BSBIOS Sustainability Report 2018

Page 1

RENEWABLE ENERGY

SUSTAINABILITY

REPORT 2018


Passo Fundo/RS

Estimated population in 2018: 201.767

Passo Fundo (BSBIOS Unit)

GDP per capita (2016) R$ 42.459,59

474º Country Position

Additional GDP: 2005 - 2016

R$ 12,8 billions Accumulated taxes: 2005 - 2016

R$ 470 millions

City Human Development Index (2010) 0,776

Estimated GDP: 2017 - 2019

R$ 6,6 billions Territorial Unit Area 783.421 km²

In 2016 BSBIOS was responsible for Direct and indirect jobs (paid occupations)

3.000 jobs

Impacts of BSBIOS on the economy: Source FIPE Municipal data: Source IBGE

24,2 of GDP of Passo Fundo


Marialva/PR

In 2016 BSBIOS was responsible for

Estimated population in 2018: 35.180

35,2 of GDP of Marialva

Additional GDP: 2010 - 2016

Marialva

R$ 1,9 billion

(BSBIOS Unit)

Accumulated taxes: 2010 - 2016

R$ 320 millions Estimated GDP: 2017 - 2019

GDP per capita (2016) R$ 39.643,95

R$ 1,8 billion

559º Country Position

Territorial Unit Area 475,564 km² Direct and indirect jobs (paid occupations)

City Human Development Index (2010) 0,735

900 jobs

Impacts of BSBIOS on the economy: Source FIPE Municipal data: Source IBGE


BSBIOS // Sustainability Report // 2018

SUMMARY

Summary

Message from the President

5

1. Biodiesel - Renewable Energy

6

2. Report Profile

10

3. BSBIOS

15

4. BSBIOS Governance

24

5. Economic and Financial Management

33

6. Internal Public

35

7. Environment

44

8. Private Social Investment

57

9. Environmental Impact - Carbon Value

61

10. Economic Impact

64

11. Glossary

68

12. GRI Content

70


BSBIOS // Sustainability Report // 2018

Erasmo Carlos Battistella President of BSBIOS

Message from the President (102-14, 102-15)

BSBIOS had a remarkable 2018 in several aspects. First, we had the company's best economic result, with a billing of R$ 3 billion for the first time. Our production of biodiesel reached the largest volume in the country, with 545,677 mÂł. We reaffirmed our commitment with sustainability. We created a Corporate Risk Management and Compliance area and we are evolving with the implementation of the Programa BSBIOS, involving the senior management, the board of directors, the advisory board, and the management, seeking to encompass all the areas of the company. It is the beginning of a road which strengthens and shows the company's values. In the company's governance, Compliance, Renovabio, and

Sustainability committees were created to include areas in management and decision making, a necessary condition so that sustainability is consolidates in the organization. For the first time, we made the inventory of GEE emissions for Passo Fundo and Marialva plants, following the GHG protocol, a tool that measures carbon footprint; and we analyzed the biodiesel life cycle with ISCC methodology. We continued investing on the development of communities in Passo Fundo and Marialva, broadening and maintaining partnerships with local entities. In order to be closer to the transformations of the sector in 2019, we will revise the Company's Strategic Planning. Thus, to meet the implementation on the increase of

the percentage of biodiesel in the country, we will expand the capacity of production in the two plants. We are getting prepared to RENOVABIO: we will use RenovaCalc and price the carbon to obtain the credits, in a task that will require studies and reflections. As a whole, the sector needs to improve the quality of the product in order to be prepared to this new scenario of the biofuel sector, requiring a business model with all the sustainability pillars - Governance and Ethics, Economic, and Environmental and Social. Finally, we will work to build a better society with ethical and sustainable values, attitudes, and behaviors. We need more engaged people who have in practice more sensible customs. Message from the President

5


BSBIOS // Sustainability Report // 2018

Biodiesel

1

Renewable Energy History

I

n Brazil, the production of biodiesel was supported by the National Program for Production and Use of Biodiesel - PNPB, launched in December 2004, with the purpose of bringing the biodiesel to the Brazilian energy matrix. With a focus on social inclusion and regional development, the main result of this first stage was the definition of a regulatory legal framework. One of these milestones was the creation of the Selo Combustível Social seal by the Ministry of Agricultural Development - MDA, a certification granted to biodiesel producers who acquire percentages according to the raw material region from

family agriculturists classified in the National Program for Strengthening of Family Agriculture - PRONAF. The seal promoted the transfer of income to the family agriculture, the regional development, and the increase of agricultural productivity. Industries were benefited with the exemption of taxes (PIS/PASEP and COFINS), the access to better conditions for funding, and the gain of reputation. An institutional arrangement brought benefits for everyone - community, government, industry, and society, - as shown in the graphs for evolution of volume and value of the raw material acquired.

Evolution of the volume of raw material acquired from family agriculture under the Selo Combustível Social arrangements (thousands of tons)

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

3.821,00

3.055,94

3.317,79

3.482,42

2.793,00

1.911,29

1.652,57

1.000,00

857,02

361,57

2.000,00

2.205,12

3.000,00

3.033,29

4.000,00

2018 *

Source: MAPA/Secretaria da Agricultura Familiar e Cooperativismo

Evolution of the value of raw material acquired from family agriculture under the Selo Combustível Social arrangements (R$ million)

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

5.057,79

3.502,64

3.942,20

3.252,82

2.855,20

2.110,50

1.519,17

1.058,69

276,52

2.000

677,35

4.000

4.273,56

6.000

2018 *

Source: MAPA/Secretaria da Agricultura Familiar e Cooperativismo

* 2018 data are partial

6

Biodiesel - Renewable Energy


BSBIOS // Sustainability Report // 2018

In 2008, the mixing of pure biodiesel (B100) to diesel oil became mandatory. The initial mixing of 2% was gradually increased to 3% (2009), 4%, 6%, 7%, 8% (2017), 10% (2018), and will reach 15% in 2023.

Evolution of the percentage of the content of biodiesel in fossil diesel

B2

B2

B2

B2

B3

B3

B4

B5

B5

B5

B5

B5

2005

2006

2007

2008

2008

2009

2009

2010

2011

2012

2013

2014

B6

B7

B7

B7

2014

2014

2015

2016

B8 B10 B11 B12 B13 B14 B15 2017

2018

2019

2020

2021

2022

2023

Source: Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – ANP

The trade of biodiesel is conducted by public auctions organized by the National Petroleum, Biofuel, and Natural Gas Agency - ANP. Biodiesel auctions are conducted for acquisition of biodiesel by diesel oil refineries and importers to meet the mandatory minimum percentage of addition of biodiesel to diesel oil and for voluntary purposes, and such volume must be

delivered by biodiesel producer plants. The large number of companies and plants manufacturing the same product, in an auction system, makes this market to be extremely transparent and competitive, and prevents any producer from obtaining a significant market share, promoting therefore efficiency in the production.

Current Days The production of biodiesel in Brazil began in 2005, with a volume close to 700,000 liters, reaching 4.29 billion liters in 2017 and 5.35 billion liters in 2018, making Brazil the second largest producer in the world.

Brazilian Production of Biodiesel (Million Liters)

5.350.036

6.000.000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

3.801.339

3.937.269

2.917.448

2.717.483

2.672.760

2.386.399

1.608.448

69.002

2005

1.000.000

404.329

736

2.000.000

1.167.128

3.000.000

3.422.210

4.000.000

2016

4.291.294

5.000.000

2017

2018

Source: Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – ANP

Brazil ended 2018 with 51 biodiesel plants. The majority of these plants are located in small and medium cities, mainly in the Center-South regions in the country, where it is possible to verify an increase of the industrial and services GDP after the installation of the plant, evidencing the generation of jobs and direct and indirect income. One of the factors for success of biodiesel is the integration

and synergy with agricultural systems in all the links of the chain - planting, production, crushing, and trade - consolidating a competitive, efficient, sustainable business model. The production of biodiesel is associated with the production of soybean (70%) and animal recycling - bovine, pork, and poultry fat (16%), other fatty materials (10%) and, in a minor scale, other materials (4%).

Biodiesel - Renewable Energy

7


BSBIOS // Sustainability Report // 2018

Raw materials for the production of Biodiesel Bovine Fat Soy Oil Bovine Fat Other Fatty Materials Others Frying Oil Cotton Oil

13%

Fat of Pork

Other Fatty Materials

2%

10% Others

4%

Fat of Chicken

1%

Frying Oil

2% Cotton Oil

Soy Oil

1%

70%

The production of biodiesel is related to the transformation of soybean into Soybean Meal and soybean oil, exercising a fundamental role for agricultural activity, providing stability and predictability to purchase and sale markets, absorbing the surplus, integrating the logistics, and generating jobs and income. Animal fat was previously treated as a product with very low use in the market, as it was a “remain” from rendering plants (industrial sites which process scraps of meat after the cuts). This product was used by Hygiene and Cleaning industries, which absorbed part of this raw material only, and the remaining part was destined for production of animal food and disposal. The processing of fats enhanced meat production chain, adding value to a waste which used to be disposed, often inadequately; and also structures the product chain with demand, generation of direct and indirect jobs in the community, avoiding environment pollution, and bringing a renovation cycle for the entire chain. Biodiesel sector is benefited as well, as it has more than one raw material to use in the production.

Palm Oil

1% Canola oil

0%

The activities are so integrated that a product becomes input to another, generating a mutual activities and benefits cycle on the entire chain and adding value. This is a new model of economy, circular economy, which consists on reducing, re-using, recovering, and recycling the materials we use in order to mitigate the consumption of resources, to reuse waste and raw materials. As Lavoisier would say: “Nothing is lost and everything is transformed”.

Biodiesel Plant in Unit of Passo Fundo

Challenges and Expectations In 2017, we had a new milestone for the sector, the new national policy for biofuels, Renovabio, established by Law no.13.576/2017, with an objective to expand the production of biofuel in Brazil based on predictability, environmental, economic, and social sustainability so that is compatible with the growth of the market. From this expansion, it is expected an important contribution of biofuels on the reduction of greenhouse effect gases emission in the country, contributing to the commitment undertaken by the Brazilian Government

8

Biodiesel - Renewable Energy

(102-15) in the Paris Agreement (COP-21). During COP-21, Brazil undertook to reduce its greenhouse effect gases emission responsible for global warming in up to 37%, below the 2005 levels, until 2015, and up to 43% until 2030. Brazil defined several measures in order to achieve such goals until 2030 such as: ✓ Reduction of deforestation to zero; ✓ Participation of 45% of renewable energy in the


BSBIOS // Sustainability Report // 2018

energy mix. These commitments were split up into specific goals such as the expansion of bioenergy, taking up the goal of 18% of bioenergy in the energy mix until 2013, which concerns the expansion of ethanol, biodiesel, and new fuels, which means opportunities to the biofuels sector. RenovaBio is a new strategic regard for the sector, as it brings economic mechanisms to create a decarbonation credit market through two controlling instruments: ✓ Establishment of national goals for reduction of emissions for the fuel mix, set out to a period of 10 years; ✓ Certification for production of biofuels by assigning

COP21 MARKS ✓ To restrict Carbon Dioxide emissions;

✓ To reduce the increase of the global temperature to 2 °C above pre-industrial levels.

different grades for each producer, inversely proportional to the intensity of carbon from the biofuel produced. The grade will reflect the individual contribution of each producing agent for mitigation of a specific amount of greenhouse effect gases with respect to its fossil substitute (in terms of tones of CO2e). The relation between these two instruments shall occur with the creation of CBIO (Decarbonation Credits by Biofuels). It will be an asset, traded in the stock market, issued by the biofuel producer, since the commercialization. Distributors of biofuel will fulfill with the goal by demonstrating the CBIOs in their portfolio.

BRAZIL MARKS ✓ NDC Nationally Determined ✓ Reduction of 43% on GEG

✓ Mandatory individual goals for distributors;

emissions;

✓ Zero deforestation; ✓ Participation of 45% of renewable energy;

✓ 18% of bioenergy in the 2030

Biofuel sector was developed by policies and incentives with focus on renewable energy, energy efficiency, and local development. The regulation brought stability to the promotion of new investments, the generation of new jobs and the expansion of the product. The greatest challenge for the sector is the maintenance of public policies which set out the reduction goals of emissions in the commercialization of biofuels, which will lead the country to reach the 18% rate of sustainable fuels until 2030.

✓ National Goals for GEG Reduction (10 years);

Contribution;

energy mix

RENOVABIO

✓ Producers' certification based on the Life Cycle Analysis - Carbon Footprint;

✓ Carbon credits for certified producers.

In addition to the maintenance of public policies, it is necessary that society effectively understands the benefits of the decarbonation of fuels, which is an constant element in our routine. This implies a rupture of paradigms, as it is necessary to review the ways and patterns of consumption, as sustainability has more to do with attitudes than words; that is why it is important to maintain these policies and its mechanisms of inspection and control, requiring a business model which takes advantages of the opportunities and a wide potential to change value chains.

Biodiesel - Renewable Energy

9


BSBIOS // Sustainability Report // 2018

Report

Profile

2

Reporting Process 102-46, 102-50, 102-52, 102-53, 102-54, 102-55, 102-56,102-36, 102-32

S

ince 2017, BSBIOS Sustainability Report is annually disclosed (10252) with a purpose to publicize results and corporate processes, demonstrating the progress of the projects and the most relevant information to several audiences. This version, corresponding to the period from January 1st to December 31st, 2018 (102-50), in Portuguese and English languages, in printed and digital copies, will not undergo accredited external audit (102-56). This report was prepared according to the GRI Standards: Comprehensive option (102-54,102-46), including information on strategy, analysis, governance, ethics, and integrity of the company, in a decision which allows to disclose the performance in a wider way by reporting the as many topics regarding the material aspects identified as possible. In order to produce a clear, transparent, accessible, and updated report, the preparation of this report involves all the areas at the company, represented

by a working group who attentively participates in its compilation, netting the legislation and provisions for the sector. The Board of Directors and the Executive Board approve the material subjects, as well as the content herein presented. In the table of contents, the topics and their location in the report are presented, as well as their correlation with the GRI Content Index (102-55). As supporting tools, the company uses the Ethos Indicators for Sustainable and Responsible Business. In this year, thematic Guides on Integrity, Anti-Corruption, and Climate Changes were used as well. During the preparation of this report, there was a significant change in the company's governance structure resulting from the request for resignation by part of the Chairman of the Board of Directors, Ricardo Greenhalgh Barreto Neto, concerning the change on the directed structure at Petrobras Biocombustível – PBIO; the ViceChairman of the Board, Marcos Cittolin,

is assuming the position of Chairman on an interim basis (102-10). Know the principles, guidelines, and GRI indicators used in this report at www.globalreporting.org (102-36). For further information regarding the company and sustainability actions, visit: Address: BR-285, Km-294 / SN District: PetrĂłpolis Code: 99050-700 Sustainability Committee Phone: (54) 2103-7100 www.bsbios.com (102-53). For the definition of the structure, the content, the scope, and the performance indicators (material topics), expectations from Stakeholders, assistants, analysts, facilitators, experts, coordinators, managers, the Executive Board, the Board of Directors, and the Audit Committee were taken into account. This process was conducted by a qualified consultancy service.

Engagement with stakeholders 102-13, 103-1, 102-40, 102-42, 102-43, 102-44, 102-21

The methodology used promotes, among other questions, the constant relationship between company and stakeholders, favoring fair, sustainable business and supporting the preparation of action plans in an engaged way and in accordance with the public's expectations. At BSBIOS, stakeholders are identified as individuals or groups, involved or affected with the company's social development, namely: 10

Report Profile

public authorities, cross-sector agents, investors, internal public, society, public bodies, customers, suppliers, press, and social agents. In the preparation of this report, the organization's stakeholders were mapped and, throughout the year, several engagement actions are conducted with such stakeholders (102-40,102-42). The Company's strategic targets are:


BSBIOS // Sustainability Report // 2018

Interested Parties Matrix Public Agents Including political and legal bodies: National Petroleum, Biofuel, and Natural Gas Agency (ANP)

City Department of Environment of Passo Fundo (SMAM)

Ministry of Mines and Energy (MME)

City Department of Economic Development of Passo Fundo

Ministry of Agriculture, Livestock, and Food Supply (MAPA)

City Department of Education of Passo Fundo

State Governments of Rio Grande do Sul and Paraná

City Department of Industry, Trade, and Economic Development of Marialva

State Federation for Environmental Protection (FEPAM)

City Department of Agriculture and Environment (SAEMA)

Environmental Institute of Paraná (IAP)

Department of Agriculture, Livestock, and Irrigation (SEAPI-RS)

City Hall of Passo Fundo and Marialva

State System for Forest Reposition (SERFLOR-PR)

Entities which Represent the Industry and Workers (102-13, 103-1) The company maintains relationships with trade associations through campaigns, direct actions, projects, and cooperation agreements, with the participation of several areas of the company, encompassing several subjects via official letter, under responsibility and monitoring of the communication area. This process includes the following entities: Associação dos Produtores de Biodiesel do Brasil (APROBIO)

Federação dos Trabalhadores da Agricultura Familiar (FETAG/RS)

Federação das Indústrias do Estado do Paraná (FIEP)

Sistema S

Federação das Indústrias do estado do Rio Grande do Sul (FIERGS)

Associação dos Cerealistas do Rio Grande do Sul (ACERGS)

Technological and Academic Development Entities: (102-40) Brazilian Agricultural Research Corporation (EMBRAPA)

Faculdade Meridional (IMED)

Assistance and Rural Development Company of RS and PR (EMATER)

Federal University of Santa Maria (UFSM)

University of Passo Fundo (UPF)

Internal Public: (102-40) Governance structure

Collaborators

Social Organizations: (102-40) Civil entities related to Communication & Marketing and Sustainability Committee such as: Brazilian Institute of Corporate Governance (IBGC)

Institute Ethos of Social Responsibility

Suppliers: (102-40, 102-9) Animal Fat

Inputs

Vegetable Oil

Chemicals

Cooperative

Services

Grain Handlers

Conveyors

Press (102-40) Newspapers

Radios

Tvs

Social Medias

Customers: (102-40) Distributors of fuel

Glycerin and Sludge Importers

Animal Food Companies

Among Others

Report Profile

11


BSBIOS // Sustainability Report // 2018

This engagement may occur in several ways, started by the company as [a] response to one or more stakeholders, formal or informal meetings, conferences, workshops, public hearing, round tables, advisory committees, regular, structured procedures for information and consultancy, collective bargaining, and forums on Internet, without periodicity defines, except in cases of: Commercial Meeting (November) Driver's Day (July), Leaders' Conference (January), and collective bargaining (May, in Paraná; August, in Rio Grande do Sul). It is important to highlight that, due to

the change on labor legislation, the category, in Rio Grande do Sul, has not reached a collective bargain with the trade association yet; and the rights and benefits reached in previous years prevail; whereas the company's collective agreement has an annual term (102-43). With respect to the engagement with suppliers and other public entities, the company always intends to discuss the subjects in a comprehensible way, approaching the relationship between the stakeholders (102-44).

Materiality matrix 102-47

From the wide engagement in the previous years (2017 and 2018), with a purpose to build and revalidate the materiality matrix, BSBIOS held three workshops to the internal public: two on January 7th, in Passo Fundo, and one in January 23rd, in Marialva. As a supporting material, three sentences were directed: “Good!”, “What a pity”, and “How about?” Based on these sentences, the collaborators evaluated the process of the previous reporting, analyzed the company's performance and strategies, suggested and indicated alternatives for a greater visibility of the report, and revalidated the

Materiality matrix Material Topics 102-47

Training and qualification Knowledge which is present in the business such as intellectual an organizational property: Innovation and Technology

12

Report Profile

materiality matrix. In addition to these workshops, technical visits were made to oil and animal fat suppliers in the region of Marialva, to whom a survey on 15 subjects discussed was applied, based on aspects addressed in previous cycles by the stakeholders and the senior management during the engagement process. For the revalidation, the company's strategic vision was complemented by specialists, besides talking into account analysis from secondary sources such as materials for agribusiness, benchmarking, internal documents, strategic policies and guidelines, among others.

Social and relationship

People

Relationship with customers, stockholders, employees, society, and different audiences: Social inclusion; Anti-Corruption; Investment on Social Actions; Transparency and Compliance With the Law

Skills and experience of people who perform the operation and their motivation to innovate: Professional Training and Development; Occupational Safety and Health and Work Conditions.

Financial Financial resources for performance and offer of products and services: Generation of Jobs and Income and Generation of Results.

Environment Environmental resources and processes used for performance and offer of services: Reduction of Emissions; Sustainable Use of Resources; Reduction of Environmental Impacts in the Community and Environmental Education


BSBIOS // Sustainability Report // 2018

These topics underwent a wide discussion and maturation process and are aligned with the Stakeholders' expectations and the company's sustainability strategies (102-44).

