump- the equipment and to guarantee the tion in the Oxiteno operation propor- quality of the products. However, the tional to the increase in production relative consumption was below the and due to the Good Manufacturing previous year. And, of this total con- Practices (GMP) and the evaporation sumed, 15% comes from reuse. rates. The plants started to carry out

RECYCLED AND REUSED WATER¹ G4-EN10 16 15 15

843.270 840.091 830.842

Water recycled and reused by the organization (m³)²

% of recycled and reused water³ 2015 2016 2017 ¹ Rainwater collected on the roofs and reused effluents from other organizations. ² Scope: Brazil (Mauá, Mineral Oils and Camaçari) ³ Scope: global.

Considering the total consumption, Oxiteno was highlighted by its water 98% of the water consumed by Oxite- management at CDP Water, which no returns to the environment, 2% is recognizes the best companies in the incorporated into the products. About world regarding the management of 60% of this water evaporates during the use of this resource. the production process and 37% becomes an industrial effluent – in this case, which amounts to approximately 2.0 million m3,, are treated in their own stations or by specialized companies and return to the environment following the standards established by law. New equipment installed in the Camaçari (BA) unit resulted in a significant reduction of 27 thousand tons in the generation and loss of effluents.

64 OXITENO · SUSTAINABILITY REPORT 2017 Emissions G4- DMA, G4-EN18 Oxiteno maintains a program to steam mesh and the energy utiliza- monitor and reduce emissions of tion of waste gases from neighboring Greenhouse Gases (GHG) and local companies. To reduce emissions in the pollutants. To manage GHG, all sources manufacture of ethylene oxide, the of emissions (direct and indirect) and gases produced are destined for other annually verified by third parties are purposes. accounted for on a monthly basis. This process has already identified different In the scope of emissions of local pol- opportunities for reduction - of the lutants, Oxiteno conducts an inventory total, 19 were prioritized to be more of its emissions and periodic sampling deeply analyzed, eight are already of the sources, according to its emis- implemented and two projects are sion monitoring plan. It also assesses underway. the impact of its emissions through a dispersion study, having met the legal The main sources are steam genera- emission and air quality standards. Direct and indirect tion, ethylene oxide production and emission sources are electricity consumption. For the generation of steam, Oxiteno continues to recorded monthly. invest in the adoption of cleaner fuels, in addition to the optimization of the

520 thousand tons of CO2e avoided and 8 reduction projects implemented since the beginning of the GHG emission reduction program.

PERFORMANCE showed close values for the years 2016 Emissions of Greenhouse Gases (GHG) and 2017 - were about 0.49 tons of

are directly related to production. CO2e per ton of product. G4-EN18 There was an increase of approximately 10% of the productive operation in In 2017, the project for the sale of 2017, compared to 2016, leading to an carbon dioxide, the residual product of increase in these emissions. the ethylene oxide reaction, to White Martins in Camaçari (BA) was followed During the year, the generation of ap- up. The project began its operation in

proximately 71 thousand tons of CO2, August 2016, and 24,175 tonnes of car- via partnerships, was avoided for the bon dioxide was sent to White Martins energetic use of waste gases from the in the year. G4-EN15 and G4-EN16 companies neighboring the Mauá and Camaçari plants. Considering the year In the plant, an advanced process 2009, at the beginning of the program, control system was also installed that

so far, 520 thousand tons of CO2 are no provided an increase in the selectivity longer released into the atmosphere. of the reaction of formation of oxide of ethene. This cutting-edge technology

Oxiteno also monitors relative indica- has significantly reduced CO2 emis- tors, which assess GHG emissions for sions. G4-EN19 the total produced. The monitoring

ENVIRONMENT 65 Still in Camaçari, a new catalyst was Due to the significance of the Camaçari In 2017, Oxiteno avoided tested, in partnership with a supplier operation for Oxiteno, the result pos- the production of 71 of Oxiteno, which proved selectivity itively impacts the operations of the thousand tons of GHG. gains, being a new ally in the strategy company as a whole. to reduce CO2 generation. On the other hand, the Mexican units All of these actions contributed to of San Juan del Río and Coatzacoalcos the decrease in the variable cost of have formally initiated the production the Camaçari operation – the largest of Kosher products, which demand ethylene oxide and derivatives unit in special cleaning in the tanks and great- Latin America, with three plants (read er energy and fuel costs, increasing the more em in Oxiteno, page 17) – with a emissions in these plants. G4-EN15 and saving of R$ 12 million baseline com- G4-EN16 pared to the period.

EMISSION INTENSITY OF GREENHOUSE GASES1,2 G4-EN18

Relative emissions (tCO2e/t produced)

0.49 0.47 0.49

2015 2016 2017

¹ Scope: Brazil, Mexico, Venezuela e Uruguay 2 The figures presented are different from those presented in previous years due to the verification of the third part of the invento- ries of Greenhouse Gases, carried out in 2017, considering the Brazil, Mexico, Uruguay and Venezuela units.

