Sustainability Report 2014 by Marcopolo S.A

Sustainability Report 2014

Summary Marcopolo SA published its first Social Report in 1998, making public its main practices and social actions in order to inform employees and their families. In 2001, the Social Report included the actions developed in the environmental area and the consolidated financial data of all Marcopolo companies in Brazil. In 2002, Marcopolo began to use the IBase model as a reference for the information of the Social Report, including further consolidated data from all Marcopolo companies in Brazil and abroad. In 2009, the Sustainability Committee was created, and after several studies jointly with the Instituto Ethos (Ethos Institute) and the Fundação Getúlio Vargas (Getúlio Vargas Foundation), the IBase model was replaced.

The financial data consolidate the results of all companies of the group in Brazil and abroad, according to the applicable legislation. However, other economic (market, production, production structure), social and environmental information are exclusively related to the subsidiaries of Marcopolo in Brazil. In the future, other units may be incorporated into the report.

Message from the Board of Directors

Marcopolo Businesses

2 Summary

46 10

Economic Performance Environmental Performance

Report Process

Corporate Governance

Always seeking to improve its relationship and transparency with its stakeholders, the Company began to publish the Sustainability Report in 2011, using as reference the GRI (Global Reporting Initiative) international standard.

Social Performance Marcopolo Foundation

56 Summary 3

Message from the Board of Directors Marcopolo presents the fourth edition of its Sustainability Report sharing its performance in the economic, environmental and social areas as well as its Corporate Governance practices. This year the Report devotes a special chapter to the actions developed by Marcopolo Foundation, aimed at employees and their families and the communities surrounding its plants in Brazil.

The uncertainties in the concession model of interstate and international lines and the lower demand in the charter segment affected the production of road models. However, the sector of urban buses felt the impact caused by the freezing of tariffs in major Brazilian cities, especially after the 2013 demonstrations.

On completing 65 years, Marcopolo reinforced to its employees the Vision, Mission and Values of the Company. Are vision of the Code of Conduct implemented in 2005 was made in order to make it more suitable to the commitments of everyone in the Company and to incorporate the new Compliance rules. A wide dissemination program of this review has reached Brazilian employees and it will be extended to the subsidiaries abroad during the year 2015.

As for environmental issues, the Company has shown an increasing attention to the impact on communities. The development of new models are constantly geared towards the use of products/recyclable inputs, especially in the product use stage, which requires less energy and natural resources, always concerning about being increasingly safe and comfortable to passengers. In addition to that, the new Volare manufacturing plant in SĂŁo Mateus (ES) (state of EspĂrito Santo) was built by taking into account sustainability concepts such as ventilation and natural lighting, wall insulation to reduce heat and water reuse in toilets and gardens.

With regard to the economic aspects, the year 2014 offered great challenges for the bus sector in Brazil.

In 2015, the area of Environmental Engineering will work on retraining employees to improve waste separation

4 Message from the Board of Directors

and reducing the consumption of high-impact materials (e.g. steel, aluminum and fiberglass), as well as electricity and water. Concerning social aspects, Marcopolo has made significant investments in improving working conditions such as ventilation, heat insulation, installation of new drinking fountains, covers for circulation areas, construction of leisure facilities and expansion of the restaurants. In 2015, the Company will focus on investments in security programs and qualification of its employees.

Finally, Marcopolo reiterates the commitment described in its Vision, of making continuously efforts to be a relevant business group in the businesses and geographies they act, as well as keeping a solid social, environmental and economic image. We hope you enjoy reading it. Your comments will be highly appreciated by the Sustainability Committee and may be sent to the Open Channel on our site.

In 2014, the Company performed an Organizational Climate Survey, which obtained an average of 66% satisfaction from employees of the Caxias do Sul unit, and 74% satisfaction of employees from the Rio de Janeiro unit. Innovatively, the Company invited employees to discuss the search results in groups and to present suggestions for improvement in each geographical unit. As a result, the Company received more than 100 suggestions and aims to achieve 75% satisfaction in 2015.

Message from the Board of Directors 5

This is the fourth Annual Sustainability Report developed by Marcopolo. The report is based on the guidelines of the Global Reporting Initiative (GRI) with reference to the G3.1, and covers the Brazilian units located in Caxias do Sul (RS), Duque de Caxias (RJ), and supports activities held in S達o Paulo (SP) and S達o Mateus (ES). The data presented refers to the year 2014, in comparison with the previous two years whenever possible.

Parameters The process of gathering information for the report has been enhanced. A group of twenty employees from different areas of the Company participated of specialized training on the GRI report model taught by the Ethos Institute. This group worked with the initial interpretation of the data that compose the indicators, providing support to the Sustainability Committee in order to produce the final qualitative analysis. The indicators come from the Enterprise Information Management System (SAP) and the Integrated Human Resources System.

Report

Process

This edition of the report includes a special chapter about the Marcopolo Foundation, which reports the social, educational, sports and leisure activities developed to the employees, their families and the community.

GRI 2.1 / 2.6 / 3.5 / 3.6 / 3.7 / 3.9 / 4.14 / 4.15 / 4.16 / 4.17

Report Process

Sustainability Report 2014

MATERIALITY AND ENGAGEMENT The last Materiality Test was conducted in early 2014, involving representatives of key external stakeholders (suppliers, agents and resellers, community, media and government), as well as employees and managers of the Company. The review of the Materiality Matrix revealed no significant changes to its content and the most relevant points were those related to health and safety, qualification of workforce and waste disposal. Health and safety issues and labor qualification were included in the BSC (Balanced Score Card) areas for monthly monitoring. The waste disposal destination was dealt with in association to the Marcopolo’s Result and Profit Sharing Program (EFIMAR), being considered one of the waste items, and the complementary actions taken are described in the Environmental Performance chapter.

The Integrated Management Standards (IMS) includes the following certifications: ISO 9001 - Quality (since 1996); OHSAS 18001 - Occupational Safety and Health (since 2002); SA 8000 - Social Responsibility (since 2003) and ISO 14001 - Environment (since 2005).

For the year 2015, there will be further consultation with stakeholders to guide the review of priority issues with the senior management and the alignment of these with the Organization’s strategies.

Periodic evaluations are made to ensure compliance with the standards. Every three years the Company goes through a recertification process in which all requirements of the standards are checked, contributing to the refinement of sustainable practices.

As a point of improvement in the relationship with stakeholders from various countries, this year there will be a scanned version of the report in French, in addition to the versions in Portuguese, English and Spanish. The idea is to cover a greater number of readers in their own language. Some subjects are treated in a briefly way, indicating further reference sources on our site.

THE COMPANY’S COMMITMENT TO CERTIFICATION

BUSINESS MANAGEMENT POLICY Marcopolo, a bus body manufacturing company, recognizes the Quality, Environment, Social Responsibility, Health, and Safety as a valuable part of its Business Management and it establishes mechanisms to

ensure that these systems are implemented, maintained and continuously improved. Marcopolo commitments:

ISO 9001 - Quality International standard related to Quality Management that identifies and controls the features required to make products and ensure continuous improvement throughout the development cycle.

OHSAS 18001 - Health and Safety Ensure increased customer satisfaction through the pursuit of continuous improvement and excellence in quality; Consider environmental, occupational, social and quality variables in the development of new products and processes; Ensure the implementation of laws, rules and other regulations to achieve effectively its planned objectives;

Prevent pollution, work accidents and occupational diseases in a permanently basis;

Requirements related to the Health and Safety Management System in order to ensure the physical integrity of employees by identifying, anticipating and managing the risks of the work environment as well as ensuring the continuous improvement of these processes.

Being ethical and socially responsible with all audiences within its context;

ISO 14001 - Environment International standard related to environmental issues that identify, anticipate and control aspects arising from activities in order to minimize impacts to the environment by ensuring the application of best practices and its continuous improvement.

SA 8000 - Social Responsibility International standard aimed at improving working conditions by establishing mandatory requirements to be met by employers in the workplace, including workers’ rights and working conditions.

8 Report Process

Report Process 9

Marcopolo

Businesses GRI 2.1 / 2.2 / 2.3 / 2.4 / 2.5 / 2.6 / 2.7 / 2.10 / 4.8 / PR.5

Marcopolo SA is a publicly traded joint-stock Brazilian multinational corporation dedicated to the manufacturing of bus bodies and components, and it is considered one of the largest manufacturing companies of this industry. Headquartered in Caxias do Sul-RS (state of Rio Grande do Sul), the Company strives to offer the best solutions for the public transport of passengers by constantly investing in design and technology. It offers to the domestic and international markets a wide product line with a variety of road models, urban, micro and minis in addition to Volare vehicles commercialized in the market in a complete manner including chassis and body. Marcopolo buses design is based on guidelines that focus on efficiency, comfort and safety. The buses manufactured by the Company are present on five continents and are distributed in more than 100 countries. In 2014, Marcopolo completed 65 years of tradition in the passenger transport industry market and won the Auto Industry Best Award and the title of Company of the Year, chosen by the Guide of Best and Biggest of Revista Exame (Exame Magazine), a respected publication of the business segment of Editora Abril (Abril Publishers).

Philosophy

GRI 4.8

Vision Be a relevant corporate group in business and geographies in which it is acting, with a sound socio-environmental and economic image.

Mission Develop solutions valued by customers based on the principles of innovation and sustainability, contributing to the evolution of collective passenger transport and social progress.

Marcopolo Businesses

Sustainability Report 2014

Values

INVESTMENT STRUCTURE

GRI 4.8

Respect and People Valuing

Economic and Financial Soundness

Marcopolo’s relationship with people is of respect, appreciation and transparency. Its main important differential is the joint work carried out by committed and prepared teams constantly motivated by opportunities for growth and professional development. Any person, either from inside or outside the Company, should be treated with dignity and fairness.

Marcopolo has as its basic premise that the economic and financial soundness of the business is key to sustainable growth. The commitment to excellence and value generation must guide the day-to-day of professionals and partners of Marcopolo.

Ethics Marcopolo adopts an attitude of responsibility and respect towards the people and institutions of its relationships. It is of great importance to the Company that conflicts of interest are avoided, and when it happens, they are resolved in a transparent manner in accordance with the guidelines of the Code of Conduct.

Marcopolo rio (99,9988% Marcopolo) (0,0012% MP Trading)

syncroparts (99,99% Marcopolo) (0,01% Marcopolo Rio)

rei (10% Syncroparts)

volare comércio (99,9% Marcopolo) (0,1% Syncroparts)

volare veículos (99,9% Marcopolo) (0,1% Syncroparts)

Customer Satisfaction

mp trading (99,99% Marcopolo)

Customer satisfaction is the reason of Marcopolo success. Efforts must be made to identify what is the perceived value by customers, establishing all actions capable of transforming this principle into mutual profit that is backed up by long-term relationships. Closeness and trust are key for the maintenance of this value.

moneo

banco moneo

(100% Marcopolo)

(100% Moneo Invest.)

superpolo (29,39% Marcopolo Colômbia)

ilmot

laureano

(100% Marcopolo)

(100% Ilmot)

polomex (70,39% Ilmot) (3,61% Marcopolo)

setbus (25,1% Marcopolo)

Environment and Communities Marcopolo and its employees have a major commitment to health, safety, environment and communities where they operate. Through programs aimed at environmental and social causes, the Company consolidates its management policy, which focuses on sustainable development.