Materiality matrix and its correlations 102-46

9,6

9,4

1.5 3.4 1.4 5.1

External Stakeholders

9,2

1.3

3.2

2.3 2.2

9,0 3.3 3.1

4.1

4.2

1.2

8,8

2.1

8,6 1.1 8,0

8,2

8,4

8,6

8,8

9,0

9,2

9,4

8,4

Internal Stakeholders

7,8

Social and relationship

Environment

1.1

Investment on Social Actions

8,52

3.1

Environmental Education

8,91

1.2

Social inclusion

8,75

3.2

Reduction of Emissions

9,03

1.3

Transparency

9,14

3.3

Reduction of Environmental Impacts in the Community

8,96

1.4

Anti-Corruption

9,26

3.4

Sustainable Use of Resources

9,20

1.5

Compliance With the Law

9,35

Financial

People

4.1

Generation of Jobs and Income

8,97

Generation of Results

8,88

2.1

Professional Training and Development

8,83

4.2

2.2

Work Conditions

8,95

Training and qualification

2.3

Occupational Safety and Health

9,12

5.1

Innovation and Technology

9,03

Material Topics

Impacted Targets

GRI Aspect

GRI Topic

Investment on Social Actions

Community and Public Authorities

Jobs; Diversity and Equality of Opportunities; Equality of Salaries Between Men and Women; Non-discrimination; Child Labor; Forced or Slave-like Labor

405-1, 405-2, 408-1, 409-1

Social Inclusion (PWD, Jovem Aprendiz Program, Needy Population)

Community and Public Authorities

Jobs; Diversity and Equality of Opportunities; Equality of Salaries Between Men and Women; Non-discrimination.

401-1, 401-2, 401-3, 405-1, 405-2, 406-1

Transparency and Disclosure of Results

Workforce, Suppliers, Trade Associations, Regulatory Bodies, Community, Market and Press

Economic Performance; Presence in the Market

201-1, 202-1

Report Profile

13


BSBIOS // Sustainability Report // 2018

Material Topics

Impacted Targets

Gri Aspect

Gri Topic

Anti-corruption

Workforce, Senior Management, Community, Regulatory Bodies, Supervisory Bodies, Public Authorities, Cross-sector Agents And Suppliers

Anti-corruption

413-1, 413-2, 205-1, 205-2, 205-3, 415-1, 206-1, 419-1

Compliance With The Law

Community, Workforce, Senior Management, Suppliers And Trade Associations

Compliance

419-1, 307-1

Professional Training and Development

Collaborators, Community, Suppliers and Service Providers

Training and Education

404-1, 404-2, 404-3

Work Conditions

Collaborators, Service Providers, Suppliers, Supervisory Bodies, Trade Associations and Senior Management

Jobs; Labor Relations; Occupational Safety and Health; Diversity and Equality of Opportunities; Equality of Salaries Between Men and Women; Evaluation of Suppliers in Labor Practices; Claim Mechanism; Claims Related to Labor Practices; Investments; Non-discrimination; Freedom of Association; Child Labor; Forced or Slave-like Labor; Safety Practices; Evaluation of Suppliers in Human Rights; Claims Related to Human Rights

401-1, 401-2, 402-1, 403-1, 403-2, 403-3

Occupational Safety And Health

Workforce, Community And Supervisory Bodies

Operational Safety And Health

403-1, 403-2, 403-3, 403-4

Environmental Education

Community, Collaborators and Service Providers

Compliance; Transports; General; Claim Mechanism Related to Environmental Impacts

307-1, 103-2 Na, Na Severel

Reduction Of Carbon, Pollutants And Waste Emission

Community, Workforce Regulatory Bodies, Cross-sector Agents And Suppliers

Emissions; Compliance; Transportation

305-1, 302-4, 305-3, 307-1, 305-4, 305-5, 305-6, 305-7, Na

Sustainable Use Of Resources (water, Power, And Materials)

Community, Public Authorities, Supervisory Bodies And Workforce

Water; Power; Materials

303-1, 303-2, 303-3, 302-4, 302-5, 306-1

Reduction Of Environmental Impacts In The Community

Community

Odor; Pollution; Significant , Real, And Potential Negative Impacts In Local Communities

413-1, 413-2 103-1

Generation Of Jobs And Income

Community And Workforce

Jobs; Diversity And Equality Of Opportunities; Decent Labor; Indirect Economic Impacts; Presence In The Market; Purchase Practices

401-1, 401-2, 405-1, 414-1, 414-2, 408-1, 203-2, 204-1, 202-1, 202-2, 203-1, 204-1

Generation of Results

Collaborators, Senior Management, Service Providers, Community Market and Trade Associations

Economic Performance; Presence In The Market; Indirect Economic; Impacts

201-1, 201-2, 201-3, 201-4, 202-1, 202-2, 203-1

Innovation And Technology

Universities, Research Entities And Internal Public

Materials; Financial Management

103-1, 203-1

It is worth emphasizing that the expectations which guide this report will focus on three subjects: environment (in particular, climate changes), compliance, and a specific chapter meeting internal and external audiences' request on biodiesel and RenovaBio and their implications (102-46). GRI Content Index (102-55) and Glossary are part of this report as well. From its first publication in 2017(102-51) until present,

14

Report Profile

there was a significant number of improvements which shall be presented in the report. We can mention the Sustainability Committee, approved by the Board of Directors in December 2017, with a purpose on building a specific policy aligned to the company's strategy, as well as on making it accessible and constant to all the areas in a transversal way.


BSBIOS // Sustainability Report // 2018

3

BSBIOS

Company Profile 102-1, 102-2, 102-3, 102-4, 102-5, 102-6, 102-7, 102-8, 102-9, 102-10, 102-11, 102-12, 102-13

B

SBIOS (102-1) is a large-sized (102-7) private company (1025), with production in two different cities: its head office, in Passo Fundo (102-3), Rio Grande do Sul, and its branch, in Marialva, Paranรก (102-4). The location of its two plants is strategic for grain production and disposal, as BSBIOS trades biodiesel, Soybean Meal, glycerin, sludge, and soybean (102-2). The company is supported by a workforce in a total of 395 (102-8, 4051), with 336 direct and 59 indirect collaborators, 308 men and 87 women working at the two plants. The average income is R$ 3,935.17, the wage floor of Passo Fundo and Marialva plants in comparison to the national wage floor (R$ 954.00), with an average variation of up to 26%. It is worth emphasizing that the collaborators, both in Marialva and Passo Fundo, receive a 30% hazard

pay. In addition, 100% of the senior management members are from the region (201-2). The company has 2124 suppliers (102-9): 1045 for materials, 642 service providers, 280 for grains, 85 for animal fat, 7 for chemicals, and 85 for processing chemicals. From its implementation to the present days, in addition to the generation of direct and indirect jobs, BSBIOS contributes with the collection of municipal, state, and federal taxes. BSBIOS (102-2), in the previous year, contributed to the cities of Passo Fundo and Marialva with R$ 3,149,249* in revenue: R$ 314,221* with added value, and R$ 44,668* with collection of federal, state, and municipal taxes. The investments in the period had a total of R$ 13,662* being recognized by all the stakeholders as a milestone in the community (202-1).

BSBIOS, in the last 3 years, contributed to the cities of Passo Fundo and Marialva REVENUES

7,6

R$

BILLIONS ADDED VALUE

R$

799, 6 MILLIONS TAXES

119,6

R$

MILLIONS

R$ Late afternoon in BSBIOS Unit Passo Fundo

Source: DVA/BSBIOS and FIPE

INVESTMENTS

38,5

MILLIONS

* In thousands of R$

BSBIOS

15


BSBIOS // Sustainability Report // 2018

BSBIOS is currently the leading national biodiesel producer, with a revenue of R$ 3,149,249,610.17 (201-1). (G4-9) Since its implementation, BSBIOS has brought opportunities for local and regional agribusiness, as biodiesel production has become an excellent option for oil seed, mainly soybean, cooperatives and processing industry. It is important to emphasize the use of animal fat: previously seen as waste - a by-product of difficult trade is currently - it is currently used as a raw material due to its improvement and operational practices for production of biodiesel. BSBIOS has the support of modern American and European technologies - such as Crown Iron Company, Desmet Ballestra, and Westfalia - for production of Biodiesel and oilseed processing, meeting both national and international standards (ANP, ASTM D 6751-06, and EN 14214), ensuring unique, high-quality Biodiesel and by-products.

Biodiesel Plant in Unit of Marialva/PR

BSBIOS Performance 102-2, 102-5, 102-9

BSBIOS is an Agroenergy company which produces and transforms products and participates in the Agribusiness chain.

Agribusiness Chain Oil Extraction Agriculture

Animal Protein

Soybean Meal

Animal Fat

Production of Biodiesel

CO 2 REDUCTION

Glycerine Use in Vehicles Powered by Diesel Biodiesel

Chemical Industry

16

BSBIOS


BSBIOS // Sustainability Report // 2018

Main Products 102-2

BIODIESEL

Biofuel produced from renewable sources such as vegetable oil and animal fat containing different types of fatty acids in their composition. It is chemically defined as a methyl or ethyl ester of fatty acid, which may vary according to the raw material used.

SOYBEAN HULLS

A by-product of the extraction of soybean oil with hexane, used as an important source of protein in animal feed. The product can be traded ground or in pellets.

SLUDGE

301-3

A by-product of soybean cleaning process. It is made of stalks, pods, soybean hulls, a small percentage of broken grains, and soybean straw. It is mainly used in cattle feeding.

A by-product of the extraction of soybean oil with hexane, used as an important source of protein in animal feed. The Soybean Meal produced by BSBIOS is in accordance with the Good Manufacturing Practices criteria, and is GMP + B2 and GMP + B3 certified.

GLYCERINE

A by-product resulting from transesterification of vegetable oil and animal fat with methanol, which can be used as raw material in glycerin double distillation plants or in industry specific applications.

DEGUMMED OIL

A by-product of neutralization reaction of vegetable oil, used as raw material in the industry for extraction of fatty acid.

Production Capacity

SOYBEAN WASTE

SOYBEAN MEAL

It is extracted from soybean with hexane and represents the main raw material used for production of Biodiesel. An average of 20% of oil is obtained from soybean. The product can also be used as an ingredient for animal feed, as well as raw material at soybean oil refining and hydrogenation plants.

BSBIOS is growing and following Biodiesel market and its transformations, in line with its strategic planning, and is working to achieve in 2019 an increase of 43% of the installed capacity of its biodiesel plants. The grain processing plants will also receive improvements, increasing its grain processing from 1,080 thousand of tones of soybean crushing/year to 1,280 thousand of tones/year. Passo Fundo plant will receive a fat deacidification plant, allowing the increase on the processing of raw material derived from animal fat, enabling the expansion from 20% to 40% on its use. R$ 72 million will be invested: R$ 47 million will be applied for expansion and R$ 25 million for turnover. The expansion of the biodiesel capacity of Marialva will receive an investment of R$ 13.7 million.

BSBIOS

17


BSBIOS // Sustainability Report // 2018

Production of Biodiesel

545.677 m³

The units of Passo Fundo and Marialva produced together in 2018:

Unit of Passo Fundo/RS

2015

2016

2017

2018

Capacity (m³ / day)

600

600

800*

800

182.400

216.000

247.200

288.000

Actual Production (m³ / year)

174.062

198.797

205.236

274.953

Distributed (m³ / year)

170.295

198.225

203.797

272.270

Authorized

(m³ / year)

* January to July 2017: 600m³ / August to December 2017: 800m³

Unit of Marialva/PR

2015

2016

2017

2018

Capacity (m³ / day)

580

580

800*

800

198.300

208.800

227.400

288.000

Actual Production (m³ / year)

196.593

196.833

203.088

270.724

Distributed (m³ / year)

196.618

196.801

203.854

269.294

Authorized

(m³ / year)

* January to October 2017: 580m³ / November and December 2017: 800m³

Soybean Crushing Crushing - Passo Fundo/RS

2015

2016

2017

2018

Capacity (ton / day)

3000*

3000

3000

3000

1.005.000

1.080.000

1.080.000

1.080.000

848.723

855.560

946.516

1.012.420

Authorized

(ton / year)

Actual Production (ton / year)

* January to May 2015: 2500 ton / June to December 2015: 3000 ton

Soybean Meal and Soybean Hulls Production - Passo Fundo/RS

2015

2016

2017

2018

Soybean Meal + Soybean Hulls (ton / year)

653.200

651.384

721.726

772.903

Degummed Oil (ton / year)

167.249

170.298

188.951

201.033

2015

2016

2017

2018

Passo Fundo (ton / year)

19.072

21.740

22.045

29.284

Marialva (ton / year)

21.597

21.578

22.509

29.198

Glycerine Glycerine - Passo Fundo/RS and Marialva/PR

18

BSBIOS


BSBIOS // Sustainability Report // 2018

Main Suppliers 102-9

Entrepreneurship is one of the BSBIOS values, fostering local development and contracting products and services in the region. 14.40% of the suppliers are from Passo Fundo and 8.25% are from Marialva and the region. Besides generating jobs and income, due to the relationship company-suppliers, entrepreneurship contributes with logistics, safety on transportation, and organization of the local economy.

Raw Material Suppliers: Soybean 102-9, 103-1

BSBIOS is present in the soybean market, participating in the purchase of the grain during the twelve months in the year. Sourced from the Northwest, North, Northeast, and Central Regions of Rio Grande do Sul, the company has a portfolio with over 260 active suppliers. The raw material is acquired from cooperatives, grain handlers, and producers in the state. With a fixed demand of 3,000 tones/day, destined to soybean crushing in Passo Fundo, BSBIOS generates liquidity to the regional soybean market and offers logistic solutions, participating in business on CIF and FOB modalities, according to the need of its supplier. The company also has a policy for acceptance of soybean to fix, seeking to contribute and mitigate the deficit of storage for the receipt of soybean in the region. BSBIOS offers the possibility to its suppliers, in addition to sell soybean, to enter into exchange agreements (swap) for its products such as Soybean Meal, soybean hulls, and soybean waste, adding value to the business and contributing with the production chain in the region. Besides the soybean processing program, BSBIOS participates in the national soybean market by purchasing and selling soybean, allocating the product for other purposes such as Export and National Market.

FOTO SOJA

Raw Material Suppliers: Family Agriculture 102-9, 103-1

Holder of the Selo CombustĂ­vel Social seal, BSBIOS has a minimum of 40% of its raw material used for production of biodiesel originated from family agriculture. The company currently purchases such products from family cooperatives located in the South Region of Brazil which have their membership base composed by a minimum of 60% of family farmers. The quantity annually purchased by the company is defined based on the volume of biodiesel scheduled for production and sale in the following year, by subdividing the family acquisitions by soybean grains and soybean oil. The contractual negotiation for purchases is held in the year prior to the year of the relevant crop. All information regarding such negotiations is passed on to the General Coordination of Agroecology and Renewable Energy - CGAER, through a specific database (SABIDO) which contains all the reports regarding the purchase. With the aid

of SABIDO, and upon request to CGAER, it is possible to identify family farmers who sold soybean and the volume of soybean traded, ensuring the traceability of the origin of such raw material. CGAER still performs data cross-checking and carries out a follow-up, including audits conducted in the company plants and cooperatives, for corroboration purposes. It is worth emphasizing that, as part of the Selo CombustĂ­vel Social Seal, for all volumes negotiated with cooperatives and their respective family farmers, BSBIOS also pays a bonus on the purchase price to strengthen the program and the Family Agriculture. In addition, an amount is passed on to the cooperative for costs regarding technical assistance, and the cooperative becomes responsible for the management of such amount for technical assistance and technical training actions to family farmers who produce such grains.

BSBIOS

19


BSBIOS // Sustainability Report // 2018

In 2018, the company acquired 531.102 Ton of soybean DAP and 7.549 Ton of soybean oil DAP from the 21 cooperatives which BSBIOS maintains raw material purchase and selling agreements with. The number of families by year and unit which supplied raw materials to BSBIOS is presented as follows:

Family Agriculture - Passo Fundo/RS

2015

2016

2017

2018

Family Cooperatives

16

18

14

13

Individual Agriculturists

935

1.285

-

-

Total of Families

9.090

10.116

9.255

8.041

Family Agriculture - Marialva/PR

2015

2016

2017

2018

Family Cooperatives

7

7

6

7

Cooperatives Oil

2

2

2

1

Total of Families

4.545

5.058

4.401

4.109

The figures show the volume originated and the values injected into the family economy, as well as the importance of Selo CombustĂ­vel Social on activities performed by Family Farmers in the region. They also prove that Family Farmers are better benefited, as they are more valued and, consequently, committed to maintaining its principles in the production of grains and food to consumer market. Thus, we can affirm that Selo CombustĂ­vel Social allows BSBIOS to structure actions which improve the technical assistance to Family Farmers, from whom the company acquires raw materials, giving Family Agriculture a strong incentive for its strengthening.

20

BSBIOS


BSBIOS // Sustainability Report // 2018

Acquisition Panel Family Agriculture Acquisitions Passo Fundo/RS

2015

2016

2017

2018

Family Cooperatives Individual Agriculturists

Family Cooperatives Individual Agriculturists

Family Cooperatives

Family Cooperatives

Quantity (Ton)

205.306 336.289

259.820 43.233

249.805

360.325

Acquisition Values (R$)

308.973* 35.906*

413.886* 52.036*

360.971*

484.060*

Bonuses (R$)

3.557* 555*

4.760* 721*

5.562*

7.742*

Technical Assistance (R$)

2.599* -----

3.830* -----

3.527*

5.955*

Acquisitions Marialva/RS

2015

2016

2017

2018

Family Cooperatives Cooperatives (Oil)

Family Cooperatives Cooperatives (Oil)

Family Cooperatives Cooperatives (Oil)

Family Cooperatives Cooperatives (Oil)

86.823 10.952

92.519 15.453

77.468 7.644

170.777 7.549

113.704* 30.390*

175.947* 52.142*

115.204* 22.058*

223.190* 18.934*

Bonuses (R$)

1.607* 1.271*

2.193* 1.933*

1.897* 1.006*

4.121* 1.020*

Technical Assistance (R$)

1.143* 557*

736* 751*

630* 366*

1.780* 342*

Total of Acquisitions

2015

2016

2017

2018

488.974*

694.011*

498.233*

726.185*

Bonuses (R$)

6.990*

6.606*

8.465*

12.883*

Technical Assistance (R$)

4.298*

5.317*

4.522*

8.076*

Source of Acquisition

Source of Acquisition Quantity (Ton.) Acquisition Values (R$)

Acquisition Values (R$)

The figures above reliably express the volume originated and the values injected into the family economy in the period, as well as the direct benefits from the subsidies on the prices of family raw materials acquired and the financial contribution related to technical assistance, which is passed on by the company to cooperatives. With the improvements and capacities promoted by the most present technical assistance to the family farmers, from the Selo CombustĂ­vel Social, we can perceive a significant increase in productivity and benefits to rural family properties, adding value and strengthening this segment.

FOTO AGRICULTOR FAMILIAR

40% of all the raw material of the BSBIOS comes from Family Agirculture.

* In thousands of R$

BSBIOS

21


BSBIOS // Sustainability Report // 2018

Raw Material Suppliers: Animal Fat Besides soybean, biodiesel produced at BSBIOS has animal fat as raw material, namely: Bovine Sebum, Poultry Oil, Pork Fat, and Fish Oil. The fat is produced in 85 rendering plants and slaughterhouses located in the South, Southeast, and Center-west regions of Brazil. The use of animal fat is another market created by Biodiesel. Animal fat was previously considered as a surplus and was discarded in rivers, causing a great environmental impact. With its transformation into raw material, it was possible to sell and appraise it, promoting its organization in the chain, when this raw material was previously depreciated and had no value. In this way, the local market was met, promoting new commercialization options for other states which produce such raw materials. The company currently has 85 animal waste suppliers and, in 2018, acquired 153.926 Ton and consumed 155.454 Ton (inventory).

Acquisition Animal Fat

2015

2016

2017

2018

Purchase (Ton)

81.639

84.118

111.389

153.926

Consumption (Ton)

81.345

82.201

111.097

155.454

Target Market 102-6, 102-12

Since its foundation, BSBIOS has been widely recognized in the industry for its commitment with the quality of its services, the increasing innovation, and the social and environmental engagement, as well as the regional development. Although its main activity is the production and distribution of biofuel, it also operates in the market for sale of Soybean Meal, glycerin, and sludge. The company operates in 10 Brazilian states, especially in Rio Grande do Sul and Paranรก, as well as in 8 countries. With a strong participation in the production and distribution of biodiesel, BSBIOS invested R$ 13,662 * in the improvement of

Export 102-2, 102-6

its processes and products (102-2, 102-9). The Company closed 2018 with a consolidated profit of R$ 111,642* and EBITDA of R$ 250,531*, total Assets of R$ 853,531*, total Liabilities of R$ 643,739*, and total Net Equity of R$ 209,792 * (102-7, 102-3). In its essence, BSBIOS contributes to sustainable and intelligent solutions in the contemporary corporate world, promoting the generation of jobs and income and distribution of wealth in the region where it operates. The company does not apply the Precaution Approach (102-11).

Glycerin is a product with a significant demand in Asia, being 18,207,480 tons exported to China in 2018. 59,025 tons of Soybean Meal were exported to Slovenia, Spain, Holland, France, Italy, Germany, and South Korea.

* In thousands of R$

22

BSBIOS


BSBIOS // Sustainability Report // 2018

Main Customers 102-6

BSBIOS is present in almost the entire national territory. Its products are present in 11 states: Rio Grande do Sul, Paraná, Bahia, Espírito Santo, Goiás, Minas Gerais, Mato Grosso do Sul, Rio de Janeiro, Santa Catarina, and São Paulo. In 2018, BSBIOS exported Soybean Meal and glycerin to Spain, France, Italy, Germany, Netherlands, Slovenia, South Korea, and China.

