Sustainability Report

Transcription

1 Sustainability Report

2

3 CROP YEAR BIOSEV SUSTAINABILITY REPORT 3 CONTENTS OVERVIEW 4 BIOSEV 4 HIGHLIGHTS OF THE 2014/2015 CROP YEAR 6 LEADING INDICATORS 8 RECOGNITION 9 MESSAGE FROM THE MANAGEMENT 10 ABOUT 13 MATERIALITY AND SCOPE 13 STRATEGY 16 DIRECTION AND VISION OF THE FUTURE 17 Stakeholder engagement 18 Commitments and certification 20 GOVERNANCE 22 Ethical behavior 23 Risk management 23 Supply chain risks 24 PERFORMANCE 26 OPERATIONAL MANAGEMENT 26 Operational performance indicators 27 Product quality and responsibility 30 FINANCIAL RESULTS 31 Capital markets 33 PERSONNEL MANAGEMENT 34 Health and safety 37 Training 39 ENVIRONMENT 41 Impact of transportation and logistics 41 Management of emissions 41 Management of water resources 42 SOCIETY 46 GRI G4 CONTENT INDEX 49 CORPORATE INFORMATION 54

4 4 CROP YEAR BIOSEV SUSTAINABILITY REPORT Overview BIOSEV Biosev S.A. is now the world s second largest sugarcane processor, with a processing capacity of 36.4 million metric tons per year, yielding 2.5 million tons of sugar and 1.6 million cubic meters of ethanol, as well as the exporting of 1,346 GWh of electricity generated from biomass. The 2014/2015 harvest employed 15,200 people and 1,200 suppliers on 340,000 hectares of managed lands. GRI G4-3 Acting through administration centers in the state of São Paulo, in the municipalities of São Paulo and Sertãozinho, 11 agribusiness units spread across four clusters in the Southeast, Center-West and rtheast of Brazil and a terminal in the port of Santos (São Paulo state), the company covers all the production stages, from the planting, harvesting and processing of sugarcane, to storage, logistics and the marketing of products in Brazil and 27 other countries across rth America, South America, Africa, Europe, Asia and the Middle East. GRI G4-6 The company has various product lines in the sugar, ethanol and animal feed businesses and sells its products to companies in the food, beverages, cosmetics, pharmaceutical and fuel distribution sectors. In the retail sector, it sells sugar under the Estrela and Dumel brand names and the former is one of the market leaders in the northeast of Brazil. Moreover, it also sells the excess electricity generated by nine of its self-sufficient agribusiness units. Biosev was founded in 2000, as a result of the acquisition of Usina Cresciumal now the Leme unit by the Louis Dreyfus Commodities Group, its controlling shareholder. The company went public in April 2013 and its shares are traded on the São Paulo Stock Exchange (BM&FBovespa). GRI G4-7

5 MAP OF COMPANY ACTIVITIES GRI G4-6, G4-8 CLUSTERS AND UNITS Processing capacity (million metric tons/year) rtheastern cluster 3.0 Estivas Arez (RN) Giasa Pedras de Fogo (PB) Leme-Lagoa da Prata cluster 5.3 Maracaju Maracaju (MS) 1.8 Rio Brilhante Rio Brilhante (MS) Leme Leme (SP) Lagoa da Prata Lagoa da Prata (MG) 3.2 Ribeirão Preto cluster 18.0 Passa Tempo Rio Brilhante (MS) 2.1 Vale do Rosário 6.5 Morro Agudo (SP) Continental Colômbia (SP) UMB Morro Agudo (SP) Sertãozinho administration center 6.1 Santa Elisa Sertãozinho (SP) Mato Grosso do Sul cluster 10.1 São Paulo administration center Guarujá Sugar Export Terminal (TEAG) Santos (SP) te: does not include the Jardest unit (Jardinópolis/SP), which was mothballed as of the 2013/2014 crop year. The Brazilian federal states, in alphabetical order, are Mato Grosso do Sul (MS), Minas Gerais (MG), Paraíba (PB), Rio Grande do rte (RN) and São Paulo (SP).

6 HIGHLIGHTS OF THE 2014/2015 CROP YEAR During the 2014/2015 crop year, Biosev held consultations with its stakeholders that led to the drawing up of a hierarchy of the topics that have the greatest impact inside and outside the organization. The following are considered to be the material issues, showing their respective highlights during the period. GRI G4-19. G4-27 Introduction of improvements in the reuse of condensed water, boiler optimization, adjustments to the cane crushers, installation of cooling towers and industrial washing using recycled water Management of water resources Processing of 28.3 million metric tons during the crop year Engagement with suppliers regarding the new Forest Code and the Rural Environmental Register (CAR) Management of social and environmental risk in the supply chain NET REVENUES Economic performance R$ 4.5 billion R$16 million Free Cash Flow (FCF) Increase of 3.1% in sugarcane TRS* (128.7 kg/t) NBR ISO 22000:2006 certification of the Estivas unit Product quality and responsibility Increase of 16.7% in energy revenue * TRS: Total Recoverable Sugar Sectorial commitments and certification

7 Resilience to climate change Strategic presence in four agribusiness clusters, with geographical distribution that makes it possible to mitigate the climate risks Mato Grosso do Sul rdeste Leme-Lagoa da Prata Ribeirão Preto Management of emissions Emissions from renewable sources account for 87% of the total, amounting to 0.24 tco 2 e per tonne of sugar produced, compared to 0.23 tco 2 e in the previous crop year Employee training, health and safety Investment of R$ 13.7 million In health and safety Reduction of 3.6% in the Occupational Accident Frequency Rate Decline of 16.0% in the Occupational Accident Severity Rate Social and environmental impact of transport and logistics Start of the Participatory Social Analysis, which will be condensed into a map of the social, environmental and economic impacts of the company s operations Investment of R$ 448,500 in community action Social and economic impacts: local development and relations with stakeholders CORPORATE GOVERNANCE and the MANAGEMENT OF SOCIAL AND ENVIRONMENTAL RISKS is a matter that cuts across all the materiality issues, permeates the entire business and is a thread running through every aspect of the company and its activities Investment of R$ 9.9 million in environmental preservation and management The World Bank s International Finance Corporation (IFC) became a Biosev shareholder

8 8 CROP YEAR BIOSEV SUSTAINABILITY REPORT LEADING INDICATORS GRI G4-9 ECONOMIC-FINANCIAL 2012/ / /2015 Change: 2013/2014 to 2014/2015 Net revenue (R$ million) 4,152 4,267 4, % Gross profit (R$ million) cash 1,848 1,641 1, % Adjusted EBITDA (R$ million) 1,286 1,147 1, % Adjusted EBITDA margin 31.0% 26.9% 29.6% 2.7 p.p. Net income (R$ million) , % Adjusted net debt (R$ million) 3,660 3,302 4, % ASSETS Total assets (R$ million) 9,737 9,529 10, % Net equity 2,464 1, % SHARES 1. of shares (common stock) - 206,810, ,628, % Share price on March 31st (R$/share) % Market value (R$ million) - 1,758 1, % Average daily financial volume (R$ 000) % OPERATIONAL Processing ( 000 metric tons) 29,533 30,009 28, % Company 18,515 17,623 17, % Third parties 11,018 12,386 11, % Utilization of installed capacity (%) 73.8% 79.2% 77.8% -1.8% Production (thousand tons of TRS) 2 3,860 3,767 3, % Sugar ( 000 metric tons) 2,136 1,723 1, % Ethanol ( 000 m 3 ) 952 1,150 1, % Mechanization of the harvesting 93% 94.7% 94.9% 0.2% Electricity co-generation for sale (GWh) % SOCIAL-ENVIRONMENTAL Total employees 16,450 16,124 15, % Water consumption/ton of % processed sugarcane (m 3 /tc) 3 Greenhouse gas emissions (tco 2 e/tc) % 1 Biosev s shares only started trading at the São Paulo Stock Exchange on April 19, TRS = Total Recoverable Sugar 3 Total emissions in tco2e = metric tons of carbon equivalent; tc = tonne of sugarcane

9 CROP YEAR BIOSEV SUSTAINABILITY REPORT 9 RECOGNITION COCA-COLA FEMSA PREMIUM SUPPLIERS AWARD Lagoa da Prata and Santa Elisa units BEST-SELLING BRANDS Presented to Estrela sugar, in the Wholesale Distributor and Neighborhood and Supermarket (up to four checkouts) Retail Segments, according to a Nielsen survey 12TH BRAZIL AGRIBUSINESS VISION AWARD Presented by Visão da Agroindústria magazine, in the sugar Logistics and Transportation category TOP 10 IN BIOENERGY, IN THE 2014 AGRIBUSINESS YEARBOOK Organized by Globo Rural magazine, showing the ranking of the 500 largest agribusiness companies 2014 MASTERCANA BRAZIL AWARD Organized by MasterCana magazine, in the Performance-Strategy & Management category RURAL MERIT AWARD Organized by the FAEPA/SENAR system and presented to the Giasa unit FERMENTEC EXCELLENCE AWARD Presented by the Fermentec research and consultancy center to the Santa Elisa and Vale do Rosário units