EMISSIONS OF GREENHOUSE GASES (tCO2E) G4-EN15 AND G4- 2015 2016 2017 EN16

Direct emissions (Scope 1) 455,881 442,345 497,436

Indirect emissions (Scope 2) 160,685 178,241 183,364

REDUCTION/COMPENSATION OF GREENHOUSE GAS EMISSIONS 2015 2016 2017 (GEE)1 G4-EN19

2 2 Reduction of CO2 (tCO2e) emissions 54,540 66,457 71,087

¹ Oxiteno's GHG inventory is verified by a third party company, Green Domus. 2 The figures presented are different from those presented in previous years due to the verification of the third part of the invento- ries of greenhouse gases, carried out in 2017, considering the Brazil, Mexico, Uruguay and Venezuela units.

66 OXITENO · SUSTAINABILITY REPORT 2017 Wastes G4-DMA, G4-EN23 Oxiteno has the Zero Landfill Policy for cycling, seeking circular economy. The industrial waste (contaminated with company uses incineration only when chemical products) for more than 16 there is no viable alternative. years. In Brazil, for example, 98% of industrial waste is recycled and 2% For waste from aftermarket products, For plants in Brazil, for more incinerated. the company prioritizes the sale in bulk and, when in agreement with the than 16 years the company Concern about waste management is customers, uses returnable packaging, has the Zero Landfill present from the design of the prod- which, after being decontaminated, are ucts, when the possibility of non-gen- reused, characterizing a type of reverse Policy for industrial eration is evaluated and, in case the logistics. waste contaminated with waste can not be avoided, a survey is made on possible uses of the waste in chemical. other productive processes, reuse or re-

Oxiteno classifies waste generated in industrial – those that are contaminated with chemicals from the productive processes – and not industrial.

PERFORMANCE The increase in waste disposal from the requirements of the Uruguayan en- 2015 to 2017 is due to the inclusion of vironmental agency and was qualified the Uruguay unit in the indicators, as via audit by Oxiteno. reported in the previous year. There was an increase in the genera- In Uruguay, there was a significant tion of hazardous waste in Tremembé advance with the disposal of segregat- (SP), due to a stoppage of the plant to ed waste, adequately conditioned and carry out improvements in the treat- stored in the plant since the acquisi- ment process, mainly in the effluent tion and deactivation of the inorganic aeration system. During the shutdown, chromium reduction plant. Continuing 141 tons of effluents were destined the works of waste disposal, the plant with waste. Since 2015, Oxiteno has has already managed to allocate 48% made investments and improvements of this waste stored in plants until in its facilities, such as the upgrading of 2017 and work continues in 2018; in the industrial effluent drainage system; Uruguay, the waste was destined for for this reason, there has been an in- landfills, the existing alternative for this crease in the generation of non-indus- type of material. The process follows trial waste from works in recent years.

ENVIRONMENT 67 The site in Camaçari (BA) started to The activity of the Guadalajara plant classify as hazardous some waste not was the one that contributed the most considered as such in 2016, which to the increase of waste generation in justifies the slight increase in the des- Mexico. Using a higher number of raw tination of hazardous waste. The chal- materials in drums, for the production lenge for 2018 is to improve this ratio, of esters, the site increased the use of although Oxiteno's generation-for-pro- pallets and drums. duction data are low.

44% of hazardous and nonhazardous waste are recycled or used energetically.

DISPOSAL OF HAZARDOUS WASTE (t) G4-EN23 2015 2016 2017

Recycling 278 396 484

Recovery (including energy recovery) 2,703 2,870 3,416

Incineration (burning of mass) 58 65 58

Landfill 0 1,340 1464

On-site storage 43 3,1501 3,2891

Others 2 2 1412

TOTAL4 3,084 7,823 8,852

¹ Waste stored in the Uruguayan plant, since its acquisition and subsequent decommissioning of the chrome plant in the destination process. ² Treatment of Tremembé effluents in an external station due to ETE shutdown. 3 Industrial waste destined for landfill is exclusive to Uruguay, as commented above. There was an increase in waste recycling and reduction of incineration. 4 The significant increase in waste generated is linked to the design of obsolete and non-compliant products.

68 OXITENO · SUSTAINABILITY REPORT 2017 The concern with the management of wastes exists since the development of the products, when the possibility of non-generation is evaluated.

Oxiteno's operations in Brazil: 98% of industrial waste is recycled and 2% incinerated.

DISPOSAL OF NON-HAZARDOUS WASTE (t) G4-EN23 2015 2016 2017

Recycling 799 1,254 1,280

Recovery (including energy recovery) 665 750 1.018

Incineration (burning of mass) 418 478 445

Landfill 1,426 3,165 2,403

On-site storage 19 49 46

Others 0 0 28

TOTAL 3,327 5,696 5,220

¹ Oxiteno has an internal classification of waste: a) industrial - those contaminated with chemicals from the production processes; and (b) non-industrial. There is hazardous and nonhazardous waste in both categories. Industrial wastes are considered to be intrinsic wastes in the production process, such as filter elements, resins, leftover waste, contaminated absorbent material used to contain leaks, contaminated cloths and tows, packaging such as drums, cylinders and IBCs, among others. Non-industrial wastes are those that are not contaminated with process chemicals and waste from administrative areas, tree pruning, organic restaurant waste and recyclable materials in general, among others. Rmk.: For non-industrial waste, there was a reduction in generation when compared to the previous year, with an increase in the destination for recycling, reducing the destination for incineration and landfill.

ENVIRONMENT 69 Control Room of the pilot plant in Mauá (SP).