Customers Satisfaction Survey Customer satisfaction is one of our guidelines and is a fundamental issue for our strategic position. A Customer Satisfaction Survey is carried out annually, aiming at improving processes in the quality of product supply. The survey is carried on an online platform, and is directed to customers via e-mail and message applications. In 2018, 77.3% of the clients consulted participated in the survey, and BSBIOS was rated 93.26. The survey takes into account the following factors: general aspects, product quality, service, commercial relations, and logistics.

External Initiatives 102-12

Main Initiatives 102-12, 102-13

SOCIAL FUEL SEAL Signatory of the Selo Combustível Social Seal since 2007, BSBIOS annually generates a minimum percentage of 40% of the raw materials from Family Agriculture. It should be noted that the company, regarding its responsibility with Selo Combustível Social, complies with the provisions provided for in the current legislation (Family Agriculture and Agrarian Development Department, Ordinance No.512, of September 5th, 2017) regarding the obligations for contracting of raw materials from Family Agriculture, the provision of technical assistance, and the availability of information in the Federal Government database (SABIDO). The renewal of the concession for the right to use Selo Combustível Social is valid for 5 years. BSBIOS renewed it on 10/30/2017, valid until December 2022, for Passo Fundo/RS plant, and on 12/28/2015, valid until December 2020, for Marialva/PR plant.

GMP+B2 and GMP+B3

Among all the organizations in which BSBIOS participates or is a signatory, BSBIOS occupies a seat in the Brazilian Association of Biodiesel Producers - APROBIO, the Advanced Biofuels Association - ABFA, and the National Biodiesel Board - NBB and, acts with regulatory or supervisory bodies or public policies such as the Ministry of Mines and Energy and the National Congress, participating in various discussion groups on topics related to the sector such as RenovaBio and its tool, RenovaCalc.

BSBIOS GMP + B2 and GMP + B3 certified, attesting its compliance with international requirements for Food Security in its production and marketing chain. The Soybean Meal produced by BSBIOS complies with Good Manufacturing Practices criteria, being in consonance with tolerable levels of the raw material used, established by specific legislation, regarding pesticide residue and inorganic and microbiological contaminants. The company received the certification on 5/30/2011. Annually, a Maintenance Audit is performed by the Certifying Authority, which also conducts, every three years, the Audit for Renewal of Certification. The renewal was validated in May 2017.

ABNT NBR ISO/IEC 17025 CERTIFICATION The standard that internationally standardizes the activities carried out by test and calibration laboratories. The certification ensures the competence of the laboratory and the reliability of the results issued. For the biodiesel certification, analyses are carried out for each batch produced, and compliance with the specifications for each parameter is mandatory. The batch is released for shipment after the results of the analyses, which must be satisfactory. All the analyses follow specific procedures which are regularly verified, ensuring reliability in the results. BSBIOS Passo Fundo and Marialva Laboratories have this certification since 2014. CGCRE/INMETRO is responsible for this evaluation in Brazil. CRL 0745

In order to achieve more sustainable actions and improve social and environmental processes, in 2018, BSBIOS joined Instituto Ethos de Responsabilidade Social, a non-profit organization which mobilizes, raise awareness of, and help companies to manage their businesses in a social and responsible way as partners toward a fair and sustainable society.

BSBIOS

23


BSBIOS // Sustainability Report // 2018

BSBIOS Governance

4

102-5, 102-18, 102-19, 102-22, 102-26

Corporate Structure

Ownership Structure

102-5

102-5

T

he company's current corporate structure is result of a Joint Venture between R.P. BIO and Petrobras Biocombustível, to explore opportunities in Agroenergy. BSBIOS and Petrobras Biocombustível started their partnership in Marialva, Paraná, in 2009, with the creation of BSBIOS Marialva Indústria e Comércio de Biodiesel Sul Brasil S/A ("BSBIOS Marialva"), when Petrobras Biocombustível acquired 50% of BSBIOS Marialva stocks and BSBIOS owned the other 50% of the company. Subsequent to this initial association, as of July 1st, 2011, Petrobras Biocombustível also became the holder of 50% of BSBIOS Indústria e Comércio de Biodiesel Sul Brasil S/A, located in Passo Fundo ("BSBIOS Passo Fundo"). At the time, a corporate reorganization was agreed upon, and BSBIOS Marialva was converted as a wholly-owned subsidiary of BSBIOS Passo Fundo. On December 31st, 2013, BSBIOS Passo Fundo incorporated the BSBIOS Marialva, which became a subsidiary of Companhia BSBIOS Passo Fundo.

PETROBRAS BIOCOMBUSTÍVEL

BIOCOMBUSTÍVEL

Petrobras Biocombustível is wholly-controlled company of Petróleo Brasileiro S.A. – Petrobras. Petrobras Biocombustível's mission is the production of biofuels with social and environmental responsibility, contributing to the diversification of the Brazilian energy mix and the reduction of greenhouse gases emissions, promoting the development in the regions where it operates.

R.P. BIO

ECB GROUP

100%

100%

BIOCOMBUSTÍVEL

50%

50%

RENEWABLE ENERGY

24

BSBIOS Governance

R.P. BIO is a holding company which belongs to Erasmo Carlos Battistella, with strategic and significant participation in companies, especially in Agrobusiness and Renewable Energy sectors. R.P. BIO belongs to ECB GROUP, which has in its portfolio RP Energia, Lavoro, and R.P. BIO Switzerland S.A.


BSBIOS // Sustainability Report // 2018

Corporate Governance 102-18, 102-19, 102-22, 102-26

BSBIOS governance is based on guidelines covering national and international legislation and standards applicable to biofuel business. It is in line with policies, codes, and internal manuals equally directed to the senior management, founded in pillars such as ethics, corporate responsibility, accountability, transparency, and fairness, in accordance with the IBGC (Brazilian Institute of Corporate Governance) guidelines.

Mission, Vision, and Values 102-16

Sustainability is in the DNA of the company, which is evidenced by its commitment with the present and future generations, through actions focused on People, Corporate Governance, and Social and Environmental Responsibility. Commitment is based on BSBIOS Mission, Vision and Values, in order to convey messages of Sustainability, Entrepreneurship, Commitment, and Transparency.

VISION

MISSION

To be one of the three largest biodiesel producers in Brazil.

To participate in the sustainable development of the planet by means of agroenergy.

VISION MISSION VALUES

VALUES Transparency; Sustainability; Commitment; Focus on the customer; Entrepreneurship.

BSBIOS Governance

25


BSBIOS // Sustainability Report // 2018

Corporate Governance Structure 102-18

The company has a governance model structured with a shared management among partners, following its stockholders' agreement, and is structured according to the organization chart below: SHAREHOLDERS GENERAL MEETING

AUDIT COMMITTEE

BOARD OF DIRECTORS

PRESIDENT

COMMERCIAL

INDUSTRIAL

ADMINISTRATIVE AND FINANCIAL

General Meeting 102-19, 102-26, 102-32

The General Meeting is the sovereign body, called and installed in accordance with the Joint Stock Company Act and the Company's Bylaws. It has the power to decide, check, and make decisions on all the questions concerning the development of the company. The powers to the company's executives are delegated through the bylaws approved by the Shareholders' General Meeting. For other hierarchical levels, the delegations occur through normative instructions and deliberations, both approved by the Executive Board.

Board of Directors 102-19, 102-20, 102-21, 102-22, 102-23,102-24, 102-25, 102-28,102-31,102-33

Composed of up to six advisors (102-22, 102-24) (among them, one woman) appointed by Petrobras Biocombustível and R.P.BIO with a biannual mandate. The Board has a mission to care and value the company's equity, as well as to maximize the return of investments. The Board of Directors also conducts an annual self-assessment and must ensure the faithful with laws, regulations and contractual provisions by directly following the reports and studies made by the

Board of Directors

Executive Board (102-28). The Chairman of the Board of Directors is not a member of the Executive Board, in order to prevent conflicts of interest (102-23 and 102-25). Any conflicts identified and not solved in a consensual manner are managed by the Chairman of the Board and solved through arbitration, ensuring faithful observance with legal rules, regulations, and contractual provisions of the company's activities.

(Board of Directors on December 31st, 2018 )

Ricardo Greenhalgh Barreto Neto (President*) Erasmo Carlos Battistella Thaís Murce Marcos Alexandre Cittolin Lair Jesus Pereira de Oliveira Ivídio Luís Wehrmamann Schweizer

Petrobras Biocombustível R.P. BIO Petrobras Biocombustível R.P. BIO Petrobras Biocombustível R.P. BIO

*During the preparation of this report in 2019, there was a change of the President of the Board of Directors.

26

BSBIOS Governance


BSBIOS // Sustainability Report // 2018

Audit Committee 102-22, 102-24

Composed of three members and their respective deputies, two of the members are nominated by R.P.BIO and Petrobras Biocombustível, and the Independent Advisor is chosen by both. The Audit Committee's activities concern the analysis of Financial Statements and follow-up of results

Audit Committee

with independent auditors in order to ensure the accuracy of the figures. It is worth knowing that the criterion adopted for construction of governance bodies (Board, Board of Directors and Audit Committee) is that of technical capacity (102-24).

(Audit Committee on December 31st, 2018)

Paulo Ricardo Pinto Alaniz

R.P. BIO

Aniger Lorena Ribeiro de Oliveira

Independent

Alessandra Maria Rodrigues Cordeiro

Petrobras Biocombustível

Executive board 102-19,102-20,102-35, 102-36, 102-38

The Executive Board is composed of four directors, approved by the Board of Directors, pursuant to criteria established in the Law, the Stockholders' Agreement, and the Company's Bylaws. The Income Policy for Directors and Advisors is established by the Board of Directors, considering the total amount of projected costs by the Company's professionals,

Executive Board

not encompassing external consulting or opinion from stakeholders (102-35, 102-36, 102-38).The powers to the company's executives are delegated through the shareholders' agreement and the bylaws, approved by the Shareholders' General Meeting. Administrative and Financial Board is responsible for economic, social, and environmental topics, reporting them to the Board of Directors (102-20).

(Executive Board on December 31st, 2018)

Erasmo Carlos Battistella

Chief Executive Officer

Leandro Luiz Zat

Chief Commercial Officer

Eduardo Kisek *

Chief Administrative and Financial Officer

Ezio Slongo

Chief Operating Officer

Governance Model 102-18

The company has a governance model structured with a shared management among partners, according to its stockholders agreement as follows:

✓ Lean structure on both levels facilitates the flow of information within and between the companies; ✓ Highly skilled, professional directors and managers; ✓ Audited by accredited, independent body;

✓ Governance ruled by stockholders agreement and bylaws;

✓ Risk Management;

✓ Active Board of Directors for making strategic decisions;

✓ Ethical conduct.

*During the preparation of this report in 2019, there was a change in the position of the Administrative and Financial Department.

BSBIOS Governance

27


BSBIOS // Sustainability Report // 2018

Board Of Directors Advisory Committee 102-18, 102-19, 102-20, 102-22, 102-27

The Board of Directors has ten advisory committees which assist and formalize the decisions made by the Board of Directors and the Executive Board: Compliance, Conduct (absorbed by Compliance Committee in 2019), Credit, Market Risk Management, Audit, Insurance, Costs, Contingency of Strikes, Projects & Studies, and Sustainability. The company's executives and manager participate in this committee (102-20 e 102-27). in 2018, Projects & Studies, RenovaBio, Contingency of Strikes, and Sustainability committees were created in order

to strengthen BSBIOS' commitment with sustainability. RenovaBio Committee has the role of developing studies and projects in order to prepare the company for the implementation of RenovaCalc. And, in this way, to be able to subsidize the Board of Directors in this new methodology. Sustainability Committee has the purpose to support actions made by senior management in social and environmental, reputation, community and engagement strategic actions, among others.

COMPLIANCE COMMITTEE

CREDIT COMMITTEE

PROJECTS AND STUDIES COMMITTEE

AUDIT COMMITTEE

CONTINGENCY OF STRIKES COMMITTEE

INSURANCE COMMITTEE

MARKET RISK MANAGEMENT COMMITTEE

COSTS COMMITTEE

RENOVABIO COMMITTEE

SUSTAINABILITY COMMITTEE

BSBIOS Policies 102-27, 102-35

The company also makes its decisions based on policies established and approved by the Board of Directors, establishing guidelines for questions concerning: Personnel Management; Health, Environment, Safety, and Quality; Commercial; Communication; Market Risks;

Solid Waste and Wastewater Management; Soybean to Fix; Purchases; Approval Hierarchy; Compliance and Risk Management; Suppliers Management; Warehouse Procedures; Use of Fleet and Vehicles; Transports; and Code of Conduct.

PERSONNEL MANAGEMENT

HEALTH, ENVIRONMENT SAFETY AND QUALITY

COMMERCIAL

COMMUNICATION

MARKET RISK

APPROVAL HIERARCHY

WAREHOUSE PROCEDURES

SUPPLIERS MANAGEMENT: PURCHASES AND SERVICES

REGISTRATION OF MATERIAL, CLIENTS AND SUPPLIERS

USE OF BSBIOS FLEET AND VEHICLES

28

BSBIOS Governance

SOYBEAN TO FIX

PURCHASES

CODE OF CONDUCT

COMPLIANCE

SOLID WASTE AND EFFLUENTS MANAGEMENT

TRANSPORTS


BSBIOS // Sustainability Report // 2018

BSBIOS Conduct 102-16, 102-17

Compliance 102-16

Following the Compliance Program launched in 2017, BSBIOS identified, mapped and classified its risks, elaborated the policy and standards applicable to Compliance, as well as promoted the alignment of risks raised and classified in the risk map, meeting 90% of the targets foreseen for 2018. The company created a Corporate and Compliance Risk Management specific area, with a purpose to: ✓ Ensure that such measures are safeguarded and that the various spheres of relationship are contemplated with specificity. The company built and submitted for approval to the Board of Directors Programa Integridade BSBIOS Program, to be approved at the first meeting of 2019. ✓ To define and structure the profile and purpose of the area; ✓ To redefine and re-signify the Ethics Committee, incorporating it to Compliance Committee; ✓ To elaborate the internal policy for management of reports and their respective flow of reception and treatment of claims; ✓ To conduct the training of the senior management

members, the Compliance Committee, and the multipliers, in order to cover and communicate all the stakeholders; ✓ To revise and implement Compliance Program policies and procedures such as revision of the Code of Conduct, relationship with public agents, mergers and acquisitions, information security and corporate governance; ✓ To prepare, together with the Marketing Coordination, the Communication Plan and training to the stakeholders, with the aim of disseminating and disclosing the program, concomitantly with the training of the senior management and multipliers; ✓ To develop and implement an independent communication channel with appropriate, outsourced technology, providing an independent reporting management in accordance with best market practices. The main objective of Compliance initiatives developed by BSBIOS is to root the culture of integrity in the organization, aiming at enabling the area to operate with effective independence. The company planned mechanisms to emphasize and disseminate the subject and, to do so, formatted the Programa Integridade BSBIOS, to be launched in early 2019.

Code of Ethics 102-17

Prepared in 2016, the BSBIOS Code of Conduct will be reviewed in 2019 in order to meet the goal established in 2018. The document concerns issues from working conditions to conflicts of interest, focusing on aspects of conduct. To do so, the document clearly and objectively describes the rules essential to the quality of interpersonal bonds and

Conduct Committee 102-16

procedures. Accessible to all audiences on www.BSBIOS.com, the company encourages the code to be known to all those involved in the company: employees, trainees, learners under the Jovem Aprendiz program, customers, consumers, suppliers, service providers, trade associations, communities, government, and society.

The Conduct Committee, absorbed by the Compliance Committee, is part of the Programa Integridade BSBIOS and reports to the Executive Board. The Committee also receives and forwards claims through a specific channel, recording whether such reports are anonymous or not, at the discretion of the reporter, accessible to all employees and the public, available at the company's website. When claims are received, the Conduct Committee reviews and takes the necessary measures provided for in the Code and forwards them to the responsible area. The Committee then closes the case, responding to the complainant about the measures adopted for the case. In 2018, the Conduct Committee received 2 claims, which were considered appropriate and had the adequate routing.

BSBIOS Governance

29


BSBIOS // Sustainability Report // 2018

With the guarantee of absolute secrecy and anonymity, the suggestions, claims, and complaints made by BSBIOS team on ethical conduct may be carried out by direct contact with the Conduct Committee's immediate superior, as well as by specific email and formal documents. Upon receipt, the cases are forwarded to the immediate board or supervisor, who deliberates on the determination of the facts, according to the company's rules and resolutions, routing to penalties, when necessary, as stipulated in the Code of Conduct. The Conduct Committee is responsible for managing issues concerning ethical behaviors. All the inquiries opened by the Company are evaluated as to their possible relation with cases of corruption (102-33). Since 2019, the Conduct Committee relationship channels began to be absorbed by the Compliance Committee, by Programa Integridade BSBIOS.

Relation Channels 102-16, 102-17

Risk Management 101-15 102-29, 102-30, 102-31, 102-34, 103-1, 103-2, 103-3

The strategic risk management program process, conducted by BSBIOS, began from a procedure coordinated by a specialized consulting and intends to map, identify, and manage risks for the business with the purpose of its continuous existence. The implementation of the management occurred by the creation of mechanisms for mitigation of risks and improvement of internal controls which may minimize losses or improve the gains by the company. The methodology used is based on COSO (Committee of Sponsoring Organizations of the Treadway Commission), the most used framework which follows a cyclic standard, ISO 3100, and the best practices provided for by the IBGC. The first stage of the project identified, assessed, and prioritizes strategic risks to BSBIOS business, and addressed initiatives for structuring the areas of Governance, Risks, and Compliance. For the identification of these risks, 36 interviews were

conducted with the Executive Board, the Board of Directors and BSBIOS managers, coordinators, and specialists who gathered and mapped such risks. The risks identified were classified according to the BSBIOS executives and leaders' perception, from a voting regarding the probability and impact for each risk. From the gathering of the risks, 56 risks and their risk factors were identified, being classified according to their prioritization (Tier 1, 2, or 3); category (strategic, operational, regulatory, or financial); subcategory and sector involved within the company. During the interviews, information was gathered on the controls and initiatives currently undertaken to mitigate the most critical risks, and these were identified for each of the risks in "Controls and Initiatives". Risks which are not covered or are partially covered has a description of the GAPs observed for such. Additionally, recommendations were incorporated to critical risks as a guideline to the company's action plans.

Catastrophic

R17 R7

Impact

Critical

R23

R6

R4 R13 R15

R11

R14 R22

Seriously

R1 R9 R10 R5R12 R2 R3 R19 R25 R8

R16

R24

R21

R18

Moderate

Mild

Remote

Unlikely

Casual

Probability 30

BSBIOS Governance

Likely

Frequent

Each risk had an action plan prepared, being followed by the Corporate and Compliance Risks Area and reported to the senior management in a regular basis (103-1). It is worth to highlight that BSBIOS risk management is dynamic and in constant evolution. As the Company progresses with the modeling of risks and changes in the internal and external scenario, some of such risks may be excluded or included in the Strategic Risk Map. In the second stage of the work, treatments were addressed for the mapped risks, as well as the set of indicators which translate the levels of exposure to risk by the company, aiding in the decision making.


BSBIOS // Sustainability Report // 2018

Responsability in the Value Chain 203-2, 204-1, 206-1, 103-1

With a purpose to broaden and consolidate sustainability culture together with its relation network, BSBIOS aims to act in synergy with its productive chain and, therefore, buys, distributes, and transforms products from regions where the company operates, generating and adding value to all the peers. With ethics and responsibility, the company promotes the improvement of conditions of life for people who live in the region and appraises the links of the biodiesel production chain by buying a minimum of 40% of raw material from family

cooperatives in the region, as well as acquisitions from grain handlers and other cooperatives where the company operates. Attentive to the responsibility towards its business partners, the company continuously seeks to improve its processes and builds possibilities of social inclusion, respect of environment, and clarity in all the corporate actions by expanding this energy between its peers and by improving processes such as health and safety, rights and guarantees and distribution of wealth (103-1).

BSBIOS Value Chain 102-9, 206-1, 204-1,103-1, 301-2

BSBIOS chain encompasses the supply of grains, the production and distribution of biodiesel, Soybean Meal and by-products. BSBIOS works in order to develop the local commerce in a fair, impartial way, providing mechanisms and fighting against unfair competition (206-1). BSBIOS acquires products from the animal recycling sector, transforming the raw material - slaughterhouse waste - into proteins, fats and minerals which return to the production chain as an input for various purposes, i.e., it is an active cycle of transformations and reuse of materials. This is a waste reconversion strategy for new materials, reflecting in a

circular business model (301-2). Seeking confidence in the relationship and the assurance that suppliers are essential for the business, the company has a Purchase Policy, in which the commitment with the existing relationship between BSBIOS and its partners is explained, following the principles of legality, impersonality, morality, publicity, efficiency, isonomy, administrative probity, and compliance with guidelines provided for in the Code of Ethical Conduct, which contains clauses regarding human rights, labor and labor decent practices, and anti-corruption practices (206-1).