Partnerships Partnerships mainly characterized by suppliers, manufacturers, sales representatives, financial institutions, distributors and dealers, are fundamental to Marcopolo. The Company believes in building longterm relationships with clear rules and practices for joint success.

superpolo (20,61% Marcopolo Colômbia)

tmml (49% Marcopolo)

mic

marcopolo s/a

(100% Marcopolo)

mapla (100% Marcopolo)

masa (100% Marcopolo)

mac (100% Marcopolo)

loma hermosa (50% Marcopolo)

metalsur

metalpar

(51% Metalpar)

(98% Loma Hermosa) (1% Marcopolo)

marsa (99% Metalpar)

kamaz marco (50% Marcopolo)

gb polo (49% Marcopolo)

mp austrália

pologren

volgren

(100% Marcopolo)

(75% MP Austrália)

(100% Pologren)

mp canadá

new flyer

(100% Marcopolo)

(19,99% MP Canadá)

sm méxico (99,99% San Marino)

san marino (45% Marcopolo)

spheros méxico

rotas do sul (99,99% San Marino)

(99,99% Spheros)

spheros

sp colombia

(40% Marcopolo)

(99,99% Spheros)

wsul (30% Marcopolo)

mvc (26% Marcopolo)

setbus (54,9% Spheros) (25,1% Marcopolo)

reparts (99,99% Spheros)

mercobus (40% Marcopolo)

apolo (65% Marcopolo)

12 Marcopolo Businesses

Marcopolo Businesses

Sustainability Report 2014

Organizational Structure

OPERATIONAL STRUCTURE

The Organizational Structure of Marcopolo aims to contribute with excellence to strengthen the ability of the Company in creating value through innovation, enthusiasm and commitment of all its employees, which multiply attitudes that build confidence, entrepreneurship,

The bus manufacturing Company has 18 plants. Two units in Caxias do Sul (RS) as well as 45% share in the company San Marino Ônibus e Implementos Ltda. (San Marino Bus and Implements). In Brazil, other two units are located in the cities of Duque de Caxias (RJ) and São Mateus (ES). And another 13 companies are located abroad (owned, subsidiaries and affiliated): one in South Africa, three in Australia; two in Argentina, one in Colombia, one in Egypt, two in India, one in Mexico, one in Russia and a manufacturing unit of parts and components for bus bodies in China.

solidarity and cooperation. The guiding principles of the Company’s Organizational Structure are:

Support the Company’s growth strategy; Meet the needs and competitiveness;

flexibility,

View of processes as a means of integration, alignment and accountability;

agility

Proximity to the customer, operational excellence and quality;

Simple structure and competitive costs;

Collegiate functioning cooperative way.

Clear definition of authority and responsibility for results;

the

teams

GRI 2.3 / 2.5 / 2.7

Spheros Climatização do Brasil S.A. (acclimatization and air-conditioning), 30% at WSul Espumas e Comércio Ltda. (foams for seats), 26% at MVC Soluções em PlásticoComponentes Plásticos Ltda. (plastic components) and 19.99% in the Canadian company New Flyer Industries Inc. (bus bodies). In addition to these companies, Marcopolo has also full control of Banco Moneo S.A. (Moneo Bank).

Marcopolo also holds 65% share in the company Apolo Soluções em Plásticos Ltda. (Plastic), 40% share at

Structure: • Support Areas: Acquisition and Logistics, Human Resources and Organizational Development, Finance and Strategy. These areas permeate the entire organization. • Business units and their operations: the operation in Ana Rech acts as a matrix for the bus business seeking synergy and excellence in products and processes.

ORGANIZATION CHART STAKEHOLDERS Controllers Board DAVOS

Administrative Board

Audit Board

Executive Committee

Audit & Risk Committee

HR & Ethics Committee

Strategy & Innovation

(JV COMERCIAL)

CEO Strategy

Finance, Controllership, IT & Legal

Ana Rech Bus Business

Acquisition and Logistics

Marcopolo Rio Bus Business

14 Marcopolo Businesses

HR & Organizational Development

International Business Bus Business

Volare Business

Moneo Bank

Businesses with Shareholder Ownership

Marcopolo Businesses

Sustainability Report 2014

BUSINESS UNITS COVERED IN THE REPORT GRI 2.2

Marcopolo Bus Caxias do Sul The unit located in Ana Rech, Caxias do Sul (RS), is equipped with high technology to produce a complete line of road models geared towards various applications in the domestic and foreign markets. The solutions developed contribute to the improvement of public transport for passengers. The unit located in the Planalto neighborhood houses parts of the manufacturing areas and the production of the minibuses Senior.

In addition to the areas of production, administration, sales and engineering, the unit located in Ana Rech currently comprises a Marcopolo Training Center (CTM) for the training of employees and customers, as well as a unit of the Marcopolo Professional Training School (EFPM). Inaugurated in 2014, the unit also counts on a logistic center that is responsible to concentrate the receipt and distribution of components.

Marcopolo Rio Unit

Marcopolo Rio

Marcopolo Ana Rech Unit

16 Marcopolo Businesses

Marcopolo Rio is located in the region of XerĂŠm, a district of the city of Duque de Caxias (RJ) and it concentrates 100% of the production of bus bodies destined for urban transportation. Founded in 1955 and originally called Ciferal, the company had 50% of its capital acquired by

Marcopolo in 1999. Two years later, Ciferal became a 100% Marcopolo Company enabling the consolidation of the concepts of safety, cost efficiency and reliability in the urban bus market.

Marcopolo Businesses

Sustainability Report 2014

volare Designed to meet the most diverse applications, from alternative or cooperatives transportation to the special utilities such as mobile units, Volare offers the market a wide range of vehicles. The business unit (currently based in Caxias do Sul, in the Planalto district) counts

Marcopolo Planalto Unit

18 Marcopolo Businesses

moneo bank on the support of an Operations Center in S達o Paulo (SP). In late 2014 the Company completed the first phase of the works of construction of its new industrial complex located in the city of S達o Mateus (ES).

Created in 2005, the mission of Moneo Bank is to facilitate the acquisition of Marcopolo products, with speed, efficiency and competitiveness. Moneo Bank plays a strategic and commercial role in the Company, enabling several businesses and thereby establishing the

12% mark of total sales financed domestically. It has offices in Belo Horizonte, Curitiba, Recife, Salvador, S達o Paulo, Porto Alegre, and Caxias do Sul, where the headquarters and the administrative area of the institution are located.

Moneo Bank

Marcopolo Businesses

Sustainability Report 2014

CLIENT APPROACH

ONLINE PRESENCE

GRI PR.5

In order to approach clients, Marcopolo invests in a set of communication channels such as Customer Care Service (SAC) and digital TV platforms (e-mails, websites, Facebook, WhatsApp). Each quarter, the Moneoâ&#x20AC;&#x2122;s publications Traveler and Volare Club disclose all the news related to the brand or materials on issues of public interest.

Another important ally for a comprehensive communication is the Representatives and Distributors Network, which assists the Company in building relationship with the customers, dissemination of information and the development of regular actions that focus on approach.

Contacts Marcopolo Caxias do Sul

0800 702 7070 (Customer Service and Open Channel)

contato@marcopolo.com.br

Marcopolo Rio

(21) 2108 4200 (Customer Service and Open Channel)

contato@marcopolo.com.br

Volare

0800 707 0078

contato@volare.com.br

Moneo Bank

0800 723 5040 (Public Defense)

bancomoneo@bancomoneo.com.br

SATISFACTION SURVEYS Because it adopts a policy of transparency, Marcopolo annually evaluates its relationship with its customers through a satisfaction survey.

GRI PR.5

In the year 2014, the Company surveyed a sample of 100 customers, taking into account aspects such as commercial service, technical support and product quality.

8.68 8.1

2012

2013*

2014

* Research developed through a different methodology

8.20

Volare The Volare 2014 Satisfaction Survey used as sample responses obtained from 372 interviews with customers from all regions of Brazil. The survey evaluated aspects such as product, after-sales, purchase process and technical sign-off.

8.20 8.23

2012

2013

20 Marcopolo Businesses

2014

Volare SOCIAL MEDIA

www.facebook.com/OnibusMarcopolo

www.facebook.com/OnibusVolare

www.twitter.com/OnibusMarcopolo

www.twitter.com/OnibusVolare

www.youtube.com/OnibusMarcopolo

www.youtube.com/OnibusVolare

www.flickr.com/OnibusMarcopolo

ONE MILLION FANS

According to Social Bakers, a leading provider of analytical data on effective brand communication in

the social network, the Fan Page of the Company is the biggest in the automotive sector in Brazil, occupying the 15th position in the rank on promotion of interaction and engagement with its audience.

CUSTOMER TRAINING Marcopolo provides, since 1994, an ongoing program of client training. In 2014, these training involved 1,659 participants in the domestic market and 251 in the foreign market for the urban, road and Volare Buses. The

8.18

their products, and strengthening the reputation of brands. Monitoring closely these interactions serves as a source of research and development.

marcopolo SOCIAL MEDIA

In 2014, the Marcopolo Fan Page on Facebook reached the milestone of 1 million followers with an average of 27,500 views for each publication.

The sample considers the type of audience and the customer purchasing volume. Check out the performance of recent years:

BUS BUSINESS ( BRAZIL )

The presence of Marcopolo SA (Marcopolo and Volare buses) in Social Media (Facebook, Twitter, YouTube and Flickr) helps the public to relate to the companies and

trainings are conducted at Marcopolo Training Center, through workshops with representatives and customers according to the demand, and through distance learning mode.

MARCOPOLO MEMORY DOCUMENTATION CENTRE To preserve the documentary heritage of the Company and provide subsidies for present or future actions, in 1999 the Company created the Marcopolo Memory Documentation Centre. The vast collection comprised of over 120,000 historical items such as photographs, magazines, newspapers, audio and video recordings, certificates, reports, newsletters, trophies and other objects can be consulted and contemplated by the community since 2011, year when the center was opened to visitors. In addition to that, the space has specialized professionals for the technical administration of the archive. Until this moment, the Marcopolo Memory Documentation Centre had already received nearly a thousand visitors, mainly students and tourists. In 2014 the Centre received 128 visitors.

Marcopolo Businesses

Sustainability Report 2014

ACKNOWLEDGMENTS

GRI 2.10

ESARH Award 2014 Engage Program receives award for People Management (South American Meeting of Human Resources - Promoted by ARH Serrana and Rational)

Lótus Award 2014 Volare as Brand of the Year in the Microbus Category

The 100 Best Companies in Corporate Citizenship Award

(Frota Publisher)

Lótus Award 2014

25 Most Admired Companies by HR Award

Best and Biggest 2014 Edition

(HR Management Publisher)

(Exame Magazine)

Marcopolo Brand of the Year of Bus Bodies and Brand of the Year of Road Buses

Among the 10 Best Companies in Corporate Citizenship in 2014

Best Company of the Year Automotive Industry Award

(Frota Publisher)

IF Product Design Award 2014

(HR Management Publisher)

Innovation Champion Award 2nd Most Innovative Company of Rio Grande do Sul (Tomorrow Magazine)

Brands of Whom Decide Award

Category Transportation for the development of Viale BRT

Great Gaucho Brand Category

(IF International Forum Design - Hannover, Germany)

Brands of Whom Decide Award

(Commerce Newspaper)

Bus Manufacturer Category

The 150 Best Companies in People Management Practices - PGPS Award

500 Biggest in the South

(Commerce Newspaper)

Marcopolo is the7th largest Company in Rio Grande do Sul in 2014–Tomorrow Magazine

(HR Management Publisher)

The 100 Best Companies in IDHO Award Innovation Champion Award Recognition of Continuous Efforts and Investment in the Development of Unique Products and Processes

(Top 500 Biggest South & Leaders)

Organizational Human Development Index 2014 (HR Management Publisher)

APIMEC Award Category Open Company “B”

(Tomorrow Magazine)

(Association of Analysts and Professionals of Capital Market Investments)

Top of Mind Award 2014

(Granted by the Boston Consulting Group)

6th place in the Large Company category (Tomorrow Magazine)

Best Company of the Year Award Best and Biggest 2014 Edition

SAE Brazil Award

(Exame Magazine)

Medal of Industrial Order of Merit Granted to Mr. Paulo Bellini, President Emeritus of Marcopolo

Global Challengers 2014 Trophy

Conferred to Mr. Paulo Pedro Bellini

Apex-Brazil Export Excellence Award 2014 International Entrepreneur Category (Apex-Brazil – Brazilian Agency for Exportand Investment Promotion)

(Prominent Entrepreneur)

ANEFAC Award (Transparency Trophy)

(CNI – National Industry Confederation)

22 Marcopolo Businesses

Marcopolo Businesses

CORPORATE

Marcopolo SA adopts good Corporate Governance practices by following the principles of transparency, fairness, accountability and corporate responsibility. Since 2002, the Company is listed under Level 2 of BM&FBovespa Corporate Governance and is subject to arbitration at the Market Arbitration Chamber as according to the Arbitration Clause contained in its Bylaws.