10 10 CROP YEAR BIOSEV SUSTAINABILITY REPORT MESSAGE FROM THE MANAGEMENT GRI G4-1,1. G4-2 The 2014/2015 crop year saw important progress in our business plan, as we constantly strive for increased operational efficiency, with staff fully engaged in achieving our goals. This has been a time for consolidating the decentralized operating structure, with its four agribusiness clusters, that we set up at the end of the previous crop year. So, despite the adverse climate conditions, with a record drought in southeastern Brazil, we were able to meet the priority targets set at the beginning of the crop year, notably a free cash flow (FCF) of R$ 16 million, which exceeded the neutral FCF target, and reduction of the company s short-term debt, from 36% to 26% of total debt. At the same time, there were important advances in employee health and safety aspects, with a 3.6% reduction in the accident frequency rate and a 16% decline in the severity rate, and progress in developing a meritocratic model, with remuneration linked to performance. Closeness is important to our relations with suppliers, clients and local communities. We moved the managers of our operating area to the Ribeirão Preto complex, designed to foster integration amongst teams and management agility, understanding that our business is agricultural in nature. We seek the best operating practices, taking a longterm view, because we understand that only in this way can we ensure our sustainability. We are moving ahead in the belief that the value chain has a key role to play in our business. As one of the leading companies in the sector, we have clearly assumed the commitment to being an important link in that chain and are dedicated to deepening these relationships. Through the support of the Mais Cana (More Cane) project, suppliers are playing a more effective role in our planning. We also strive to be closer to the end customer, boosting our sales of value-added products such as liquid sugar and neutral ethanol, while augmenting our participation in the energy market. Establishing the clusters also enabled closer relations with the local communities neighboring our industrial and agricultural operations, allowing us to pass on our values in activities relating to education and health, promoting Biosev s integration within these areas and building stronger and long lasting ties based on trust. In this respect, during the next crop year we will move ahead with the Participatory Social Analysis at all our units, which will enable us to draw up a map of the social, environmental and economic impacts of our activities and, based on that, adopt effective management measures. In-house, we have made major progress in developing our cultural values, clearly defining the pillars of the Biosev spirit and our way of doing things. Three dimensions to this have been determined achievement, teamwork and relentless pursuit of excellence with a view to improving our performance while always remaining grounded in the basic issues of health, safety and the environment. We faced the severe drought with the support of what we call the Alavancas (Leverages) project, through which we seek ideas that will influence our results, while overcoming adversities presented by the external environment. An example of this is the development of the electric energy business, operating cogeneration plants outside the harvesting period

11 CROP YEAR BIOSEV SUSTAINABILITY REPORT 11 Despite the adverse climate conditions, with a record drought in southeastern Brazil, we were able to meet the priority targets set at the beginning of the crop year" by using outside biomass sources such as grass, urban pruning residue, straw and wood chips which enabled us to generate 10% more electricity than was obtained using only sugarcane bagasse. As a result, the energy business has become more important to our portfolio and enhanced the company s resilience. This progress was reinforced during the year with the International Finance Corporation (IFC) taking a stake in the company s share capital, a sign of the confidence this strategic investor has in our business plan and the quality of Biosev s management. We are aware that financial and operational discipline and the application of good business strategies are developing the company s backbone for ongoing and strong productivity gains. Rui Chammas CEO

12 12 CROP YEAR BIOSEV SUSTAINABILITY REPORT

13 CROP YEAR BIOSEV SUSTAINABILITY REPORT 13 About this Report For the fourth year running, Biosev is presenting its Sustainability Report, providing information about the economic, social and environmental performance of its operations in Brazil s Southeast, rtheast and Center- West regions. The information refers to the 2014/2015 crop year, covering the period from April 1, 2014 to March 31, GRI G4-28, G4-30 Preparation of the document followed the guidelines of the Global Reporting Initiative (GRI), version G4, and addresses the most significant considerations that have had the greatest impact, from the point of view of the company and its principal stakeholders. The social and environmental data are based on Brazilian labor standards and the ISO 9001, ISO and Bonsucro certifications. The financial indicators, audited by Deloitte Touche Tohmatsu, follow the international accounting standards of the IFRS (International Financial Reporting Standards) and, in addition to Biosev S.A. and its subsidiary Biosev Bioenergia S.A., include the companies Biosev Bioenergia Internacional S.A., Biosev Bioenergia Ltda., Bioenergia Finance International B.V., Biosev Bioenergia S.A., Biosev Terminais Portuários e Participações Ltda., Biosev Passatempo Bioenergia S.A., Crystalsev Comércio e Representações Ltda., Sociedade Operadora Portuária de São Paulo Ltda., Terminal de Exportação de Açúcar do Guarujá Ltda. (TEAG); Crystalsev Participações Ltda., Crystalsev Internacional S.A., Crystalsev Fomento Ltda., Crystalsev Serviços de Intermediação de Negócios Ltda., Crystalsev Bioenergia Ltda., Indumel Indústria e Comércio de Melaço Ltda. and Agrícola e Comercial MB Ltda. An outside auditor has not examined the non-financial information. GRI G4-17. G4-33 MATERIALITY AND SCOPE GRI G4-18 Biosev introduced a new materiality process for this edition, so as to be able to identify the elements that, in the opinion of the stakeholders, are most significant to the business, taking into consideration the impacts, risks and opportunities. BSD Consulting was responsible for determining the themes for the purpose of structuring the content, in accordance with the GRI recommendations and the principles of the AA1000 standard. The topics were then hierarchically organized in a materiality matrix, using quantitative, qualitative and subjective analysis that weighted the influence criteria, in the assessment of the stakeholders, and the importance of the economic, social and environmental impacts. A total of 11 priority themes were identified in the process, one of which, Corporate Governance and the Management of Social and Environmental Risks, affects all the others.

14 14 CROP YEAR BIOSEV SUSTAINABILITY REPORT STAGES OF THE MATERIALITY PROCESS 1 EXAMINATION OF SECONDARY INTERNAL AND EXTERNAL SOURCES Analysis of Biosev s documents (annual reports, results of the previous materiality assessment, social and environmental programs and projects); benchmark companies in the sugar-energy sector; sectorial studies; and research into media coverage of the company and the sector. 2 CONSULTING IN-HOUSE STAKEHOLDERS Social analysis through 32 interviews with internal stakeholders superintendents of the clusters, managers and directors with the results presented to the Executive Board. 3 MATERIALITY MATRIX AND VALIDATION Determining of the material topics for the report content, using quantitative, qualitative and subjective analysis, taking into consideration the influence on the stakeholders assessments and the importance of the company s economic, environmental and social impacts.

15 CROP YEAR BIOSEV SUSTAINABILITY REPORT 15 SCOPE OF THE MATERIALITY TOPICS SUPPLIERS OF INPUTS BIOSEV AGRICULTURAL INDUSTRIAL SALES AGRICULTURAL SUPPLIERS LEGEND Economic performance (G4-EC1) Corporate governance and the management of social and environmental risks (GRI G4-34 to G4-40 and G4-42 to G4-50) Sectorial commitments and certification (GRI G4-15 and G4-16) Product quality and responsibility (GRI G4-PR1; G4-PR3 and G4-PR9) Employee training, health and safety (GRI G4-LA1; G4-LA4; G4-LA6; G4-LA9; G4-LA12; G4-LA13 and G4-LA16) Management of social and environmental risks in the supply chain (GRI G4-LA15; G4-HR5; G4-HR6; G4-HR8; G4-HR11; G4-HR12; G4-SO10; G4-EN29 and G4-EN33) Management of emissions (GRI G4-EN17; G4- EN29; G4-EN30; G4-EN33 and G4-EN34) Social and environmental impacts of transport and logistics (GRI G4-EN17; G4-EN29; G4-EN30; G4-EN33; G4- EN34; G4-SO10; G4-SO11; G4-LA16 and G4-HR12) Management of water resources (GRI G4-EN8; G4- EN12; G4-EN22; G4-EN29; G4-EN33 and G4-EN34) Resilience to climate change (GRI G4-14; G4-EC2 and G4-EN19) Social and environmental impacts: local development and relations with stakeholders. (GRI G4-26; G4-27; G4-EC8; G4-HR8 and G4-SO1)

16 16 CROP YEAR BIOSEV SUSTAINABILITY REPORT Strategy and management The 2014/2015 crop year saw the consolidation of the new organizational structure established in the previous cycle, with the setting up of four agribusiness clusters Ribeirão Preto, Leme/ Lagoa da Prata, Mato Grosso do Sul and the northeast of Brazil. During this process, the company reviewed its strategic positioning and way of doing business and devised a new Biosev vision and spirit, based on three pillars: achievement, teamwork and excellence. GRI G4-56 The new concept has been disseminated among the management and should be widely disclosed among the teams during the 2015/2016 crop year, thereby permeating relations between the company and its employees, customers, suppliers and partners. BIOSEV VISION To be the leading sugar and energy producer by generating sustainable results from land, partnerships and knowledge and efficiently producing food and energy to serve the needs of our clients. BIOSEV SPIRIT Success: what you obtain with a vision that is both ambitious vision and aligned with Biosev s standards. Teamwork: union that strengthens the organization s relationships and makes the group more agile for solving problems or attaining results Excellence: excellent level of quality in practices, processes, services and products, confirmed by high levels of performance and stability over time. ATTITUDES Leadership Respect for differences Demanding high standards Focus on the result Transparency Doing the right thing Creativity Engagement Knowledge Benchmarking Desire to serve Productivity Discipline

17 CROP YEAR BIOSEV SUSTAINABILITY REPORT 17 DIRECTION AND VISION OF THE FUTURE To fulfill this vision of the future, it was decided that the company's management focus would concentrate on three pillars: asset optimization; product and market exploitation; and reduction of financial leverage. 1 Optimizing the four asset groups: 1) biological; 2) harvesting and transportation; 3) sugar and ethanol; and 4) co-generation. Which means: Using the most advanced agricultural, industrial and information technology, such as agricultural automation, precision agriculture and the introduction of new varieties of sugarcane, among others, in order to attain the best market performance indices. Improving the logistics infrastructure (transport, warehousing and port terminals) Exploiting products and markets Using market intelligence to allow flexibility in the sugar and ethanol production mix, so as to ensure a balance in relation to price movements and to identify the best time for marketing products and the most profitable markets. Assigning priority to higher value-added products, such as liquid sugar Reducing financial leverage Extending the debt profile, taking advantage of the completion of the growth cycle by means of acquisitions and investment in augmenting capacity. At the close of the crop year, the adjusted net debt was 3.1 times the cash flow generation, as represented by the EBITDA. Boosting electricity co-generation and export capacity by expanding the use of supplementary fuels, such as sugarcane straw, elephant grass and other forms of biomass. Developing supplier loyalty, through an integrated view of the supply chain, so as to ensure that sugarcane supplies meet the current and future needs of the company, while maintaining high quality and competitiveness. Qualifying and systematizing the processes, to ensure operational excellence. Assign priority to higher value-added products, such as liquid sugar

18 18 CROP YEAR BIOSEV SUSTAINABILITY REPORT STAKEHOLDER ENGAGEMENT GRI G4-DMA. G4-24. G4-25. G4-26. EC8. SO1 PARTICIPATORY SOCIAL ANALSIS To deepen its relations with stakeholders, in 2014 the company surveyed the population groups linked to its 11 operating units. Based on this list, stakeholder identification improved and a Participatory Social Analysis process was initiated. It will be carried out in three stages, to map out the social, environmental and economic impacts of the company's activities. The analysis will be completed at the beginning of the 2015/2016 crop year, with the condensed results presented as a map of the social, environmental and economic impacts, in support of a Stakeholder Engagement Plan, designed to help sustain the dialogue opened up by the process. Stage 1 Interviews conducted in-house with the company's management (head office and units) to update the stakeholder mapping and determine Biosev s impact on the communities where it operates. Stage 2 External interviews with key persons for relationships, including some in the public sphere and experts in fields identified as priority areas. Stage 3 Organizing discussion panels with representatives of local communities in the vicinity of the company s units.

