The President of Odebrecht S.A. Considering: • That Sustainability is a seminal value embedded within the principles of “TEO” - Odebrecht Entrepreneurial Technology, which when lived and practiced guarantees the Survival, Growth, and Perpetuity of our organization • That Sustainability is increasingly a priority policy value, incorporated into the decision making framework of the public sector, governmental institutions, multilateral development agencies, financial organizations, academic circles, and the business community as a whole. • That Sustainability is a value that is multidimensional in character and incorporates in its definition the complexity of social, economic, environmental, cultural, and political dimensions. • That real competence in sustainable business practices will be a differentiating factor in maintaining existing client loyalty and market position, as well as a competitive requisite to gain access to new markets and new clients. Has decided: • To outline a Sustainability Policy for the Organization, which will be a frame of reference for the posture and practice of all our Odebrecht associates as they work within each of our group’s corporate entities, and as they relate to the world of business, the communities they reside in, and society at large. • To charge those accountable within the organization for strategic planning and human resource development (RAE) to be responsible for supporting the President in deploying this Policy throughout the Organization and for guaranteeing that it remains relevant to the times and circumstances that will develop in the future. São Paulo, November 19th, 2008 Pedro Novis - President
RESOLUTION OF THE PRESIDENT - RES. DP – 03/08 – Sustainability Policy
â€œOur organization cannot hope to grow, nor have any prospect of perpetuity without regional, national, and global development that is sustainable.â€?
â€œDevelopment, by definition, must be sustainable or it cannot be called development.â€? Norberto Odebrecht
Table of Contents
Sustainability in the Odebrecht Entrepreneurial Technology (TEO)
Sustainability: Social Responsibility and Social Action
Sustainability in Odebrechtâ€™s Business Practices
1. Basic Concepts of Sustainability
Sustainability: a multidimensional phenomenon.
Sustainability is a multidimensional phenomenon. It embraces economic, social, environmental, political, and cultural aspects. In this phenomenon, business practices, to be sustainable, must work to foster prosperous communities and countries, that are socially just, environmentally secure, politically stable, and culturally diverse. The role of the Private Sector is not to substitute the basic functions of the Public Sector. The Private Sector should, however, by example and practice, be a catalyst and advocate for policies, which assure that the Public Sector and Civil Society live up to their respective roles and responsibilities. Often in the past, Development, Sustainability, and Competitiveness, were erroneously juxtaposed, and characterized as exclusionary concepts in fundamental conflict with each other. Today these very same ideas have been redefined in an original and innovative synthesis that, when combined, can create synergy.
Sustainability within the Organization
Sustainability within the Odebrecht Organization means that we create synergy by simultaneously achieving results in the following domains:
Economic Development Produce goods and services that are basic to the needs of society, and which create prosperity for Clients, Shareholders, and Associates, as well as for the Communities where we live and work.
Social Development Generate jobs and income for Associates, Suppliers, and Subcontractors, as well as indirect benefits to the Communities where we operate. The opportunity to work and have a job is a path for personal fulfillment and professional development, and also a community development strategy that, when inclusive and accessible, is a means to build social solidarity and community.
Environmental Balance Use natural resources rationally. Maximize the use of clean technologies and renewable resources. Reduce residues and waste generated directly or through suppliers and service providers. Mitigate environmental impacts of operations on affected communities. Transfer proven technologies and solutions to restore degraded environments.
Political Participation Be proactive in collaborating with both Civil Society and the Government to develop public policy which promotes the sustainable development of the country or region where we work.
Cultural Diversity Include in the Organization people of diverse origins, races, ethnicities, sexual preferences, religious orientation, and those with special needs, without discrimination, and at all times respect the customs of the cultures of the various communities where we operate. Promote the integration of the Organization within such cultures, so that there is an exchange and assimilation of positive cultural values and perspectives with the result that learning and capacity building are shared by all parties.
Sustainable business practices must promote and enhance the dignity of each and every human being on this planet.
2. Sustainability in Odebrechtâ€™s Entrepreneurial Technology (TEO)
Inherent in the Principles and Values of TEO, is a fundamental commitment to sustainability. The practice of sustainability is an organizational prerequisite to guarantee the appropriate progression through the phases and cycles of Survival, Growth, and Perpetuity. It is important to recognize that the practice of sustainability is to be found not only in the cycle of perpetuity, but also as a fundamental aspect of organizational survival and growth. Stewardship and accountability for our Survival, Growth, and Perpetuity is an intergenerational responsibility. Sustainable development is an ethical commitment of the present generation to the well being of future generations.
Clients are the source of life for the Organization
Clients are the source of life for the organization. The survival of the organization depends on the quality of the relationship and partnership created between the client and the entrepreneur. The entrepreneur must understand that his responsibility and obligation is to craft relationships that allow him to identify new clients, and perform services that surpass the client’s expectations, thereby creating a living business dynamic that benefits the client, as well as shareholders and associates. When the principles inherent in the concept of survival are practiced, a dynamic relationship is formed with the client and the result is a living business partnership with the consequence that: • Productivity will be increased. • Liquidity will be created. • Image and brand will be enhanced. If each Entrepreneur understands and practices this business dynamic The Organization’s Sustainable Survival is guaranteed.
Sustainable Growth of the Organization is coupled with the following actions and outcomes: • Formation of new Leaders via face-to-face dialogue and mentorship, where the transfer of values and the creation of a learning culture that fosters personal development becomes an “every day” on-the-job practice and process. • Reinvestment of Profits: expand existing business relationships, and promote the creation of new areas of business opportunity. • Competency Building in Innovative Technologies: Concentrate on the mastery of new technologies and skills that anticipate where competitive advantages can be achieved.