GOVERNANCE

The Company has standardized management practices based on the distinction between the roles and responsibilities of the Board of Directors, the Executive Committee and the Administrative Council, in addition to an Audit Board consisting of three members. The duties of each of these bodies are listed in the Companyâ&#x20AC;&#x2122;s Bylaws.

GRI 4.1 / 4.2 / 4.3 / 4.5 / 4.6 / 4.8 / 4.9 / 4.10 / 4.11

President Emeritus In 2012, Paulo Bellini was named President Emeritus of Marcopolo. His main attributions are to ensure the preservation of Marcopoloâ&#x20AC;&#x2122;s culture in order to strengthen ethical values and the principles of society. He is also responsible for strengthening actions aimed at people management, ensure the continued motivation of employees, act as mentor to the executives, follow institutional and political activities, watch over the brand and image of Marcopolo and ensures the fulfillment of its social function. The position is honorary, personal and nontransferable.

SHAREHOLDING STRUCTURE 2014 Shareholders in Brazil

35,03%

Shareholders abroad

39,23%

Controlling Group

25,75%

Corporate Governance

Sustainability Report 2014

GOVERNANCE STRUCTURE

EXECUTIVE COMMITTEE MEMBERS

GRI 4.1 / 4.3

ADMINISTRATIVE BOARD Mauro Gilberto Bellini is the President of the Board of Directors of Marcopolo, which consists of seven members elected by the General Meeting, on a unified term of up to two years. Of these seven, four are independent, with one of them being appointed by the minority shareholders, one by the holders of preferred shares, and two by the controllers. The Board of Directors also counts with a secretary appointed by the President. The President does not participate of the Board. On a permanent basis, the Board of Directors has the Executive Committee, Technical Advisory Body, and Statutory, which advises, suggests and supports the conduction of businesses.

In order to make the performance of the Council more effective, the Committee strives to enhance the Company’s strategic discussions with based guidelines. Besides that, to assist in implementing the legal and statutory duties, it counts with the following committees support and advice: Audit and Risk, HR and Ethics and Strategy and Innovation. Each committee is composed of at least three and at most six members within a twoyear term. The details of the purposes and duties of each committee can be found at Marcopolo website, at the Investor Relations hot site > menu Corporate Governance > Bylaws Committees.

Name

Position

Elected in

Mandate of

Mauro Gilberto Bellini

Sitting Member and Coordinator

march 2014

two years

Paulo Pedro Bellini

Sitting Member

march 2014

two years

José Rubens de la Rosa

Sitting Member

march 2014

two years

Luciano Moisés Bado

Appointed Member

march 2014

two years

José Antonio Valiati

Appointed Member

march 2014

two years

Carlos Alberto Casiraghi

Guest Member

march 2014

two years

Ruben Antonio Bisi

Guest Member

march 2014

two years

Carlos Zignani

Secretary

march 2014

two years

Mauro Bellini is a member of the Board of Directors since March 2008. In March 2010, he was elected Vice President and is in charge of the presidency of the Board since March 2012.

BOARD OF DIRECTORS

ADMINISTRATIVE BOARD MEMBERS

Name

Position

Elected in

Mandate of

José Rubens de la Rosa

Director-General

march 2014

three years

Carlos Zignani

Director

march 2014

three years

José Antonio Valiati

Director of Accounting and Finance and Investor Relations

march 2014

three years

Name

Position

Elected in

Mandate of

Mauro Gilberto Bellini

President

march 2014

two years

Oscar de Paula Bernardes Neto

Vice-President

march 2014

two years

AUDIT BOARD

Luciano Moisés Bado

Advisor

march 2014

two years

Maria Letícia de Freitas Costa

Independent Advisor

march 2014

two years

Composed by three effective members, the Audit Board comprises of one member appointed by minority shareholders, one appointed by the holders of preferred shares and one elected by controllers, with an equal number of alternates.

Paulo Cezar da Silva Nunes

Independent Advisor

march 2014

two years

Odair Lucietto

Independent Advisor Representative of Minority Shareholders

march 2014

two years

Manuela Cristina Lemos Marçal

Independent Advisor Representative of Preferred Shareholders

march 2014

two years

Carlos Zignani

Secretary

march 2014

two years

26 Corporate Governance

Name

Position

Elected in

Mandate of

Francisco Sergio Quintana da Rosa

President and Advisor appointed by the Controllers

march 2015

one year

Egon Handel

Advisor Appointed by Preferred Shareholders

march 2015

one year

Marisa Minzoni

Advisor appointed by the Minority Shareholders

march 2015

one year

Corporate Governance 27

Sustainability Report 2014

RULES FOR IDENTIFICATION AND MANAGEMENT OF CONFLICTS OF INTEREST GRI 4.6 / 4.8 / 4.11 Among its many responsibilities, the Administrative Board must approve the execution of agreements between the Company and its management and / or controlling shareholders, or between the Company and third parties, directly or indirectly, controlled or controlling by the controlling shareholder. With regard to the Code of Conduct of the Company, which is also applied to management, there is a Conduct Committee which is in charge of providing guidance to

interested parties in case of doubt as to the application of the Code, as well as assessment and decision making when verified cases of violation of specific principles. Whenever the Committee is faced with situations that may cause discomfort or embarrassment for judgment, the Committee shall submit the case to the Human Resources and Ethics Committee and if the standoff persists, it can seek support from an impartial and independent outside arbitrator to help in the solution of the case.

Human Resources and Ethics Committee: Is the highest authority of implementation and evaluation of situations that are conflicting with the Code of Conduct. It ideals with issues related to the positions of Management and Executives, as well as for cases that exceed the powers of the Central Committee. It represents the Administrative Board. Conduct Central Committee: Its main function is to coordinate the adoption of the Code of Conduct by everyone who is part of Marcopolo, regardless of geographic location or area. It reports directly to the Committee of Human Resources and Ethics. Local Conduct Committee: Its main function is to coordinate the adoption of the Code of Conduct in operations whose geographical location is outside the geographical context of the Head Office (Caxias do Sul, RS, Brazil). The Local Conduct Committee reports directly to the Central Committee.

Code of conduct

GRI 4.8

The Marcopolo’s Code of Conduct has been revised and the Board of Directors approved its new version on August 19, 2014. This review covers the Company’s guidelines regarding the Compliance and adaptation to current legislation in Brazil (Law No. 12,846 / 13) and in its units abroad. The full version is available at the Company’s website

MANAGEMENT REMUNERATION

GRI 4.5

The General Assembly is responsible for establishing the annual overall amount of the fixed remuneration, which is shared between the managers of the Administrative Board. For the remuneration of the Administrative Board, Executive Committee, Executive Committee, Statutory Board, Audit Board and Committees, the practice adopted by the Company reflects on the responsibilities of each body, the time applied to their respective functions, competence and professional reputation, the value of their services in the market and their qualifications. Regarding the compensation of its executives, which includes the non-statutory Board, the Company employs a policy based on the following assumptions:

Alignment of shareholders and executives interests; Sustainable value creation in the short, medium and long term; Promote the transition from strategy to implementation; Alignment

with

other

tools

and

people

management practices; Recognize, retain and attract executives in an equal way. The amounts paid to directors in 2014 are available for inspection at the hot site of the Company, Investor Relations: Menu > Download Center > Reference Form 2014 version 15.0.

DISCLOSURE POLICY AND USE OF RELEVANT INFORMATION AND TRADING POLICY GRI 4.6 In order to maintain consistency, simultaneity and transparency in the disclosure of acts and events involving the Company’s business, the Marcopolo Information Disclosure Policy establishes procedures that are practiced for the dissemination of information including those involving significant actions and events. Besides that, when required, the process ensures the preservation of confidentiality regarding undisclosed material information.

The Investor Relations Director is responsible for the compliance, monitoring and general management of the Trading Policy and all communication between the Company and the Brazilian Securities and Exchange Commission (CVM) and Stock Exchanges, as well as with the market, investors and analysts.

www.marcopolo.com.br Hot site Investor Relations, Corporate Governance menu> Code of Conduct

COMPLIANCE PRACTICES - LAW Nº 12.846/13 Marcopolo has been seeking to adapt to the new requirements of Law No. 12,846 on August 1, 2013, in force since January 2014. It is a complement to the Governance Best Practices and Risk Management already adopted by the Company. In view of that, it was created a Compliance department that comprises a Compliance Advisory Committee made up of Statutory Directors, the President of the Board of Directors and the Legal Manager. The Compliance department also counts with a Compliance Officer, a Compliance Analyst and a Compliance Internal Agent. The official launch of the Marcopolo Compliance program took place on July 10, 2014, and it counted with the participation of the entire Board and Management of the Company. From this day onwards, a series of actions were

28 Corporate Governance

taken for the implantation of the Compliance process, such as its release to the commercial representatives, concession holders, affiliates and all employees of the Company in Brazil. Other actions were taken to intensify the incentive of using internal and external channels for communication and complaints. All contracts signed by the Company were submitted to a thorough and complete review in order to include Compliance clauses. Risk Mapping processes, audits, reviews, Company policies and procedures regarding the compliance requirements are being developed in parallel. Moreover, the Compliance team has been participating of external training events and benchmarking.

PERFORMANCE ASSESSMENT PROCEDURE The Administrative Board assesses the Company’s performance bimonthly in person meetings that are reported by the Board of Directors. The Audit Board and an independent external audit also examine the results at every quarter. The Executive Board is the governance body responsible for identifying relevant risks and opportunities to the Company, proposing,

GRI 4.9 / 4.10

based on the Strategic Plan, necessary actions to the Audit and Risk Committee and subsequently to the Administrative Board, and also implementing them in case of approval. Indicators of the Sustainability Report are now incorporated into the agenda of the meetings of the Administrative Board.

Corporate Governance 29

Economic

Performance GRI 2.2 / 2.7 / 2.8 / 2.9 / EC.1 / EC.6 / HR.2

Marcopolo 2014 GRI 2.7 / 2.8

Bus manufacturing in 18 factories; 17,713 units produced; 86.6% units produced in Brazil; 21,435 employees; R$ 3,400.2 million net revenue 7.1% below 2013; Leadership in the Brazilian market, with a market share of 39.6%; In the road segment the market share was 57%, 1% above 2013.

Economic Performance

Sustainability Report 2014

2014: A CHALLENGING YEAR The year of 2014 was characterized by major challenges for the bus and bus body sectors in Brazil. In order to adapt to a less favorable moment, Marcopolo strived to improve operational efficiency and reduce costs, confirming its potential for adaptation and resilience in different scenarios. The Learning Curves affected the Company’s margins in the year. This conclusion was specially drawn from three actions: the launch of the new version of the Torino model at Marcopolo unit in Rio de Janeiro; the nationalization process of the Paradiso 1200 at the Mexico unit; and the ongoing Transformation Program in the unit of Australia, which is aimed at increasing operational efficiency.

GRI 2.9

The Road Transport industry was largely affected by the uncertainty of the concession of interstate and international lines in Brazil and by the lower demand at the bus charter (services sector). As regarding the first issue, although the Brazilian president has sanctioned the option for the authorization model in June 2014, the lack of regulation by the National Land Transportation Agency (ANTT) generated concerns to industry entrepreneurs who, decided to postpone investments in the renewal of their fleets. Regarding the charter segment, the lowest growth of the Brazilian Gross Domestic Product (GDP), hence the decline in industrial activity affected the demand for buses used forthe transportation of employees.

payroll permanent, despite of the rate being re-evaluated in Congress. The positive outcomes of Marcopolo in operations abroad, were the responsibility of the units of Polomex (Mexico) and Masa (South Africa). In 2014, both units presented an increase in the production growth of 18.4% and 24.8% respectively. In Mexico, this increase was a reflection of the start of local production of bus model Paradiso 1200 Generation 7. In Masa, the installation of BRT (Bus Rapid Transit) systems was the reason for an increase in the production. Even in a challenging year with the market downturn and consequent drop in production volume in all sectors, combined with the introduction of new products, which at first affected the company’s performance, Marcopolo continued delivering a return on invested capital (ROIC) above the weighted average cost of capital (WACC), and kept its market share stable in all segments. It is important to highlight that Marcopolo has managed to keep this spread (ROIC - WACC) for many years without losing market share, which demonstrates its resilience, even in adverse moments.