19 CROP YEAR BIOSEV SUSTAINABILITY REPORT 19 ENGAGEMENT ACTIVITIES Audience Clients Investors and Shareholders Suppliers Employees Media Academic Sphere Local Communities, Local Government and NGOs Activity Ongoing communication with the Commercial and Quality Control areas Technical visits Customer Care Service (using an 0800 number) for the Estrela and Dumel brands Action Plans for improvements overseen by Corporate Quality Management Participation in meetings and workshops organized by the clients Disclosure of the Food Safety requirements and the ranking of the suppliers Annual satisfaction survey Regular meetings and quarterly conference calls for presentation of results Annual face-to-face meetings with investors, surveying the current scenario and challenges for the sugar-energy sector Public Apimec (Association of Capital Market Analysts and Investment Professionals) meeting Continual contacts through the Origination department Annual meetings with sugarcane suppliers for the presentation of results, good environmental practices, productivity initiatives and labor laws Annual agenda of technical talks on topics relating to fire prevention, traffic control and harvest mechanization, among others Face-to-face communication, through meetings, daily safety dialogues, online and off-line channels, such as the intranet, circulars, newsletters, notice boards, motivational campaigns and recognition, that deals with topics of interest, such as remuneration, training, development, productivity, recognition and integration with the local community Carrying out Internal Communication Analysis, to enhance the communication among employees and breathe new life into the communication channels (Biosev Communication Network) Relationship and disclosure activities for the international, national, regional and specialized media, assisted by media advisors, passing on news, press releases and discussion topics, meeting demands and arranging interviews with executives In a pilot initiative, the Santa Elisa unit welcomed a group from Kansas State University (USA) graduate and post-graduate students, professors and assistants in the Agronomy field and presented the operations and activities connected to the Brazilian sugar-energy sector Program of visits, agenda for dialogue and action related to the social arena, organized by the Social Responsibility area and operational unit management, seeking to involve society in general and, more specifically, the populations in the vicinity of the company s opertions

20 20 CROP YEAR BIOSEV SUSTAINABILITY REPORT COMMUNICATION CHANNELS As part of its stakeholder relations strategy, during this crop year the company set up the Talk to Biosev system, comprising a communication channel for receiving opinions and questions. The aim is to establish a trusting reciprocal relationship with the various population groups, listening to their concerns and demands in a systematic, ongoing and organized manner, so the company can take the necessary steps to deal with and respond to each situation. The company seeks, in this way, to reduce risks and prevent or respond more quickly to possible negative impacts, while simultaneously improving the dialogue and relationship with stakeholders. Talk to Biosev is independently operated by a specialized company to preserve confidentiality and, at the user's discretion, anonymity of the opinions expressed. This toll free 0800 number and the company s Internet and intranet sites are available to receive emergency calls (24-hour service for accidents or fires, for example), customer care service (SAC) requirements and reports of code of conduct violations, as well as suggestions, complaints and questions. Since the channels will undergo a process of structuring and enhancement during the 2015/2016 crop year, it will be possible to systematically register grievances and complaints and to publish the results in the next reporting period. GRI G4-EN34. G4-LA16. G4-HR12. G4-SO11. G4-SO5 COMMITMENTS AND CERTIFICATION Biosev s 11 operating units manufacture products following best practices and based on the national regulatory requirements (RDC 275 Anvisa) that include checking items that are of significance to the food safety management system. During the 2014/2015 crop year, the Estivas unit was awarded NBR ISO 22000:2006 certification, which includes food safety requirements whereby the organization must have control over its production chain from receiving the raw materials to the shipment of end products and demonstrate its ability to control hazards so as to ensure that the food is safe at the moment of human consumption. The Santa Elisa and Lagoa da Prata units are also certified. A trusting reciprocal relationship with the various population groups, hearing their concerns and demands Talk to Biosev

21 CROP YEAR BIOSEV SUSTAINABILITY REPORT 21 QUALITY CERTIFICATION CERTIFICATION Bonsucro EU Production Standard EPA and CARB NBR ISO 9001:2008 NBR ISO 22000:2005 Kosher Certification SCOPE Santa Elisa: the certification for ethanol (anhydrous, hydrous, neutral) and sugar (crystal and VHP) also covers the chain of custody, including plant, company and leased farms and the port facilities. It provides for the reduction of the environmental and social impacts of sugarcane production, embracing a standard of principles, criteria and indicators Vale do Rosário, MB, Santa Elisa, Leme and Giasa: produce ethanol fuel registered under the EPA (US Environmental Protection Agency) RFS2 (Renewable Fuel Standard 2) Program, for sale in the USA Vale do Rosário, MB, Santa Elisa and Leme: for the state of California (USA), the company is registered under the CARB (California Air Resources Board) LCFS (Low Carbon Fuel Standard) Program Santa Elisa: production and sale of sugar (crystal, liquid, liquid invert), ethanol (anhydrous, hydrous, extra neutral, refined, distilled alcohol) and electricity MB: harvesting, loading and transportation of sugarcane, production and sale of crystal sugar, anhydrous alcohol, hydrous alcohol and electricity Vale do Rosário: production and sale of crystal sugar, anhydrous alcohol, hydrous alcohol and electricity Santa Elisa: manufacture of sugar (liquid, liquid invert and crystal) Estivas: production of refined sugar Lagoa da Prata: production of crystal sugar Santa Elisa, MB and Vale do Rosário: production of sugar, anhydrous alcohol and hydrous alcohol at units that meet the criteria of the Jewish community To fulfill its commitment to perform its activities in a sustainable manner and promote the development of the sugar-energy sector, Biosev participates in the bodies that represent the sector, including the Sugarcane Industry Union (UNICA), Mato Grosso do Sul Association of Bioenergy Producers (Biosul) and Siamig, an entity that brings together the Association of Sucroenergy Companies and the trade unions of the Alcohol Manufacturing Industry and the Minas Gerais Sugar Industry. GRI G4-16 In the search for new technologies and new varieties of sugarcane, the company also works with the Canavieira Technology Center (CTC), of which it is a shareholder, Canavialis (Monsanto), and Ridesa Federal University Network (UFSCar SP and MS/UFV units LPT unit/ufrpe NE units). All the company units located in the state of São Paulo are signatories of the Environmental Protocol, a São Paulo state government initiative to develop activities that encourage good environmental practices and the sustainability of the sugar-energy sector, by awarding a compliance certificate that is renewed on an annual basis. Among the main initiatives are bringing forward deadlines for elimination of the burning of sugarcane straw, protection of riparian forests and remaining forests around springs, controlling erosion and adoption of best land use practices. GRI G4-15

22 22 CROP YEAR BIOSEV SUSTAINABILITY REPORT GOVERNANCE Biosev constantly strives for management excellence. The company is listed in the São Paulo Stock Exchange (BM & FBovespa) vo Mercado (New Market), which requires the highest standard of corporate governance, adoption of best practices and equal rights in conducting business. To avoid conflicts of interest, the company observes the standards and practices set out in the Brazilian corporate legislation and the vo Mercado regulations. On top of this, there is the company s Transactions with Related Parties Policy, which lays down the rules governing transactions of that kind, in order to protect the company s interests. CORPORATE GOVERNANCE STRUCTURE The company s corporate governance structure comprises a Board of Directors and an Executive Board. To oversee the management activities and analyze the financial statements, the Bylaws provide for a non-permanent Fiscal Council, to be convened whenever called upon at the shareholders discretion. GRI G4-34 BOARD OF DIRECTORS Highest corporate governance body at Biosev, the Board of Directors is responsible for setting out the general guidelines of the business, such as longterm strategies, company performance control and supervision, as well as overseeing the management and compliance with standards and regulations. The Board meets at least once every quarter to discuss about matters relating to the company s economic, social and environmental performance. The Board has nine members, elected by a General Shareholders Meeting, four of whom are independent (without any link with the company, in accordance with the vo Mercado regulations) and none of whom is a company executive. Members are elected for a two-year term, with the possibility of reelection. BIOSEV HAS THREE COMMITTEES TO ASSIST THE BOARD: Strategic Committee Responsible for reviewing the business plan, risk management policy, significant investment projects and mergers and acquisitions, budget proposals, joint ventures and associations involving the company and its stakeholders. Audit Committee In addition to handling possible assignments determined by the Chairman of the Board of Directors, it is responsible for examining the financial statements, analyzing the Transactions with Related Parties Policy and suggesting possible adjustments, reviewing the proposed independent auditor s fees and the company s compliance policies and practices, as well as analyzing the fraud risk. Human Resources Committee Responsible for reviewing the employee and executive remuneration and benefit policies and plans, in the context of market conditions, and suggesting changes wherever necessary.