Agreements 205-1, 408-1, 409-1, 412-3

The company does not have a structured program for management of impacts of suppliers and service providers in human rights in the production chain. However, in all the signed agreements, there is a clause ensuring the compliance with environmental legislation, labor legislation, national and international safety standards, as well as the commitment to follow the principles of social and environmental responsibility such as: to never use child, slave, degrading or slave-like labor (408-1, 409-1); to never consent with sexual exploitation of children and adolescents on highways; to avoid unhealthy conditions or any such which infringe the rules governing the subject. Since 2018, 37.1% of agreements concluded with suppliers have social and environmental clauses (412-3). The company conducts inspections and, if any irregularity is detected, the supplier or service provider is notified; if such

Selection 206-1, 308-1, 308-2

pending issues are not solved, the violator may receive a warning, a suspension, a termination of the agreement, or a lawsuit, according to the severity of the infraction. External inspections are also conducted in order to assess the quality and source of materials acquired which verifies, among other criteria, the origin of such products in order to avoid the purchase of counterfeit or falsified products. Compliance with technical specifications and standards, safety standards and labor law are observed as well, according to the guidelines already described. In this context, Compliance acts to verify all compliance issues. The Company is acknowledged by its strict practices to select its service providers. In 2018, 593 contracts were subject to risk assessments regarding corruption and labor practices, covering 100% of the BSBIOS plants.

Pursuant to its commitment with regional development and its Compliance program, BSBIOS has criteria for selection, maintenance, evaluation, and termination of suppliers and service providers, based on legality, companies' financial health, logistics, environmental and social compliance, and guidelines from regulatory bodies, clarifying opportunities for new suppliers in order to obtain better quality and cost of raw materials, goods, and services contracted.

BSBIOS Governance

31


BSBIOS // Sustainability Report // 2018

Relation Channels 102-16, 102-17, 418-1

The company maintains several communication channels with its suppliers: Website, BSNet, telephones, direct email, ordinary mail, social networks, radio, booklets, and newspapers. In these channels, there are general guidelines for registration, internal regulations, policies, and legislation. Purchase and Services Policy makes explicit the commitment with the relationship between BSBIOS and its partners

pursuant to fair trade and fair competition guidelines, as provided for in the Code of Ethics, which presents clauses for human rights, labor and decent labor practices, and anticorruption. It is worth emphasizing that it is a channel which serves several audiences with respect to claims, complaints, suggestions etc.

Suppliers Engagement Program 102-13, 103-1, 102-40, 102-42, 102-43, 102-44, 102-21

Aware of its importance and activity in the market, the company has an open communication with the contractors in order to receive ideas for improvements of processes. The Commercial Board annually holds an event with suppliers, bringing speakers nationally recognized. During such event, the company presents its Sustainability Report.

Commercial Meeting BSBIOS 2018

Social Impacts 413-1

BSBIOS has the mission to contribute to the development of the communities where it operates by promoting actions in favor of quality of life, health and well-being of society, the reduction of unfair social conditions, the improvement of working conditions, and the commitment with community issues. Therefore, it carries out a series of engagement activities which strengthen the bonds with the communities where it operates, as well as prevent and mitigate negative social and environmental impacts. In 2018, BSBIOS made several engagement actions such as

meetings, appointments, workshops, lectures, visits, Business Meetings, Release of the Sustainability Report, Meeting with Drivers, Sementinhas do Futuro Program, among others. Other meetings were held with suppliers, with the presentation of questions regarding economic and financial issues, including those concerning the social impact on interested parties' lives. In some of these meetings, issues concerning the sustainability report, such as materiality matrix and survey of expectations were discussed as described in the report profile.

Neighborhood Impacts 412-2, 413-1, 413-2, 103-1

The company works in a dynamic way to prevent, reduce, and mitigate the negative impacts of its production chain in the communities where it operates. There was no case of significant impact in 2018. However, BSBIOS is working with the competent bodies for the construction of a new access road to the head office, promoting a more efficient, safer traffic. 32

BSBIOS Governance

Because it is an activity with a high risk of accidents, inherent to the production and distribution, BSBIOS, concerned about the community's safety, adopts follow-up regulatory instruments and evaluation of impacts in order to reduce accidents between the users of its services, e.g. through campaigns for the correct use of equipment and necessary care.


BSBIOS // Sustainability Report // 2018

Economic and Financial

5

Management

Economic and Financial Management 102-34, 201-1, 201-2, 201-3, 201-4, 202-1, 202-6, 203-1, 203-2, 204-1

B

SBIOS economic and financial management is based on plans and programs which guide the Company's management, defining operational, financial, and sustainability goals, in order to be a reference in the agroenergy sector. With economic and financial planning, important measures were conducted and contributed with the

Company's good results such as: increase on the capacity of biodiesel plants and reduction of costs with the implementation of efficient technologies, tax efficiency, operational expenses management etc. The company ended 2018 with a billing of R$ 3,133,224*, a net revenue of R$ 111,642*, and EBITDA of R$ 250,531* (102-7, 102-3).

The chart below presents the company's economic performance: Bsbios Economic Performance

2016 In thousands of R$

2017 (%)

In thousands of R$

2018 (%)

In thousands of R$

(%)

Revenue

2.300.739

2.175.035

3.149.249

Input acquired from third parties

2.114.637

2.007.697

2.835.028

Gross added value

186.102

167.338

314.221

Distributable total added value

221.707

195.092

382.868

Added value distribution

221.707

(100%)

195.092

(100%)

382.868

Personnel and charges

32.625

(15%)

26.274

(13%)

28.270

(7%)

Taxes, fees and contributions

47.328

(21%)

27.650

(14%)

44.668

(12%)

City

422

228

166

State

36.076

14.126

12.444

Federal

10.830

13.296

32.058

(100%)

183.684

(83%)

102.509

(53%)

198.288

(52%)

Retained earning (loss) for the fiscal year

41.929

(-19%)

38.659

(20%)

111.642

(29%)

EBITDA

95.971

119.111

250.531

Investments made by the company

6.931

17.911

13.662

125.679

133.316

193.292

Compensation of third parties' capital

Fiscal incentives

Source: DVA BSBIOS * In thousands of R$

Economic and Financial Management

33


BSBIOS // Sustainability Report // 2018

Added Value Distribution in 2018

Retained earning (loss) for the fiscal year (29%)

Personnel and charges (7%) 7%

Taxes, fees and contributions (12%)

12%

29%

52% Compensation of third parties’ capital (52%)

Compensation of third parties’ capital

Retained earning (loss) for the fiscal year

Taxes, fees and contributions

Personnel and charges

BSBIOS activities prove its importance in the regional economic scenario, especially by promoting a vast network of supplies, in operation with local suppliers, in particular family farmers, generating jobs and income in the cities and the region. In this way, the company contributes effectively to local, state and national development, collecting taxes in the amount of R$44,660*.

Research And Development 103-1 A 103-3

Investments In 2018, the company invested in technology, industrial operations, infrastructure and safety, as presented below: Category of investment

2018

Investment on technology and industrial operations (R$)

11.105.892,47

Investment on infrastructure, safety, and others (R$)

2.556.502,48

Total (R$)

13.662.394,95

Innovation Investments on research and development seek innovations which surpass the technological and market challenges, for reduction of costs and waste, optimization of results, and, mainly, environmental quality. The innovation processes management is in charge of the Operational Board, which performs the management and improvement of the process in order to obtain a better return to the society by means of its projects. In 2018, BSBIOS invested R$ 4,708*. Expenses with Innovation and Energy Efficiency Innovation Energy Efficiency

2018 4.433.908,63 245.851,53 26.851,47

Other

Total (R$)

4.708.629,63

The federal government, pursuant to the Law no. 11,196/05, (Lei do Bem), grants tax incentives for income tax (IRPJ) and social contribution under net profit (CSLL) to companies which carry out Research and Development of Technological Innovation (RD& I) , so as to remain competitive in the current scenario. BSBIOS invests on the development of new technologies in its plants, improving the use of utilities and inputs (steam, cold water, ice cold water, and filtration catalyst) on production stages of soybean crushing, fat refining, oil pre-treatment, and biodiesel production.

Energy Integration In its purification process, Biodiesel reaches high temperatures in order to vaporize its volatiles. However, the next stage - filtration - requires mild temperatures to ensure its quality as final product. In the last 3 years, BSBIOS has implemented energy recovery technology for heating the glycerin to be purified. By means of a suitable set of heat exchangers, the biodiesel can be cooled, returning its thermal energy to the process. It is estimated that the project has reduced local steam consumption by 20%. In this perspective of technological innovation, the company promoted the study and development of projects for saving steam such as the New Methanol Rectification Style, linked to the Triple Effect of Glycerin, and the Re-use of evaporated steam (Flash) from the Zero Effluent Discharge System condensate, reflecting a local reduction of 25% and 7%, respectively. Moreover, BSBIOS invests on studies for sustainable energies such as the plant for Co-generation of Electrical Energy. * In thousands of R$

34

Economic and Financial Management


BSBIOS // Sustainability Report // 2018

Internal

6 Public Internal Public 103-1, 103-2, 102-8, 102-8, 201-3, 401-1, 402-1, 405-1, 406-1, 401-2, 407-1

I

n accordance with current labor legislation, BSBIOS acts to promote an attractive, equitable and peaceful work environment for its employees and service providers. On December 31st, 2018, the company had 336 own employees, hired for an indefinite period. Based on the guidelines of the personnel management policy (103-1 and 103-2), the company hires its employees through a recruit-

336

ment process, ensures the reservation of positions for people with disabilities, offers a training program, and offers the first job through the learning program (406-1). The company does not have a retirement preparation program, nor a dismissal plan for the employee (203-1). The turnover rate among employees is low. The labor liabilities with respect to the payroll is lower than 1%.

Employees Effective in 2018

24

Trainees and Learners in 2018

Staffing

2017

2018

Effective Employees in Passo Fundo

230

249

Effective Employees in Marialva

90

87

Total of Effective Employees *

320

336

Trainees in Passo Fundo

9

6

Trainees in Marialva

5

5

Total Trainees

14

11

Learners in Passo Fundo

10

9

Learners in Marialva

4

4

Total Learners

14

13

* Total of company staff Employees in the payroll on 12/31/2018.

Internal Public

35


BSBIOS // Sustainability Report // 2018

Labor and Gender 405-1, 406-1, 407-1

Number of company staff employees by gender in the Passo Fundo/RS e Marialva/PR plants.

Number of Employees Effective for Labor and Gender

2017

2018

56

60

274

276

Total of Outsourced and Temporary Workers: Women

23

27

Total of Outsourced and Temporary Workers: Men

44

32

Total Workforce (company staff, outsourced, or temporary employees): Women

79

87

Total Workforce (company staff, outsourced, or temporary employees): Men

318

308

Employees Covered by Collective Labor Agreements (%)

100%

27,3%

22

5

Total of Company Staff Employees: Women Total of Company Staff Employees: Men

Total of claims on Labor Practices reported, forwarded and solved through formal claim mechanisms

Until the change on the labor legislation, 100% of the collaborators were covered by collective labor agreements; currently, the workers of Marialva are covered only. In the Passo Fundo plant, the company maintains the guarantees and rights of the collective agreement made in the previous year, although there was no negotiation with the union. Learners and temporary workers, among others, are hired according to the current laws and are not covered by the Collective Bargaining Agreement (102-8, 407-1).

In 2018, BSBIOS counted on the participation of employees in administrative, operation, production, maintenance and loading and unloading activities. For the production area, which has uninterrupted work, with shift scale, it was measured that approximately 365 days were worked. The days worked by third parties and subcontractors are calculated from the total number of business days and Saturdays of the relevant year, assuming that, on a daily basis, there are outsourced people working at BSBIOS (103-1, 414-1, 414-2).

Working Environment 103-1, 103-2, 102-8, 102-39, 202-1, 401-1, 405-1, 404-2, 404-3, 405-2

With a focus on attracting and retaining talents, the company seeks to maintain an environment with salary practices aligned with the market (103-1 and 103-2). To do so, the company conducts market surveys by role and position in a regular basis. In 2018, a broad review of the structure of positions and salaries was carried out, aiming at aligning the management practices with the current labor legislation (102-8,

2018

Women (%)

0,40%

0,32%

Men (%)

1,26%

1,15%

Average for the year (%)

1,66%

1,47%

Employees' New Hiring

2017

2018

Women

10

15

Men

34

49

Total

36

1,66%

Internal Public

1,47%

Women

Women

0,40%

0,32%

% ,43 78

2

%

2017

57 1,

Turnover (average for the year)

102-39). After reviewing the structure of positions and salaries and the frameworks in the new table, the personnel management area works on the preparation of the Position and Wage Policy in order to make compensation practices more transparent. Also in 2018, the company reviewed the percentage of inflation and considered some criteria for salary readjustment of some employees by meritocracy (404-2, 404-3).

2017

2018 Men

Men

1,26%

1,15%


BSBIOS // Sustainability Report // 2018

Salary and Income Between Women and Men, Detailed by Relevant Functional Categories and Operating Plants 102-37, 202-1, 405-1, 405-2

The table below presents the salaries for men and women. It is important to highlight that the calculation included the company's salary reference, not including benefits of any nature such as (annual, triennial, five-year bonuses, overtime, compensations, additional bonuses, among others) (405-2).

Salary and Compensation between Women and Men

$

$

$

$

2017

2018 *

Base-pay (without benefits) and wage proportion between men and women, by functional category, by significant operating plants, related to the number of employees: base-pay of women/men

19,11%

18,93%

Base-pay and wage proportion between men and women, by functional category, by significant operating plants, related to the number of employees: management

8,06%

7,30%

Base-pay and wage proportion between men and women, by functional category, by significant operating plants, related to the number of employees: administrative

8,58%

8,82%

Base-pay and wage proportion between men and women, by functional category, by significant operating plants, related to the number of employees: production

2,20%

2,67%

* In 2018, there was a change on the calculation of such indicators. In previous years, the proportion of base-pay was took into account with respect to the total number of employees in the determined category only. As of 2018, the proportion of base-pay was took into account with respect to the total number of the company's employees. Therefore, the indicators for 2017 were changed.

Benefits Granted Passo Fundo and Marialva 103-3, 414-1

The collaborators at the BSBIOS units are granted with the following benefits:

DINING HALL

COVENANT WITH UNIVERSITIES

HEALTHCARE PLAN

OUTSOURCED TRANSPORT

DENTAL HEALTH PLAN

FUNERAL AID

LIFE INSURANCE

VACCINATION AGAINST INFLUENZA

PAYROLL DEDUCTIBLE LOAN

QUALITY OF LIFE PROGRAM

COVENANT WITH DRUGSTORES

WORKPLACE EXERCISE

Internal Public

37


BSBIOS // Sustainability Report // 2018

BSBIOS Family Day

As a result of a discussion about the workers' health, Dia da Família BSBIOS is inspired by the concept of quality of life, involving the family in the workplace and stimulating health care. On a particular day of the year, in a leisure area, family and employees share recreational activities, games, health fair and honors to employees; in short, a series of entertainment activities aimed at strengthening bonds and integrating families.

Collaborators Participate In Sport Activities BSBIOS encourages its employees to seek a better quality of life, e.g., by encouraging the practice of sports. Passo Fundo unit leases spaces for the practice of football, futsal, volleyball, and bocha. In Marialva, the company leases a space destined to collaborators at Olé Futebol Society. The collaborators are invited, every year, to participate in the Jogos do Sesi event. In 2018, 77 employees of Passo Fundo participated in 11 sports: bocha, bolão, canastra, dominoes, soccer (11 and 7-a-side), futsal, ping-pong, table tennis, volleyball and beach volleyball. In Marialva, 13 collaborators participated in the soccer modality.

Men's Volleyball Team of BSBIOS, champion of the SESI 2018 Games in Passo Fundo.

Satisfaction Survey 103-1, 103-2, 103-3

Hoping to maintain a friendly and collaborative work environment, the Personnel Management area conducted a satisfaction survey in 2018, aiming to: ✓ Provide a "listening" channel for employees to realize their value to BSBIOS; ✓ Encourage team participation and engagement; ✓ Improve the relationship between company and employee, making a pleasant and motivating work environment. 14 factors were considered in the survey: Environment, communication, cooperation, growth, performance, development, engagement and belonging, structure and 38

Internal Public

processes, focus on the customer; institutional, leadership, decision-making process, compensation, and benefits. By means of an online survey, the employee were invited to answer: ✓ 57 objective questions; ✓ 01 open question; The collection of data was made between 6/18/2018 and 7/15/2018 by means of an online survey (internal system developed by the IT area). Since the year 2018, the Satisfaction Survey will be held annually.


BSBIOS // Sustainability Report // 2018

65.97% of the Company's total employees answered the Satisfaction Survey Total Percentage Response per Unit

Percent of Responses

80

Satisfaction

76,47%

Passo Fundo Marialva

70

Unsatisfactory

Satisfactory

13,78%

84,35%

60 50 40 23,52%

30 20

0

Passo Fundo

Marialva

Unsatisfactory Satisfactory

Unit Replies

Training 103-1, 103-2, 404-1, 410-1,412-2

BSBIOS seeks constant improvement of its employees by means of training and qualifications in accordance with the specific needs of each position or area of activity. In 2018 there were no human rights training actions or procedures related to human rights, conduct and compliance (410-1, 412-1). The company invested R$191,212.14 in qualification and training activities

Training with the Industrial Area of units of Passo Fundo and Marialva.

Total of training hours by position and gender 403-1, 103-1

In 2018, the total number of training hours reached 11,103 hours and 45 minutes, with an average of 28 hours and 17 minutes per employee; 8 hours and 17 minutes for women and 20 hours for men.

Total hours of training per position and gender

2018

Average of training hours by employee

28h 17min

Training time for employees (women)

08h 17min

Training time for employees (men)

20h

Percentage of employees who received career development plan in the period

95%

Internal Public

39


BSBIOS // Sustainability Report // 2018

Continuing Education Program With a mission to develop talents in business administration, Programa Educação Continuada trained 36 employees of the Passo Fundo and Marialva units, in a total of 1,488 hours of training. The objective is to promote the management of the organizational knowledge, the diffusion of corporate culture and values, establishing synergy and training professionals aligned with the company's strategies. Graduation Class of 2018 Continuing Education Program.

Health and Safety 103-1, 103-2, 403-1,403-2,403-3, 403-4

At BSBIOS, health and safety issues are treated in an attentive, responsible way in order to ensure the workforce with a solid contribution to their professional functions. The main focus is the prevention of accidents and incidents, which is possible through strict and thorough monitoring of activities of both the own and contracted teams. The company's guidelines guide assessments in observance to labor and conduct practices, seeking to ensure that safety standards are totally followed (103-1, 103-2). The company, through SESMT - Serviços Especializados em Engenharia de Segurança e em Medicina do Trabalho (103-2, 403-1), develops a series of actions and programs with the purpose of taking care of the health of the professionals, and make them aware of such issues (403-1). The Company follows the guidelines of the legislation in force regarding the themes related to Occupational Health and Safety, preparation of Policies for Work at Altitudes, Work at Confined Spaces, Hazardous Energies LockOut, Handling of Chemicals, Emergencies, Work Permits, Recording and Investigation of Accidents/Incidents, among others (403-1, 103-1, 103-2, 103-3). The CIPA - Internal Accident Prevention Commission (103-1, 103-2, 103-3, 403-4), formed by employees from different sectors, is also supported and encouraged by the Company to participate actively in 40

Internal Public

inspections of areas, to bring suggestions for improvement, to identify unsafe practices and conditions, and to help raising awareness on safety among the colleagues about safety. In addition, SIPAT - Internal Work Accident Prevention Week, organized by CIPA, in addition to addressing issues concerning Safety, also works on Health and Quality of Life issues, so that employees and Service Providers can take this learning for their families.


BSBIOS // Sustainability Report // 2018

Work Safety Training Training related to Occupational Safety is a constant practice within the Company which, since 2014 has encouraged training by an Internal Instructor, so that theory and practice are aligned with the reality of BSBIOS. The training for risk activities performed by the operation, encompasses Work at Altitudes, Work at Confined Spaces, Handling of Chemicals, Use of PPE, and formation of Fire Brigades and Medical Emergency Attendants. Specific training such as Operation with Shovel, Tractor and Forklift are performed by an external instructor. Annual simulations carried out with the Firefighters also aim at carrying out practical activities in different emergency scenarios mapped by the Company, such as rescue at altitudes, rescue at confined spaces, leakage of chemicals, and fire in the facilities.

Emergency simulations in units of Passo Fundo and Marialva

Service Providers Specific criteria addressing occupational safety-related items are also taken into account when contracting service providers. As appropriate, integration processes are carried out in order to review current safety practices, aiming at the preservation of life, health and physical integrity, the care for the environment, and the facilities.

Collaborators and Service Providers' Health SESMT promotes actions aimed at the health of employees and service providers through programs and Awareness Raising Campaigns such as: Pink October, Blue November, Workplace Exercise, Annual Influenza Vaccination Campaign, Oral Health Campaign, actions in the prevention of STIs and Health Promotion Campaigns aimed at drivers, as well as periodic monitoring of the occupational examinations of employees.

Recording of Incidences At BSBIOS, the recording of accidents and incidences meets the criteria of ABNT NBR 14280/2001 - Recording of Occupational Accidents - Procedures and Classification. In the following table, we have the records of incidences related to Occupational Safety, with regard to Rates, Numbers and type of Injuries. It should be noted that the data refer to workers of the South region, where the company operates (403-2). As for service providers and temporary workers, BSBIOS registers and investigates all the incidences involving this workforce, acting with the companies in the implementation of actions that prevent the recording of new incidences. A step to be implemented for 2019 is the recording of hours worked that will allow to calculate the frequency rates (TFCA) and the Severity Rate (TG).