CONSOLIDATED NET REVENUE R$ 2,252 million or 66.2% of total net revenues (68.6% in 2013). The exports and the overseas business generated a revenue of R$ 1,148.2 million or 33.8% of the total. Revenues by product and target market are presented in the table below:

The Company’s consolidated net revenue reached R$ 3,400.2 million in 2014, 7.1% lower than the R$ 3,659.3 million in fiscal year 2013. It is a result from the reduction of 14.1% of registered units in net income in the domestic market and the lower sales of chassis. Sales to the domestic market generated revenues of 2013

In the urban transportation sector, the lack of increase in the bus tariffs of major Brazilian cities, especially after the public demonstrations of June 2013, caused the reduction of bus investments by the companies of the sector. In contrast to that, recent tariff adjustments practiced in more than eighty cities, coupled with municipality demands, such as the implementation of air conditioning systems and limitation of the age of the fleet, indicate the sale of products with higher benefit. Regarding the Caminho da Escola (Pathway to School) program, the last trading day (Phase 6) was held in January 2014. According to the Notice to the Market released on February 4, 2014, Marcopolo can produce

32 Economic Performance

and deliver up to 4,100 units to the program. This year, the Company produced and won profits of approximately 40% of the lot. In the foreign market, despite the lower volume sold, profit margins have shown some recovery. This result was due to both the devaluation of the Brazilian currency (BRL), and the permanent return, starting in October 2014, of the Special Regime for the Reintegration of Tax Values for Exporting Companies (REINTEGRA). These two events helped to partially offset the decline of profit margins in the domestic market. Another positive development was the conversion of the Provisional Measure 651 into Law. The new Law No. 13. 043/14 made the exemption of

(1)

2014

PRODUCTS / MARKETS(1)

TOTAL

Road Buses

863.7

418.3

1,282

701.4

515.1

1,216.5

Urban Buses

570.1

495.3

1,065.4

597.9

453.6

1,051.5

Minibuses

75.9

42.4

118.3

77.6

20.8

98.4

Bus Bodies Subtotal

1,509.7

956

2,465.7

1,376.9

989.5

2,366.4

Volare(2)

794.3

38.3

832.6

769

29.7

798.7

Chassis

103.5

155.5

19.7

35.1

54.8

Moneo Bank, Parts, Other

101.6

103.9

205.5

86.4

93.9

180.3

General Total

2,509.1

1,150.2

3,659.3

2,252

1,148.2

3,400.2

DM: Domestic Market / EM: External Market |

(2)

Volare’s revenue includes the chassis

Economic Performance 33

Sustainability Report 2014

REVENUE FROM CONSOLIDATED PRODUCT LINE (%)

CAPITAL MARKETS

GRI 2.2

INVESTORS 2013

The Investor Relations department is responsible for Marcopolo’s relationship between its shareholders and potential investors. In 2014, the company hosted several analysts from Brazil and abroad. It also promoted numerous conference calls with investors. The eighth edition of Marcopolo Day, event in which the company receives analysts and investors at its facilities in Caxias do Sul, was a success. In the occasion, a presentation about the company and its strategies, products and production process is done. The Investor Relations area has a specific space within the site Marcopolo, in which investors find updated content. It can be accessed through the link http://ri.marcopolo.com.br/.

2014 Chassis 4.3% Minibuses 3.2% Moneo Bank, Parts, Other 5.6% Volare 22.8% Urban Buses 29.1% Road Buses 35%

Chassis 1.6% Minibuses 2.9% Moneo Bank, Parts, Other 5.3% Volare 23.5% Urban Buses 30.9% Road Buses 35.8%

DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED

GRI EC.1

Revenues, operating costs, employee compensation, donations and other investments in the community, retained earnings and payments to capital providers and government represent the Economic Value Generated and Distributed of Marcopolo. In December 2014,

these entire items together totaled the amount of R$ 1,327.2 million.

R$ 768.3 million or 57.9% was allocated to the compensation of employees;

R$ 78.7 million or 5.9% was allocated to the Government in the form of contributions and taxes;

R$ 256.1 million or 19.3% were destined to the remuneration of third party capital;

R$ 52.8 million or 4% was allocated to shareholders for payment of interest and dividends.

Allocation of the total amount:

R$ 171.3 million or 12.9% were the retained earnings for the year;

ÁREA

2012

2013

2014

Total Distributable Value Added (R$ million)

R$ 1,290,864.00

R$ 1,392,333.00

R$ 1,327,200.00

Government Employees Value Added Distribution

Shareholders

8.36% 52.81% 11.09%

6.42% 56.12% 4.92%

5.9% 57.9%

the share of foreign investors in Marcopolo’s share capital totaled 58.6 % of the preferred shares and 39.2% of the total share capital.

The Company gives fair and equal treatment to all minority stakeholders, either capital owners or other stakeholders. Marcopolo has high standards of transparency when disseminating information. It is always aiming at maintaining an atmosphere of trust with the public as well as in its internal relations with third parties. The Financial Statements are disclosed in accordance with the standards established by the International Financial Reporting Standard (IFRS), in order to meet with the provisions of law with excellence and improve the information released to the market in general, and foreign investors in particular. In 2014, the Company held meetings with the Association of Analysts and Professionals of the Capital Market Investments APIMEC in São Paulo and Porto Alegre, as well as nondeal road shows in Brazil and abroad. Marcopolo ended the year 2014 with 1,578,200 transactions made with the Company’s shares, growth of 42.6% over the 1,106,400 made in 2013. In addition to that, 918.2 million shares were traded. Transactions with Marcopolo’s shares moved R$ 3.9 billion in the year, a volume 1.2% lower than in 2013. In December 31, 2014,

The following chart shows the evolution of the main indicators related to the capital market:

0.16

0.145

0.110

6.38

5.1

3.33

1.45

1.69

1.83

5,705.9

4,553.1

2,963

3,397.2

3,971.7

3,923.5

328.2

455.8

918.2

15.4%

16.48%

19.3%

Retained

12.34%

16.06%

12.9%

Interest on Own Capital and Dividends per share (R$/share) POMO4 quotation (last business day) Asset Value per Share (R$) Market Value (R$ million) (1) (2)

Third parties

Indicators

692.5

1,106.4

1,578.2

Transacted Value (R$ million) Traded Shares (millions) Number of Transactions (thousands)

2012

2013

2014

Notes: (1) Share price of the last transaction of the period of the Scriptural Preferential (PE) share, multiplied by the total shares (OE + PE) in the same period. (2) Of this total, 7,095,615 preferred shares were in treasury on 31.12.2014.

34 Economic Performance

Economic Performance 35

Sustainability Report 2014

SHARE PERFORMANCE OF MARCOPOLO ON BM&FBOVESPA

GLOBAL PRODUCTION CONSOLIDATED BY MODEL 2012

Marcopolo PN x Ibovespa - Base 100 POMO4: -34.7% IBOV: -2.9% 51,507 pts

50,007 pts

R$ 5.10

R$ 3.33

31/12/2013

31/03/2014

01/07/2014

01/10/2014

31/12/2014

MARKET SHARE Marcopolo has maintained its leading position in the Brazilian market ending the year with a share of 39.6% market share. The market recovery happened gradually over the year, especially after a first weaker half, in which the Company’s share was affected by the Learning

Curve after the release of the new version of the Torino Urban model at Marcopolo Rio. The table below shows the market share of Marcopolo Brazilian production by product line:

27.4 %

24.9

2013

2014

Total 39.5%

Total 39.8%

Total 39.6%

3 4.6 %

3 4.7 %

34%

(2)

(1)

Road Buses

Urban Buses

% 57

2012

% 56

.9% 58

22.8

PARTICIPATION AT THE BRAZILIAN PRODUCTION (%)

Minibuses

Source: FABUS and SIMEFRE Notes: (1) Includes 100% of Marcopolo Rio de Janeiro. (2) Volare is not included in the market share figures.

2013

2014

PRODUCTS / MARKETS(1)

TOTAL

Road Buses

4,286

1,106

5,392

4,487

1,195

5,682

3,334

1,253

4,587

Urban Buses

6,032

2,621

8,653

6,013

2,232

8,245

5,369

2,353

7,722

Minibuses

618

525

1,143

792

444

1,236

770

222

992

Subtotal (2)

10,936

4,252

15,188

11,292

3,871

15,163

9,473

3,828

13,301

Volare (3)

4,160

505

4,665

5,245

235

5,480

4,236

176

4,412

Total Production

15,096

4,757

19,853

16,537

4,106

20,643

13,709

4,004

17,713

Notas: (1) DM: Domestic Market / EM: External Market. (2) Total production figures of the Export Market include the units exported as KD (partially or totally disassembled bodies) which in 2014, amounted 336 units, against 177 units in 2013 and 128 units in 2012. (3) The production of Volare It is not part of the SIMEFRE and FABUS data, or the production industry.

The year of 2015 In 2015, the bus market in Brazil was impacted by changes in the rules for financing through the BNDES Finame (National Bank of Economic and Social Development) (Financing of Machinery and Equipment), and the Investment Support Program – BNDES PSI. The year also has been marked by the lack of definition from ANTT (National Agency of Land Transport) as regarding the final settlement of the authorization model of interstate and international lines, which will take place following completion of the public hearings. On the other hand, there are important ongoing business to foreign markets. These facts combined with an exchange rate that has been devalued may result in a more favorable year for exports.

Regarding the subsidiary units of Marcopolo abroad, the company expects a better performance both in Australia and Mexico. In Australia, the Transformation Program should already reflect increased operational efficiency, and in Mexico, there is an expectation of progress in the sales mix with additions to the volume of traffic due to the nationalization of the road model Paradiso 1200, which started in 2014.

In the Road transport sector, the expectation is that with the final publication of the rules of the authorization model by ANTT, companies start the renewal of their fleets, a fact that has been delayed for over a year and a half due to uncertainties regarding the new regulations. Meanwhile, in the urban division, the market signals a movement towards the renewal of the fleet, due to the transfer rates in some major cities of the country. In the state of Espírito Santo, the new Volare plant began production operations of disassembled kits that were sent to Caxias do Sul in January 2015. From the second half of the year, the unit will start the production of the new Volare five tons.

36 Economic Performance

Economic Performance 37

Sustainability Report 2014

SUPPLIERS

PURCHASING PROCESS

GRI EC.6

Marcopolo’s relationship with its suppliers is based on three guidelines: Maturity, Ethics and Trust. Known in the company by the acronym MEC, these guidelines are aligned with the Vision, Mission, Values and Code of Conduct that are available at the company’s website. As regarding the direct relationship with its suppliers, Marcopolo counts on a tool for information exchange and management called Electronic Portal Data Interchange (EDI). At this portal, partners have direct access to a manual that explains all matters related to the procedures,

instructions and relevant policies. Marcopolo’s EDI Portal is a simple and effective way to provide equal treatment, evaluation, development and continuous improvement to its suppliers. Access it via company’s website:

https://novaoc.marcopolo.com.br

Marcopolo´s policy prioritizes the relationship with suppliers located in its vicinity. In the year 2014, the Caxias do Sul unit acquired an average of 65% inputs in the state of Rio Grande do Sul.

exceeded 5%. The lack of domestic suppliers or much higher costs than international prices lead to the importing of products. Even so, in 2014, the share of purchases from abroad accounted for less than 3% of the products used in the bus bodies.

Due to the lack of qualified suppliers near Marcopolo Rio, local purchases represent only 30%. In all of the company’s units, the percentage difference is acquired in other states. This year, R$ 2.3 billion were invested in the purchase of products and services to the units covered in this report.

Marcopolo’s suppliers must necessarily align their processes to the international standard requirements regarding Quality, Environment and Human Rights. They must also submit to audits carried out by the Company. In 2014, 41 suppliers were audited. In the same year, the company recorded 3,237 active suppliers, of which 3.5% belonged to curve A, 10.3% to curve B, and 86.2% to curve C.