23 CROP YEAR BIOSEV SUSTAINABILITY REPORT 23 EXECUTIVE BOARD With members appointed by the Board of Directors, the Executive Board coordinates and supervises the activities of the company, including dealing with risks and compliance with internal standards, laws and regulations, and seeks to conduct the business with a view to achieving the best possible performance in the economic, social and environmental contexts. To mitigate any risk of violating labor rights, the Executive Board is assisted by a Labor Committee, with members provided by the Legal, Operational, Human Resources areas, plus the CEO. In addition to assessing actual and potential cases, the committee seeks to foster preventive action. ETHICAL BEHAVIOR To guide the daily attitudes and behavior of the employees and board members, the company has a Code of Conduct that, together with other internal values, forms an essential part of Biosev s corporate governance. The Code of Conduct is available on the company s institutional and Investor Relations websites and the intranet, and is also presented to new employees as part of the integration process. The document sets out the guidelines for ethical conduct, as well as rules, limits and specific situations aimed at avoiding any risk of corruption. It addresses issues such as discrimination, bullying or harassment, workplace safety, conflict of interest, child labor or forced labor and indigenous peoples. Complaints regarding violations of the code's principles can be made through the Ethics Line, a specific communication channel. All reported cases are registered and submitted to the Audit Committee, which, following analysis by the Internal Auditors, will determine the appropriate action. Another channel is Talk to Biosev, an 0800 phone number operated by a specialized company, which receives different types of contact from the company's stakeholders. (More information about Talk to Biosev on page 20). RISK MANAGEMENT GRI G4-2 Biosev identifies and continuously monitors its risk factors through an integrated management system that applies analytical techniques to assessing aspects and impacts of all company's activities. Assessment of the impacts of the company s processes and products is carried out by cross-referencing the probability data against the outcomes, yielding a risk matrix, and through analysis of historical data and discussions in multidisciplinary groups. The company may be affected by, among other factors, the revoking of current tax incentives, unfavorable financing conditions, non-compliance with the financial indicators specified in contracts, the risk of accidents in agricultural, industrial and logistics operations, failures or inadequacies in the information management and risk control systems, and the action of social movements. In the economic sphere, the company has a Financial and Risk Management Policy that encompasses prudent parameters and guidelines for all the stakeholders. It is available at the Download Center of the Investor Relations Internet page ( and sets out the medium-term goals, such as leverage limits, and guidelines for the debt structure and management of foreign exchange and price risk. The Risk Management Department handles the calculation, measurement, analysis, mitigation and monitoring of the company s exposure to risk factors, as well as taking the appropriate corrective measures. In its management of environmental risk, the company takes a precautionary stance, whereby "when an activity presents a risk of harm to the environment or to human health, precautionary steps must be taken, even if a relationship of cause and effect has not been fully confirmed, scientifically." GRI G4-14

24 24 CROP YEAR BIOSEV SUSTAINABILITY REPORT SUPPLY CHAIN RISKS GRI G4-DMA. G4-12 The company sees its suppliers as an essential part of the business. There are two kinds of sugarcane supply contracts: partnership or leasing (Biosev takes control of the area and is responsible for all the agricultural operations) and suppliers (whereby suppliers deliver the sugarcane to the mill or, in certain cases, the company picks up the sugarcane from the supplier). During the latest crop year, suppliers provided 39% of the sugarcane used by the company. During the 2014/2015 crop year, Biosev undertook an extensive due diligence process, conducted by a team from the IFC (International Finance Corporation), a new shareholder in the company, which involves eight performance standards, including the management of impacts on the supply chain. Thus, in line with the social and environmental standards, the company has taken steps to manage the impacts on its supply chain. One notable activity during the crop year was a series of talks promoting engagement and providing information about the new Forest Code and the Rural Environmental Register (CAR) for partners and suppliers, with a view to mitigating the social and environmental risks. The CAR is a public record set up to integrate environmental information about rural properties and land tenure to create a database for the purposes of control, monitoring, environmental planning, economic planning and combating illegal land clearance and logging. GRI G4-EN33 The Origination area organizes meetings with suppliers, taking place at the complexes and covering topics such as the challenges and outlook for the sugar-energy sector. SELECTION GRI G4-DMA. 5; G4-HR5; G4-HR6; G4-HR11; SO10 Biosev evaluates economic, technical (logistics and harvest viability manual or mechanical) and legal compliance (environmental conditions, such as a legal reserve and conduct adjustment agreement) considerations when taking decisions on the purchasing of sugarcane and/or forming an agricultural partnership. Furthermore, 100% of the sugarcane supply contracts contain human rights clauses addressing the prohibition of child or forced labor. Manual planting and harvesting are subject to this risk, but no such cases were identified during the latest crop year. GRI G4-EN33; G4-HR12 What is more, the company has been mechanizing its operations and encourages its suppliers to do the same thing, in order to obtain greater efficiency and create a more suitable and specialized working environment. During this latest crop year, the harvest mechanization index reached 94.9%, 0.2 p.p. above the level recorded for the previous harvest. As for the planting, Biosev has consistently invested in raising the efficiency and yield of the harvesters. As a result, the planting mechanization index rose from 86.5% in the previous crop year to 94.0% in the 2014/2015 period. The company also started to make improvements in the systematic management procedures and to ensure that there is no use of child or forced labor in its chain of sugarcane suppliers. MAIS CANA One of the leading initiatives in the company s relations with suppliers is the Mais Cana (More Cane) program, a two-way resource that benefits both Biosev and its service providers. The program has been implemented at all the units and involves a number of tools to promote greater synergy and develop service provider loyalty, while focusing on increasing productivity and reducing costs. (See page 25)

25 CROP YEAR BIOSEV Sustainability Report 25 MAIS CANA BENEFITS Transfer of land for planting sugarcane Land cultivated using the Biosev structure 1,948 hectares Land cultivated using transferred resources 4,091 hectares Total 6,039 hectares Transfer of land for planting legumes Transfers for cultivating soybeans 2,407 hectares Transfers for cultivating peanuts 400 hectares Total 2,807 hectares Purchasing of ICMS from suppliers Total R$ 2,631, Animal feed provided at cost price Descontos sobre defensivos e fertilizantes Pesticides R$ ,11 Fertilizers R$ ,25 Total 42,716 metric tons Total R$ 8,412, Sale of company farms Replenishment/renewal of the sugarcane fields of suppliers and partners Special terms for the sale of sugarcane seedlings Financial advances for the purchasing of sugarcane plants and stumps and agricultural partnerships Transfer of technology through technical presentations te: ICMS is a Brazilian Tax on Goods and Services

26 26 CROP YEAR BIOSEV SUSTAINABILITY REPORT Performance OPERATIONAL MANAGEMENT With our focus on the discipline required to attain excellence and make the greatest possible gains in agriculture, the company s Agricultural Priorities were determined during the period and disseminated to the full agricultural team in publications and training sessions. These will also be the guidelines for our 2015/2016 activities. AGRICULTURAL PRIORITIES Safety - Zero Accidents Planting without Failures, Harvesting without Uprooting Varied crop strains Technology and Automation Auto-pilot/On board computer The company took a number of steps to boost productivity, such as soil improvements that made it possible to cultivate better varieties, setting up yards for the production of organic fertilizers using industrial waste such as filter cake and ash, and a pilot project for pumping stillage, which helps to optimize the use of labor in stillage application in the field and the control of flow rates and applications. Improvements in the practice of alternated planting are currently being studied, with a view to optimizing the crop cycle. Moreover, to ensure the enhancement of processes that involve technology, Biosev maintains partnerships with institutions such as the Canavieira Technology Center (CTC), Ridesa (RB) and Canavialis (CV). And on the subject of technology, since February 2015 the company has been using an Unmanned Aerial Vehicle (UAV), or drone, to take high-definition aerial photographs along a predetermined flight plan, which are used to monitor the sugarcane fields and look out for planting failures, weeds and certain pests. During the latest crop year, the company also began to use pre-sprouted seedlings (PSS), following the introduction of promising new materials for planting in nurseries, resulting in the reduced consumption of seedlings. The process also improves the health of the sugarcane fields and speeds up nursery expansion. The focus in the 2015/2016 crop year will be on investing even more in PSS and studying the results. Taking good care of the equipment

27 CROP YEAR BIOSEV SUSTAINABILITY REPORT 27 SUGARCANE PROCESSING ( 000 TONS) 78+22M 28, / M 30, M 2013/ , / % of capacity 79.2% of capacity 73.8% of capacity OPERATIONAL PERFORMANCE INDICATORS During the 2014/2015 crop year, the amount of sugarcane processed attained 28.3 million metric tons and the capacity utilization rate stood at 77.8%, 1.4 p.p. below the level of the previous year. That 5.6% reduction in the volume of processed sugarcane was mainly due to drought in the states of São Paulo and Minas Gerais, which led to reduced productivity in the sugarcane plantations of the Ribeirão Preto and Leme- Lagoa da Prata agribusiness clusters. The processing of sugarcane from the fields under Biosev management was down by only 2.1% in comparison with the previous crop year. One highlight was the 13.4% increase in the volume processed by the Mato Grosso do Sul (MS) agribusiness cluster, which totaled 7.8 million metric tons. This performance was bolstered by the recovery in cane field productivity, which had been affected by frost in July 2013, and improvements in biological asset management introduced during the crop year. Moreover, the rtheastern agribusiness cluster achieved its best performance in the last three years, processing 2.8 million metric tons of sugarcane and delivering a capacity utilization rate of 94.7%. 13.4% Increase in the volume processed by the Mato Grosso do Sul (MS) Agri-Industrial Cluster, which totaled 7.8 million metric tons

28 28 CROP YEAR BIOSEV SUSTAINABILITY REPORT METRIC TONS OF CANE PER HECTARE (TCH) PRODUCTIVITY GRI G4-EC2 The productivity of the sugarcane plantations, as measured by the TCH (Ton of Cane per Hectare) indicator, amounted to 66.6 t/ha in the 2014/2015 crop year, which was 6.2% lower than in the previous year, also due to the drought in southeastern Brazil. 2012/ / / 2015 The Total Recoverable Sugar (TRS) content of sugarcane for the period was kg/t, an increase of 3.1% compared to 2013/2014. The indicator improved in all regions, but especially in the Ribeirao Preto cluster where the TRS was kg/t, assisted by the drier climate and improvements in plantation management processes introduced during the crop year. The MS cluster s TRS still suffered in the 2014/2015 crop year from the negative effects of frost in In addition to its diversified geographical strategy, with four agribusiness clusters, the company introduced the Leverage Program, comprising a set of initiatives aimed at improving business results and offsetting, among other things, the economic impact of adverse climate events that occurred during the period. TOTAL RECOVERABLE SUGAR (TRS kg/t) / 2013 SUGAR PRODUCTION ( 000 T) 2, / , / ,623 PRODUCTION The production yield in TRS Product was 3.65 million metric tons, a 3.0% reduction over the previous crop year, mainly due to a 6.2% decline in TSH. This was partially offset by a 3.1% increase in the TRS content and, to a lesser extent, by increased manufacturing process efficiency as measured by the Corrected Total Yield (CTY), which was up by 0.3 p.p. The crop mix was devoted more to ethanol, which represented 50.2% of the total production, against 48.9% in the previous crop year. The anhydrous mix (anhydrous ethanol as a proportion of total ethanol produced) was 28.2% this year, 15.3 percentage points less than in the 2013/2014 crop year, due to the diversion of steam (required for the conversion of hydrous to anhydrous ethanol) to the electricity co-generation plants. 2012/ / / 2015 ETHANOL PRODUCTION ( 000 m 3 ) / , / , / 2015