Reinforcement of safe attitude is part of Oxiteno's organizational culture. Safety

MATERIAL TOPIC

Oxiteno's culture provides for the SAFETY permanent reinforcement of the safe attitude. The performance is the result of a management focused on the HEALTH AND SAFETY hazards and their potential impacts through the identification of the risk at each stage of the production process and also in the various complementa- See the infographic on ry activities carried out, reducing the Oxiteno's material topics on probability of a failure and investing pages 30 and 31. in the capacity of the employees in detect deviations and correct them.

70 OXITENO · SUSTAINABILITY REPORT 2017 Occupational health and work safetyG4-DMA The production processes use prod- the group of units already certified: preparation and development of the ucts with potential health risks, but Camaçari (BA), Mauá (SP) and Triunfo Emergency Care Plan, and the second all preventive measures are taken and (RS). The focus in 2018 will be at the related to the inspections and tests of rigorous medical supervision is carried Tremembé (SP) unit, which is preparing emergency care equipment. The units out. There is no case of specific disease to obtain certification. In relation to of Brazil have advanced in the publica- related to contact with these products the international units, the planning tions of their respective contingency or in relation to the work environment. is elaborated for execution in the next plans in 2017. The efforts in 2018 will Reinforcing safe practices, occupa- years. be directed to the international units, tional hygiene programs aimed at starting with Uruguay and Mexico. It worker exposure prevention are widely In 2017, the company faced the should be stressed that this new model disseminated and disseminated by the corporate challenge of reviewing the is part of the work started in 2015, with company. G4-LA7 work permit procedure. The process Ultra's demand, whose objective was involved the units of Brazil, Mexico and to carry out an evaluation process that The pillars of the OHSAS 18.001 Venezuela and aims to ensure a single covered the capacity to respond to standard are incorporated into the procedure that meets the needs of the eventual emergencies in the context of company's integrated management regions. the elements of Preparation, Planning system and guide management in and Emergency Response. occupational health and safety. In 2017, In the pillar of emergency care, the the Suzano unit (SP) went through advance was in the consecration of the certification process, integrating the guidelines, the first related to the

Management in health and safety has as guideline the standard OHSAS18.001.

With this same scope, the unit of assessments of fire protection systems Uruguay passed the diagnosis in 2017, and components were completed finalizing the activity in the Mercosur in Tremembé (SP). This initiative has region. By 2018, the proposal is to already been carried out at the Mauá move forward with the model for the unit (SP). The result allows identifying if There are no recorded cases Mexican units, which will allow a broad the resources and equipment available of diseases related to diagnosis to direct the efforts for the to fight emergencies are efficient when management of emergency response. required. contact with products. Also to meet the scope of Ultra, in 2017, qualitative and quantitative

SAFETY 71 TRAINING AND AUDITS of the tasks of Oxiteno employees and In December 2017, the Mauá (SP) contracted companies. The objective is operation carried out the largest and to increase risk analysis, strengthening most complete emergency simulation the culture of the safe attitude, which of its history at the Grande ABC Petro- has gained strength with the intensifi- chemical Complex. A product leak was cation of training in the last two years. simulated, followed by the complete There were 45 trainings in 2017, two abandonment of the petrochemical per week. complex, with the participation of fire- fighters, companies that integrate the At the Mauá unit (SP), audits focused Mutual Assistance Plan, civil defense on employee behavior were intensi- and other security agencies to evaluate fied, with approximately 1,300 behav- the operation of prevention and miti- ioral observations being performed in gation of impact in the region. the year.

The company also sponsored the first Finally, with regard to health and safety course focused on safe behavior for information systems, the company has professionals in the region of São Paulo completed the implementation of the ABC, conducted in partnership with system adopted in Brazil at the units The largest and most a consulting firm. Twenty employees of Mexico, consolidating a single base from Oxiteno and 12 professionals from for data management and equalizing complete emergency the region participated. processes, which brings more speed to simulation of the history the access to information. For the units In Uruguay, the elaboration of the in Brazil, the system is being prepared of the site in Mauá (SP) was Task Risk Assessment (TRA) began in to meet the demands required by the held at the Grande ABC 2017, which contributes to the future e-Social, which has its period of validity certification process in OHSAS 18001 at the beginning of 2019 for health and Petrochemical Complex. and includes risk analysis and mapping safety issues.

RATES OF INJURIES, OCCUPATIONAL DISEASES AND LOST DAYS G4-LA6

HEALTH AND SAFETY RATES¹ 2015 2016 2017 Rate of accidents with leave (per 3.1 1.0 3.4 million hours worked) Rate of accidents without leave (per 6.4 5.8 8.0 million hours worked) Rate of layoffs2 1,374.43 48.23 44.54

Number of LAYOFFS 1 0 0

¹ Data consider unit in Brazil + Headquarters + GEDEA (employees, interns and third parties). The health and safety data recording system does not discriminate data by gender or type of hiring. 2 Calculated from the total number of days lost related to typical work accidents * 1,000,000 / HHT Total. In 2015, 6,000 days were lost due to the fatality in the period, according to the guidance of NBR 14280.