Compared to the year 2013, there was a decrease of approximately 18%. Compared to 2012, the decrease

NUMBER OF SUPPLIERS FORMALLY AUDITED

GRI HR.2

41 22 14 2012

2013

2014

SHARE OF LOCAL SUPPLIERS 2012 Marcopolo Caxias do Sul

70%

2.6%

2013 Marcopolo Rio de Janeiro

30.75%

Marcopolo Caxias do Sul

67%

1.48%

Marcopolo Rio de Janeiro

29.4%

3.6%

0.8%

27.4%

67.77%

29.4%

69.8%

RS (State of Rio Grande do Sul) Out of the State Abroad

RJ (State of Rio de Janeiro) Out of the State Abroad

RS (State of Rio Grande do Sul) Out of the State Abroad

RJ (State of Rio de Janeiro) Out of the State Abroad

2014 Marcopolo Caxias do Sul

58.04%

38 Economic Performance

2.25%

Marcopolo Rio de Janeiro

36.29%

0.67%

39.71%

63.04%

RS (State of Rio Grande do Sul) Out of the State Abroad

RJ (State of Rio de Janeiro) Out of the State Abroad

Economic Performance 39

GRI EN.24

Marcopolo conducts programs focused on environmental issues in all of its units. The Company continuously invests in new technologies in order to minimize environmental impacts caused by its activities. Concerns about waste disposal were highlighted in the Materiality Matrix, which originated a series of materials released at the ViaPolo Communication Network. Through various means of communication such as advertisement boards, a magazine, Intranet and corporate TV, the network provided information and guidance on the proper disposal of waste materials as well as waste reduction. Hazardous waste is destined for external recycling, recycling for reuse, co-processing or external treatment, upon availability or requirement by law. Due to the installation of the internal recycling process of solvents generated in the process of manufacturing fiberglass parts in 2014, Marcopolo Caxias do Sul avoided to transport 26.1 tons of it. Non-hazardous waste is destined for external recycling for reuse, co-processing or external treatment. Marcopolo Caxias do Sul presented a reduction in nonhazardous waste disposal in landfills and a reduction of waste sent to external treatment. On the other hand, there was a proportional increase in waste intended for recycling and external co-processing. This change is in line with the environmental policy of the Company, which advocates the non-generation of environmental liabilities.

Environmental

Performance GRI EN.30 / EN.24 / EN.1 / EN.8 / EN.9 / EN.10 / EN.21 / EN.22 / EN.24 / EN.26 / PR.1

Environmental Performance

Sustainability Report 2014

WATER SOURCES SIGNIFICANTLY AFFECTED BY WATER WITHDRAWAL GRI EN.9 GRI EN.30

The greatest amount of water that the Marcopolo unit in Caxias do Sul uses in industrial processes comes from the city Public System Supply that is located at theTaquari-Antas Drainage Basin and the Caí Drainage Basin. In addition to that, the Company acquires third-party artesian water wells and extracts groundwater through its own artesian wells.

In 2014, Marcopolo invested R$ 5,508,728.51, in Caxias do Sul and R$ 1,181,170.70 in Rio de Janeiro on environmental protection, especially regarding transport and waste disposal, wastewater treatment, monitoring of

air emissions, laboratory analysis and audit and taxes, as well as contemplated fixed costs of environmental areas including trainings.

In 2015, will be launched a water saving campaign aiming at employees awareness and their families.

Unit

2012

2013

2014

Marcopolo Caxias do Sul

R$ 5,438,997.31

R$ 4,834,438.00

R$ 5,508,728.51

Marcopolo Rio de Janeiro

R$ 252,960.64*

R$ 1,702,157.33

R$ 1,181,170.70

FOCUS ON THE FUTURE In 2014, the Planalto unit of Marcopolo Caxias do Sul started the process of reusing the treated effluents from its treatment plant. The final quality of these treated effluents was considered acceptable for reuse. From this result, the Environmental Engineering Department developed a study to reuse these effluents as flushing water for the toilets in the Company.

*The amounts related to Marcopolo Rio de Janeiro did not include spending on waste disposal, only the fixed costs of the Environment team, taxes and annuities, audit and laboratory tests.

MATERIALS USED BY WEIGHT OR VOLUME The manufacturing of bus bodies demands a wide variety of materials. For this report, the Company presents again the annual consumption of steel, aluminum and fiberglass*. Waste control of these materials is part of the Profit Sharing Program (EFIMAR). Marcopolo Caxias do Sul reports the last three years and Marcopolo Rio de Janeiro reports the last two years.

GRI EN.1

In 2014, there was an increase in the percentage of steel and aluminum materials loss. At the Marcopolo unit located in Caxias do Sul, this happened due to the greater diversity of models produced, which negatively affects the optimization programs of raw material use, and at Marcopolo unit in Rio de Janeiro, the introduction of a new model of bus caused a loss increase during the learning curve.

Marcopolo Caxias do Sul Material

2012

2013

In Marcopolo Rio de Janeiro, the water supply comes from the Public System Supply of the State Company for Water and Sewage (CEDAE), located at Guanabara Bay Drainage Basin.

Marcopolo Rio de Janeiro 2014

Material

2013

2014

Stainless Steel (t) % loss

45,339 45,716 40,230 12 12 14

Stainless Steel (t) % loss

13,029 13,132 20 20

Aluminium (t) % loss

6,453 18

6,517 17

5,751 19

Aluminium (t) % loss

2,341 13

2,384 16

Fiberglass (t) % loss

3,384 34

4,274 29

3,748 25

Fiberglass (t) % loss

3,217 26

2,820 21

To put the project into practice it was necessary to acquire pumps, a network pressurizer and water tanks, as well as the installation of specific networks to take the reused water to the toilet flushing system. The success of the system is worthy of a celebration! The wastewater reuse saved the Company about 900 m³ of water consumption from the Public Supply Systems. This reduction represents approximately 23% of the total cost

GRI EN.10

of the water bill of one of the factories. The volume of this recycling contribution represents a 3.56% reduction in the consumption of water at Marcopolo units in Caxias do Sul. Percentage and Total Volume of Recycled and Reused Water (Marcopolo Caxias do Sul) 2012

2013

2014

Treated Water Disposal m³/year

12,078 13,375 14,443

Gray Water (Wastewater Generated by Household Processes) m³/year

46,464 56,183 59,923

Recycled Wastewater from the Processes Above m³/year

5,916

Recycled Wastewater in % of Water Intake Volume

3.56

TOTAL WATER DISPOSAL IN QUANTITY AND USE

GRI EN.21

The wastewater treatment system in Caxias do Sul consists of the effluents of paint booths, soundproof booths, E-coat process, sanding booths, gel and lamination booths, network air dryer, among others.

* Components with greater quantity significance

TOTAL WATER WITHDRAWAL BY SOURCE

GRI EN.8

(public system, wells, river capture, rainwater harvesting etc.) The following table shows the total water used for both industrial processes as well as human consumption, cafeterias, toilet facilities, etc. Source

Marcopolo Caxias do Sul 2012 2013

2014

Marcopolo Rio de Janeiro Public Supply Source

Third party supply

38,366 m³

29,950 m³

42,580 m³

2012

57,832 m³

Public supply

153,509 m³

163,321 m³

115,323 m³

2013

39,823 m³

Own supply

13,999 m³

12,416 m³

8,117 m³

2014

30,846 m³

42 Environmental Performance

Environmental Performance 43

Sustainability Report 2014 TOTAL PLANNED AND NOT PLANNED FOR WATER DISPOSED

GRI EN.24

GRI EN.21

(excluding rainwater and domestic sewage)

In the graphs, the volumes of hazardous waste transported are described in tons.

The sum of paint booth, soundproof booths, water testing and dryer effluents.

2012

2014

Legal Limit

Oxygen Chemical Demand

64.41

67.98

330

Total of Suspended Solids

20.8

29.63

125

Chrome

0.008

0.049

0.012

0,4

Zinc

0.105

0.015

0.063

14,443 m³

2013

2014

1,4

210 m³

*External Treatment 2012

TOTAL WASTE WEIGHT BY TYPE AND DISPOSAL METHOD Marcopolo Caxias do Sul 2012 2013

2014

2013

2014

GRI EN.22

Marcopolo Rio de Janeiro 2012 2013

Weight of Hazardous Waste in Tons

(t)

1,7

4 2.2 2012

231 m³

148 m³

Weight of Hazardous Waste in Tons

(t)

Total Water Disposal (Marcopolo Rio de Janeiro)

In Marcopolo Rio de Janeiro, the effluents generated by paint booths, soundproof booths and sanding booths, are treated externally by an approved company to carry out this kind of specialized work.

2014

Hazardous waste (t) Non-hazardous waste (t) Total (t)

3,296 20,483.42 23,779.42

1,442.2 21,888 23,330.2

1,289.7 19,618.1 20,907.8

Hazardous waste (t) Non-hazardous waste (t) Total (t)

1,650.49 6,869.89 8,520.38

1,732.83 7,355.92 9,088.75

1,704.82 7,037.9 8,742.72

External recycling (t) %

18,086.5 76.1

18,964.6 81.3

17,639.7 84.4

External recycling (t) %

5,770.08 67.72

6,339.66 69.75

6,065.73 69.38

Recycling for reuse (t) %

198.4 0.8

175.5 0.8

251.4 1.2

Recycling for reuse (t) %

0 0

Co-processing (t) %

580.8 2.4

456.1 2

545.8 2.6

Co-processing (t) %

1,381.56 16.21

354.6 3.9

1,519.68 17.38

Industrial Landfill (t) %

3,077.8 12.9

3,227.9 13.8

2,283 10.9

Industrial Landfill (t) %

1,368.61 16.06

2,278.67 25.07

1,157.31 13.24

External Treatment (t) %

1,835.8 7.7

505.6 2.2

187.9 0.9

External Treatment (t) %

0.13 0

115.88 1.27

608 6.95

0.49 65

13,375 m³

2013

96 3,2

12,078 m³

2012

Marcopolo Rio de Janeiro

1,711 .

Quality (mg/L)

1,26 3

Total Water Disposal (Marcopolo Caxias do Sul)

Marcopolo Caxias do Sul

2013

3 2.83

2014

INITIATIVES TO MITIGATE THE ENVIRONMENTAL IMPACTS The manager of Process Development Engineering has technical responsibility for the projects and processes of Marcopolo products. In all its methods, the Company continuously strives to reduce environmental impacts. This is especially noticed in the development of the products, since the conception stage up to the use by final customers until the end of their lifespan. Within this concept, the LWV Project - Low Weight Vehicle was born. The LWV is a new version of the road model Paradiso. The constant quest for improvement and intensive studies directed to the use of noble engineering materials, which have less weight than conventional

ones, and yet, maintains and/or improves its technical performance. The result could not be more satisfactory: the LWV design provides a reduction of 346 kg in the bus body, which represents a 2.5% decrease in the total weight of the vehicle. This way, the user of the Paradiso version LWV has the possibility of an increase in its operating revenue from the delivery of parcels without exceeding the balance weight limits provided by law. Advantages of the project:

Replacement of the blankets used for the thermoacoustic engine’s compartment by lighter weight ones with superior acoustic properties; Implementation body sealing;

new

concept

GRI EN.26 / PR.1

bus

Despite the high investment, it represented a significant improvement in the bus lounge floor’s thickness in specific regions with less mechanical stress; Inclusion of glass microspheres in fiber parts. This procedure leads to the weight reduction of these components without compromising its performance characteristics.

The main benefits obtained are: Reduction of fuel consumption and emissions in the atmosphere; Less tire wear; Increased durability of components (clutch, brake, etc.).

GRI EN.23

In 2014, there was no spillage of substances with contamination hazard at Marcopolo units of Caxias do Sul and Rio de Janeiro.

44 Environmental Performance

Paradiso 1200 - Project LWV

Environmental Performance 45

GRI LA.1

Marcopolo and its affiliates count on 21,435 employees in Brazil and abroad. Investments in training, benefits package, and health and safety programs govern the actions taken by the Company, which are aligned with the culture and the legislation of each place it operates.