Records of Occurrences related to Occupational Safety

2017

2018

Accident Rates (TFCA)

3,22

3,32

348,84

26,53

Occupational Diseases Rate

0

0

Number of injuries without accident leave

11

23

Number of injuries with accident leave

2

2

Total number of injuries with and without accident leave

13

25

Casualties

0

0

Deaths

0

0

Lost Days Rates (TG)

Internal Public

41


BSBIOS // Sustainability Report // 2018

Marialva: more than 3 years without Accidents with Accident Leave Marialva ended 2018 with 1131 days without Accidents with Accident Leave - ACA. Achieving the 3-year and 36-day mark without ACA, until 12/31/2018, was only possible due to the commitment of the team to comply with the internal Security standards, the engagement of Managers and their teams, investments in improvements and the constant work of awareness and prevention. In August of 2018 the unit of Marialva completed 1000 days without accidents with withdrawals.

Diversity

405-1, 406-1

Based on the belief that the best decisions are made when the work environment is characterized by diversity of views, experiences, cultures and ways of life, without discrimination, BSBIOS has sought to provide work opportunities compatible for people with different abilities, skills, and life stories. The

workforce in the company is composed of 276 men and 60 women. There are no people in senior management who have declared themselves black or indigenous. Regarding the support to women on maternity leave, the company has improved their retention rate: 100% in 2018. (401-3)

Maternity leave

2017

2018

Employees on maternity leave

1

4

Employees who returned to work after maternity leave

1

3

Employees who returned to work after maternity leave and were employed twelve months after their return to work

1

5

100%

100%

Retention rate of employees who received maternity leave Paternity leaves had a total of 9 (401-3).

In relation to the age bracket, there is a young workforce: 40% are up to 30 years old, and 50% are between 30 and 50 years old, as shown in the following table (405-1):

Employees by category, by age bracket

2017

2018

Up to 30 years old (%)

42,8

33,9

Between 30-50 years old (%)

53,5

61,2

Over 50 years old (%)

3,7

4,9

Over 65 years old (%)

0

0

With respect to the inclusion of people with disabilities, the percentages are presented as follows (406-1): Employees with deficiency with respect to the total of employees: People with disabilities * (%) * The quota required for companies with staff between 200 and 500 employees is 3%.

42

Internal Public

2017

2018

3,33

3,28


BSBIOS // Sustainability Report // 2018

Employees by category, according to gender, age bracket, minorities, and other indicators of diversity - with respect to the total number of employees (405-1, 405-2). Employees for minorities and other indicators of diversity

2017

2018

Black women *

ND

1,09

Black Men *

ND

9,02

* The percentage of black women and men mentioned above refers to employee who declared themselves black and are registered in the new hires until December/2018. No cases of discrimination were registered.

The strength of Women Simone Duarte Saldanha is a strong, sensitive woman. She is mother of two children: Samuel, 7; and Ronaldo, 19. In this mostly male universe, she is the only woman working as a biodiesel operator; she has been in the company for 10 years, she started in the cleaning, and later promoted to operator. She inspires other women and opens the for them. “I do the same things the 'guys' do, they always treat me well, and I have never been discriminated against. I did all the courses, except the forklift course, because I do not have a driver's license,� said Simone. In addition to Simone, BSBIOS has a staff of 09 manager women, who have important positions in the company.

Human Rights

Child labor and forced or slave-like labor 408-1, 409-1

412-3

BSBIOS complies with Human Rights national and international legislations and seeks to safeguard such rights by including in their agreements clauses related to such subject. The company did not receive any claim concerning disrespect to human rights in its agreements. In 2018, the percentage of agreements and contracts including human rights clauses or subject to the assessment in human rights was 37.10%.

BSBIOS welcomes four Venezuelans

The corporation has policies that indicate the need for proof of documents that demonstrate fiscal, labor, and security of suppliers regularity, and joins other companies committed to permanently eradicate all forms of slave-like works. Although BSBIOS does not have a specific policy or management on the subject, BSBIOS has important initiatives to reduce inequalities and acts for social inclusion, as in the case of the reception of four Venezuelan immigrants who came to Brazil in search of a better life.

402-3, 412-3, 412-2, 406-1

Ramon Fernando, Ymmi Eloy, Osmar Johan, and Renni Daniel left their families in the midst of an unprecedented crisis in Venezuela. The lack of food, medicines, freedom and opportunities brought them to Brazil. The entrance of immigrants in the country took place in Boa Vista, state of Roraima. They arrived in Passo Fundo through a program of emergency assistance to immigrants, in partnership with civil society, religious entities, universities, NGOs and the UNHCR (UN agency for Refugees), formed an internalization network, with an objective to support Venezuelans. In this process, 80 Venezuelans were welcomed in the South Region of the country. BSBIOS got involved in this partnership and received four immigrants, providing them with work, housing, and dignity. Hope is present in the stories told by them. They are hoping for better days and Ymmi still believes he can return to his native country. Ramon, Osmar and Renni believe in happy days with their families in Brazil. Prior to the crisis, they worked at PetrĂłleos de Venezuela (PDVSA), a Venezuelan state-owned company engaged in exploration, production, refining, marketing and transportation of oil. All of them work at the operational area. An internal campaign among employees is also in progress to gather clothes, blankets, and household items.

Internal Public

43


BSBIOS // Sustainability Report // 2018

7

Environment Environmental Management System - Commitment With Life 103-1, 301-1, 301-2, 302-2, 302-3, 302-4, 302-5, 302-21, 303-1,303-2, 303-3, 305-1, 305-2, 305-3, 305-4, 305-5, 305-6, 305-7, 307-1

T

he guidelines of the Environmental Management System (103-1, 103-2,103-3) are based on Licensing/Authorization conditions in force at BSBIOS and include actions related to Atmospheric Emissions, Water Inlet, and Solid and Liquid Waste Management. BSBIOS's environmental management acts strongly in monitoring and controlling the environmental impacts of operation of its production units, following the rules and legal require-

ments of the supervisory bodies of the three spheres. In addition, BSBIOS has developed actions and projects with the objective of making its processes efficient, reducing the consumption of resources such as biomass and water intake, optimizing processes for steam generation and use of chemicals, acting in a conscious way in the use of natural resources. All documentation related to Environmental Management (Management Plans, Work Instructions and

Records) is managed by the SA Strategic Adviser, complying with the GMP + B2 and + B3 standards for Food Safety requirements for production and trade of Soybean Meal, used as ingredient in animal feed. In addition, documentation control via system ensures that documents are reviewed annually, are available electronically to users and internal stakeholders, maintaining electronic revision history and avoiding the use of obsolete versions.

Sustainable use of Resources: Water 303-1, 303-2, 303-3

The water used in the company came from groundwater from artesian wells. 2018 presented a consumption of 711,281.0 m³ (303-1). Of the total volume consumed, about 1.6% is used in the supply of dressing rooms, toilets, restaurant, and laboratory, and 98.4% in industry, in the processes of steam generation and cooling. Quarterly, water sampling of the artesian wells is performed to inspect the quality parameters, in compliance with the current legislation, Consolidation Ordinance No. 5.

Unit of Passo Fundo/RS Consumption of water

(Liters)

Production of Biodiesel (m³) Performance (liters of water/m³ of Biodiesel) Unit of Marialva/PR Consumption of water

(Litros)

Production of Biodiesel (m³) Performance (liters of water/m³ of Biodiesel)

44

Environment

2015

2016

2017

2018

364.094.930,00

358.964.170,00

408.649.200,00

546.126.000,00

173.853,00

198.797,00

205.236,00

274.953,00

2.094,30

1.805,70

1.991,10

1.986,30

2015

2016

2017

2018

93.739.000,00

133.410.000,00

146.683.000,00

165.155.000,00

196.532,00

196.832,00

203.087,00

270.723,60

476,70

677,90

722,30

610,05


BSBIOS // Sustainability Report // 2018

Wastewater 306-1, 306-2, 306-3, 306-4, 306-5

The company generates two types of wastewater: domestic and industrial, which are domestically treated and released according to the relevant legislation. The domestic wastewater generated by Passo Fundo plant comes from dressing rooms, toilets, restaurant, and laboratory, the treatment is conducted by means of a biological system and its subsequent disinfection before the launch. Industrial wastewater, generated in the Biodiesel Plant, goes through stages of physical and chemical and biological treatment. The two types of wastewater, after the treatment, are released into the receiving water body - the Passo Fundo

Unit of Passo Fundo/RS*

river, with no impact on the biodiversity of the water body. Both the cases are in accordance with the quality parameters specified by the CONSEMA Resolution no. 355/2017 (306-1,306-2, 306-3, 306-4, 306-5, 103-1 A 103-3). The unit of Marialva generates domestic and industrial wastewater as well. All the domestic wastewater are disposed in cesspools, while industrial effluents undergo physical and chemical and biological treatment in their own treatment plant. The wastewater treated is used for fertirrigation in eucalyptus plantations, located in the company's premises.

2015

2016

2017

2018

60.757.320,00

62.486.840,00

57.892.700,00

73.280.000,00

173.853,00

198.797,00

205.236,00

274.953,00

Performance (Liters of wastewater/m³ of Biodiesel)

349,5

314,33

282,08

266,52

Unit of Marialva/PR

2015

2016

2017

2018

34.752.000,00

26.557.200,00

18.524.050,0

27.986.300,00

196.532,00

196.832,00

203.087,00

270.723,60

176,8

134,9

91,21

103,37

Volume of wastewater generated (Liters) Production of Biodiesel (m³)

Volume of wastewater generated (Liters) Production of Biodiesel (m³) Performance (Liters of wastewater/m³ of Biodiesel)

* Even though wastewater was also generated in the crushing process, in Passo Fundo, for purposes of calculation and comparison between the mentioned years, it was considered that this volume was being generated by biodiesel plants only.

With the expansion of Marialva's production capacity, an opportunity to foster the increase the animal fat processing was perceived - Table 5. In the unit, the implementation of new technology for physical refining of animal fat allowed an increase of 25% in the use of fat, in addition to reducing specifically 35 kg of steam/m³ in the production of Biodiesel and maintaining the volume in the generation of wastewater between 2017 and 2018, below the volume generates in the previous years, as shown in the table above.

Unit of Marialva/PR Consumption of Animal fat (Ton.)

Efluentes Impacts On Natural Resources:

306-1, 306-2, 306-3, 306-4, 306-5

303-1, 306-5, 103-1, 103-2, 103-3

2015

2016

2017

2018

72.547,00

69.346,00

76.655,60

101.317,20

The company's environmental policy provides for the daily monitoring of the volume of water captured, as well as the search for technology and processes of treatment of the water of industrial use that reduces the losses and, consequently, the volume captured. BSBIOS does not withdraw water from surface sources. All the water consumed comes from groundwater, granted by the regulatory agency (303-2). The company partially adopts water re-use in the extraction stage of the Passo Fundo unit. The Zero Wastewater Discharge System (ZED) is intended to recycle all the wastewater generated in the Extraction Plant, from the Water/Hexane Separation stages. The re-use of wastewater occurs through the generation of low pressure steam that is then used for toasting the hulls in the Desolventizer/Toaster - DT. With respect to administrative re-use or capture of water, there is not any procedure established yet (303-3).

Environment

45


BSBIOS // Sustainability Report // 2018

Management and Monitoring of Impacts on Ecossystem Services and Biodiversity: Water 304-1, 304-2

The areas where the company installed its industrial units underwent analysis of plant cover, with the objective of evaluating the fauna and flora of the place of installation, having been proven that they were not affected. As appropriate, BSBIOS - Passo Fundo is inserted within the limits of 10 km of the Private Reservation of Natural

Heritage - Reserva Maragato (Ordinance No.14 of October 11th, 2007). In this way, any intervention in the plant that implies an increase in area of production capacity and storage, among others, precedes the consent of the Conservation Unit (304-3).

Management and Monitoring of Impacts on Ecossystem Services and Biodiversity: Energy 302-1, 302-4, 303-1, 103-1, 103-2, 103-3

Energy is indispensable in BSBIOS production processes, and electricity and steam energy are the main forms of energy used. In the steam generation, wood chip (biomass) is used as fuel in boilers. This biomass is mainly composed of pine and eucalyptus, originating from traders of forest products and by-products, duly registered at the SEAPI Department of Agriculture, Livestock, and Irrigation for suppliers in Rio Grande do Sul, and at the SERFLOR - State System for Forest Reposition, mandatory for suppliers in Paraná. For the administrative areas, the company uses a lighting system, avoiding that they remain unnecessarily connected when there are no employees on the site. In 2015, incandescent bulbs were replaced with LED bulbs, which consume less energy and have a longer shelf life than ordinary bulbs. Another improvement to be mentioned, with regard to the reduction of electric energy, was the installation of the heating system with use of the steam generated in the boilers in the administrative areas of Passo Fundo.

Unit of Passo Fundo/RS*

2015

2016

2017

2018

Consumption of Biomass (m³)

296.192,00

312.885,00

350.595,00

396.020,40

Production of Biodiesel (m³)

173.853,00

198.797,00

205.236,00

274.953,00

1,70

1,57

1,70

1,44

2015

2016

2017

2018

Consumption of Biomass (ton)

43.779,00

35.658,00

32.444,00

30.392,00

Production of Biodiesel (m³)

196.532,00

196.832,00

203.087,00

270.723,60

222,80

181,20

159,07

112,26

Performance (m³ of Biomass/m³ of Biodiesel) Unit of Marialva/PR

Performance (m³ of Biomass/m³ of Biodiesel)

* The generation of steam at Passo Fundo plant supplies the Biodiesel Plant and the crushing machine. For purposes of calculation and comparison between the years, it was considered that all the biomass consumed would generate steam for the Biodiesel Plant only.

46

Environment


BSBIOS // Sustainability Report // 2018

Improvement Efluentes in Performance 306-1, 306-2, 306-3, 306-4, 306-5

It is observed an improvement in the performance of biomass consumption by the Marialva unit over the years. The following actions allowed this objective to be achieved: Replacement of boiler pre-air tubes; Elimination of false air intake points in the boiler; Purchase of portable equipment to control CO2 at the outlet of the gases to the chimney; Purchase of portable equipment to control the humidity of the chip on receipt; Investment in personnel to act directly in the reception of chip, with implementation of quality control of the material upon receipt, measurement, and follow-up of the performance of the boiler intervening, when necessary, faster; Greater interaction between PCP and Industry with data control, records, daily and monthly consumption analysis, investigating and treating deviations; Strengthening of business relations with suppliers.

Power Consumption Within the Organization 302-1, 103-1, 103-2, 103-3

In addition to electricity, diesel is used to supply the shovels and the tractor used by industrial plants. The company has a reduced fleet of gasoline-powered vehicles. GLP is used in restaurants, laboratories, and yet as fuel in the plant fat refining boiler at the unit of Marialva. In 2015 and 2016, the unit of Marialva used diesel as fuel in the fat refining plant boiler. In 2017, diesel was replaced by GLP, which justifies the reduction on the consumption of this fuel;

Fuel Consumed by BSBIOS Fleet

2015

2016

2017

2018

Gasoline (Liters)

Not Available

Not Available

Not Available

17.301,20

Diesel (Liters)

633.877,00

528.365,00

98.448,00

89.526,06

0

0

0

0

633.877,00

528.365,00

98.448,00

106.827,26

Ethanol (Liters)

0

0

0

0

Biodiesel (Liters)

0

0

0

0

Natural Gas (Liters) Non-renewable total (Liters)

Power Consumption 302-1, 302-2

For the Plant of Passo Fundo, the electricity is consumed in Biodiesel and Soybean Crushing production process. In this way, the calculation of performance is not segregated by productive area. The increase in electricity consumption is directly related to the expansion of the productive capacity of both plants. As a result, BSBIOS is studying the possibility of using alternative energy sources to promote financial, social, and environmental sustainability (302-1, 302-2, 302-3, 302-4, 302-5, 103-1).

Unit of Passo Fundo/RS

2015

2016

2017

2018

33.084.248,00

33.611.551,00

36.677.760,00

39.945.000,00

173.853,00

198.797,00

205.236,00

274.953,00

Performance (Kwh / m続 de Biodiesel)

195,04

174,92

178,71

145,30

Unit of Marialva/PR

2015

2016

2017

2018

Consumption of Electricity (Kwh)

8.110.803,00

7.438.103,00

8.368.048,00

10.152.000,00

Production of Biodiesel

196.532,00

196.832,00

203.087,00

270.723,60

41

38

41,20

37,50

Consumption of Electricity Production of Biodiesel

(Kwh)

(m続)

(m続)

Performance (Kwh / m続 de Biodiesel)

Environment

47


BSBIOS // Sustainability Report // 2018

Power Consumption and Generation

2015

2016

2017

2018

41.195.051,00

41.049.654,00

45.045.808,00

50.097.000,00

Consumption of Steam (Ton.)

357.673,00

352.826,00

364.719,95

433.150,94

Diesel (Litros)

633.877,00

528.365,00

98.448,00

89.526,06

Biomass Passo Fundo (m³)

296.192,00

312.885,00

350.595,00

396.020,40

Biomass Marialva (Ton.)

43.779,00

35.658,00

32.444,00

30.392,00

Consumption of Electricity (Kwh)

BSBIOS uses all the electricity supplied by distributors. The percentage of this energy, which is being generated by renewable sources, as well as the total volume of emissions, will depend on the source of the energy being offered (305-1, 305-2, 305-3).

Waste 306-1, 306-2, 306-3, 306-4, 306-5

The waste generated in production, laboratory, and administrative building processes was mapped in order to compose the Solid Waste Management Plan PGRS, in accordance with the National Policy of Solid Waste and aligned with available treatment and disposal technologies in the vicinity of the plants. The objective of the Plan, besides ensuring that all the waste generated in the sites are properly packed, transported and disposed of, is to evaluate possibilities of destination which add and generate lower environmental liabilities. In this sense, BSBIOS bet on composting as a technology that incorporates these goals. In Rio Grande do Sul, composting is carried out by specialized companies which sell organic fertilizer. In Paraná, a project coordinated by City Hall of Maringá uses such waste for manufacture of organic fertilizer, which is distributed to community vegetable gardens. The largest volume of waste generated is concentrated in production, and is classified as a non-hazardous waste, consisting mainly of boiler ash, road sweeping waste, and organic sludge from STP. Central of Waste in the Passo Fundo Unit

Waste Generation

2015

2016

2017

2018

7.272,80

5.147,33

6.918,67

7.814,24

Hazardous Waste (Ton.)

86,36

58,15

23,70

163,54

moved Waste in tones used for composting (%)

98,81

98,87

99,65

90,76

229,80

326,26

383,70

0

Hazardous Waste (m³)

8,76

4,65

5,40

0

moved Waste in m3 used for composting (%)

96,18

98,57

98,59

0

Non-Hazardous Waste (Ton.)

Non-hazardous Waste (m³)

In 2018, BSBIOS standardized the measurement of the volumes generated, adopting a standard unit of measure for both units. Therefore, we do not have volume reports in m³

48

Environment


BSBIOS // Sustainability Report // 2018

Waste Generation Total of non-hazardous waste generated by the operation

Total of hazardous waste generated by the operation

2015

2016

2017

2018

7.272,80

5.147,33

6.918,67

7.977,78

229,80

326,26

383,70

0

(Unit)

60.387,00

70.486,00

3.616,00

0

(Ton.)

86,36

58,15

23,70

163,54

8,76

4,65

5,40

0

60.387,00

70.486,00

2.997,00

0

60.387,00

70.486,00

1.807,00

0

0

0

0

0

25,18

14,39

23,32

111,90

8,76

4,65

5,40

0

7.601,00

3.835,00

3.616,00

0

Not applicable

Not applicable

Not applicable

Not applicable

(Ton.) (m³)

(m³) (Unit)

Number of packaging recovered (Unidade) Total weight of exported Hazardous waste (Ton.) (Ton.)

Total weight of exported Hazardous waste

(m³) (Unit)

Total of products sold or services provided (unidade)

As mentioned in the previous table, 7.977.78 tons of waste were generated in 2018 in Marialva/PR and Passo Fundo/RS plants. The form of disposal in percentage of this total volume is presented below.

Composting

Biological Treatment, Recycling, Reverse Logistics, and re-refining.

Licensed Landfill

90,76%

7,46%

1,15%

Composting: The composting system consists of a natural process in which microorganisms, such as fungi and bacteria, are responsible for the degradation of organic matter, transforming it into humus, a nutrient rich material for the soil. The main advantages on using this waste as raw material in the production of fertilizer are: return of organic matter in a useful way to nature and reduction in the emission of methane gas (which causes the greenhouse effect). ✓ In 2018, 90.76% of the waste classified as Class II A was sent to composting. In Passo Fundo, the main destination is Folhito Adubos Orgânicos, a company located in the city of Lajeado/RS. Marialva/PR unit participates in the Projeto Hortas Comunitárias project, and composting carried out by Composting Center in Maringá/PR.

In the Marialva unit, the ashes of the boiler generated by the burning of the eucalyptus chip for steam generation, are intended for the Maringá / PR Composting Project, where they become a rich organic compound for community gardens.