72 OXITENO · SUSTAINABILITY REPORT 2017 Safety and process In 2017, Oxiteno's Process Hazard Anal- will reach 100% in 2019. The periodic ysis (PHA – ) Program now covers the recycling of the process hazards and Guadalajara and San Juan del Río units risks assessment reinforces the imple- in Mexico, as well as Oleoquímica, in mentation of prevention and mitiga- Camaçari. Currently, the program goes tion barriers for possible deviations, as through the second cycle of revalida- well as ensuring the value of the safety tion of its five-year plan - 65% of the topic in the company. units have been revalidated, a rate that

Periodic recycling of hazard and process risk assessment reinforces the implementation of prevention and mitigation barriers.

Product safety G4-DMA G4-PR1 Oxiteno maintains structured processes System of Classification and Labelling to classify physical, health and environ- of Chemicals (GHS). mental hazards and ensure compliance with national and international safety Chemical Safety Data Sheets (SDSs), and environmental requirements in Emergency Sheets and Labels are also the manufacture, use, storage, trans- produced, with data on components portation and final destination of its contributing to hazards and precau- products. tionary, storage, handling and disposal recommendations, as well as legal Toxicological and ecotoxicological requirements. information is analyzed to carry out the hazard classification of chemicals. Oxiteno provides a corporate system There is also monitoring national and for project management that records international trends to identify risks and retrieves the information of all that may affect business through the products sold. Audits, dissemination of use of legislation monitoring tools and information, guidelines and alerts are participation in industry organizations. also carried out to comply with laws, G4-14 resolutions and regulatory standards, in order to minimize incidences of non- For information on Products and raw materials meet the conformities and improve operations. classification and labeling standards Oxiteno products, go to for chemical products and transport www.oxiteno.com.br in force. 100% of the new products developed in 2017 were evaluated according to the Globally Harmonized

SAFETY 73 Value chainG4-DMA

MATERIAL TOPIC The business partners, who make up the Oxiteno value chain, are essential Customers for the success of the company and its VALUE CHAIN customers. In a joint effort, suppliers The focus on meeting customer and distributors ensure both the deliv- demands and positioning as a partner ery of quality raw materials to Oxiteno's to develop solutions that positively SUPPLIER MANAGEMENT production processes and the efficient impact your products and services are distribution of the portfolio manufac- strategic premises. LOCAL DEVELOPMENT tured by the company. AND DEVELOPMENT OF In this way, Oxiteno performs joint OTHER INDUSTRIES actions, adding sustainability attri- butes and more efficient application See the infographic on Oxiteno's alternatives to the products. The main material topics on pages 30 and 31. goal is to strengthen the construction of more lasting relationships, with the narrowing of the commercial relationship to meet the increasing demands of the market.

As a result, there was a substantial increase in business and greater interaction with customers that generated innovative solutions aligned to market trends in the various segments that Oxiteno operates (read more in Prod- ucts and Services, on page 36).

74 OXITENO · SUSTAINABILITY REPORT 2017 Investments made in 2017 have improved the distribution channel, increased efficiency and optimized the logistics and packaging capabilities of the products.

During the year, Oxiteno recognized and awarded the distributor that best fulfilled the objectives and goals of the management plan.

Distributors Distribution system Logistics The distributors, in particular, support guarantees service to In 2017, investments were made to the company's sales extension strate- add improvements to the distribution gy, guaranteeing the service to 90% of channel, increasing efficiency and small and medium-sized companies optimizing resources directed to the that consume some type of chem- 90% logistics and packaging stages of prod- ical in Brazil, in addition to the big of small and medium-sized ucts transported to the final customer. players in the market. These partners One example is the adoption of smaller help strengthen the relationship companies that consume trucks to serve smaller customers in with Oxiteno's customers and further some type of chemical in long distance routes. The measures still support the company's innovation significantly reduce the environmental processes. Brazil. impacts on the chain.

VALUE CHAIN 75 Suppliers G4-DMA, G4-12 and G4-EN32

Oxiteno's Supply area, which is respon- all processes were reviewed, making Expenditure on raw materials of renew- sible for supplying raw materials, pack- them clearer, more aligned, more able origin accounts for approximately aging and utilities of all industrial units robust and more efficient. 26% of expenditure on raw materials and contracting (tolling), is composed and accounts for 12% of the total (in of a Global structure based in São Pau- The relationship with suppliers is tonnes) of raw materials consumed. lo and three regional units: Mercosur, guided by the Ultra's Code of Ethics MAC (Mexico, Andean and Caribbean) and specific Ultra policies (Conflict of The contracting strategy of suppliers and the United States. Interest Policy, Anti-Corruption Policy, considers criteria such as price, avail- Anti-Corruption Policy and Relation- ability, relationship and lead time. As part of the organizational restructur- ship with Public Agents and Corporate Although the geographical location of ing promoted by the Evolution Project Competitive Policy), which are stan- the supplier may influence, there are (read more on page 24), the Global dards that meet technical guidelines no specific policies or practices that Supply area has taken important steps and commercial. The company also prioritize the hiring of local suppliers. towards the globalization of its pro- develops a responsible purchasing "Locals" are all suppliers located in the cesses in 2017. In partnership with the program with environmental, social same country as the corresponding three regional areas of Supply and with and quality requirements. industrial unit. the Global Quality Management area,

90% of Oxiteno's acquisition costs are allocated to local suppliers in Brazil.