Total number of employees of subsidiaries/affiliates in the proportion of shareholding Personnel Worksheet Number of Employees

2012

2013

2014

Controller

8,204

8,158

7,883

Subsidiaries Brazil

2,617

2,554

2,776

Subsidiaries Abroad

1,680

2,105

1,889

Affiliates

3,834

5,699

4,270

Total (1)

16,335

18,516

16,818

Grand Total (2)

20,508

21,002

21,435

Notes: (1)Includes employees of subsidiaries/affiliates in the proportion of shareholding. (2)Refers to the total participation in the subsidiaries/affiliates.

Social

Performance GRI LA.1 / LA.14 / LA.2 / LA.3 / EC.3 / LA.7 / LA.10 / LA.12 / HR.3 / 4.8 / 4.4

Social Performance

Sustainability Report 2014

LABOR PRACTICES

Employee Turnover

As mentioned in the Reporting Process, this report specifically addresses the programs and actions carried out in the units controlled by Marcopolo Brazil. Information regarding the city of Caxias do Sul, RS (State of Rio Grande do Sul), includes workers allocated at the office in São Paulo and those who work at the Volare project in the city of São Mateus, ES (state of Espírito Santo), because they represent a very small number.

The turnover rates of the Company are compatible to the market, and remain at acceptable levels. In 2014, there were 2,109 layoffs in the units located in Caxias do Suland in Rio de Janeiro. A higher turnover rate among employees below 30 years of age has been observed.

Employees by functional category in Brazil

GRI LA.14

Year

Marcopolo Caxias do Sul 2012 2013 2014

EXECUTIVE MANAGEMENT

958

1014

990

SUPERVISION

6,247

5,952

254

286

282

601

586

687

8,263

Total 8,268

Marcopolo Caxias do Sul < 30 years between 30 and 50 years > 50 years

Total

2012

1,131

560

1,775

2013

1,208

622

117

1,947

2014

949

486

1,513

COORDINATION

Year 6,328

The unit in Rio de Janeiro had a turnover rate of 1,74% while in Caxias do Sul the turnover rate was 1,46%. However, in general, the rates improved 23% over the previous two years.

AGE DISCRIMINATION LAYOFFS

Employees are divided into functional categories according to their level of activity, which defines areas of responsibility in the Company’s processes. New projects such as the Volare São Mateus are responsible for an increase in the number of employees of the technical category.

MANAGERIAL/ADMINISTRATIVE

GRI LA.2

Marcopolo Rio de Janeiro < 30 years between 30 and 50 years > 50 years

Total

OPERATIONAL

TECHNICIANS

2012

572

290

892

2013

477

224

728

2014

370

164

548

8,047

GENDER DISCRIMINATION LAYOFFS All employees are full-time and have employment contract for an undetermined time and 100% of them have collective bargaining agreements

Marcopolo Caxias do Sul Male

Marcopolo Rio de Janeiro 2012 2013 2014 MANAGERIAL/ADMINISTRATIVE

150

151

Female

1,235

EXECUTIVE MANAGEMENT

SUPERVISION

2,204

2,069

2,197

159

170

184

2,559

Total 2,443

2,613

64 818

665

345

COORDINATION

2012

2013

2014

2012

2013

2012

2014

2013

2014

2012

2013

2014

OPERATIONAL

Total

Male

Female

TECHNICIANS

2,298

408 2,267

369 1,719

2012

48 Social Performance

Female

484

295

1,602

Male

246 1,480

174

Marcopolo Rio de Janeiro

2013

2014

310 2012

2013

2014

Social Performance 49

Sustainability Report 2014

BENEFITS PACKAGE FOR EMPLOYEES AND THEIR FAMILIES GRI LA.3

The benefits offered to employees and their families in Caxias do Sul and Rio de Janeiro units are the same. The benefits package, coverage and its providers are adapted to their local differences.

HEALTH PLAN Marcopolo understands the importance of providing health plans that are adjusted to the demands of the regions where its employees live. The Company also believes that dependents coverage assures peace of mind to the employee and their families.

to its beneficiaries. MarcoSaúde provides Emergency Care, Women’s Clinic, Clinical Specialties Care and Ambulatory, including physiotherapy, nutrition and psychology, pediatrics and dentistry and hospital care in Caxias do Sul and Porto Alegre.

Since 2012, employees of the units of Caxias do Sul can count on the MarcoSaúde health plan. A unique health plan, managed by Marcopolo, which offers exclusive care

There are 24 thousand lives of employees and their families covered by health plans.

Private Pension Plan

GRI EC.3

Marcopolo employees count on a Closed Pension Plan - Marcoprev Private Pension Scheme that grants additional benefits and Social Security to all employees. The plan uses actuarial determination of costs and the contributions are made through the capitalization method. It is a Joint Plan, which represents a mix between defined benefit, where contributions are the sole responsibility of Marcopolo, and defined contribution, where the contributions are the responsibility of the sponsor Company and the participant.

RELATIONSHIP ACTIVITIES WITH ITS CONTRIBUTORS Marcopolo performs several activities for the recognition and appreciation of its employees; the main ones are the Marcopolo Employee’s Day, the Merit of Honor Award and the Appointment Date. Festive dates such as Women’s Day, Mother’s Day, Father’s Day, Easter and Christmas are

also celebrated. In addition to that, activities involving employee’s family members are also covered in the Marcopolo Foundation chapter.

Employee’s Day: Celebrated on August 6, this day honors all professionals of the Company. Live music and special meals at restaurants, gifts and other activities that promote interaction between employees are held to celebrate the date.

and receive a money bonus. When an employee completes 25 years of Marcopolo they receive a gold pin, they have a festive dinner and a trip to the Northeast of Brazil with a companion. Employees with over 30 years within the Company are honored with plaques and medals.

Merit of Honor Award: The award values the participation of employees in the Company’s development by promoting a sense of integration and belonging to the Marcopolo team. The employees that have working time in the Company of multiples of 5 to 20 years, are honored with a certificate, have a cocktail party in a restaurant

50 Social Performance

In December, the Appointment Date takes place, when the President Emeritus, Paulo Bellini and the Chairman of the Board of Directors, Mauro Bellini, share their traditional message of the end of the year and grant a souvenir to Marcopolo’s employees.

Merit of Honor Award

Other benefits Food Restaurants in the industrial units;

Banking services, pharmacy, clearance agent and other

Transportation;

facilities available in the Company;

Group Life Insurance;

Childcare assistance and help care for employees;

Loan Policy for emergencies such as health, construction

Arriving Baby project to pregnant women, with guidance

and others;

lectures and prenatal consultations.

HEALTH AND SAFETY Marcopolo recognizes the importance of Health and Safety to the management of its businesses.That is the reason why the Company invests in mechanisms to ensure the protection of its employees, acting preventively to reduce and eliminate the risks that are inherent to the productive process. Based on the historical events of the last three years, it is possible to verify that in 2014 there was an increase in health absenteeism rates, frequency and severity, especially in Caxias do Sul, which hinder the possibility of achieving the overall goal of 5% rate reduction established to the year. The indicators were mostly

GRI LA.7

affected by the reduction of worked hours caused by the lower demand of production, although the absolute number of accidents decreased from 2013 to 2014. The analysis of critical areas in accidents, the types of lesions and major causing agents, allowed us to establish new guidelines for taking actions on Health and Safety. The goal for 2015 is to seek solutions to improve the indicators. For this to happen there must be a collective and sustained effort from relatedareas such as Production, Engineering, Maintenance, CIPA, Purchase, and Training, among others.

Marcopolo Caxias do Sul

Marcopolo Rio de Janeiro

2012

2013

2014

2012

2013

2014

Health Absenteeism

2.13

2.1

2.3

Health Absenteeism

3.15

2.46

2.31

Frequency Rate

2.53 2.31 2.41

Frequency Rate

2.63

1.1

1.02

Occupational Disease Rate

0.06 0.09 0.03

Occupational Disease Rate

0,04

Gravity Rate

86.65 67.25 73.78

Gravity Rate

Number of Deaths

344.84 393.37 478.37 0

Social Performance 51

Sustainability Report 2014

EDUCATION AND TRAINING Education and Training are essential for the sustainable development of Marcopolo. Only in 2014, the Company invested R$ 2,062,202.33 in the professional development of its employees, with an average of 66 hours in Caxias do Sul and 44 hours in Rio de Janeiro of training per employee. The training is provided to all levels of the organization. The training programs are focused on specific areas of expertise or individual learning needs. During 2014, 88% of the workforce participated in at least one specific activity for the development of personal and professional skills. In order to encourage quality improvement and performance development in their daily activities, employees receive formal training, where the Company advises, evaluates and monitors the employees in operational areas, straight at their work stations.

Marcopolo Rio de Janeiro GRI LA.10

it must be continuously revised in order to keep the Company’s strategies up-to-date. Besides that, 200 operational leaders who work directly with the workforce began a new training program specially designed for the development of coaching techniques and interpersonal skills. Since 1991, the Company also maintains an Education Incentive Program, which grants scholarships to facilitate the access of its employees to high school, technical courses, college, MBA and foreign language programs. The selection of grantees is based on criteria defined by specific policy. Financial Incentives in Education

Another positive impact on the year was the implementation of the School of Leadership, a set of training and development activities aimed at preparing management through the development of the right skills for the present position as well as future ones. The programs developed by the School of Leadership cover approximately 250 managers of the units in Brazil that grouped into learning tracks according to their level of expertise. The school initiated the training track and

R$ 2,062,202.33

R$ 860,000.00

R$ 1,033,000.00

2013

R$ 3,121,712.95

2013

Supervisors and Equivalents

Technicians

Administrative and Assistants

Operational

2012

136

2013

279.5

72.94

42.01

40,.9

24.14

2014

34.72

40.98

66.64

24.17

Total Number of Induction Program Hours

3,145

15,840

7,808

22,064

11,454

15,472

2012 2013 2014 Marcopolo Rio de Janeiro Marcopolo Caxias do Sul

New employees participate of the Induction Program, which presents the benefits offered by the Company as well as internal rules, rights and duties, including the ombudsman channels so that employees can express ideas, complaints, criticisms and suggestions on the various issues of the Organization.

MARCOPOLO PROFESSIONAL TRAINING CENTER

R$ 3,121,712.95

Loyal to its commitment to the communities where it operates, the Company has counted on Marcopolo Professional Training School (EFPM) for 25 years. Founded in 1990, EFPM has three active units in Brazil (two in Caxias do Sul and one in Rio de Janeiro) and one at the Masa affiliated, in South Africa. The School offers industrial training courses for young people including those in a social vulnerability situation. It also offers benefits, first paid job and access to the Company’s Career Plan.

R$ 2,257,743.22 2012 2014

Coordinators and Equivalents

R$ 2,062,202.33

R$ 2,257,743.22

R$ 814,000.00

2012

Financial Incentives Financial Incentives in Training in Training

Directors / Managers

2014

2012

2013

2014

the states of Rio Grande do Sul and Rio de Janeiro, with the University of Caxias do Sul (UCS) and the Social Assistance Foundation of Caxias do Sul (FAS). In 2014, the school trained 92 young apprentices, totaling over 1,250 graduates so far. Marcopolo’s affiliated companies abroad develop learning courses for young people according to the current legislation in each country, promoting their promotion of permanent employees wherever possible.

The EFPM operates in partnership with units of the National Industrial Apprenticeship Service (SENAI) in

THE ENGAGING PROGRAM

AVERAGE HOURS OF TRAINING BY POSITION

GRI LA.10

Marcopolo Caxias do Sul Directors / Managers

Coordinators and Equivalents

Supervisors and Equivalents

Technicians

Administrative and Assistants

Operational

2012

2013

83.08

69.56

72.14

23.16

74.92

24.44

2014

53.55

42.98

51.46

20.63

20.96

25.17

52 Social Performance

Created in 2008, the Engaging Program promotes the inclusion and the qualification training of professionals with disabilities. The program is concerned about adapting the manufacturing environment to its employees in order to welcome them, promoting care and respect to their differences. The program was recognized and awarded at the South American Meeting of Human Resources ESARH 2014, in the category of People Management. It also participated of a workshop promoted by the Ministry of Social Development, where the Federal Government considered it as a reference to be pursued. At the end of 2014, the Engage Program had 390 employees with disabilities in the units located in Caxias do Sul and other 107 in the units of Rio de Janeiro.