Environment

49


BSBIOS // Sustainability Report // 2018

FOOD SCRAPS MEALS

Cycle of Organic matter FOOD

GARBAGE

COMPOSTING PILE IN A CONTAINER

FERTILIZATION

ORGANIC CORRECTOR * Co-processing: Another option for non-recyclable solid waste is blending for co-processing, due to the high calorific value of such waste. One of the benefits of this process is the replacement of fossil fuels in the cement industry, and the reduction of waste accumulation in Licensed Landfills. Such process consists in the mixing of compatible debris used partially as fuel in clinker kilns.

✓ In 2018, 0.63% of the waste generated in Passo Fundo was destined for blending and co-processing; These data demonstrates that less than 2% of the waste generated by BSBIOS was disposed in a licensed landfill, which is in accordance with the objectives of the Solid Waste Management Plan implemented by the Company.

Climate Changes 305-1, 305-2, 305-3, 305-4, 305-5, 305-6, 305-7, 308-2

Inventory of Gas Emissions Greenhouse Effect (GHG) - Year 2018

BSBIOS GHG Inventory had a total of 17,129 tCO2e. Passo Fundo plant contributed with 50.2% and Marialva plant contributed with 49.8%.

50

Environment

BSBIOS emissions by factories

%

,2% 50

Results BSBIOS

biodiesel makes an important contribution on reducing GHG emissions to the environment and the Brazilian society by replacing part of fossil diesel oil with renewable fuel. In addition to this sustainable positioning with the production of biodiesel, BSBIOS uses Biomass as boiler fuel, which is reflected in the reduction of its GHG emissions and defines it as a company that operates in lowcarbon economy.

49 ,8

In line with its sustainability strategy, in 2018, BSBIOS decided to produce the first Greenhouse Effect Gas (GHG) Emissions Inventory, related to the operations of the biodiesel production plants in Passo Fundo and Marialva. Scope 1 (direct emissions) and scope 2 (indirect emissions) emission sources were included using the "Brazilian GHG Protocol Program"* method. The nature of BSBIOS's activities with the production of

BSBIOS Emissions Passo Fundo (equivalent tCO )

8.592

Marialva (equivalent tCO )

8.537

2

2

Total BSBIOS (equivalent tCO ) 2

Marialva Passo Fundo

17.129

Total: 17.129 tCO2e

* Brazilian GHG Protocol Program is a tool used to quantify and manage greenhouse gas emissions. It is currently the most widely used method worldwide by companies and governments to conduct GHG inventories.


BSBIOS // Sustainability Report // 2018

In a total of 11 emission sources, as shown in the table below, the most relevant source is the burning of fuel in boilers for steam generation in the production process, in a total of 42%, which contains a part of emissions of biomass (wood chips), followed by wastewater treatment, with 33% of the total emissions, which reflects the nature of the operations of the factories which use considerable amounts of water to process grains/soybean oil and animal fat, generating wastewater with significant organic load . And, in the third place, we have emissions related to electrical energy con-

sumption, which contributes with 22% of the total inventory. According to the GHG Protocol method, biogenic CO2 emissions must be quantified and reported separately from the inventory. It is important to highlight the relevance of BSBIOS biogenic CO2 emissions, which presented a total of 303,838 tCO2e, due to the use of biomass in steam generation. In this way, GHG inventory presents a relatively low value for this type of industry, with a production process of great demand in fuel burning.

Sources of Emission

Passo Fundo

Marialva

Total BSBIOS

4.805

1.068

5.872

Fossil Fuel in Boilers (tCO2e)

0

1.189

1.189

Electricity Generator (tCO2e)

48

5

53

Restaurant and Laboratory (tCO2e)

18

10

28

165

49

214

7

1

8

Own fleet (tCO2e)

23

7

29

Refrigerating Gases (tCO2e)

44

312

357

Industrial Wastewater (tCO2e)

486

5.137

5.624

Domestic Wastewater (tCO2e)

13

6

19

Total Scope 1 (tCO2e)

5.610

7.783

13.393

Acquisition of Electric Power (tCO2e)

2.982

754

3.736

Total Escopo 2 (tCO2e)

2982

754

3.736

Total (tCO2e)

8.592

8.537

17.129

Biomass in Boilers (tCO2e)

Scope 1

Stationary Combustion

Shovel and tractor (tCO2e)

Mobile Combustion

Forklifts (tCO2e)

Fugitive Emissions

Scope 2

Wastewater treatment

Acquired Electric Power

Biogenic CO2Emissions

Passo Fundo (tCO e)

Marialva (tCO e)

Total (tCO e)

55.234

248.604

303.838

2

2

2

From the point of view of direct and indirect emissions, graph 1 shows that direct emissions are the most relevant for BSBIOS, contributing with 78% of the total, and scope 2, which is related to the acquisition of electric energy, represented 22%.

Scope Emissions - BSBIOS

Emissions by sources - BSBIOS

Graph 1

8.000

Emissions (tCO2e)

78

%

2

Total: 17.129 tCO2e

2%

Scope 1 Scope 2

* Such emissions concern CH4 e N2O gases produced in biomass burning only. CO2 emissions, which are the largest amount of biomass burning emissions, are considered zero carbon and the results are presented separately.

(42%)

5.643

6.000

(33%)

3.736 (22%)

4.000

2.000

0 Graph 2

Total S1 + S2: 17.129 tCO2e

7.142

Combustion Stationary

Treatment of Effluents

Energy Electrical

357

252

(2%)

(1%)

Refrigeration Gases

Mobile Combustion

Environment

51


BSBIOS // Sustainability Report // 2018

Emissions from Marialva and Passo Fundo sources - BSBIOS Total: 17.129 tCO2e

Emissions (tCO2e)

8.000

Passo Fundo Marialva

6.000 2.271

4.000

2.000

4.871

754

5.143

2.982

0

Combustion Stationary

Treatment of Effluents

57

312

500

195

44 Energy Electrical

Refrigeration Gases

Mobile Combustion

Graphs 2 and 3 show that stationary combustion, wastewater treatment, and the acquisition of electricity had a total of 96% on BSBIOS emissions. Other emission sources refer to mobile combustion (vehicle fleet and internal handling) followed by the use of cooling gases in refrigeration equipment in the production process and air conditioning in offices. Industrial and sanitary wastewater emissions are due to the anaerobic treatment of methane gas (CH4).

Graph 3

Biogenic CO2 Emission Biogenic CO2 emission* was 303,838 tCO2e, with 98% related to the biomass burning in steam production in the production process at factories. Table below shows that the Passo Fundo plant presented the highest contribution of biogenic CO2, with biomass burning in steam production.

Emission Sources

Passo Fundo

Marialva

Total BSBIOS

Biomass in boilers (tCO e)

248.577

55.227

303.804

Shovel and tractor (tCO e)

16

5

21

Own Fleet (tCO e)

5

2

7

5

0

5

248.604

55.234

303.838

2

2

2

Energy generator (tCO e) 2

Total

Non-kyoto Fugitive Emissions HCFC or CFC greenhouse gas emissions are controlled by the Montreal Protocol and should be reported separately in the GHG inventory. MRV unit uses R-22 cooling gas, which had an emission of 5 tCO2e in 2018.

Carbon Emissions Intensity This indicator reflects the efficiency of the production process in relation to GHG emissions. In its ongoing process of expanding production, BSBIOS seeks to reduce emissions over the years to reduce the intensity of carbon emissions, and thus to become increasingly the protagonist of the new low-carbon economy.

CO 2

Carbon intensity indicators

Passo Fundo

Marialva

Total BSBIOS

Production of Biodiesel (Ton.)

274.953

270.724

545.677

8.592

8.537

17.129

0.031

0.032

0.031

Emission (tCO e) 2

Carbon Intensity (tCO e/Ton. of Biodiesel) 2

52

Environment

* According to the GHG Protocol, the CO2 emissions from biomass burning are quantified but not accounted for in the GHG Inventory, since they are considered carbon dioxide due to the absorption of CO2 during plant photosynthesis. However, the CH4 and N2O gases emitted at the flaring are counted in the inventory.


BSBIOS // Sustainability Report // 2018

Results Passo Fundo GHG Emissions Inventory in Passo Fundo had a total of 8,592 tCO2e, and biogenic CO2 emissions generated by the biomass burning, which are not included in the Inventory, had a total of 248,607 tCO2e. These results show that the use of biomass in steam generation is currently the great differential of BSBIOS activities in the mitigation of GHG emissions of its operations.

Inventory of GHG Emissions - Passo Fundo 2018 Emissions (tCO 2 e)

%

Biogenic CO2

4.590

53%

237.476

215

2%

11.101

Electricity Generator

48

1%

5

Restaurant and Laboratory

18

0%

0

165

2%

16

7

0%

0

Own Gasoline Consumption

23

0%

5

Refrigerating Gases

44

1%

0

Industrial Wastewater

486

6%

0

Domestic Wastewater

13

0%

0

Total Scope 1

5.610

65%

248.603

Electric power consumption

2.982

35%

0

Total Scope 2

2982

35%

0

Total Emissions (tCO2e)

8.592

100%

248.603

Sources of Emission Biomass Burning in Boilers Biomass Burning in Grain Dryer

(tCO 2 e)

Scope 1

Stationary Combustion

Diesel Consumption in Shovel and Tractors

Mobile Combustion

Consumption of LPG in Forklifts

Fugitive Emissions

Scope 2

Wastewater treatment

Acquired Electric Power

Emissions by Scope

Emissions by Source

With respect to scopes, the results in Passo Fundo show a better balance, as 65% of the emissions are scope 1 and 35% scope 2, result of the factory operations with the consumption of biomass in steam generation and a greater consumption of electricity in relation to Marialva.

As shown in figure 6, the most relevant emission source in Passo Fundo is stationary combustion (57%), and the greatest contribution is CH4 and N2O gases fr om the biomass burning in the boiler, as the C O2 emitted is biogenic and is presented separately from the GHG inventory.

Emissions by Scope - Passo Fundo

Emissions by Source - Passo Fundo

6.000

Emissions (tCO2e)

5%

%

3

Total: 8.592 tCO2e

65

Total: 8.592 tCO2e 4.871 (57%)

4.000

2.982 (35%)

2.000 500 (6%)

Graph 4

Scope 1 Scope 2

0 Graph 5

Combustion Stationary

Purchase of Energy

Treatment of Wastewater

195 (2%)

Combustion Mobile

Environment

44 (1%) Emissions Fugitives

53


BSBIOS // Sustainability Report // 2018

Biogenic CO2 Emissions - Passo Fundo

Emissions by Type of GHG - Passo Fundo

3.000

2.352 (27%)

2.000

1.000

CO 2

N20

Total: 248.603 tCO2e

248.577 (100%)

2.957 (34%)

0

300.000

Emissions (tCO2e)

(38%)

Emissions (tCO2e)

Total: 8.592 tCO2e

3.239

4.000

CH 4

200.000

100.000

44

16

5,5

4,7

(1%)

(0%)

(0%)

(0%)

Drying of Grains

Own fleet

Shovel and Tractor

0

HFC

Graph 6

Boiler Process

Graph 7

Efluentes Biogenic CO2 Emissions

306-1, 306-2, 306-3, 306-4, 306-5

Steam production is the largest source of biogenic CO2, with the total burning of 136,796 tons of wood chip and reforested eucalyptus wood in production process. The other amounts are related to the use of fuel in vehicles.

Results Marialva GHG inventory in Marialva accounted for 8.537 tCO2e, and the most relevant source was wastewater treatment, which accounted for 60% of total emissions, followed by biomass and fossil burning (LPG) in the boiler, with 27%, and electricity, with 9 Biogenic CO2 Emission was 55.234 tCO2e, with 99.99 % related to the biomass burning in steam production in boilers. Inventory of GHG Emissions - Marialva 2018 Emissions (tCO 2 e)

%

Biogenic CO2

Biomass Consumption in Boiler

1.068

13%

55.227

Consumption of LPG in Boiler - Refinery

1.189

14%

0

5

0%

0,47

Restaurant and Laboratory

10

0%

0

Diesel Consumption in Shovel and Tractor

49

1%

4,82

Consumption of LPG in Forklifts

1

0%

0

Own Gasoline Consumption

7

0%

1,63

312

4%

0

Industrial Wastewater

5.137

60%

0

Domestic Wastewater

6

0%

0

7.783

91%

55.234

Electric power consumption

754

9%

0

Total Scope 2

754

9%

0

8.537

100%

55.234

Sources of Emission

Stationary Combustion

Scope 1

Electricity Generator

Mobile Combustion

Fugitive Emissions

Refrigerating Gases

(tCO 2 e)

Wastewater treatment

Scope 2

Total Scope 1

Acquired Electric Power

Total Emissions (tCO2e)

54

Environment


BSBIOS // Sustainability Report // 2018

Emissions by Scope

Emissions by Source

Emissions in Marialva show the relevance of Scope 1 in relation to Scope 2, mainly due to effluent emissions that represent 60% of the inventory, but also to the relatively low consumption of Scope 2, as shown in graph 8.

In the ranking of emissions in Marialva, the highlight is the wastewater treatment, which represented 60%, followed by stationary combustion, with 27%, and electrical energy , with 9%.

Emissions by Scope - Marialva

Emissions by Source - Marialva Total: 8.537 tCO2e

9%

6.000

%

Emissions (tCO2e)

65

5.143

Total: 8.537 tCO2e

(60%)

4.000

2.271 (27%)

2.000

754 (9%)

312 (4%)

Scope 1 Scope 2

Graph 8

0 Graph 9

Emissions by Type of GHG - Marialva Total: 8.537 tCO2e

5.549

2.012 (24%)

663

2.000

(8%)

312 (4%)

0

60.000

(65%)

4.000

CH 4

CO 2

N20

HFC

Graph 10

Emissions by Efluentes type of GHG

306-1, 306-2, 306-3, 306-4, 306-5

Combustion Stationary

Energy Electrical

Refrigerating Gases

Combustion Mobile

Biogenic CO2 Emissions - Marialva

Emissions (tCO2e)

Emissions (tCO2e)

6.000

Treatment of Wastewater

57 (1%)

Total: 55.234 tCO2e

55.227 (100%)

40.000

20.000

0

GLP in Boiler

16

1.6

0.47

(0%)

(0%)

(0%)

Shovel and Tractor

Own fleet

Generator Energy

Graph 11

In the profile of the Marialva emissions by GHG type, methane (CH4) is the most relevant because the largest source of emissions is wastewater treatment, and methane is emitted in anaerobic processes.

Impacts of Transport, Logistics and Distribution 301-1, 301-2, 103-1, 103-2, 103-3

The company's policies provide guidelines to be followed in all respects, including in stages of transport selection and contracting for its products, inputs, and raw materials. All processes involving Transport and Logistics are under the responsibility of the Logistics Sector. The Sector has control panel and monitoring of goals and, in conjunction with other areas of the Company, defines actions ranging from performance, costs, and deadlines to activities directed to the health and well-being of drivers who access the company.

Actions to celebrate the Driver's Day are an example of activities that go beyond "transporting". It is a moment of interaction with drivers, of awareness about their responsibilities in the traffic, and to alert them of their care with their own health. The company has both formal and informal channels which allow to report any noncompliance or possible risks. The company also had contractual tools to control compliance with all standards and regulations by its logistics and transportation partners, and Environment

55


BSBIOS // Sustainability Report // 2018

also encourages its transportation providers to join an awareness-raising program, such as prevention of accidents. The company also created a health and safety program, as well as a formal channel of communication for employees, partners, customers, and the community, whereby negative

impacts of transport or any non-compliance with the standards may be reported. The contract of the transportation service is already part of the Compliance Policy, demonstrating company's concern on seeking partnerships able to operate in this very important part of the chain.

The Passo Fundo plant operates with railway modal in the distribution of Biodiesel, and, in a minor scale and with less relevance, of Soybean Meal, while Marialva plant is strategically installed next to the railroad, which allows to offer such modal in the future. The numbers demonstrate the importance of this modal on the transportation of Biodiesel at Passo Fundo Plant.

Rail transport Biodiesel transported via modal rail (%)

It is observed that the reduction in the use of railways, in comparison to the latest years, has nothing to do with the unavailability of this modal by part of BSBIOS. Unfortunately, not every Biodiesel receipt base in Brazil is able to operate with this modal, and distributors meet their demands on other destinations where there are not railroads.

2015

2016

2017

2018

45,1

61,8

53,6

42,6

Currently, the only destination of the wagons is Araucรกria/PR (due to the structure available). Another factor that implies a reduction is that of each customer, who decides to operate with trucks on bases closer to Passo Fundo/RS. Although BSBIOS offers and makes available this modality of disposal, in all its negotiations, it is subject to conditions of acceptance and unloading at the base.

Reverse Logistics 103-1, 301-3, 307-1, 103-3, 417-1

BSBIOS trades the majority of its products in bulk. A small percentage of soybean hulls and Soybean Meal is traded in 25 and 40 Kg raffia bags. In 2018, 1.97% of the total of Soybean Meal was traded in bags, while for the soybean hulls, the 56

Environment

percentage was 10%, proving that the generation of waste from the products does not have a significant impact. In addition, the bag used for the packaging of the products can be used by farmers on their properties, without the need for pre-cleaning.


BSBIOS // Sustainability Report // 2018

8

Private Social

Investment 201-4, 413-1, 413-2, 415-1

B

etting on local development, BSBIOS invested in 2018 the amount of R$ 1,900,383.36 in social and environmental, sports and cultural projects, through private social investment or tax exemptions in projects held directly in the communities. Since always, it adopts as a guideline the investment in communities where it operates and in its surroundings, as shown by the FIPE studies on

the Social and Economic Impact of BSBIOS, impacting on the GDP of Passo Fundo in 24.2% in 2016 , and 35.24% in Marialva. But the company goes beyond this, following pre-established criteria and consonant to the Compliance Program, systematically promoting social, environmental, sports and cultural projects in the community seeking effective results, contributing to social transformation.

Following these criteria, the company contributed through Incentive Laws (201-4) to the sum of R$ 948,070.80. Investments made in 2018:

Laws and Incentive Funds

2018

Culture Development Law – Lei Rouanet

R$ 474.326,00

Sport Development Law

R$ 118.581,60

National Program of Oncology - Pronon

R$ 118.581,60

City Fund for Children and Adolescents

R$ 118.581,60

City Fund for Elderly

R$ 118.000,00

Total

R$ 948.070,80

SOCIAL INVESTMENT

1,9

R$

MILLION

invested in projects socio-environmental, sports and cultural

We present the projects benefited by the company in the culture and sports area:

EXPOSOL 2018

XIV FESTIVAL INTERNACIONAL DE FOLCLORE

Audited Audience: 160 thousand visitors 400 exhibitors

Audited Audience: 106.476 people 160 volunteers

Private Social Investment

57


BSBIOS // Sustainability Report // 2018

58

40º ZESKAMP

10ª EXPOTAPEJARA

Audited Audience: 1000 people 8 sports

Audited Audience: 60 thousand people 200 exhibitors

12ª CANTATA NATALINA

32ª FEIRA DO LIVRO DE PASSO FUNDO

Audited Audience: 32 thousand people 600 volunteer students

Audited Audience: 20 thousand people

18º RODEIO INTERNACIONAL DE PASSO FUNDO

TURNÊ - 25 ANOS DOS PERALTAS

Audited Audience: 25 thousand people

Audited Audience: 18 thousand people 12 shows

IMERSÃO CULTURAL A ARTE CÊNICA NA ESCOLA

ESPORTE CLUBE VILA NOVA INDEPENDENTE

Audited Audience: 4.092 people 80 young people in 3 workshops

Audited Audience: 700 young people with age between 5 and 17 years

Private Social Investment


BSBIOS // Sustainability Report // 2018

We present the projects benefited by the company in the other Development Laws: Incentive Laws

locality

National Program of Oncology (Pronon)

Hospital Pequeno Príncipe* – Curitiba/PR

City Fund for Children and Adolescents

Passo Fundo/RS and Marialva/PR

City Fund for Elderly

Passo Fundo/RS and Marialva/PR

City Fund for Elderly

Solar Energy Project Asilo São Vicente de Paula – Jandaia do Sul/PR

* The Hospital Pequeno Príncipe looks for markers of the therapeutic response in Acute Lymphoblastic Leukemia.

Private Social Investment Private social investment is the voluntary transfer of private resources in a planned, monitored, and systematic way for social, environmental, sport, cultural, and scientific projects of public interest. BSBIOS contributes directly with the amount of R$ 952.312.56.

SOCIAL AND ENVIRONMENTAL

CULTURAL AND EDUCATIONAL

SPORTS

R$ 419.896,70

R$ 231.838,31

R$ 300.577,49

TOTAL INVESTMENT: R$ 952.312,56

Meet some projects and actions supported by the company:

TRANSFORMAÇÃO EM ARTE

ONG AMOR

Audited Audience: 60 children and adolescents Supported since 2011

Audited Audience: 280 families Supported since 2018

APAE PASSO FUNDO

APAE MARIALVA

Audited Audience: 350 users Supported since 2013

Audited Audience: 120 users Supported since 2018

Private Social Investment

59


BSBIOS // Sustainability Report // 2018

LAR EMILIANO LOPES

PROJETO SEMEAR

Audited Audience: 30 children and adolescents Supported since 2009

Audited Audience: 130 children and adolescents Supported since 2018

CRIANÇA PÉ QUENTE

HOSPITAL DE CLÍNICAS

Audited Audience: 100 children and adolescents Backed in 2018

Audited Audience: Northern Region of RS Construction of the new Emergency Unit

BSBIOS UPF

SPORT CLUBE GAÚCHO

Sementinhas do Futuro Sementinhas do Futuro is a program developed by BSBIOS, aimed at raising social and environmental awareness to 4th grade students of elementary public and private schools of Passo Fundo/RS and Marialva/PR. The company hosts visits in the industrial unit, explains about the transformation of soybean and animal fat into biodiesel and still exposes actions of nature preservation. And to illustrate in a playful way all the content presented, the students watch the play "O Sumiço da Consciência", with the Grupo Ritornelo. The costs are funded by the company. The company believes that children are disseminating knowledge and will replicate in their homes, in their daily lives, the good practices of environmental preservation learned in BSBIOS. In 2018 the company received a visit of 1300 students from 24 schools.