PROPORTION OF SPENDING ON LOCAL SUPPLIERS (%)1 G4-EC9 2016 2017

Domestic 89.59 74.66 Brazil Foreign 10.41 25.34

Domestic 62.92 65.97 Mexico Foreign 37.08 34.03

Domestic 18.72 15.73 Uruguay Foreign 81.28 84.27

Domestic 14.85 5.45 United States Foreign 85.15 94.55

Domestic n.d.1 n.d.1 Venezuela Foreign n.d.1 n.d.1

1 Information not available up to the date of publication of this report.

76 OXITENO · SUSTAINABILITY REPORT 2017 PALM KERNEL OIL (PKO) G4-12 The palm oil production chain, in- Palm kernel oil (PKO) is the most cluding palm kernel oil, still presents consumed vegetable oil in the world. challenges in social, environmental Malaysia and Indonesia account for and economic aspects. The Malay- more than 90% of the production of sian-based non-governmental organi- this renewable source material. Oxite- zation Roundtable on Sustainable Palm no, with its Oleoquímica unit, located Oil (RSPO), develops and implements in the Industrial Complex of Camaçari global standards for the sustainable (Brazil), is the only company in Brazil palm oil chain. Oxiteno is an ordinary that manufactures fatty acids, fatty member of this NGO and, in support of alcohols and glycerine from PKO. the cases defended, has established a Oxiteno's goal is to (Responsible Palm Oil Sourcing Policy) exclusively use PKO These three derivatives are the basis of that defines specific requirements the manufacture of numerous Oxiteno for suppliers of this raw material of RSPO certificate by 2024. products in the segments of person- strategic importance for your busi- al care, domestic and institutional ness. This document is available at cleaning and food. They are present in www.oxiteno.com. G4-15 shampoos, conditioners, skin creams, oral hygiene products, among others.

Oxiteno has 98.6% traceability for palm derivatives up to the stage of processing the (palm kernels) in the mills.

NEW SUPPLIERS SELECTED BASED ON SUSTAINABILITY CRITERIA (%) G4-EN32

52.17 45.50

2016 2017

VALUE CHAIN 77 Social development G4-DMA In order to put into practice its vision Thinking about the development of and its values, Oxiteno focuses its the supply chain, the company, when- efforts to make possible different so- ever possible, opts for the contracting cio-environmental actions that impact of local suppliers. In the year, 74.66% the entire chain of relationships. There of the inputs were purchased from are, for example, specific initiatives companies located in Brazil. Another % aimed at the selection and monitoring relevant point is the supplier quali- of suppliers of raw materials, or even fication policy, which monitors and 74.66 actions that positively impact com- develops suppliers following the best of the inputs were munities around the operational units. sustainability practices. Throughout the process of product acquired from development, the company also companies located in remains committed to the health and well-being of society. Brazil.

Oxiteno carries out socio-environmental initiatives to select and monitor suppliers of raw materials.

INITIATIVES IN MEXICO In Coatzacoalcos, also in Mexico, Ox- AND URUGUAY iteno participates in the local mutual In San Juan del Río (Mexico), the aid committee, which includes the Safety, Quality and Health Week is Adopt a School program. The unit organized annually, with actions that provides training, courses, lectures engage customers, suppliers and and shares knowledge with the local communities. The San Juan del school community on weekends. It Río unit also maintains agreements also organizes visits so that the com- with three major universities in the munity knows Oxiteno's company fa- city to implement initiatives that help cilities, production process and good promote these issues. practices. The plant also participates in the Reciclon, program for the recy- Oxiteno's management team in cling of electronic products, main- Mexico includes a group of 45 execu- taining its presence in the organizing tives, representatives of Brazilian and committee of the initiative. foreign companies in the country, with the objective of contributing to In Uruguay, the company shares the development of markets close to and exchanges knowledge with the the region, with great potential for students of a training center located growth due to its natural resources near the plant, which is one of the and location geographical proximity poles forming human capital ac- to the Atlantic and Pacific Oceans, a cessed by Oxiteno. There are sched- strategic location for exports, espe- uled visits to Oxiteno's site where the cially to the United States and other company has the opportunity to boost regions of Mexico itself. local development and generate environmental, economic and social value.

78 OXITENO · SUSTAINABILITY REPORT 2017 INITIATIVES IN BRAZIL ricular activities – artistic and sports strengthening relationships between The manager of the unit in Mauá workshops – covering judo, dance and the company and society. (SP) took over the chairmanship of soccer. This project is maintained by the Industrial Promotion Committee resources of sports incentive laws and The units of Mauá (SP), Tremembé of Polo Grande ABC (Cofip), which managed by the National Sports Asso- (SP), Suzano (SP), Triunfo (RS) and disseminates best practices among ciation (ANE) and National Association Camaçari (BA) relate to the surround- companies in the region. In the unit, of Sports and Education Development ing communities through the Com- the Open Doors program takes place, (Andee). munity Councils. representatives of the an initiative that aims to present Oxite- communities (leaders, civil defense, no and its products to the surrounding Oxiteno Camaçari (BA) has a theater schools, health posts, among others) community and family members of group formed by its employees and are held bi-monthly meetings to align the employees, thus strengthening the third parties, which deals with issues topics related to health, safety and the company-society tie. relevant to the unit, such as safety and environment. good manufacturing practices. Due Also in Mauá, Oxiteno supports the to the commemoration of the 40th We also highlight the Formare Pro- social project Integrating Art and Life, anniversary of the Camaçari Complex gram, which is managed by the Ultra carried out in partnership with the in 2018, the unit will join, along with Institute, which focuses on the student municipal government and the local 14 other companies, a Cofic initiative and professional education of young education secretariat. The purpose to carry out a study on the competi- people from the less favored classes of the initiative is to complement the tiveness of the Polo. This project, led by (read more about Formare on page 57). educational process to avoid school SENAI Cimatec, will involve academics dropouts, offering alternatives such and experts over the coming year. as cultural and sports workshops. In 2017, the project 100% sponsored by Also highlighted is the Coral initia- Oxiteno, involved monthly about 210 tive, in the Camaçari and Mauá units, children of the Municipal School Cora which promotes culture and collective Coralina, who participated in extracur- responsibility in these communities,