Social Performance 53

Sustainability Report 2014

WAGES POLICY

COMMUNICATION CHANNELS

The Company conducts periodical salary surveys in order to compare and evaluate the amounts paid to employees within regional standards. The remuneration consists of a fixed amount, which is according to the skills and abilities of the employee, and a variable amount that is a result from the compliance with the goals of the Profit Sharing Program. For the management positions, the Company uses the GGS - Global Grading System (Towers Watson) methodology.

In March 2012, Marcopolo launched the ViaPolo Internal Communication Network in order to unify the various media outlets that Marcopolo uses to build a relationship with its employees and their families. The ViaPolo network comprises advertisement boards, Intranet, monthly magazine and corporate TV. The Internal Communications team operates it and is also responsible for designing and implementing information, engagement and relationship campaigns as well as for disseminating information aligned with the Company’s business strategy.

EVALUATION OF EMPLOYEES

GRI LA.12

Employees are formally assessed by their managers, receiving guidelines for the development of their skills and abilities as part of their career plan. The constant goal of the BSC (Balanced Score Card) for all areas is to evaluate 100% of employees at least once a year. The objective is to continue it in 2015, including the assessment of management positions. Career Development*

Marcopolo Caxias do Sul % Evaluation Marcopolo Caxias do Sul Marcopolo Rio de Janeiro % Evaluation Marcopolo Rio de Janeiro

2012

2013

2014

8,204

8,158

7,883

82.52%

89.82%

83.72%

2,559

2,443

2,613

62.68%

88.51%

75.88%

Marcopolo’s Code of Conduct was revised in 2014 and it complies with the Brazilian legislation (Law 12,846/13). It covers topics such as corruption, money laundering and Compliance. After the changes, all managers and employees had new training, where they signed the term of receipt and the agreement of following the guidelines of the Code. The disclosure was extended to representatives, distributors, dealers and suppliers of products and services throughout Brazil.

54 Social Performance

Marcopolo has also the ViaPolo Ombudsman in order to assist with decision-making actions to improve people management practices, an important communication channel between employees and the Company, which allows constant monitoring of the organizational environment.

The issues discussed can be either regarding relationships as well as Company´s management. The Conduct Committee is responsible for providing guidance to stakeholders in the application of the Code of Conduct, as well as the determination and decision making in cases of violation of principles. The employee can easily access the specific link on the corporate Intranet page. It is completely safe, and the system does not require any identification. All complaints are forwarded to those responsible for the highlighted issues, and answers should be provided within a period of 20 days. After that, the answers to their issues will be available on the Intranet, and the sender can access it through the password received when sending the message. This practice meets the requirements of the SA 8000 by addressing the concerns of workers. Besides the Free Channel and the Conduct Committee, employees and the public can use the External Ombudsman through the Open Channel. This communication tool deals with allegations of possible fraud, theft or related issues. In case that happens, the reports will be categorized and forwarded to the Internal Audit evaluation, which are managed by the Audit and Risk Committee.

EMPLOYEE SATISFACTION Every second year the Company’s Internal Communications team carries out the Organizational Climate Survey, an important instrument that measures employee satisfaction.

GRI HR.3 / 4.8

In 2005, Marcopolo implemented the first version of its Code of Conduct aiming at guiding business decisions and the behavior of all officers and employees of the Company, at all levels without exception. Since then, employees receive training during the Induction Program or when an update is needed.

In 2014, the network started a new program in the Corporate TV. It is named ViaPolo for you, which is aired every two months, where employees actively participate as presenters and reporters telling stories.

Marcopolo has two Ombudsman channels for employees, the Free Channel and the Conduct Committee. The Free Channel is a program that welcomes suggestions, criticisms, complaints or compliments of employees.

* % of employees that were evaluated in the year.

ANTI - CORRUPTION PRACTICES

GRI 4.4

Code of Conduct Training (Marcopolo Caxias do Sul) 2012

2013

2014

Total number of hours Code of Conduct Training

1,047 2,281.2 2,373.6

% of Employees that received the Code of Conduct Training

11%

88%

97%

Code of Conduct Training (Marcopolo Rio de Janeiro) 2012

2013

2014

Total number of hours Code of Conduct Training

185

2,350

1,443

% of Employees that received the Code of Conduct Training

92%

82%

The latest edition of the survey, conducted in April 2014, had 66% average satisfaction for units of Caxias do Sul. In the unity of Rio de Janeiro, the result of the evaluated items in June of that year, reached the rate of 74% satisfaction. In order to value the contribution of our employees, we developed a unique system to identify opportunities for improvement in priority issues of the search. Through focus groups, participants of the Marcopolo Environmental Improvement Suggestions Group (SUMAM), discussed these issues with co-workers and formulated a set of suggestions that was presented to the management of the Company. These suggestions are part of the action plan that for 2014 and 2015. A sample survey will be made in the fourth quarter of 2015 in order to monitor the improvement of the development actions.

Social Performance 55

Marcopolo

Foundation GRI LA.10

MARCOPOLO FOUNDATION PROGRAMS FOR EMPLOYEES AND FAMILIES The quality of life programs for employees and their families are adapted to the reality of each country in which Marcopolo has subsidiaries or affiliated companies. In Brazil, these activities are coordinated by the Marcopolo Foundation, which has as its mission the social development of children and adolescents in communities where the Company is present, as well as stimulating volunteering actions.

Marcopolo Foundation

Sustainability Report 2014

EDUCATION

GRI LA.10

Among the actions developed to the community, the Schools Project stands out. The project promotes activities to contribute to the development of the educational environment, create relations between the school and the community, as well as to promote training for citizenship. In 2014, the theme for the ideas developed in the three schools that are part of the project was Culture of Peace. Carried out after class hours, the socio-educational workshops involved the Construction of Peace Circle, a movement started officially by the UN for Education, Science and Culture - UNESCO in 1999 - that included activities involving social relations and training to teachers in valuing education. Another important activity was the Recycled Paper Workshop, in which students had diverse classes including Production, Costs, Finance, Marketing and Environment taught by volunteering teachers from Marcopolo. The result was different products made of recycled paper that were sold in school fairs, and bought by the Marcopolo Foundation. From the choices of students, the profits generated improvements to the education centers and distribution of food baskets to the families involved. Another project developed is the Everyone at School, which encourages the permanence of employees’ children in school life. In 2014, 27,000 notebooks were distributed to dependents enrolled in primary and secondary schools aged between five and eighteen. The project has been ongoing since 2004. Moreover, in order to encourage reading in the plants, it is available to employees and their families an extensive collection of more than 6,200 copies of books in three libraries.

VOLUNTEERING WORK VOLUNTEERS OF JOY Formed by employees, the Volunteers of Joy Group operates in educational and health centers, performing socio-educational activities, physical plant renovations and food collection for children campaigns. The Foundation coordinates about 230 volunteers, benefiting approximately 5,310 people. One of the most popular events of the volunteering program is A Happy Day, held annually on the Foundation Recreational Headquarters, in October, which in 2014 gathered about 2,000 children and adolescents from different charities of Caxias do Sul (RS) (state of Rio Grande do Sul).

ACTING PROJECT Counting with the support from Marcopolo Rio and Marcopolo Foundation, the Acting Project conducts remedial classes and educational activities for the children of Lamarão community in Xerém, Duque de Caxias district (RJ) (Rio de Janeiro). Based on the identification of a local problem of Attention Deficit Disorder in children and adolescents of the community, the Acting Project proposes continuous actions in order to improve student performance. In addition to that, the volunteers organize and guide activities that promote leisure time for participants on weekends. The progress achieved has been noted in the first year of the project: None of the students of the Acting Project has failed classes. Currently, the project helps 45 children and adolescents.

FOOD DONATIONS In 2014, about 50,000 people participated in the activities of the Foundation. In all events of the Foundation, employees and community are encouraged to make food donations that are collected as a means of registration or entry in the event. Donations are delivered to the Food Bank of Caxias do Sul, which helps 97 charities in the region.

58 Marcopolo Foundation

Marcopolo Foundation 59

Sustainability Report 2014

TAX ALLOCATION Besides volunteering, the Marcopolo Foundation makes monthly contributions to health and education in the community institutions, especially giving support to the Neonatal Pediatrics Service of the General Hospital in Caxias do Sul, which serves patients of the Unified Health System (SUS). Marcopolo Caxias do Sul, Banco Moneo, Spheros and Marcopolo Rio give 1% of Income Tax Due to the Municipal Fund for the Rights of Children and Adolescents (FMDCA) of the cities of Caxias do Sul (RS) and Duque de Caxias (RJ), where the companies are located, which totaled R$ 233,000 in 2014. In Caxias do Sul, the Foundation also acts towards facilitating and encouraging the allocation of 6% of the Personal Income Tax of employees from Marcopolo companies to the Municipal Funds, promoting the increase of resources generated for the development

of social projects to benefit children and adolescents. Because of these efforts in 2014, employees allocated R$ 345,2 thousand to the benefit of professionalization projects to aid about a thousand young people living in social and personal risk. Another activity with the same focus is called Allocate You Too, which also sought to increase the allocation of taxes to the Municipal Funds with the participation of as many individuals possible, with the allocation of 3% in when presenting their Income Tax Statement. In 2014, Marcopolo also allocated R$ 233,000 to the Elderly Fund of the City of Caxias do Sul, which serves projects aimed at senior citizens. Regarding the Sports Incentive Law, R$ 230,500 were transferred together by the companies Marcopolo, Moneo Bank, Spheros and Marcopolo Rio.

PROJECT DEVELOPMENT

RECREATE MAKING ART EDUCATION Sponsored by Marcopolo since 2004, in its ten years, the Recreate Project is contemplating 3,600 young people in the community with 31 workshops given after school hours, in 26 institutions. Furthermore, the Recreate supports the Reolon Popular Culture Center, which offers music lessons to over 100 children and adolescents on the outskirts of Caxias do Sul, subsidized by funds raised via the Rouanet law.

OTHER CULTURAL ACTIVITIES The Marcopolo Foundation encourages the participation of employees and their families in cultural activities, by articulating different possibilities such as the Theatre Group exclusively for employees, which gathers an

average audience of 580 people per show. The Children and Youth Choir and the Orchestra of Flutes count on about 60 participants, mainly children of employees and the general community.

MORE MUSIC - YOUTH ORCHESTRA MARCOPOLO FOUNDATION In 2013, was initiated the pilot project More Music Youth Orchestra Marcopolo Foundation. The success was absolute and 60 teenagers, children of the employees and members of the community of Caxias do Sul, who received theoretical and practical music lessons, performed at the first year of its official edition. Furthermore, students took home an instrument of their choice in order to facilitate and continue their studies.

In 2014, there were 100 students participating. In 2015, the goal is to provide the discovery of the musical world to another 120 students. Participants perform various presentations, such as in the Semana Farroupilha of Caxias do Sul and in the traditional Marcopoloâ&#x20AC;&#x2122;s Christmas party.

Open dialogue and partnership relationships permeate Marcopoloâ&#x20AC;&#x2122;s communication within the communities where the Company operates. Moreover, these two pillars allow the Company, through the Human Resources, Marketing and Marcopolo Foundation, disseminates socially relevant projects as well as give institutional support and financial resources more assertively for public and private collaborations. The request form for projects via Incentive Laws is available on:

www.fundacaomarcopolo.com. br/pt/contato/lei_de_incentivo

CULTURE OF CAXIAS DO SUL The allocation of taxes was important for the activities in Marcopolo Caxias do Sul. Through the Law of Cultural Incentive of Caxias do Sul City (LIC), R$ 78,620.00 were destined to projects in order to encourage reading: Passport Reading and Community Libraries. Through the Federal Culture Incentive Law (Rouanet Law), the Company invested R$ 710,090.00 that were distributed among eight projects, especially for the projects Recreate Making Art Education and the More Music - Youth Orchestra of Marcopolo Foundation, both involving children and adolescents.