60

Private Social Investment

ESPORTE CLUBE PASSO FUNDO

CLUBE ATLÉTICO GUARANY


BSBIOS // Sustainability Report // 2018

9

Environmental Impact

Report on Carbon Value

Presentation

I

n this part of the report we make an initial effort to estimate the value generated by BSBIOS in terms of avoided carbon emissions. As information on the emissions generated throughout the biodiesel production chain is still limited, especially in the case of input production, we have restricted this exercise to the Passo Fundo/RS and Marialva/PR production units. In other words, in the exercise presented here, we excluded the potential on reducing carbon

emissions in both the production and transportation of raw material and the transportation and distribution of the final product. The results presented below should be viewed carefully, as a carbon credit allocation policy is not yet fully drawn. In particular, we still lack a definition of how the avoided emissions will be calculated and how carbon credits will be allocated to these emissions. For example, if relatively low pollution results from technological and market choices

that the company would have made regardless of efforts to reduce emissions, the regulator may decide not to allocate carbon credits to this reduced pollution (additionally principle). Thus, what we are presenting here is an initial exploration of the partial economic gains associated with carbon emissions in the company. More specifically, these gains are concentrated on the use of biomass rather than other fossil fuels in the company's boilers.

Methods and Data To estimate the value generated by BSBIOS in relation to carbon emissions, we begin by estimating total greenhouse gas emissions measured in equivalent tones of carbon dioxide (tCO2e). Next, we wonder how BSBIOS would have emitted more if the company used fossil fuels more intensely in its production process. In particular, we simulate the total emissions by the company in two hypothetical scenarios: (1) the biomass used in the boilers for the production of biodiesel is replaced by liquefied petroleum gas (LPG) and (2) the biomass used in the boilers for the production of biodiesel is replaced by fossil diesel oil. Finally, we calculate the monetary value of these additional issues in each of the scenarios described above. This result should be interpreted as the value generated by BSBIOS because the company uses biomass instead of fossil fuels in hypothetic scenarios. To better situate the exercise presented here, we can imagine that such a value could be converted, in theory, into negotiable carbon titles. The calculation of the monetary value associated with carbon emissions is based on two approaches. The first [approach] uses real public policies adopted in various parts

of the world and the price of a tCO2e is derived from these policies. The second approach uses the frontier of current scientific and economic knowledge to estimate the economic damage a tCO2e generates to society. In both approaches, we multiplied the total of emissions avoided in relation to the two hypothetical scenarios by the value of one tCO2e. The first approach for calculating the value associated with avoided emissions is divided into two cases. In the first case, we multiplied the avoided emissions by the value of a tCO2e bond traded on the European Union Emissions Trading Scheme (EU ETS), the largest carbon market in the world in terms of trading volume. The result obtained estimates the total value of negotiable securities that BSBIOS would obtain based on our hypothetical scenarios. In the second case, we multiply avoided emissions by tCO2e taxes in the world. We calculate the average of these taxes and use the highest value in Sweden. The result obtained estimates that BSBIOS would avoid paying taxes if it were subject to this public policy. The reason we use the highest value in Sweden results from the fact that this figure is close to some recent estimates of the cost of carbon to society. The second approach is based on computational models

Environmental Impact

61


BSBIOS // Sustainability Report // 2018

that integrate the dynamics of nature with the dynamics of economy. These integrated assessment models (IAMs) estimate the damage that an additional tCO2e generates for consumption and investment. Such damage is called the Social Cost of Carbon (SCC). As in the first approach exercise, we investigated two cases in the second approach. In the first case, we multiply the total emissions avoided by the SCC produced by the scientific models used by the US government to evaluate public policies related to emissions of carbon. In the second

case, we multiply the total of emissions avoided by the SCC produced by a state-of-art IAM model. This model enhances previous ones in that it takes into account the existence of uncertainties in both the dynamics of the economy and the climate. The results obtained in the second approach are interpreted as BSBIOS social contribution, measured as economic damages avoided, as the company reduces the emissions of its production process in hypothetical cases where it would use more fossil fuel.

Results: Unit of Passo Fundo The following table presents the results for the Passo Fundo unit. The first column indicates the actual emission in tCO2e in 2018; the other columns represent the emissions if the company replaced the biomass used in the Boilers by LPG or fossil diesel. The increase would be significant, up to 13 times.

Emissions (tCO2e)

150.000

115.858 (tCO e)

123.894 (tCO e) 2

2

100.000

50.000

8.592 (tCO e) 2

Total Emission - Real

If the emissions avoided by BSBIOS were converted into negotiable securities, we estimate a total value of carbon credits of about R$ 10 million, according to the prices in the European Union (EU ETS) carbon market. On the other hand, if BSBIOS were subject to a carbon tax policy, we estimate that the company would save R$ 12 to R$ 56.5 million from paying taxes. The first result uses the average value of taxes on tCO2e, among regions which adopt this policy. The second result uses the highest amount of tax levied on carbon emissions in Sweden. Finally, based on the frontier models of scientific knowledge, we estimate that emissions avoided in the biodiesel production process at the Passo Fundo plant generate a social benefit between R$ 17 million (models adopted by the USA) and R$ 54 (a more realistic model which considers economic and climatic uncertainties).

62

Environmental Impact

Total Emission - Simulation with the use of LPG

Total Emission - Simulation with the use of diesel


BSBIOS // Sustainability Report // 2018

Results: Unit of Marialva The following table presents the results for the Marialva unit. The first column indicates the actual emission in tCO2e in 2018; the other columns represent the emissions if the company replaced the biomass used in the Boilers by LPG or fossil diesel. The increase would be significant, up to 4 times.

Emissions (tCO2e)

40.000

32.368 (tCO e)

34.154 (tCO e) 2

2

30.000

20.000

10.000

8.537 (tCO e) 2

Total Emission - Real

Total Emission - Simulation with the use of LPG

Total Emission - Simulation with the use of diesel

If the emissions avoided by BSBIOS were converted into negotiable securities, we estimate a total value of carbon credits of about R$ 2 million, according to the prices in the European Union (EU ETS) carbon market. On the other hand, if BSBIOS were subject to a carbon tax policy, we estimate that the company would save R$ 2.6 to R$ 12.5 million from paying taxes. The first result uses the average value of taxes on tCO2e among regions which adopt this policy. The second result uses the highest amount of tax levied on carbon emissions in Sweden. Finally, based on the frontier models of scientific knowledge, we estimate that emissions avoided in the biodiesel production process at the Marialva plant generate a social benefit between R$ 3.8 million (models adopted by the USA) and R$ 12 (a more realistic model which considers economic and climatic uncertainties).

Added Value for BSBIOS In the aggregate, the process of production of biodiesel by BSBIOS, in both its units, generates an amount in the order of R $ 12 million in negotiable securities. The economy with the hypothetical payment of carbon taxes is between R$

14.5 million and R$ 69 million. Finally, based on the current frontier of knowledge, we estimate that the social value of carbon (avoided social damage) generated by BSBIOS is between R$ 20 million and R$ 66 million, on average.

Codes JEL: C53, O13, O18 e R11 C53: Forecast Models, Simulation Models. O13: Agriculture; Natural Resources; Energy; Environment; Other Primary Products. O18: Urban Analysis; Rural; Regional; Transports; Housing; Infrastructure. R11: Economic Regional Activity: Growth, Development, and Changes.

Environmental Impact

63


BSBIOS // Sustainability Report // 2018

BSBIOS

10

Economic Impact

on the Cities of Passo Fundo and Marialva

Study Objective

I

n this study, we ask the following question: How BSBIOS changed the economy of Passo Fundo and Marialva? It is not simple to answer this question because we do not know how these cities would be without BSBIOS. In other

words, we do not have a Passo Fundo with BSBIOS and another Passo Fundo without BSBIOS to compare the economic impact, since we have one Passo Fundo with BSBIOS only.

Synthetic Control Method for Evaluation of Economic Impact To answer the question on how BSBIOS impacted local economies, we use a statistical method called "synthetic control". The basic idea behind this method is simple. Imagine a mother, Mrs. Vitรณria, who has a son in school age, Carlos. In the middle of the year, Mrs. Vitรณria hired a private teacher for her son and, at the end of the year, she wonders if the private lessons were worth it. Without knowing how to answer this question, she talks to Carlos' teacher, who shows an interesting fact to Mrs. Vitรณria: until the middle of the year, Carlos's grade was very next to the average grade of three other students, Paulo, Marina, and Sandra. For example, in the first test, Paulo had 4, Marina 5, and Sandra, 6. The average of grades the three students had was 5, while Carlos had 4.8. In the second test, Paulo had 7, Marina, 6, and Sandra, 5. The average was 6 and Carlos had 6 in the second test.

Then, the teacher suggests calculating Paulo's, Marina's and Sandra's average grade in the tests of the second half of the year, after the start of the private lessons, and comparing with Carlos' grades. In the third test, Paulo had 4, Marina, 3, and Sandra, 5. The average was 4, and Carlos, this time, had 6, 2 points higher than the average of his three colleagues. Finally, in the last test of the year, the average of the three colleagues was 6, while Carlos had 9. Before taking private lessons, Carlos' grades were very similar to the grade average of his three classmates, while after the private lessons, his grades were above the average. The graph below illustrates the idea that, after the private classes, Carlos' grades were higher than the average of his three classmates. This result suggests that they were worth it, even if Carlos had the same grade in second and third tests.

Figure 1: Synthetic Control - An example

Average (P, M e S)

Carlos

Test grade

10 8 6 4 2

01

02

03

Tests

64

BSBIOS Economic Impact

04

05


BSBIOS // Sustainability Report // 2018

This is the basic idea behind the synthetic control method. It is like if we created a "Synthetic Carlos" (also called "synthetic control"),without private lessons, and compared him to the real Carlos, who had private lessons. "Synthetic Carlos", in our example, is represented by the average of the grades of his classmates. In practice, the method is more complex than

we have described here. Calculations are used to find the group of students whose grades are similar to Carlos' grade before private lessons, and this method considers simple and weighted averages of the other students' grades. There is a possible risk here is: the method may not find a group of students that can be used to create a "Synthetic Carlos".

Synthetic Control and BSBIOS Impact In the case of BSBIOS, we are looking for a group of cities that could form a synthetic Passo Fundo and a synthetic Marialva for the economic indicators selected. By doing so, we should be careful about which group of cities we should consider in our search for a synthetic control. To understand this better, it is worth considering Carlos' case. Let's suppose, for example, that Carlos have a great friend in school, Marcos. Carlos and Marcos have always studied together for the exams and, because of this, Marcos cannot be in the group of students who form the "Synthetic Carlos". That happens because, as they both study together, Marcos may be benefited from Carlos' private lessons and may have his grade increased as well. If we include Marcos in the group of students who forms synthetic Carlos, we will be comparing the real Carlos, who had private lessons with a synthetic Carlos who took classes through Marcos. Thus, we could not tell the actual effect of the lessons.

Therefore, to create a synthetic Passo Fundo, we consider the cities of Rio Grande do Sul, except those located within a radius of 50 km around the city. We did this because the economy of these cities may also grow due to the BSBIOS activities. Imagine, for example, a freight company located in a city near Passo Fundo which provides services to BSBIOS. The economy of this neighbor city will be "contaminated" by BSBIOS and, if we compare Passo Fundo with the city, we will have the impression that the economic impact was less than occurred in fact. We use the same criteria to create a synthetic Marialva. We form the synthetic Marialva based on economic data for other cities in Paranรก, which are not located in a radius of 50 km. In addition, in both cases, we exclude cities of Rio Grande do Sul and Paranรก that have another biodiesel company or are located in a radius of 50 km from these cities. This way, we isolate the BSBIOS effects in cities with relationship to the non-existence of the biodiesel production or similar company.

Results First, consider what happened to the city GDP as a result of the BSBIOS activity. GDP is a measure of the economic activity in a region. Figure 2.a below shows the evolution of GDP of Passo Fundo by the solid line between 2002 and 2016. The dotted line represents the synthetic Passo Fundo, that is the estimated GDP of Passo Fundo, if BSBIOS had never set up in the city. The vertical line marks BSBIOS date of the foundation. As the figure shows, the GDPs of the real city and the synthetic city were fairly close up to 2005. After that year, the city GDP was consistently above the city GDP that would have been generated without the company. If we add up the difference between the real GDP and the synthetic GDP for Passo Fundo, we estimate that BSBIOS contributed,

directly and indirectly, for the GDP of Passo Fundo, with a total of R$ 12.8 billion between 2005 and 2016, at prices of 2016. We also estimate the positive effects of BSBIOS on tax collection and employment. Although BSBIOS had a negative effect on tax collection in the first 7 years after its installation, our estimates show that in the following years, tax collection increased and in 4 years offset the losses of early years. Thus, in the accumulated from 2005 to 2016, tax collection in the city was R$ 470 million higher, due to the activity of BSBIOS (figure 2.b). Moreover, we estimate that the company contributed directly and indirectly with a total of 3,000 additional jobs in Passo Fundo in 2016 (figure 2.c). BSBIOS Economic Impact

65


BSBIOS // Sustainability Report // 2018

Figure 2: Passo Fundo before and after BSBIOS (2016 values)

Passo Fundo

Passo Fundo ''Synthetic'’

a.

City GDP (R$ Billion)

9 8 7 6 5 4 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

b.

Taxes (R$ Billion)

1.2 1 0.8 0.6

c.

Paid Employed Person (thousand)

0.4

60

50

40

30

Figure 3 shows the evolution of GDP of collection of taxes on products and of jobs in Marialva before and after the BSBIOS operations in the city. The starting year of the company's operations, 2010, is represented by vertical line in the graphs. As in the case of Passo Fundo, the solid lines represent the data of the city, while dotted lines represent the estimates of GDP and employment if

BSBIOS had never set up in Marialva. We estimate that BSBIOS contributed directly and indirectly for the increase of the GDP of Marialva, PR, with a total of around R$ 1.9 billion in GDP and R$ 320 million in taxes between 2010 and 2016, at 2016 prices. Our estimates also suggest that BSBIOS, directly and indirectly, brought about 900 additional jobs to the city in 2016.

Figure 3: Marialva before and after BSBIOS (2016 values)

Marialva

Marialva ''Synthetic'’

a.

City GDP (R$ Billion)

1.4 1.2 1 0.8 0.6 0.4 2002

66

2003

BSBIOS Economic Impact

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016


BSBIOS // Sustainability Report // 2018

b.

Taxes (R$ Billion)

2 1.5 1 0.5

c.

Paid Employed Person (thousand)

0

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

8 7 6 5 4

The official data series for the GDP of Passo Fundo and Marialva, produced by IBGE, are valid up to 2016. Based on these data, we made statistics to estimate GDP values from 2016 to 2018. We estimate the same values for the synthetic controls of Passo Fundo and Marialva in order to extend our estimate of BSBIOS contribution to local economies by the end of 2019. Figure 4.a shows the evolution of the GDP of Passo

Fundo and its synthetic counterpart by 2019. Red lines denote our estimates for 2017, 2018, and 2019. Our calculations suggest that BSBIOS contributes with R$ 6.6 billion for the economy of Passo Fundo between 2017 and 2019. Figure 4.b applies to the city of Marialva. For 20172019, it is expected that the difference between the PIB of Marialva and its synthetic counterpart achieves a total of R$ 1.8 billion.

Figure 4: Projection the GDP of Passo Fundo (a) and Marialva (b) and their respective synthetic controls from 2017 to 2019 (R$ million in 2016).

a. Passo Fundo (R$ billion)

Passo Fundo

Passo Fundo ‘‘Synthetic’’

Projection Passo Fundo

10

8

6

4

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Marialva

2014

2015

2016

Marialva ‘‘Synthetic’’

2017

2018

2019

Projection Marialva

b. Marialva (R$ billion)

2

1.5

1

0.5

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

BSBIOS Economic Impact

2019

67


BSBIOS // Sustainability Report // 2018

Glossary Life Cycle Assessment: The Life Cycle Assessment (LCA) is a technique developed to measure the possible environmental impacts caused as a result of the manufacture and use of a particular product or service. LCA systemic approach is known as the "cradle to grave", in which data are collected at all stages of the product life cycle. Life cycle refers to all stages of production and use of the product, related to the extraction of raw materials, through production, distribution to consumption and final disposal, also contemplating recycling and reuse where appropriate (IBICT - Brazilian Institute of Information in Science and Technology). JEL Code: Articles in economics journals are generally classified according to the system originated by the Journal of Economic Literature (JEL). JEL is published quarterly by the American Economic Association (AEA) and contains research articles and information on recently published books and dissertations. Compliance: Definition of compliance: From the English verb 'to comply', which means 'to comply, to execute, to satisfy, to fulfill what was imposed', i.e., compliance means is to be in conformity; the duty to enforce internal and external regulations imposed on the activities of the institution.” (Source: Glossário Índice de Sustentabilidade Empresarial Bovespa - ISE). Climate Convention (COP): an international environmental treaty aimed at stabilizing concentrations of greenhouse gases in the atmosphere, resulting from human action, with the aim of preventing them from interfering in a harmful and permanent way in the planet's climatic system. Conference of the Parties (COP): It is the supreme body of the United Nations Framework Convention on Climate Change (UNFCCC), an association of 196 member countries (or "Parties") signatories to the Convention, which meet annually to assess the state of climate change on the planet and propose mechanisms to ensure the effectiveness of the Convention. COP 21: In 2015, the 21st Conference of the United Nations Climate Change took place. As a result of the conference, the Global Agreement on Climate Change was signed, known as the Paris Agreement, where 195 member countries established their commitments to reduce emissions. Nationally Determined Contribution (NDC): the commitments made by the countries during the COP 21. Decarbonization: Reduction on the use of energy sources which emits carbon dioxide and other greenhouse gases. Carbon dioxide (CO2): The most abundant greenhouse effect gas in

68

Glossary

11

the atmosphere. Equivalent carbon dioxide (CO2): It is the metric unit used to compare and account for greenhouse gases, where the quantity of each gas is multiplied by its global warming potential, the result being expressed in Co2e. Low-Carbon Economy: It is a propositional configuration of the business environment, which favors new technologies in favor of the preservation of the environment and the reduction of greenhouse gas emissions (CEBDs - Brazilian Business Council for Development). Circular Economy: An economic model based on the reduction, reuse, recovery and recycling of materials and energy. Circular economy is seen as a key element in promoting the dissociation between economic growth and the increase in resource consumption, a relationship seen as inexorable hitherto. Emissions of carbon: Carbon refers to greenhouse effect gases of GHG GHG Direct Emissions: Emissions whose GHG sources are owned or controlled by the organization. GHG Indirect Emissions: Emissions whose GHG sources are not owned nor controlled by the organization. GHG Inventory Scope: Defines the operational limits with respect to GHG direct and indirect emissions. GHG Protocol Brazilian Program Specifications: This specification is an adaptation of the GHG Protocol method for the Brazilian context, which was developed by the World Resources Institute (WRI) in association with the World Business Council for Sustainable Development (WBCSD). Greenhouse effect gases (GHG): Gaseous constituents of the atmosphere, whether natural or resulting from human (anthropogenic) activities, which absorb part of the infrared radiation reflected by the earth's surface, preventing radiation from escaping into space, and heating the planet's surface. There are seven GHGs covered by the Kyoto Protocol: Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs), and nitrogen trifluoride (NF3). Corporate Governance: The system by which organizations are directed, monitored and encouraged, encompassing relations between owners, the Board of Directors, the Executive Board, and controlling bodies. Good corporate governance practices are principles into objective recommendations, aligning interests in order


BSBIOS // Sustainability Report // 2018

to preserve and optimize the value of the organization, facilitating its access to resources and contributing to its longevity. Source: Indicadores Ethos de Negócios Sustentáveis e Responsáveis). Social and Environmental Impacts: Social and environmental impacts are changes suffered by the environment which have been caused by certain actions or activities, impacting the quality of life, human health, urban economy, and further modifying the environment and built environments. Social and environmental impacts are caused by human activity, mainly in industries, which use natural resources and spills waste and pollutants in the environment. To prevent these impacts from destroying nature, behavioral changes and improvements in natural resource management are needed. Indicadores Ethos para Negócios Sustentáveis e Responsáveis: Indicadores Ethos is a management tool that aims to support companies in incorporating sustainability and corporate social responsibility (CSR) into their business strategies, so that it becomes sustainable and responsible. Instituto Ethos de Empresas e Responsabilidade Social: A Civil Society Organization of Public Interest founded in 1998 by entrepreneurs and executives. Its mission is to mobilize, to raise awareness, and to help companies managing their business in a social, responsible way, making them partners in the construction of a fair and sustainable society. Greenhouse effect gases emission inventory: It is a process which accounts for GHG emissions and removals related to the operations in a system (organization, production process, product, city, state, country, etc). Private Social Investment: the voluntary transfer of private resources in a planned, monitored, and systematic way for social, environmental, cultural, and scientific projects of public interest. Private Social Investment encompass social actions carried out by companies, foundations and institutes of business origin or instituted by families, communities or individuals. (Source: GIFE) Lei do Bem: The Law no. 11.196/05 (Lei do Bem), grants fiscal incentives to legal entities which carry out Research and Development in Technological Innovation (RD&I). It is known that the growth of the countries passes through the investment on RD& I; therefore, the Federal Government, through the Ministry of Science, Technology, Innovation and Communications (MCTIC), uses this mechanism to encourage investments on innovation by the private sector. With this, it seeks to bring companies closer to universities and research institutes, boosting results in RD&I.

developed in the United States in 1998 by the World Resources Institute (WRI) and is currently the most widely method used worldwide by companies and governments for preparation of GHG inventories. RenovaCalc: A tool created to prove the environmental performance of biofuel plants, encompassing agricultural and industrial aspects of its production and transportation process which result in carbon emission. The total of emissions is compared with that of the fossil fuel (gasoline, for ethanol; or diesel, for biodiesel), resulting in an Energy Efficiency Invoice. This invoice becomes a multiplier factor when the decarbonation credits (CBios) are traded on the stock market and will act as a new product for the companies. CONSEMA Resolution Nº 355/2017: Provides for criteria and standards of the emissions of wastewater to the generating sources that discharge their effluents in surface waters in the State of Rio Grande do Sul. Stakeholder: one of the terms used in several areas such as project management, media (Public Relations), administration, and software regarding interested parties who must be in accordance with corporate governance practices. Tiers: In the Corporate Risk Management process, "Tiers" refers to a classification used to divide the risks identified and mapped according to their relevance and criticality to the Company. Tiers serve to define the risks as to their degree of importance or impact. Tiers 1 and 2 are related to the most relevant and critical risks and Tier 3 refers to the least relevant and critical risks for the Company. Child labor: Any type of work or labor performed by children and adolescents below the minimum age allowed, according to the legislation of each country. In Brazil, labor is generally forbidden to people under the age of 16. Forced or Slave-like Labor: According to article 149 of the Brazilian Penal Code, forms of labor analogous to slavery is characterized by: degrading working conditions (incompatible with human dignity, characterized by violation of fundamental rights, which endanger the health and life of the worker), an exhaustive journey (in which the worker is subject to excessive physical effort or work overload that causes damage to his health or risk of life), forced labor (keeping the person in the service through fraud, geographic isolation, threats and physical and psychological violence), and debt bondage (causing the worker to illegally contract a debt and be bound by such debt). The elements above may occur separately or jointly.