29 Rio Brilhante (MS) CO-GENERATION OF ELECTRICITY FOR SALE ENERGY The 11 Biosev mills are self-sufficient in electricity, which is generated using sugarcane bagasse. Nine of the mills produce surplus energy that is exported to the Brazilian Electricity Grid (SIN), responsible for generation and transmission of electricity throughout Brazil. The electricity co-generated for sale increased by 25.8% in the 2014/2015 crop year, to a total of 896 GWh. This performance was the result of improved productivity from the company s co-generation plants, which in turn is the result of the investments made in recent years, improvements in asset operational management and the generation of electricity by burning biomass sourced from outside the company. The productivity of the co-generation plants, expressed in volume of electricity available for sale per metric ton of sugarcane processed, increased by 19.1%, from 27.1 kwh/t to 32.3 kwh/t, with notable performances from the MS and LL clusters, which recorded respective productivity levels of 48.2 kwh and 38.2 kwh. 896 GWh 2014/ GWh 2013/ GWh 2012/2013

30 30 CROP YEAR BIOSEV SUSTAINABILITY REPORT PRODUCT QUALITY AND RESPONSIBILITY GRI G4-DMA. G4-PR1 To ensure product quality, the 11 operational units follow best manufacturing practices, based on the Brazilian regulatory requirements (RDC Anvisa), involving checking items material to the food safety management system. Management of the regulatory requirements applicable to the company's business is carried out using Ius Natura s CAL software. The technical specifications of the products sold are updated and monitored by Corporate Quality Management, evaluating the impacts on consumer health and safety of all the company s manufactured products and analyzes any physical, chemical or microbiological contaminants. The procedures include preparing Safety Information Cards for the products displaying all necessary information for handling and storage, including physical, chemical and toxicological properties, first aid and fire fighting measures, among others. Verification of the units compliance with regulatory standards for quality certification, which is valid for three years (Santa Elisa, Vale do Rosário and MB are certified), is through internal and external audits, the latter by an outsourced specialist. (See more information under Commitments and Certification, on page 20) LABELING GRI G4-PR3 The technical specifications of all products contain the following information: correct handling, storage conditions, conservation and transportation, restrictions on use and intended use of the product, where applicable, as in the case of sugar. The labels on the packaging of products for retail sale (company brands) meet the Brazilian regulatory requirements, which determine the disclosure of nutritional information, production data for traceability (product type, batch number, production, expiry and harvest date, sequential production number and quantity) and guidance on the origin (production unit) and conservation of the product. Sulphite is considered a potential allergen and its presence in sugar is monitored during the production stages and in the final product. The amounts considered acceptable are those permitted under the Codex Alimentarius (or Food Code), the UN s harmonized international food standards.

31 CROP YEAR BIOSEV SUSTAINABILITY REPORT 31 FINANCIAL RESULTS The company s financial performance presented significant progress in this crop year, reflecting financial and operational discipline and higher prices for sugar, ethanol and electricity, as well as increased sales of other products. Net revenues were up 5.8%, to R$ 4.5 billion, of which 45.7% came from sugar and 37.5% from ethanol, with equilibrium between the domestic (49.9%) and foreign (50.1%) markets. Gross cash profits (excluding depreciation, amortization and the fair value of biological assets) amounted to R$ 1.8 billion, an increase of 7.5%, with a gross margin of 39.1%. Cash generation, as reflected by the adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), grew by 16.3% to R$ 1.3 billion, with a margin of 29.6% (26.9% in the previous crop year). The figure reflects Biosev's improved operational performance and also the results of management improvements introduced during the crop year. NET REVENUES (R$ million) 4, / 2013 EBITDA AND EBITDA MARGIN (R$ million) 1, % 4, / ,148 4, / , % 29.6% TO SEE THE FINANCIAL STATEMENTS, USE AN APP TO READ THIS QR CODE ON A TABLET OR MOBILE PHONE, OR GO TO: Investment totaled R$ 1.1 billion in the 2014/15 crop year, 6.1% less than in the previous year, and was focused on planting (R$ million), cultivation practices (R$ million) and maintenance (R$ million). Free Cash Flow of R$ 16 million was a highlight for the period, representing an important turnaround in relation to the negative R$ 192 million recorded the previous crop year. This was the result of a series of strategic, operational, financial and organizational initiatives, notable among which was a R$ 160 million reduction in the working capital requirement through improved management of materials and supplies and the realignment of supplier payment due dates. 2012/ 2013 INVESTMENTS (R$ million) 1, / / , / / , / 2015 FREE CASH FLOW (R$ 000) 2013/ /15 Variação % EBITDA (adjusted) 1,147,817 1,335, , % Investments (1,205,813) (1,132,339) 73, % Interest (paid)/earned (281,590) (346,880) (65,290) 23.2% Changes in working capital requirement 147, ,561 11, % Accounts receivable (20,620) 4,527 25,147 - Inventory 88,400 52,874 (35,526) -40.2% Suppliers 79, ,160 22, % Free Cash Flow (191,937) 15, ,681 -

32 L L+7+33 L L CROP YEAR BIOSEV SUSTAINABILITY REPORT REVENUES BY TYPE OF SUGAR 2014/ % VHP 16.7% Crystal 7.9% Refined 4.5% Liquid Crystal REVENUES BY TYPE OF ETHANOL 2014/ % Hydrous 32.9% Anhydrous 6.9% Neutral and Industrial DEBT Another highlight of the 2014/2015 crop year was the reduction of the company s shortterm debt, which accounted for 25.5% of the total, compared to 35.8% at the end of the previous year, as is a reflection of Biosev s commitment to extend its debt profile. Two financial market transactions that contributed to that objective stood out in this crop year: in June 2014, the company secured a revolving credit facility in the Advances on Foreign Exchange Contracts (ACC) format, amounting to US$ 440 million and with a three year maturity; and in early 2015 a US$ 318 million loan was taken out, in the form of export prepayments maturing in April At the end of the crop year, gross debt totaled R$ 6.3 billion and adjusted net debt amounted to R$ 4.1 billion, equivalent to 3.1 times the adjusted EBITDA. NET REVENUES BY PRODUCT 2014/ % Sugar 37.5% Ethanol 6.3% Electricity 10.5% Others NET REVENUES BY MARKET 2014/ % Foreign 49.9% Domestic Short-term debt at the end of the 2014/2015 crop year accounted for 25.5% of the total, compared to 35.8% at the end of the previous year.

33 CROP YEAR BIOSEV SUSTAINABILITY REPORT 33 COMPOSITION AND DISTRIBUTION OF ADDED VALUE (R$ 000) GRI G4-EC1 2012/ / /2015 Variação (%) DIRECT ECONOMIC VALUE GENERATED (EVG) 4,995,067 4,912,511 5,454, % 1) Revenues 4,785,813 4,712,543 5,132, % 2) Transfers 209, , , % ECONOMIC VALUE DISTRIBUTED (EVD) 4,995,067 4,912,511 5,454, % 2) Operating costs 3,769,756 4,069,085 3,425, % 3) Employees (remuneration and benefits) 553, , , % 4) Capital providers 641, ,963 1,300, % 4.1) Remuneration of third party capital 1,261,478 1,143,836 1,798, % 4.2) Remuneration of own capital -619,558-1,466, , % 5) Government and society (taxes, fees and contributions) 29, ,395 91, % CAPITAL MARKETS Biosev has been a listed company since April 2013 and its shares are traded at the Brazilian Stock Exchange (BM&FBOVESPA) and included in the portfolios of stock market indices that demand a high standard of corporate governance (IGC) and that comprise the vo Mercado (IGCNM) and offer special tag-along rights (ITAG). The put options in connection with the company s IPO matured on July 21, 2014 and 99.9% (37,402,763 options) of them were exercised at R$ per option, the counterparty being the controlling shareholder. On December 17, 2014, the financial arm of the World Bank, the International Finance Corporation (IFC), became a shareholder in the company through subscription and payment of up to 12,817,750 new shares, equivalent to 5.8% of the total capital, to be issued by Biosev for the sum of R$ 128 million. As a result, the registered share capital has increased to R$ 2,618,213,511 and the number of shares to 219,628,363 common shares. The free float increased to 27.75%. GRI G4-13 SHARE PERFORMANCE 50% EXERCISING OF THE PUT OPTIONS 30% 10% 51,150 (1.8%) -10% -30% -50% Apr/14 May/14 Jun/14 Jul/14 Aug/14 Sep/14 Oct/14 v/14 Dec/14 Jan/15 Feb/15 Mar/15 R$5.62 (-33.1%) Source: Bloomberg, March/2015 IBOV BSEV3

34 34 CROP YEAR BIOSEV SUSTAINABILITY REPORT PERSONNEL MANAGEMENT GRI G4-DMA TOTAL EMPLOYEES GRI G4-LA10 Male Female 2013/ /2015 2, rtheast 2, /2014 3, /2015 Center-West 3, /2014 9, /2015 Southeast 8, Biosev has a large staff, whose members are essential to the development of the business. Guided by the Biosev Spirit, embracing achievement, teamwork and excellence, the company attaches great importance to the organizational climate and seeks to create a participatory environment, with employment opportunities and possibilities for professional growth and fulfillment. (See more information about the Biosev Spirit in Strategy and Management, on page 16) During the 2014/2015 crop year, in addition to the effects of the previous year s mothballing of the Jardest unit, the company also took on some activities that had previously been outsourced and retained the services of employees on seasonal contracts during the off-season. With a total of 15,243 registered employees, headcount was 5.8% lower than the previous crop year. During the latest fiscal year, 100% of Biosev s employees were covered by collective bargaining agreements and there is no inherent risk within the company to freedom of association of this kind, since union membership and participation are allowed. GRI G4-11

35 CROP YEAR BIOSEV SUSTAINABILITY REPORT 35 EMPLOYEES BY REGION GRI G / / /2015 Male Female Total Male Female Total Male Female Total Center-West 3, ,573 3, ,409 3, ,682 rtheast 2, ,710 2, ,578 2, ,502 Southeast 9, ,167 9, ,137 8, ,058 Total 15,362 1,088 16,450 15,011 1,113 16,124 14,153 1,090 15,243 EMPLOYEES BY TYPE AND EMPLOYMENT CONTRACT* GRI G / / /2015 Male Female Total Male Female Total Male Female Total Unlimited time period 2, ,967 2, ,991 1, ,881 Limited time period 12,468 1,015 13,483 12,119 1,014 13,133 12,348 1,014 13,362 Total 15,362 1,088 16,450 15,011 1,113 16,124 14,153 1,090 15,243 *All employees are hired on a full-time basis, including those working in shifts STAFF TURNOVER IN THE 2014/2015 CROP YEAR GRI G4-LA1 Average of employees in the year Average of employees admitted Average of employees dismissed Admission rate (%) Dismissal rate (%) Turnover (%) BY GENDER 15, Female 1, Male 14, BY AGE GROUP 15, to 25 years 2, to 30 years 2, to 40 years 5, to 50 years 3, to 60 years 1, Over 60 years BY REGION 15, Center-West 3, rtheast 2, Southeast 9, DIVERSITY INDICATORS 1 (%) GRI G4-LA12 BY GENDER BY AGE GROUP Superintendents/ Directors/CEO 2013/ / / /2015 Male Female Male Female < >50 < > Managers Supervisors Consultants Coordinators Other positions Percentage of total employees There has been a change in the reporting criteria from 2013/2014 to 2014/2015. In the previous crop year, the position of cluster superintendent did not exist within the company structure and the Consultant and Coordinator categories were not included in the indicator.