Promoting science among children G4-DMA, G4-EC8 Oxiteno conducts Nau dos Mestres (Masters' Ship), a science teaching program that awakens curiosity, playful learning and the investigative instinct of children. Equipped with a mobile laboratory and a collection of books combining chemistry, physics, biology and optics, the project seeks to encourage students' interest and learning from scientific experiments and interactive challenges.

In 2017, Oxiteno enabled the execution and distribution of Nau dos Mestres in five schools in the cities of Santo André and Mauá, in the metropolitan region of São Paulo, benefiting 4,339 students between the ages of nine and 13, attending Elementary School, and 18 teachers. The program, developed by Evoluir, in partnership with Science in Show, is funded by the Ministry of Culture through the Rouanet Law.

VALUE CHAIN 79 GRI content summary G4-32

GENERAL STANDARD CONTENTS

Page/answer Omission

Strategy and analysis

G4-1 Message from the President 5

Organizational Profile

G4-3 Name of organization 10

G4-4 Major Brands, Products and Services 10

G4-5 Location of organization's headquarters 16

G4-6 Countries where the main operations are or those most relevant 16 to the sustainability aspects of the report

G4-7 Type and legal nature of the property 27

G4-8 Markets in which the organization operates 16

G4-3 Size of organization 12

G4-10 Profile of the employees UNGC 47 and 50

98% because it disregards the Executive G4-11 Percentage of employees covered by collective bargaining Managers that are managed by an Ultra agreements UNGC Corporate Policy.

G4-12 Description of the organization's supply chain 76 and 77

G4-13 Significant changes in size, structure, shareholding and supply There were no significant changes chain in the size, shareholding and chain of suppliers.

G4-14 If and how the organization adopts the precautionary 73 approach or principle

G4-15 Letters, principles or other initiatives developed externally 77

Oxiteno actively participates in the Brazilian Chemical Industry Association (Abiquim) and its committees. Among the initiatives, it G4-16 Participation in associations and organizations is part of the Responsible Action® Program, which establishes the commitment for the implementation of actions related to health, safety and environmental management systems.

Material aspects identified and limits

The information presented in this report refers to Brazil, a more significant operation, and, where G4-17 Entities included in the consolidated financial statements and possible, extends to international units. The entities not covered by the report financial statements are disclosed by Ultrapar holding company and include all Oxiteno units.

80 OXITENO · SUSTAINABILITY REPORT 2017 Page/answer Omission

G4-18 Process of defining the content of the report 8

G4-19 List of material topics 9 and 30

G4-20 Limit, within the organization, of each aspect 30

G4-20 Limit, outside the organization, of each aspect 30

Reformulations, when they occur, are indicated G4-22 Reformulations of information provided in previous reports in the notes of the tables.

G4-23 Significant changes to the scope and limits of material aspects There were no significant changes in the scope over previous reports and limits of material aspects.

Stakeholder Engagement

G4-24 List of stakeholders groups engaged by the organization 8

G4-25 Base used for the identification and selection of stakeholders 8 for engagement

G4-26 Approach to engage stakeholders 8

G4-27 Key topics and concerns raised during engagement by 8 stakeholders group

Report Profile

G4-28 Period covered by the report 9

G4-29 Date of most recent previous report 9

G4-30 Reporting cycle 9

G4-31 Contact for questions about the report or its content 9

G4-32 Option to apply the guidelines and location of the GRI table 9

G4-33 Policy and current practice regarding the search for external 84 verification for the report

Governance

G4-34 Governance structure of the organization 24

Ethics and integrity

G4-56 Values, principles, standards and norms of behavior of the 34 organization

GRI CONTENTS SUMMARY 81 GENERAL STANDARD CONTENTS

PAGE/ MATERIAL ASPECTS DMAS AND INDICATORS ANSWER OMISSION

Economic category 18, 19 and G4-DMA Form of management 37 UNGC economic performance G4-EC4 Financial aid received from government 38

G4-DMA Form of management 79 Indirect economic impacts G4-EC8 Description of significant indirect economic impacts 79

G4-DMA Form of management 76 Purchasing Practices G4-EC9 Policies, practices and proportion of spending on local suppliers 76

UNGC environmental category

G4-DMA Form of management 61

Information not available: energy consumption Energy G4-EN 3 Energy consumption within the organization 61 broken down by renewable and non- renewable source.