The key to Perpetuity is the continuous and proactive transfer between generations of the core values and principles of the Odebrecht culture. All organizations have assets that are both tangible and intangible, quantitative and qualitative. These assets are the legacy that is passed from one generation to the next. With the passage of time these assets should grow in both size and quality. Perpetuity is realized when each new generation becomes, as the time or era requires, a responsible steward and fulfills its fiduciary responsibility to transfer its own legacy to the next generation.
3. Sustainability,Social Responsibility, and Social Action
The two dimensions of Odebrechtâ€™s Social and Cultural initiatives
The Odebrecht Policy with regard to Social and Cultural Initiatives has two dimensions. One is Corporate Social Responsibility; the other is Social Action. The distinction between these two domains of sustainability merits a nuanced understanding of their distinguishing characteristics, in order to commit to practices that are appropriate for each.
Corporate Social Responsibility The Odebrecht Organization meets its Social Responsibility by fulfilling the societal mission of each one of its affiliated Companies, which is to provide services and products of the highest quality and with levels of productivity that surpass the expectations of clients, while simultaneously: • Participating in business efforts that are basic to the needs of each community. • Support, via the payment of taxes and fees, the necessary resources to the public sector that allow the Government to fulfill its legitimate responsibilities to its citizens. • Create opportunities for community development.
• Distribute to both associates and shareholders an appropriate share of business profits. • Re-investing a substantial part of profits earned into new opportunities that follow sound principles of smart growth and respect the environment and development norms and legislation of each respective community, in order to: • Create the foundation and conditions today that guarantee continuity of social responsibilty in the future.
Social Action At the discretion of the shareholders, a portion of profits may be designated to support initiatives that are characterized as having positive social and cultural impacts in the spheres of influence of Odebrecht and its affiliated companies.
Each Company Leader, Investment Leaders and the Vice Presidents of Engineering and Construction should, based on this Policy, disseminate guidelines for the practice of social action in their respective spheres of business, including initiatives to promote and support sustainable development in the community, region, or country where they operate.
It should be clear that the principal social responsibility of the Entrepreneur in Odebrechtâ€™s business practices is to generate wealth. This is done by satisfying and by surpassing client expectations, and by providing and producing goods that are basic to the needs of society. It is fundamental to understand that the society in which we live presents unique challenges, both today and in the future, that require all entrepreneurs to have a global vision and a profound understanding of the basic concepts of sustainability. Todayâ€™s Entrepreneur must generate outcomes and results that are explicitly and consistently aligned with the basic concepts of sustainability and at the same time incorporate these practices into Odebrechtâ€™s model of Survival, Growth, and Perpetuity.
â€œA company in the red is not protecting the green.â€? Norberto Odebrecht
4. Sustainability: Roles and Responsibilities
In Odebrecht’s Business Practices, the roles of individuals, as regards Sustainability, are linked to their responsibilities that are appropriate to their spheres of operation, as the chart below illustrates:
S H A R E H O L D E R S
ENTREPRENEURIAL STRATEGY SPHERE
BUSINESS OPERATIONS SPHERE
PERPETUITY C L I E N T S
GROWTH SURVIVAL FIRST GENERATION Shareholders’ Representatives
SECOND GENERATION Entrepreneurial-Leaders
THIRD GENERATION Entrepreneurial-Partners
The focus of the Entrepreneurial-Partners and their teams is to achieve outcomes that will generate profitability, liquidity, and enhance the image and brand of Odebrecht, thus guarantees the Survival of the Company. The sphere of responsibility of the EntrepreneurialPartner is focused on his Business Unit and on the Communities in which he works. In these Business Units, each Entrepreneur-Partner should develop specific programs that enhance the environment in a manner that is appropriate for his particular business operation.
Issues to consider: • Use of clean technologies that do not degrade the environment nor generate unnecessary residues. • Responsible employment of natural resources, in particular water and power. • Use of renewable resources and reduction of waste. • Mitigation of pontential negative social and environmental impacts on the surroundings. The Entrepreneurial-Partner must be aware that the deployment of an infrastructure project or an industrial plant in a given region often offers opportunities to promote community development that can be synergistic with the project. These opportunities should be identified, assessed, and supported by the Entrepreneurial-Partners when there can be synergistic benefits that maximize his own business mission and his responsibility for outcomes relating to Survival. These initiatives should feature the collaboration of Odebrecht’s associates, Suppliers, and Service Providers. These initiatives should include in their design indicators and criteria that make it possible to monitor the internal effects and the external impacts that can facilitate an evaluation and appraisal of all benefits and impacts on the community. At a minimum this evaluation framework should have indicators that assure compliance with applicable legislative norms.
This group of leaders, known as The Second Generation, is responsible for the Sustainable Growth of Business, by a strategy of re-investment to build new business opportunity, training of new leaders, the expansion and broadening of relationships, and the mastery of new technologies. This group works to create new Business opportunities which promote the development of the region or country where they operate. They also have the responsibility to promote and support social investments in the region or in the country, which contribute to sustainable development and create conditions for the continued Growth of the Company. The Entrepreneurial Leader must promote this “Culture of Sustainability” as an integral part of the formation and training of a new generation of Leaders who via personal mentoring and “on the job orientation” become aligned and integrated with overall corporate policy.
The group, known as the First Generation, is responsible for the Perpetuity of the Organization, by guaranteeing that the principal values of the corporate culture are transmitted and integrated into the formation of each new generation of associates. Its area of action is a country or a macro-region. Its initiatives should consider the support and promotion of development in a region or country, so that poverty is reduced, the environment is preserved, and opportunity is offered to all members of society. Our organization cannot hope to grow, nor have any prospect of perpetuity without regional, national, and global development that is sustainable. Organizational perpetuity is not sustainable in a world where people are poor and the environment is at risk.