36 36 CROP YEAR BIOSEV SUSTAINABILITY REPORT Two projects were set up during period under the personnel management portfolio: one to enhance the leadership and the other to demonstrate appreciation of employees: PEOPLE WHO GET THINGS DONE PROJECT: a pilot project in the rtheastern cluster, that aims to motivate, develop and engage personnel managers to have a direct impact on the company's results. This includes continual leadership development through training divided into modules, backed by monthly meetings addressing subjects such as labor legislation, bullying and sexual harassment, management tools, civil and criminal liability, interview skills, managing training and development, leadership and feedback. The next step will be to implement the project in all of the company s clusters. PEOPLE WHO EVOLVE PROJECT: introduced in Mato Grosso do Sul, this project seeks to recognize employees who participate in the company s ongoing collective growth. It names them and reports on their professional development case histories that exemplify the career opportunities offered by Biosev. It also serves as a stimulus for new employees, reinforcing the importance of partaking in Participatory Management, the program for getting new ideas, both on operational matters as well as suggestions on cost-cutting, quality and Health, Safety and the Environment (HSE). REMUNERATION The company seeks to align its remuneration policy with the best market practices. Furthermore, it offers a benefits package that includes health care, vaccines, pharmacy expense allowance, chartered transportation, transport vouchers, meal vouchers, basket of basic food items, private pension, variable remuneration through a Profit Sharing Program (PSP), and education and language course subsidies. During the latest crop year, it sought to promote greater transparency regarding the individual goals and bonus evaluation model geared to company s results through evaluation sessions. JUAREZ BERNARDINO IZIDIO Career at Biosev Maracaju Unit Industrial Assistant (laboratory) Operator I Operator II Operator III Industrial Leader 04/03/1998 I thank God that my track record is a triumph! I am always dedicated in my work, so that my colleagues can be assured that, with great effort, they also can achieve what I have. ADAILTON FÉLIX PEREIRA Career at Biosev Passa Tempo Unit General Services Assistant 05/03/2012 I thank the company for its rapid recognition of my work. Biosev highly values its employees and the safety to perform the work. Agronomic Development Leader

37 CROP YEAR BIOSEV SUSTAINABILITY REPORT 37 HEALTH AND SAFETY GRI G4-DMA Employee health and safety is one of the subjects that is considered most important to the development of the business. So much so that, rather than being treated as a department, HSE (Health, Safety and the Environment) is being organized as a Division, a model that will be completed in 2015/2016. One of the highlights during the latest crop year was the development of the Prisma Program, which incorporates all activities relating to health, safety and the environment and is evolving in five stages, starting with the most critical points. One of the program's initiatives was establishing the Zero Fatalities and Freedom to Work strategy, which focused on the most critical procedures in terms of safety, such as working at height or involving electricity and vehicle safety. To this end, Seven Golden Rules were determined that place moral obligations far ahead of production concerns. SEVEN GOLDEN RULES 1 Obtain and follow all the recommendations and observations of the Risk Job Authorization (ATR) and Work Permit (PT) 2 Lock out all energy sources before starting the job Only remove machinery safety devices after all 3 the energy sources have been locked out 4 Drive responsibly, for your own safety and that of other people 5 Utilize all Personal Protective Equipment (PPE) and/ or Collective Protection Equipment (CPE), in accordance with the ATR/ PT and safe procedures 6 Report any and all accidents, whether on the way to/ from work, at work or environmental 7 Do not violate the Golden Rules and report all breaches of the Golden Rules During the crop year, a number of detailed inspections were carried out at each of the industrial facilities, where independent experts assessed the risk of fire or explosion and also appraised each of the fixed assets at risk. The high technical level of the assessments enabled the industrial management to make better decisions on investment in industrial infrastructure and provided insurance companies with an up-to-date snapshot of the operational risks. Other existing programs were merged into Prisma, such as Conduct-Based Safety, aimed at improving the safety culture, and the Vehicle Safety Program, focused on disseminating the importance of safe driving to eliminate accidents involving light vehicles and reduce the number of speeding fines. In the latest crop year, there was 100% monitoring of the vehicle fleet and in the 2015/2016 crop year the strategy for vehicle safety management will be enhanced. To assist the management in this context, the company has In-House Accident Prevention Committees (CIPA), whose members are from the industrial/administrative area, CipaTRs, with members from the agricultural/administrative area; and Specialized Services in Safety Engineering and Occupational Medicine (SESMT). All Biosev s units have collective agreements with local labor unions that are renegotiated on an annual basis and contain specific health and safety provisions, such as free work tools and personal protective equipment (PPE) and suitable sanitation facilities, among other things. GRI G4-LA-8 The company also holds an In-House Prevention of Occupational Accidents Week (SIPAT), an In- House Prevention of Rural Occupational Accidents Week (SIPATR) and a Safety Day, all focused on developing the awareness of its teams about the importance of a safe working environment. There is also a lecture program for each participating unit. Talks are given, ergonomic analyses are conducted and calisthenics for employees are organized, as well as distribution of informative materials on topics relating to health and quality of life. As a result of these management and employee engagement actions, almost every accident indicator (with and without lost time) has been reduced as well as the accident frequency and severity rates.

38 38 CROP YEAR BIOSEV SUSTAINABILITY REPORT SAFETY INDICATORS GRI G4-LA6 2012/ / /2015 Change (%) 13/14 X Men Women Total Men Women Total Men Women Total 14/15 NUMBER OF ACCIDENTS NOT INVOLING LOST TIME Center-West % rtheast % Southeast % Total % NUMBER OF ACCIDENTS WITH LOST TIME Center-West % rtheast % Southeast % Total % FREQUENCY RATE INCLUDING ACCIDENTS REQUIRING FIRST AID TREATMENT 2 Center-West % rtheast % Southeast % Total % ACCIDENT SEVERITY RATE Center-West % rtheast % Southeast % Total % 1 Internal reviews have been conducted of accident classification. The indicators for the 2012/2013 and 2013/2014 crop years did not take into account accidents that involved first aid treatment when calculating the rates, unlike the 2014/2015 crop year, when accidents involving first aid were added to accidents with and without lost time. Nevertheless, the company posted a reduction in the number of accidents and in the rates. Furthermore, the frequency rates for the 2012/2013 and 2013/2014 crop years were reviewed and some were altered, to provide an accurate picture. GRI G The accident frequency rate considers the sum of accident with and without lost time and those requiring first aid. The company s senior management monitors the accident frequency and severity rates, calculated according to NBR Accidents are investigated and reported to the employees via corporate , meetings and Daily Safety Dialogues (DDS). Consequently, the experiences acquired as a result of accidents is applied and disseminated through corrective plans aimed at enhancing prevention at all units.

39 CROP YEAR BIOSEV SUSTAINABILITY REPORT 39 INVESTMENT IN TRAINING 2014/2015 Technical training 81.7% Educational subsidies 15.3% Language course subsidies 2.4% Behavioral training 0.6% TOTAL R$ 2,818,622 AVERAGE HOURS OF TRAINING 1 GRI G4-LA9 2013/ /2015 Male Female Male Female Management positions Posts requiring higher education Posts not requiring higher education Overall average Considers all training, including hours of English classes. The figures do not include the training of interns. TRAINING GRI G4-DMA The invests in employee training and development, which in the 2014/2015 crop year amounted to R$ 2.8 million, with an average of 35 hours of training provided per employee during the year. Through its Annual Training Program, the company offers courses to promote awareness in areas such as safety, quality, technical training for specific activities and knowledge acquisition. There is also training for people working at the various operational levels and financial assistance for obtaining qualifications in technical, higher education, postgraduate and English language courses.

40 40 CROP YEAR BIOSEV SUSTAINABILITY REPORT TRAINING PROGRAMS One notable training course at Biosev is the Operator Maintenance Program, which aims to develop the technical skills of the harvester operators for carrying out basic maintenance. The training is for employees in the agricultural area, to provide greater autonomy for operators to solve technical problems with their work equipment. Monitored by specialized outside consultants, more than 200 professionals were trained in the subject during the crop year and the company will expand the program to cover the entire group. The following table presents the most notable training programs: PROJECT LOCATION GOAL RESULTS Operator Maintenance Program Formar Educational Project Biosev Trainee Program Employee Education Program (PET) Digital Inclusion Ribeirão Preto and Mato Grosso do Sul clusters Lagoa da Prata Unit National Estivas Unit rtheastern cluster Improve the availability and operational life of the agricultural machinery, thereby boosting agricultural productivity and reducing the need for outsourcing, by developing the technical skills of the mechanized harvester operators and vehicle maintenance mechanics. In a partnership with the federal government, the company suspends employee contracts during the off-season, but they continue to receive the benefits and training (professional qualifications) for a period of two to five months, subject to a collective bargaining agreement and the formal agreement of the employee. A two-year program to speed up the development of professionals with considerable potential who could assume a coordination post or similar function at the end of the program. The class of started with 19 trainees, 12 candidates for positions in the operational area and 7 in corporate areas. The selection process focused on the major markets for Biosev s activities and the development was organized to provide four weeks of training on job rotation basis. Develop a pedagogical proposal among the employees that meets the need to raise their education levels and will be reflected in improved qualifications and performance at Biosev. A Biosev partnership with the Social Service for Industry (SESI) aimed at the digital inclusion of the employees, using a computer lab with Internet access. Improved availability of the machinery, reduced operational and maintenance costs, career development and increased productivity. Employee training and retention. 70% retention of the trainees taken on in August/2013 and the expectation of hiring 90% of the current trainees. Quality basic education for the company s employees and their dependents, focused on mastering skills for productive inclusion and citizenship. Training and developing Biosev s professionals, helping to reduce digital exclusion and digital illiteracy, while generating new knowledge and enhancing employment opportunities.