60 Marcopolo Foundation

Marcopolo Foundation 61

Sustainability Report 2014

CULTURE OF RIO DE JANEIRO In the state of Rio de Janeiro, the allocation of taxes is destined to projects that stimulate the cognitive development of children and adolescents, such as the Workshop Theatre Dolls and the Orchestra of Violins.

PUPPET THEATRE WORKSHOP Since 2012, the Puppet Theatre Workshop uses teaching and learning methods from the theatre, it has classes of performing arts such as making puppets, manipulation techniques, audio, set design, lighting and the development of a script for a final show at the end of the workshop. The workshop develops artistic language and techniques among other things that influence the human development of the students. In 2014, the Puppet Theatre Workshop took place at the Célia Rabelo Municipal School - CIEP and at the Ely Combat Municipal School, both in the region of Xerém in Duque de Caxias. Altogether 65 students participated in the show whose theme was called Victrola Radio FM. The final presentation took place on November 26, when school children were able to applaud the beautiful spectacle along with their parents.

VIOLINS ORCHESTRA The Violins Orchestra Project has existed for three years and it has been revealing many talents. The project benefits about 30 young people, children of employees, offering classes twice a week at the facilities of Marcopolo Rio de Janeiro. Throughout this period, the Violins Orchestra Project has conducted several external and internal presentations in events held by the Company. Once a month students perform to the employees of the entire factory at lunchtime. Marcopolo Rio believes in music as an agent of social and cultural transformation for these adolescents.

LEISURE The Recreational Venues of Marcopolo in Caxias do Sul and Rio de Janeiro, count on a wide structure for the use of employees and their families. In 2013, the venues registered the access of 126,850 people, and in 2014, the number increased to 134,690 users. Marcopolo Foundation believes that leisure activities are essential to strengthen the bond between the community and the company, reason why the Foundation promotes culturally traditional parties such as the June and July Festivals (Festa Junina and Julina). The most awaited event of the year is the traditional Christmas party, with different attractions to employees as well as the distribution of Christmas baskets and toys for the children of employees. Other events are realized for the internal and external audiences, such as walks and dances. The Cycling Ride, created in 2012, gathered in 2014, almost 450 participants including cyclists, employees and member of the community of Caxias do Sul.

SPORTS Sports actions developed for children and adolescents are also a priority for the Marcopolo Foundation; they can have indoor soccer and regular soccer lessons. After school hours, children belonging to the community can participate of sports such as basketball and taekwondo, as well as various activities in the Foundation Recreational Centre. Through the Federal Sports Incentive Law, activities such as Handball, Basketball and Canoeing.

Among the projects, the APAA Volleyball stands out, which serves about 100 teenagers from various communities in the district Xerém (RJ), through the training of volleyball teams. Various other sport activities are offered to employees and their families, such as athletics, bowling, tennis, table tennis, chess, sports court and field, among others. In 2014, sports activities involved in approximately 7,350 people.

APPRECIATION OF REGIONAL CULTURE In Caxias do Sul, in order to highlight the local culture, the company supports the Marco da Tradição Gaucho Traditions Center (CTG) and the Piquete de Laçadores, which bring together about 500 employees in traditional activities of Rio Grande do Sul. The Farroupilha Revolution celebrated on September 20, is the most important date for the state of Rio Grande do Sul. Also known in the rest of Brazil as Gaucho day, this date is celebrated through an event called Entrevero Farroupilha, which is organized by the Marcopolo Foundation. The event brought together about 18 thousand people in its last edition. In Duque de Caxias, recognizing the natural musicality of people from Rio, Marcopolo values this aspect of their culture by encouraging employees with singing and guitar lessons.

62 Marcopolo Foundation

Marcopolo Foundation 63

Indicators

Description

Page

STRATEGY AND ANALYSIS 1.1

Statement of the President

04 and 05

ORGANIZACIONAL PROFILE 2.1

Name of Organization

2.2

Main brands, products and/or services

2.3

Operational Structure

2.4

Head office location

2.5

Number of countries of the Company operation

2.6

Type and legal nature

2.7

Markets it operates

2.8

Organization Size

2.9

Major changes in the reporting period

32 and 33

Awards received

22 and 23

2.10

11 16 to 19, 34 14 and 15

15, 31 31

PARAMETERS FOR THE REPORT

gri

index

3.1

Period covered by the report

2014

3.2

Latest report date

2013

3.3

Report frequency

3.4

Contact information in case of questions

3.5

Process for defining report content

06 to 09

3.6

Report limitations

06 to 09

3.7

Limitations on the scope or boundaries of the report

06 to 09

3.8

Joint ventures, subsidiaries, leased facilities, outsourced operations and other organizations

3.9

Data measurement techniques and calculation bases

Annually 71

13 06 to 09

3.10

Consequences of reformulations of information provided in earlier reports

Not applicable

3.11

Significant changes in scope, boundary or measurement method compared to previous years

Not applicable

3.12

Table identifying the location of information in the report

65 to 70

GRI Index

Sustainability Report 2014 Indicators

Description

Indicators

Page

GOVERNANCE, COMMITMENTS AND ENGAGEMENT 4.1

Governance Structure

4.2

Indicate whether the president of the highest governance organ is also an executive director

4.3

Number of independent members or non-executive of the highest governance body

4.4

Mechanisms for shareholders and employees to provide recommendations or direction to the

Relationship between compensation for members of the highest governance body and the

24 a 27

EC.1

Generated and distributed direct economic value

Not applicable

EC.3

Coverage of benefit pension plan obligations

EC.6

Policies, practices and proportion of spending on local suppliers

Process in force in the highest governance body to ensure conflicts of interest are avoided

There is no structured program 4.7

Process for determining the qualifications and expertise of the highest members of the governance body for guiding the organization’s strategy on economic, environmental and social issues

38 and 39

26 to 27

organization’s performance (including social and environmental performance) 4.6

Page

ECONOMIC PERFORMANCE INDICATORS

ENVIRONMENTAL PERFORMANCE INDICATORS

highest governance body 4.5

Description

for the qualification of the highest sustainable

EN.1

Materials used by weight or volume

EN.8

Total water withdrawal by source

EN.9

Water sources significantly affected by water withdrawal

EN.10

Percentage and total volume of water recycled and reused

EN.21

Total water discharge by quality and destination

EN.22

Total weight of waste by type and disposal method

governance body

43 and 44 44 There was no spillage of

4.8

Statements of mission and values, codes of conduct and internal principles

4.9

Procedures of the highest governance body to supervise the identification and management of the

11, 12, 28 and 54

EN.23

Total number and volume of significant spills

compromise the soil or water in

the company

economic, environmental and social performance 4.10

Self-assessment of the highest governance body’s performance

EN.24

41 and 45

Initiatives to mitigate environmental impacts of products and services and the extent

44 and 45

of impact mitigation

COMMITMENT TO EXTERNAL INITIATIVES Explanation of how the organization applies the precautionary principle

Weight of transported, imported, exported or treated waste deemed hazardous under the Basel Convention

EN.26

4.11

substances that

Marcopolo has

not received any fines for EN. 28

ENGAGEMENT WITH STAKEHOLDERS

noncompliance with environmental laws and regulations

4.14

List of the organization engaged stakeholder groups

06 to 09

4.15

Basis for the identification and selection of stakeholders with whom to engage

06 to 09

4.16

Approaches to stakeholder engagement

06 to 09

4.17

Key topics and concerns raised through stakeholder engagement

06 to 09

66 GRI Index

Monetary value of significant fines and total number of non-monetary sanctions for

non-compliance with laws or environmental regulations

EN.30

Total investments and expenses in environmental protection by type

GRI Index 67

Sustainability Report 2014 Indicators

Description

Page

Indicators

INDICATORS RELATING TO LABOR PRACTICES AND DECENT SOCIAL WORK Total employees by type, employment contract and region of employment

LA.2

Total number and turnover rate of employees by age group, gender and region

LA.3

Benefits provided to full-time employees

LA.4

Percentage of employees covered by collective bargaining agreements

LA.7

Rates of injury, occupational diseases, lost days, absenteeism and work-related fatalities by region

Average hours of training per year and per employee by employee category

LA.12

Percentage of employees who regularly receive performance and career development analysis

Page

SOCIAL INDICATORS REGARDING HUMAN RIGHTS

LA.1

LA.10

Description

47 and 48

HR.9

Total number of incidents involving the violations of indigenous people rights and actions taken by the company

There are no indigenous areas around

SOCIAL INDICATORS REGARDING THE COMPANY No cases of S.04

Actions taken in response to incidents of corruption

corruption were identified in the

52 and 53

period

There are no S.06

Policies of financial contributions to political parties, politicians and institutions

clear policy for this type of contribution

SOCIAL INDICATORS REGARDING HUMAN RIGHTS HR.2

Contracted companies and critical suppliers that have undergone assessments on human rights and

S.07

Number of lawsuits for unfair competition

S.08

Description of significant fines and total number of non-monetary sanctions

the actions taken HR.3

Total hours of employeeâ&#x20AC;&#x2122;s training on policies of procedures concerning aspects of human rights

There were 54

Number of incidents of discrimination and actions taken

no fines or sanctions in the

relevant to operations, including the percentage of employees who received training HR.4

There was none

period There were no reports in 2014

PERFORMANCE INDICATORS REGARDING PRODUCT LIABILITY

There were no HR.5

Identified operations in which the right to exercise freedom of association, collective bargaining, and actions taken to support these rights may be at significant risk

reports during the SA 8000

PR.1

Policy for the consumer health and safety while using the product

audits carried out

There were no

in 2014 There were no HR.6

Operations identified as high risk for incidents of child labor, and measures taken to contribute to the elimination of child labor

Non-conformities related to the impacts caused by products and services PR.2

period

the SA 8000 in 2014

There were no PR.4

Non-conformities related to the labeling of products and services

Identified as high risk for incidents of forced or compulsory labor, and measures taken to contribute to the elimination of forced or compulsory labor

reports during the SA 8000

period PR.5

Practices related to customer satisfaction including survey results

audits carried out in 2014

reported cases of this type in the

There were no HR.7

reported cases of this type in the

reports during audits carried out

20 and 21 No cases of non-

PR.7

Cases of non-compliance related to the communication of products and services

compliance have been reported

68 GRI Index

GRI Index 69

Sustainability Report 2014 Indicators

Description

Page

PERFORMANCE INDICATORS REGARDING PRODUCT LIABILITY

Contact Address There were no

PR.8

Proven complaints regarding breaches of customer privacy

Production credits

reported cases of this type in the period

Marcopolo - Unidad de Ana Rech | 2.4 Av. Rio Branco, 4.889 – Barrio Ana Rech 95.060-145 - Caxias do Sul - RS - Brasil Telephone +55 54 2101 4000 Open Channel - www.marcopolo.com.br

There were PR.9

Fines for non-compliance concerning the provision and use of products and services

no fines in the

2014 MARCOPOLO SUSTAINABILITY REPORT

period

Execution Human Resources Division Marketing Division

Publication July 2015

President of the Board of Directors Mauro Gilberto Bellini

Sustainability Committee Eliana Zanol de Oliveira - Environmental Engineering Irina Eberhardt - Human Resources Thiago Arrue Deiro - Investor Relations

Production, Editing and Review Adriana Silva Comunicação & Conteúdo NMOTION

Graphic Design Original Branding+Design

Printing Gráfica São Miguel

Photography ACCJ Fotografías Aéreas • Photo Archive Internal Communication Marcopolo Photo Archive Marketing Marcopolo • Denise Boff Gelson Mello da Costa • Júlio Soares Luiz Chaves • Maryo Franzen Paquito Masiá • Vitor Leite

Contact | 3.4 ri@marcopolo.com.br recursoshumanos@marcopolo.com.br

Free Distribution We thank all the professionals from Marcopolo companies that contributed to this report. This publication is the responsibility of Marcopolo S.A.

70 GRI Index

Production Credits 71