Consolidation Ordinance Nº5: Consolidation of the norms on actions and health services of the Unified Health System. ORDINANCE Nº 14/11 of October 2007: To create the Private Natural Heritage Reserve - RPPN, of public interest and in perpetuity, in a 56ha area called 'MARAGATO', located in the city of Passo Fundo, State of Rio Grande do Sul. Global Warming Potential (GWP): concerns the ability of each greenhouse gas to retain heat at a given intensity over a given time horizon compared to carbon dioxide. For example, over a 100-year horizon, methane (CH4) has GWP = 25, that is, it contributes 25 times more than CO2 in global warming. GHG Protocol Brazilian Program: GHG Protocol is a tool used to understand, quantify and manage GHG emissions, being originally

Glossary

69


BSBIOS // Sustainability Report // 2018

GRI Content PAGE

DISCLOSURE GRI STANDART

|

OMISSION

GENERAL DISCLOSURES

GENERAL DISCLOSURES 5

102-15: Main impacts, risks, and opportunities

5

None

102-1: Name of the Organization

15

None

102-2: Activities, brands, products and services

15, 17, 16 and 22

None

102-3: Location of the Head Office

15, 22, 33 and 34

None

15

None

15 and 24

None

102-5: Ownership and legal form

102-6: Markets supplied

102-7: Size of the Organization 102-8: Information on employees and other workers

15, 22 and 23

None

Due to strategic purposes, the company chose not to mention its main customers.

15 and 22

None

15, 35 and 36

None

15, 22, 19 and 31

None

15

None

102-11: Approach or precaution principle The company does not apply precaution approach

15 and 22

None

102-12: External Initiatives

15 and 23

None

102-13: Participation in associations

15 and 23

None

102-16: Values, principles, patterns and behavior standards

25, 29 and 30

None

102-17: Mechanisms of counseling and ethical concerns

29, 30 and 32

None

24, 25, 26, 27 and 28

None

24, 25, 26, 27, 28 and 29

None

26, 27 and 28

None

26

None

102-9: Suppliers Chain 102-10: Significant changes in the organization and tis supplier chain

102-18: Governance structure 102-19: Delegation of authority 102-20: Executive responsibility for economical, environmental and social topics 102-21: Consultation to stakeholders on economical, environmental, and social topics 102-22: Composition of senior governance and its committees

|

OMISSION

GENERAL DISCLOSURES

GENERAL DISCLOSURES

102-14: Statement from the highest member in the organization (Message from the Chairman)

102-4: Location of operations

PAGE

DISCLOSURE GRI STANDART

12

102-28: Performance assessment of the highest governance body

26

None

102-29: Identification and management of economic, environmental and social impacts

30

None

102-30: Efficacy of processes in risk management

30

None

102-31: Assessment of economic, environmental and social topics

30

None

10 and 26

None

26

None

102-32: Role of the highest governance body in the preparation of the sustainability report 102-33: Communication of critical concerns 102-34: Nature and total of critical concerns

30 and 33

None

102-35: Compensation Policies

27 and 28

None

102-36: Process for determining the compensation

10 and 27

None

102-37: Engagement of stakeholders on compensation

37

None

102-38: Annual total compensation ratio

27

None

102-39: Relationship between the percentage increase in total annual compensation Operations with own employees and outsourced services in Brazil only

36

None

10 and 11

None

102-41: Collective bargaining agreements Due to changes in labor legislation, approximately 45% of workers opted to remain affiliated to unions. BSBIOS follows the same remuneration policy and guarantees of previous agreements guaranteeing the same rights and prerogatives to all its employees

36

None

102-42: Basis for identification and selection of stakeholders for engagement. The company kept the same stakeholders mapped in the first reporting process and gave more space in this report to animal fat suppliers

10

None

102-43 – Approach to engagement of stakeholders. The same reporting channels used in 2016 and 2017 reports were maintained, except for the application of and online survey in 2018

10

None

102-44: Main topics and concerns gathered

10

None

None

None

13 and 14

None

102-47: List of Material Topics

12

None

102-49: Change of Scope and Limits - The Company expanded the scope and limits from the GRI STANDARDS Essential to Comprehensive and reported all the 56 General Disclosure topics and 77 specific topics: Economic, Social and Environmental, in a total of 133 topics.

10

None

102-40: List of stakeholders

102-45: Entities included in financial statements 24, 25, 26, 27 and 28

None 102-46: Definition of the content of the report and limits of the topics

102-23: Chairman of the highest governance body - Due to PBIO policy issues, during the preparation of this report, the chairman resigned and was replaced on an interim basis by Vice-Chairman Marcos Cittolin

26

102-24: Appointment and selection of the highest governance body

26 and 27

None

26

None

24, 25 and 26

None

102-50: Period covered by the report - from 1/1 to 12/31/2018

10

None

28

None

102-51: Date of last report - from 1/1 to 12/31/2017

14

None

102-25: Conflicts of interest 102-26: Role of the highest governance body in defining purpose, values and strategy 102-27: Collective knowledge of the highest governance body

70

GRI Content

None


BSBIOS // Sustainability Report // 2018

PAGE

DISCLOSURE GRI STANDART

|

OMISSION

GENERAL DISCLOSURES

GRI STANDART

GENERAL DISCLOSURES 10

TOPICS MATERIALS: ENVIRONMENTAL

None

303-1: Consumption of water by source

44, 45 and 46

None

303-2: Sources significantly affected by withdrawal of water

44

None

303-3: Recycled and re-used water

44

None

304-1: Own, leased, managed, in or adjacent to protected areas and high biodiversity value areas located outside protected areas

46

None

304-2: Significant impacts of biodiversity activities, products and services

46

None

304-3: Protected or restored habitats

46

None

None

None

102-53: Contact point for questions on the report

10

None

102-54: Statement of preparation of report in compliance with GRI Standards- This reports follows all GRI STANDARDS

10

None

102-55: GRI Content Index

10

None

10

None

102-56: External verification – BSBIOS does not use external verification performed by an accredited organism

|

|

OMISSION

WATER - 2018

102-52: Report issuance cycle - annual

GRI STANDART

PAGE

DISCLOSURE

BIODIVERSITY - 2018

TOPICS MATERIALS: ECONOMICS

ECONOMIC PERFORMANCE - 2018 103-1: Form of management

10, 19, 30 and 32

None 304-4: Species included in the IUCN red list and in national conservation lists with habitats in areas affected by the organization's operations

201-1: Direct economic value generated and distributed

33

None

201-2: Financial implications and other risks and opportunities arising from climate change - RenovaBio and RenovaCalc

33

None

201-3: Defined benefit plan obligations and other retirement plans - Not applicable

33

None

305-1: Direct greenhouse effect gases emissions (GHG-Scope 1)

44, 48 and 50

None

None

305-2: Indirect greenhouse effect gases emissions (GHG-Scope 2)

44, 48 and 50

None

305-3: Other indirect greenhouse effect gases emissions (GHG-Scope 3)

44, 48 and 50

None

305-4: Intensity of greenhouse effect gases emissions (GHG)

44 and 50

None

305-5: Reduction of greenhouse effect gases emissions (GHG)

44 and 50

None

305-6: Emission of substances which destroy the ozone layer (SDO)

44 and 50

None

305-7: Emissions of NOX, SOX, and other relevant emissions

44 and 50

None

306-1: Disposal of water by quality and destination

45 and 48

None

306-2: Waste by type and disposal method

45 and 48

None

306-3: Significant leakage

45 and 48

None

306-4: Transport of hazardous waste

45 and 48

None

306-5: Water bodies affected by water disposal and drainage

45 and 48

None

44 and 56

None

201-4: Financial assistance from the government

33 and 57

MARKET PRESENCE - 2018 202-1: Lowest salary paid ratio by gender, compared to the local minimum wage 202-2: Proportion of member of the senior management hired in the local community – 100%

33 and 36

None

14

None

EMISSIONS - 2018

INDIRECT ECONOMIC IMPACTS - 2018 203-1: Investments on infrastructure and services offered - BSBIOS Economic Impacts Study carried out by FIPE and integral part of this report

33

203-2: Significant investments on infrastructure and services offered - BSBIOS Economic Impacts Study carried out by FIPE and integral part of this report

31 and 33

None

None

WASTE AND WASTEWATER - 2018

PURCHASE PRACTICES - 2018 204-1: Proportion of expenses with local suppliers - approximately 80% of contract for local suppliers

31 and 33

None

ANTI-CORRUPTION - 2018 205-1: Operations assessed for corruption risks

31

None

ENVIRONMENTAL COMPLIANCE - 2018 205-2: Communication and training on anti-corruption policies and procedures - There was no training related to the topic in 2018, there is a goal for 2019 to train 100% workforce 205-3: Cases of corruption confirmed and measures taken

None

None

14

None

SUPPLIERS ENVIRONMENTAL ASSESSMENT - 2018

UNFAIR COMPETITION - 2018 206-1: Lawsuits for unfair competition, trusting practices, and monopoly

GRI STANDART

|

31

None

TOPICS MATERIALS: ENVIRONMENTAL

MATERIALS - 2018 103-1: Form of management 301-1: Materials used for weight and volume

None

44, 55 and 56

None

44 and 55

None

301-3: Recovered products and its packaging materials

17 and 56

None

ENERGY - 2018 46 and 47

None

302-2: Power consumption outside the organization

44 and 47

None

302-5: Reduction on energy requirements on products and services

31

None

308-2: Negative environmental criteria on the supplier chain and measures taken

31

None

GRI STANDART

|

TOPICS MATERIALS: SOCIAL

EMPLOYMENT - 2018 35 and 36

None

401-2: Benefits for full-time employees who are not offered to temporary or part-time employees

35

None

401-3: Maternity/paternity leave

42

None

35

None

40

None

40 and 41

None

LABOR RELATIONS - 2018 402-1: Minimum period for notifying operational changes

302-1: Power consumption within the organization

302-4: Reduction on power consumption

308-1: New suppliers selected bases on environmental criteria

401-1: New hiring of employees and turnover and employees 44 and 56

301-2: Materials from recycling

302-3: Energy intensity

307-1: Non-compliance with environmental laws and regulations

44 and 47

None

44, 46 and 47

None

44

None

OCCUPATIONAL SAFETY AND HEALTH - 2018 403-1: Average of annual training hours by employee 403-2: Types of injury rates, occupational diseases, lost days, absentee, and number of work-related deaths

GRI Content

71


BSBIOS // Sustainability Report // 2018

PAGE

DISCLOSURE GRI STANDART

|

OMISSION

TOPICS MATERIALS: SOCIAL

PAGE

DISCLOSURE GRI STANDART

|

OMISSION

TOPICS MATERIALS: SOCIAL

OCCUPATIONAL SAFETY AND HEALTH - 2018

CUSTOMER SAFETY AND HEALTH - 2018

403-3: Workers with high incidence or high risk of diseases related to their occupation

40

None

416-1: Assessment of health and safety impacts on product and service categories

None

None

403-4: Health and safety topics covered by formal agreements with trade unions - None, in compliance with legislation

40

None

416-2: Cases of non-compliance regarding health and safety impacts on product and service categories

None

None

TRAINING AND EDUCATION - 2018

MARKETING AND LABELING - 2018

404-1: Average of annual training hours by employee

39

None

417-1: Requirements for information and labeling of products and services

56

None

404-2: Programs for the development of employee competencies and career transition assistance

36

None

417-2: Cases of non-compliance with information and labeling of products and services - not applicable

None

None

404-3: Percentage of employees receiving regular performance and career development reviews

36

None

417-3: Cases of non-compliance with marketing communication - none

None

None

32

None

14

None

CUSTOMER PRIVACY - 2018 DIVERSITY AND EQUALITY OF OPPORTUNITIES - 2018 405-1: Diversity in governance bodies and employees

35, 36, 37, 42 and 43

None

36, 37 and 43

None

405-2: Mathematical ratio for base-pay and remuneration of women in relation to men

SOCIAL AND ECONOMIC COMPLIANCE - 2018

NON-DISCRIMINATION - 2018 406-1: Cases of discrimination and corrective measures taken- No case reported

35, 36 and 42

None

FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAIN - 2018 407-1: Operations and suppliers in which the right to freedom of association or collective bargaining may be at risk - None, strictly observes the current legislation

32, 35 and 36

None

31, 32 and 43

None

31, 32 and 43

None

39

None

None

None

412-1: Operations subject to analysis or assessments of human rights impacts

39

None

412-2: Employee training in human rights policies or procedures - Brochure on child and youth sexual exploitation on highways

32, 39 and 43

None

31 and 43

None

413-1: Operations with local community engagement, impact assessments, and programs and development

32 and 57

None

413-2: Operations with significant , real, and potential negative impacts in local communities

32 and 57

None

414-1: New suppliers selected based on social criteria

36 and 37

None

414-2: Negative environmental criteria on the supplier chain and measures taken

36

None

57

None

CHILD LABOR - 2018 408-1: Operations and suppliers with significant risks of child labor

FORCED OR SLAVE-LIKE LABOR - 2018 409-1: Operations and suppliers with significant risks of forced labor

SAFETY PRACTICES - 2018 410-1: Security personnel trained in human rights policies or procedures

INDIGENOUS PEOPLE RIGHTS - 2018 411-1: Cases of violation of the rights of indigenous people - Not applicable

ASSESSMENT IN HUMAN RIGHTS - 2018

412-3: Significant investment agreements and agreements that include clauses on human rights or have been subjected to human rights assessments - 37.10% of agreements and contracts have been evaluated

LOCAL COMMUNITIES - 2018

SOCIAL ASSESSMENT OF SUPPLIERS - 2018

PUBLIC POLICIES - 2018 415-1: Contributions to public policies - via class associations such as APROBIO

72

GRI Content

418-1: Claims proven regarding privacy violations and customer loss of data

419-1: Non-compliance with laws and regulations in social and economic area - The company strictly follows national and international legislation and has a solid Compliance program, there was no non-compliance in this regard.


BSBIOS // Sustainability Report // 2018

Making Of The preparation of this Sustainability Report is the result of the joint effort of the team of professionals of the BSBIOS Group. We Appreciate the participation and commitment of all.

Making of cover For the second year the cover of the Sustainability Report BSBIOS was designed by employee IsaĂ­as Teixeira Klein.

Making Of

73


Work Team

Group: André Luiz Roll

Fabiane dos Santos Ramos Ribeiro

Luciana Languila

Industrial Manager

Audit Analyst

SMSQ Coordinator

Andreise Dalmaso

Fábio Júnior Benin

Maitê dos Santos de Oliveira

Social Label Analyst

Social Label Coordinator

Administrative Coordinator

Bruno Coleoni Sanvezzo

Felipe Gehring

Mariana Pacheco

Administrative Coordinator

Personnel Management Specialist

Communication and Marketing Trainee

Carine Bastos Almeida

Felipe Oro de Lírio

Marília Chaves Damian

Legal Manager and Compliance

Legal Assistant and Compliance

Execution Analyst

Carlos Augusto Reis Mostardeiro

Fernanda Dubenczuk

Marta Rebequi

Financial Manager

PCP Analyst

Personnel Management Assistant

Carlos Roberto Ferreira Júnior

Fernanda Pereira Rosa

Michele Farias

General Manager of Marialva

Quality Control Coordinator

Supplies Coordinator

Cristian de Castilhos de Mattos

Gabriel Klein

Morgana Muller Flores

Communication and Marketing Assistant

Commercial Trader of Oils and Fats

Execution Analyst

Cristiane Motta

Gustavo Santana Flores

Morgane Lampugnani Marafon

Executive Secretary

Logistics Coordinator

Management Assistant

Daniel Begrow

Henrique Müller dos Santos

Paulo Henrique Oliveira

Project Specialist

Supplies Specialist

Accounting Coordinator

Débora Pacheco

Hiaimara Poliene Campos Feitosa

Pedro Henrique Candaten Farias

Financial Coordinator

Work Safety Technique

Logistics Analyst

Emanuele Milani Groth

Isaías Teixeira Klein

Queli Enilda de Brum

Personnel Management Manager

Specialist in Commercialization of Oils and Fats

Environmental Specialist

Erasmo Carlos Battistella

Josiara Canova Novello

Ricardo Franzen Reckziegel

President

Accounting Analyst

Commercialization Manager

Esequiel Meira

Larisse Garibotti

Rodrigo Severiano Jung

Audit Coordinator

SMSQ Manager

Origination Manager

Evaldo Gomes de Araújo

Leandro Luiz Zat

Sidon Tonello Gusatti

Personnel Management Analyst

Commercial Director

Soybean Meal Commercial Trader

Ezio Slongo

Letícia Fazolin Wendling

Vinicius Luiz Ganske Malmann

Industrial Director

Comunication and Marketing Coordinator

IT Manager

Fabiana Maestá dos Santos

Letícia Oliveira e Silva

Zenaide Andreia Backes Hohn

Environmental Analyst

Specialist in Risk and Financial Control

Supplies Analyst


Executive Board Erasmo Carlos Battistella - President Leandro Luiz Zat - Commercial Director Ezio Slongo - Industrial Director

Board of Directors Erasmo Carlos Battistella - R.P. BIO Thaís Murce - Petrobras Biocombustível Marcos Alexandre Cittolin - R.P. BIO Lair Jesus P. de Oliveira - Petrobras Biocombustível Ivídio Luís W. Schweizer - R.P. BIO

Audit Committee Paulo Ricardo P. Alaniz - R.P. BIO Aniger Lorena R. de Oliveira - Independente Alessandra Maria R. Cordeiro - Petrobras Biocombustível

General Coordination of the Report Communication and Marketing BSBIOS

GRI Consultancy and Preparation Fundação Instituto de Pesquisas Econômicas - FIPE/USP Staff: Ariaster Baumgratz Chimeli, Fátima Pereira Pinto, Fernanda Gabriela Borger, Keyi Ando Ussami, Maria Tereza Remor Pache e Viviani Bleyer Remor

Editorial Coordination and Graphic Production Communication and Marketing BSBIOS Cover: Isaías Teixeira Klein

Photos Image Bank BSBIOS, Photos by Notre Dame, Photos by ECPF, Alex Borgmann, Diego Chagas, Diogo Zanatta, Letícia Michele and Eduardo Knoff.

More information about this report imprensa@bsbios.com www.bsbios.com


BEING SUSTAINABLE

IS OUR MISSION

PASSO FUNDO/RS

MARIALVA/PR

BR 285 KM 294, s/nยบ, Bairro Petrรณpolis Code 99050-700 | Phone (54) 2103-7100

Estrada da Fruteira, s/nยบ, Lote 212 A/B Code 86990-000 | Phone (44) 3112-1000

www.bsbios.com

BSBIOS

@bsbios


Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.