41 CROP YEAR BIOSEV SUSTAINABILITY REPORT 41 ENVIRONMENT GRI G4-DMA As with Health and Safety, environmental considerations are managed by the HSE department and activities are coordinated under the Prism Program. Regular qualitative and quantitative environmental monitoring of water resources and atmospheric emissions is carried out. What is more, through a control group, the company monitors the results of water and energy consumption and the generation of effluents, waste, energy and emissions. During the fiscal year, R$ 9.8 million was invested in process improvements and application of technology to minimize the environmental impact of the company s activities. The following items presented the environmental issues that are considered to be of greatest importance to the company, according to the materiality survey. (See more information in About this Report, on page 12). IMPACT OF TRANSPORTATION AND LOGISTICS GRI G4-DMA The company considers the main transportation impacts to be the deterioration of roads and vehicle accidents. Consequently, during this crop year, it increased the use of railways to transport its sugar and occasionally used an ethanol pipeline network to move its ethanol. Around 70% of exported sugar is carried by rail. Moreover, some of the products are transported by clients, whose fleets must comply with requirements to ensure potential impacts are mitigated. Additionally, as part of the action plans defined in accordance with the environmental standards of the International Finance Corporation (IFC), Biosev will survey impacts on access roads to neighboring communities caused by its sugarcane transportation operations and determine control and mitigation measures to reduce such risks and impacts. GRI G4-EN30 MANAGEMENT OF EMISSIONS GRI G4-DMA Total greenhouse gas (GHG) emissions in the 2014/2015 crop year amounted to 7,933,676 metric tons of carbon equivalent (tco2e). This volume is 87% derived from renewable sources and equivalent to tco2e per ton of sugarcane, 3.8% more than in the previous year. The inventory is based on the GHG Protocol international methodology and the ABNT NBR ISO standard and considers all the company s operational units. GRI G4-EN18. G4-EN19 In order to manage the environmental factors, the company monitors the atmospheric emissions GREENHOUSE GAS EMISSIONS GRI G4-EN15. G4-EN16. G4-EN / /2015 Change Emissions considered tco 2 e tco 2 e/tc tco 2 e tco 2 e/tc tco 2 e/tc Scope 1 489, , % Scope 2 3, , % Scope 3 721, , % TOTAL 1,214, ,070, % Renewable sources Scope 1 6,736, ,856, % Scope Scope 3 7, , % TOTAL 6,743, ,863, % TOTAL EMISSIONS (considered + renewable) 7,958, ,933, %

42 42 CROP YEAR BIOSEV SUSTAINABILITY REPORT of its processes using specialized laboratories that issue analytical certificates to assist in the regular maintenance and adjustment of the particulate filter systems. It also has programs for maintenance of its gas scrubbing equipment. The company has looked at different alternatives for expanding electricity co-generation from renewable sources. Using biomass from outside the company such as grass, urban pruning, straw, and wood chips has enabled the co-generation process to be extended into the off-season period. This initiative has brought gains for business efficiency and for the environment. The increased supply of renewable energy from biomass to the national electricity grid has helped reduce greenhouse gas emissions in the rest of the country, since the drought that occurred in some parts of Brazil during the 2014/2015 crop year affected generation of hydroelectric power, leading to increased use of thermal power generation from fossil fuels. Due to the extended period using its own renewable energy, the company also was able to reduce its GHG emissions in relation to energy consumption. The fires that occur in the sugarcane plantations are also a cause of atmospheric emissions in the sugar and ethanol sector. Due to the droughts that have occurred in recent years, fires have been quite frequent and damaging, both to mill production and to the neighboring communities. WHAT IS THE DIFFERENCE BETWEEN BURNING AND A FIRE? Burning is an agricultural practice in which fire is used in a controlled manner to remove straw and facilitate sugarcane harvesting. Fires are uncontrolled outbreaks of fire resulting from natural causes or human action (accidental or criminal). To reinforce the efforts to reduce outbreaks of fire in the cane fields, the company has conducted awareness-building campaigns within the local communities in the regions where it operates and is working on mapping areas of risk and means of control, to reduce the occurrence of fires in areas of sugarcane cultivation within the Ribeirão Preto cluster. This work involves making a detailed analysis, determining the areas that require action due to their critical situation and vulnerability to fires. From this survey, a plan will be drawn up for action to eliminate the risk of fire on those properties, especially those that are considered at high risk. This work will also be adapted and used at the other units. MANAGEMENT OF WATER RESOURCES GRI G4-DMA Water consumption is managed through an inhouse system and consolidated on a monthly basis by the Health, Safety and Environment board. The consumption details are monitored by means of flow meters or estimates (where meters are not installed). For constant improvement of the information management, the company is seeking to have new flow meters installed. To reduce water consumption at its units, certain initiatives were introduced during the crop year, such as improvement in the reutilization of condensed water, boiler optimization, mill adjustments, installation of cooling towers and industrial washing using recycled water. Moreover, in the last crop year Biosev conducted a campaign to raise awareness about water use at all its units. The initiative aimed to promote action to reduce water consumption in operations, disseminate best practices and guide employees in the use of this resource. The campaign included a "Brainstorming" competition, to give recognition to employees who take steps to reduce the water consumption in their homes and to encourage the preservation of this precious resource.

43 ,0 0,3 0,6 0,9 1,2 1,5 0 CROP YEAR BIOSEV SUSTAINABILITY REPORT 43 INITIATIVES 1 MB The MB plant took the initiative to shut off the water cooling system used in sugar manufacturing and to also shut off the water system used in scrubbing the gases found in the boilers, thereby helping to reduce water consumption 2 Maracaju Adjustments at the sugar mill, boiler optimization and the reutilization of condensed water from the pre-evaporators are some examples of initiatives that led to a reduction in water consumption at the unit Reduction of 14% in water consumption at Biosev s units during the 2014/2015 crop year, compared to the previous one Total savings of 34,580,925 m 3 3 Passa Tempo Several improvements were completed to the mill that made the water reutilization process more efficient. Other improvements were made at the plant, such as installing buoys to control the water level in the tank. Use of recycled water in the soot decanter and the reduction of water discharge from the boilers are other measures that are worth mentioning TOTAL WATER WITHDRAWN, BY SOURCE 1 GRI G4-EN8 Underground Surface Total Consumption rate (m 3 /tc) Volume ( 000 m 3 ) , / ,757 39, /2014 5,513 35,482 40, /2015 4,917 29,664 34,581 1 The overall consumption figures correspond to the monthly measurements throughout the crop year. Calculation of the consumption rate (water consumption in cubic meters per metric ton of cane processed) considers only water consumption during harvest months, when the sugarcane is being processed.

44 44 CROP YEAR BIOSEV SUSTAINABILITY REPORT IMPACTS ON BIODIVERSITY GRI G4-DMA. G4-EN12 The significant potential impacts of Biosev s activities on biodiversity relate to pollution, habitat conversion and changes in ecological processes. Among the main activities relating to these impacts are transportation, storage and application of stillage and wastewater in agricultural areas. The stillage and wastewater generated in the company s industrial processes are reutilized and applied in cultivation areas as a supplement to fertilizer, as they also help to improve soil conditions. However, any leak or spill of stillage, wastewater or fertilizer into bodies of water can have a direct impact on aquatic fauna and flora, due to the change in water quality. Furthermore, the application of these resources beyond the soil absorption capacity can jeopardize the soil quality and alter ecological processes. Consequently, Biosev has made investments in the constant improvement of the structures and processes related to the application of stillage and wastewater in the fields. Moreover, the agricultural areas exert constant planning and control of these applications in order to maximize operational efficiency. Hence, they ensure that the planned application will take into account the terrain and the crop requirements, as well as soil fertility, potassium content in the mix and demand for sugarcane, while simultaneously avoiding any potential impacts related to these activities. What is more, every year, all units draw up an Application Plan, which determines the controls to be set for performing the activity and the application methods to be used in the agricultural areas. Inspections are also carried out, along with regular maintenance, in order to ensure the integrity of the storage tanks and waterproofed primary stillage channels. Biosev exercises the control and management of information relating to environmental accidents, whether they are linked to the company s activities or not, using tools and mediums that are shared by all the units. An investigation is conducted into each incident to discover causes, implement corrective procedures and mitigate related impacts.

45 CROP YEAR BIOSEV SUSTAINABILITY REPORT 45 UMB Morro Agudo (SP) TOTAL WATER DISCHARGE GRI G4-EN22 a a VOLUME (m 3 ) 21,993,051 26,429, / / ,007,152 10,025,975 a a RATE (m 3 /tc) / /2014 Wastewater Stillage

46 46 CROP YEAR BIOSEV SUSTAINABILITY REPORT SOCIETY GRI G4-SO1 Biosev sees its relations with local communities, social inclusion and social responsibility as fundamental pillars of sustainability. Consequently, in addition to following the legislation, technical standards and best practices, it has its own Social Responsibility area, responsible for social engagement and investment in the populations living in the vicinity of its units, including making use of the tax incentive laws for that purpose. In addition to its activities, programs and projects, Biosev also engages with trade associations such as Siamig-MG, Biosul- MS, Sindálcool-PB and Unica. It also provides direct channels of communication such as the form on its website, address and toll-free phone number (Talk to Biosev: ), which can be used for suggestions, criticism and questions concerning safety, health, environmental and corporate social responsibility issues, emergencies and reporting misconduct, as well as resolving doubts about the company's activities, among other things. Relations with local communities are seen as one of the pillars of the company s sustainability, and priority in its social programs is given to populations neighboring its operations For the 2015/2016 crop year, the company will introduce Social Responsibility Banners, providing guidelines for the relations with these population groups to adopt a strategic angle that will enhance the efficiency of its programs. To analyze the projects that are to be given priority and support the activities, an in-house committee will be set up to select projects for support. The committee will comprise the superintendents of each agribusiness cluster and representatives of the Human Resources, Communication and Social Responsibility areas.