G4-EN5 Energy intensity 61

G4-DMA Form of management 62

Water G4-EN8 Total water withdrawal by source 62

G4-EN10 Percentage and total volume of water recycled and reused 64

G4-DMA Form of management 65

G4-EN15 Direct emissions of greenhouse gases 65 and 66

G4-EN16 Indirect emissions of greenhouse gases from the purchase of Emissions 65 and 66 energy

G4-EN18 Intensity of GHG emissions 65 and 66

G4-EN18 Reduction of GHG emissions 65 and 66

G4-DMA Form of management 67 Effluents and waste G4-EN23 Total weight of waste, broken down by type and method of 67, 68 and disposal 69

82 OXITENO · SUSTAINABILITY REPORT 2017 PAGE/ MATERIAL ASPECTS DMAS AND INDICATORS ANSWER OMISSION

G4-DMA Form of management 20 Products and services 20, 58 and G4-EN27 Initiatives to mitigate environmental impacts 60

G4-DMA Form of management 74 Environmental evaluation of suppliers G4-EN32 Percentage of new suppliers selected based on environmental 77 criteria

Social category - labor practices and decent work UNGC

G4-DMA Form of management 46 Employment G4-LA1 Total number and rates of new hires and employee turnover – 51, 52 and BRAZIL 53

G4-DMA Form of management 71

Health and safety in the workplace G4-LA6 Rates of injuries, occupational diseases and lost days 72

G4-LA7 Employees with high incidence or high risk of diseases related to 71 their occupation

G4-DMA Form of management 54

G4-LA9 Average number of hours of training 54 and 56 Training G4-LA10 Programs of management of competences and continuous 54 learning

G4-DMA Form of management 46 Diversity and equal opportunities G4-LA12 Composition of groups responsible for governance and 47 and 50 discrimination of employees by functional category

G4-DMA Form of management 54 Equal pay for women and men G4-LA13 Proportion of basic salary between women and men 53

Social category - product liability

G4-DMA Form of management 73 Customer's Health and safety G4-PR1 Assessment of health and safety impacts during the life cycle of 73 products and services

GRI CONTENTS SUMMARY 83

ASSURANCE STATEMENT G4-33

SUSTAINABILITY REPORT ASSURANCE STATEMENT

Members of Senior Management and other stakeholders of Oxiteno

Introduction Assurance Limits Green Domus Desenvolvimento Sustentável The assurance was limited to the evaluation (Green Domus) was hired by Oxiteno to of the preliminary information in the 2017 assure its Sustainability Report for 2017. Sustainability Report of Oxiteno and the other evidence that based its content. Oxiteno was responsible for preparing and presenting the information on its Methodology sustainability performance in its 2017 The assurance began with the preliminary Sustainability Report, as well as presenting evaluation of the information in the 2017 the evidence necessary for the assurance Sustainability Report of Oxiteno and in the procedures; while Green Domus proceeded documents that based its preparation. A visit with the independent assurance in a was made to the centralizing unit of the systematic and documented manner, based information used in the sustainability report, on the required evidence produced by aiming at interviewing the stakeholders Oxiteno. involved and gathering evidence of the reported information. Assurance Standards The assurance process was conducted based Through the Assurance Protocol, on the AA1000 Assurance Standard 2008; adjustments to the information presented in AA1000 Accountability Principles Standard the report were requested, and 2008 and on the Guidelines for Sustainability improvements were suggested for adequacy Report, version G4, 2013, of the Global to the assurance standards used. The Reporting Initiative (GRI). assurance procedures were finalized only after the completion of the indications Assurance Level and Type made. The assurance conducted by Green Domus was moderate and of type 1, according to Independence and Impartiality the concepts defined by AA1000 Assurance For the assurance purposes, Green Domus Standard 2008; thus, it was verified the states that it has no relationship with adhesion to the Principles of Inclusion, Oxiteno that might prevent it from issuing Materiality and Capacity of Response, and this Assurance Statement in an independent how the organization communicates this and impartial manner. It should also be performance on the sustainability report; noted that all professionals involved in this the presentation of the information assurance process are aware of and trained requested in the essential “agreed” option in Green Domus's Corporate Management defined by GRI and following the criteria to System, whose content includes policies and define the content and quality assurance of procedures that set a neutral operation the report. pattern for and mitigate possible technical risks in the development of the company's activities.

84 OXITENO · SUSTAINABILITY REPORT 2017

procedimentos que conferem à empresa um . Aprofundar a gestão de dados

padrão de operação impessoal e a mitigação de quantitativos dos indicadores relatados, possíveis riscos técnicos no desenvolvimento de de forma a ampliar a capacidade de suaComments and Recommendationss atividades. §resposta Deepen aos the temas management materiais da of Without interfering in the positive organização.quantitative data of the procedimentos que conferem à empresa um . Aprofundar a gestão de dados conclusion of this assurance, Green Domus reported indicators, in order to padrãoComentários de operação e Recomendações impessoal e a mitigação de quantitativos dos indicadores relatados, recommends some improvements and the increase the capacity to respond possíveisSem riscosinterferir técnicos na conclusãono desenvolvimento positiva ddestae Conclusõesde forma a ampliar a capacidade de adoption of good practices for Oxiteno's to the relevant issues of the suasasseguração, atividades. a Green Domus apresenta as Na opiniãoresposta da Greenaos temasDomus materiaisDesenvolvimento da report: organization. seguintes recomendações de melhoria e adoção Sustentável,organização. o Relatório de Sustentabilidade de

de boas práticas para o relato da Oxiteno: 2017 da Oxiteno é uma representação adequada Comentários§ e RecomendaçõesRedo and/or update the Conclusions da empresa, que relaciona as suas estratégias, Sem interferir. Refazer nacompany's materiality matrix to conclusãoe/ou atualizar positiva a matrizdesta de ConclusõesIn the opinion of Green Domus políticas e ações com seu desempenho em asseguração,materialidade a ensure Green Domus its da adhesion apresentaempresa, to aspara the Na opiniãoDesenvolvimento da Green Domus Sustentável, Desenvolvimento the 2017 sustentabilidade. seguintes recomendaçõesassegurarreality of the sector and a closer sua de aderência melhoria à erealidade adoção do Sustentável,Sustainability o Relatório Report de Sustentabilidade of Oxiteno de is an de boas práticassetor para relationship e para o r elatoestreitar da Oxitenorelações with : com seus its 201Com7adequate da Oxitenobase nos representation é umaprocedimentos representação of realizados, the adequada company, pode - stakeholdersstakeholders.. da empresa,sewhich afirmar relates que que relacionanada its chegou strategies, as suas ao conhecimento estratégias, policies, da and . Refazer e/ou atualizar a matriz de . Adaptar, nos próximos ciclos de relato, o políticasGreenactions to its sustainability performance. e Domusações quecom a seuleve desempenho a acreditar queme as materialidade da empresa, para § processoAdapt, in the next report cycles, de desenvolvimento do sustentabinformações ilidade. constantes no Relatório de assegurar sua aderência à realidade do relatóriothe development de sustentabilidadeprocess of the a fim de SBased ustentabilidade on the procedures de 2017 da Oxiteno performed, não foram it can setor e para estreitar relações com seus Com base nos procedimentos realizados, pode- atendersustainability à versão Standard report s da to GRI observe . compiladas,be affirmed em todos that os nothing aspectos came relevantes, to Green de stakeholders. se afirmar que nada chegou ao conhecimento da . Ampliarthe version of GRI Standards. a descrição da forma de gestão acordoDomus's com knowledge as Diretrizes that would para Relato lead it de to . Adaptar, nos próximos ciclos de relato, o Green Domus que a leve a acreditar que as dos tópicos materiais relatados, para Sustentabilidadebelieve that the information contained in the da GRI, versão G4, referentes à processo de desenvolvimento do informações constantes no Relatório de § atenderExpand às the recomendações description of das the opção2017 “de Sustainability acordo” Essencial Report , com of os Oxiteno Princípios was relatório de sustentabilidade a fim de Sustentabilidade de 2017 da Oxiteno não foram Diretrizesmanagement GRI e evoluir of em the direção reported aos AA1000not compiled, AccountAbility in all Principles material Standard respects, , dein atender à versão Standards da GRI. compiladas, em todos os aspectos relevantes, de requisitosrelevant dos Standards topics to GRI. implement 2008,accordance e com a with s diretrizes the Guidelines organizacionais for que GRI . Ampliar a descrição da forma de gestão acordo com as Diretrizes para Relato de the recommendations of the serviramSustainability Report, version G4 de base para sua preparação, related to . dos tópicos materiais relatados, para Sustentabilidade da GRI, versão G4, referentes à GRI Guidelines and move the Essential “agreed" option, with the 2008 atender às recomendações das opção “de acordo” Essencial, com os Princípios towards the compliance with AA1000 AccountAbility Principles Standard, Diretrizes GRI e evoluir em direção aos AA1000 AccountAbility Principles Standard, de the requirements of GRI and with the organizational guidelines that requisitosStandards. dos Standards GRI. 2008,based its preparation. e com as diretrizes organizacionais que São Paulo, 01 de novembro de 2018. serviram de base para sua preparação.

São Paulo, November 1, 2018

São Paulo, 01November de novembro 1, 2018 de 2018. Nino Sergio Bottini Marina Dall’Anese Revisor Independente Auditora Líder

Nino Sergio Bottini Nino Sergio Bottini Marina Dall’Anese RevisorIndependent Independente Reviewer Independent Reviewer AuditoraLead Auditor Líder

GRI CONTENTSGreen SUMMARY Domus Desenvolvimento Sustentável Ltda. Marina Dall'Anese Tel.: +55 (11) 5093-4854 85 Av. Eng. Luís Carlos Berrini, 936 – 8º andar, cj. 81 Fax:+55 (11) 5093-1417 CEP 04571 -010 | São Paulo/SP Lead Auditor [email protected]

Green Domus Desenvolvimento Sustentável Ltda. Tel.: +55 (11) 5093-4854 Av. Eng. Luís Carlos Berrini, 936 – 8º andar, cj. 81 Fax:+55 (11) 5093-1417 CEP 04571-010 | São Paulo/SP [email protected]

2 Credits GENERAL COORDINATION Global Sustainability Management (Oxiteno)

GENERAL COORDINATION OF GRAPHIC DESIGN Global Management of External Communication (Oxiteno)

WRITING, EDITING, GRAPH DESIGN AND GRI CONSULTING Report Sustentabilidade

TRANSLATION Better Traduções

PHOTOGRAPHY Vanessa Ferreira da Rocha (employee of Oxiteno) and image bank

86 OXITENO · SUSTAINABILITY REPORT 2017 www.facebook.com/Oxiteno www.linkedin.com/company/oxiteno