47 CROP YEAR BIOSEV SUSTAINABILITY REPORT 47 LEADING PROGRAMS PROGRAM / PROJECT Meu vo Mundo My New World Educação para a Sustentabilidade Education for Sustainability Vivenciar, Entender e Multiplicar (VEM) Experience, Understand and Propagate APProximar Get Closer (To Nature) Tax Incentives DESCRIPTION Works for the inclusion of disabled people in the labor market, as apprentices, through activities covering industrial apprenticeship, digital inclusion, citizenship, sports and raising the educational level, over a period of three years. Aims to raise awareness among teachers in the municipal public school system of the importance of reducing the consumption of natural resources and the proper disposal of waste, and the implementation of selective garbage collection. During the latest crop year, the program was introduced in three municipalities in the interior of São Paulo state Aguaí, Colômbia and Morro Agudo. Biosev regularly opens the doors of some of its units to the local community schools, NGOs and other organized social groups so that they see and experience the operations in action. Aims to contribute to the sustainable development of local communities in the vicinity of its Estivas (RN) and Giasa (PB) units, by supporting the implementation of a plan for the restoration and preservation of native forests and permanent preservation areas (APP) in those regions, along with educational workshops and courses for the local population. During the 2014/2015 crop year, six workshops were held and the installation of a nursery, with a production capacity of 50,000 seedlings a year, was completed. Every year the company selects and approves projects to receive support under the laws for the Encouragement of Culture and Sport in the state of São Paulo (ProAC and PIE), in benefit of the communities in the regions where it operates. Among the projects supported in the 2014/2015 crop year were Cia. Minaz, the Ribeirão Preto Cycling Team, the NGO Lacultesp and Bola Livre.

48 48 CROP YEAR BIOSEV SUSTAINABILITY REPORT In specific regard to indigenous and traditional peoples, Biosev recognizes the social organization and land rights of the indigenous communities, under the terms of the applicable legislation. It undertakes to respect the boundaries of the Amerindian lands and will not take or keep possession of such land or buy sugarcane harvested by third parties from such lands. To this end, during the 2014/2015 crop year, the company drew up and published a policy undertaking not to lease land or purchase sugarcane grown on land located within the Amerindian reservations. GRI G4-DMA. G4-HR8 Liga pela Paz (Promoting Peace) Set up by the Inteligência Relacional (Relational Intelligence) publishers and developed in partnership with the education departments of the municipalities where the company has business units, the project has been supported by Biosev for the last five years. It aims to promote a culture of non-violence using material distributed to elementary school students in the municipal public network. Students are evaluated on the development of their behavior and emotional and social skills, through a before test at the beginning of the year and an after test at the end of the school year, the results of which are compared and measured using a variety of indicators. (See more information at www. inteligenciarelacional.com.br/liga-pela-paz) In 2015, more than 200 educators and 400 students from 22 public elementary schools in the municipalities of Lagoa da Prata (Minas Gerais state), Pedras de Fogo (Paraíba state) and Arez (Rio Grande do rte state) will be educated in the Liga Pela Paz methodology. cx EVALUATION OF SOCIAL AND EMOTIONAL SKILLS Overall average 2011 Before test After test % 61.5% 67.9% 58.8% 64.7% 81.9% % 76.3% 2012 LIGA PELA PAZ Schools 530 Educators 12,259 Students

49 CROP YEAR BIOSEV SUSTAINABILITY REPORT 49 GRI G4 CONTENT INDEX FOR AGREEMENT OPTION ESSENTIAL GRI G4-32 GENERAL STANDARD DISCLOSURES STRATEGY AND ANALYSIS Page External assurance G4-1 Provide a statement from the most senior decision-maker of the organization (such as CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and the organization s strategy for addressing sustainability 10 G4-2 Provide a description of the main processes in place to address performance and relevant changes ORGANIZATIONAL PROFILE G4-3 Report the name of the organization 4 G4-4 Report the primary brands, products, and services 4 G4-5 Report the location of the organization s headquarters 54 G4-6 Report the number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report G4-7 Report the nature of ownership and legal form 4 G4-8 Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) G4-9 Report the scale of the organization, including: total number of employees; total number of operations; net sales (for private sector organizations) or net revenues (for public sector organizations); total capitalization broken down in terms of debt and equity (for private sector organizations); quantity of products or services provided G4-10 Report the total number of employees by employment contract and gender; report the total number of permanent employees by employment type and gender; report the total workforce by employees and supervised workers and by gender; report the total workforce by region and gender. Report whether a substantial portion of the organization s work is performed by workers who are legally recognized as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors. Report any significant variations in employment numbers (such as seasonal variations in employment in the tourism or agricultural industries) G4-11 Report the percentage of total employees covered by collective bargaining agreements 34 G4-12 Describe the organization s supply chain 24 G4-13 Report any significant changes during the reporting period regarding the organization s size, structure, ownership, or its supply chain, including: changes in the location of, or changes in, operations, including facility openings, closings, and expansions; changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations); changes in the location of suppliers, the structure of the supply chain, or in relationships with suppliers, including selection and termination G4-14 Report whether and how the precautionary approach or principle is addressed by the organization 23 G4-15 List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses G4-16 List memberships of associations (such as industry associations) and national or international advocacy organizations in which the organization: holds a position on the governance body; participates in projects or committees; provides substantive funding beyond routine membership; views membership as strategic IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES G4-17 List all entities included in the organization s consolidated financial statements or equivalent documents. Report whether any entity included in the organization s consolidated financial statements or equivalent documents is not covered by the report. 13

50 50 CROP YEAR BIOSEV SUSTAINABILITY REPORT GENERAL STANDARD DISCLOSURES Page External assurance G4-18 Explain the process for defining the report content and the Aspect Boundaries. Explain how the organization has implemented the Reporting Principles for Defining Report Content 13 G4-19 List all the material aspects identified in the process for defining report content 6 G4-20 For each material aspect, report the aspect boundary within the organization, as follows: Report whether the aspect is material within the organization. If the aspect is not material for all entities within the organization (as described in G4-17), select one of the following two approaches and report either: the list of entities or groups of entities included in G4-17 for which the aspect is not material or the list of entities or groups of entities included in G4-17 for which the aspects is material. Report any specific limitation regarding the aspect boundary within the organization G4-21 For each material aspect, report the aspect boundary outside the organization as follows: report whether the aspect is material outside of the organization. If the aspect is material outside of the organization, identify the entities, groups of entities or elements for which the aspect is material. In addition, describe the geographical location where the aspect is material for the entities identified. Report any specific limitation regarding the aspect boundary outside the organization G4-22 Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements G4-23 Report significant changes from previous reporting periods in the scope and aspect boundaries There were no changes during the period. STAKEHOLDER ENGAGEMENT G4-24 Provide a list of stakeholder groups engaged by the organization 18 G4-25 Report the basis for identification and selection of stakeholders with whom to engage 18 G4-26 Report the organization s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report preparation process G4-27 Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised each of the key topics and concerns 18 6 REPORT PROFILE G4-28 Reporting period for information provided 13 G4-29 Date of most recent previous report (if any) 2013/2014 crop year. G4-30 Reporting cycle (such as annual, biennial) 13 G4-31 Report the contact point for questions regarding the report or its contents 54 G4-32 Report the in accordance option the organization has chosen. Report the GRI Content Index for the chosen option. Report the reference to the External Assurance Report, if the report has been externally assured. (GRI recommends the use of external assurance but it is not a requirement to be in accordance with the Guidelines.) G4-33 Report the organization s policy and current practice with regard to seeking external assurance for the report. If not included in the assurance report accompanying the sustainability report, report the scope and basis of any external assurance provided; report the relationship between the organization and the assurance providers; report whether the highest governance body or senior executives are involved in seeking assurance for the organization s sustainability report GOVERNANCE G4-34 Report the governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts 22 ETHICS AND INTEGRITY G4-56 Describe the organization s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics 16

51 CROP YEAR BIOSEV SUSTAINABILITY REPORT 51 SPECIFIC STANDARD DISCLOSURES Material aspects DMA and Indicators Page Omissions External assurance CATEGORY: ECONOMIC Economic performance Indirect economic impacts G4-DMA Generic Disclosures on G4-EC1 Direct economic value generated and distributed CATEGORY: ENVIRONMENTAL Water Biodiversity Emissions G4-EC2 Financial implications and other risks and opportunities for the organization's activities due to climate change G4-DMA Generic Disclosures on G4-DMA Generic Disclosures on ,5-17,5-17, G4-EN7,5 Total water withdrawal by source 43 - G4-DMA Generic Disclosures on G4-EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas G4-DMA Generic Disclosures on G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) G4-EN17,5 Greenhouse gas (GHG) emissions intensity G4-EN19 Reduction of greenhouse gas (GHG) emissions Effluents and waste Compliance Transport Supplier environmental assessment Environmental grievance mechanisms G4-DMA Generic Disclosures on G4-EN22 Total water discharge by quality and destination G4-DMA Generic Disclosures on G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations G4-DMA Generic Disclosures on G4-EN30 Significant environmental impacts of transporting products and other goods and materials for the organization's operations, and transporting members of the workforce G4-DMA Generic Disclosures on G4-DMA Generic Disclosures on G4-EN34 Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms Information currently unavailable. Based on the materiality matrix, the company has set the goal of reorganizing its sustainability strategy, during the 2015/2016 crop year, which will lead to changes in the management of this issue

52 52 CROP YEAR BIOSEV SUSTAINABILITY REPORT SPECIFIC STANDARD DISCLOSURES Material aspects DMA and Indicators Page Omissions External assurance CATEGORY: SOCIAL SUB-CATEGORY: LABOR PRACTICES AND DECENT WORK Employment Labor/management relations Occupational health and safety Training and education Diversity and equal opportunity Equal remuneration for women and men Supplier assessment for labor practices G4-DMA Generic Disclosures on G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region G4-DMA Generic Disclosures on G4-LA4 Minimum notice periods regarding operational changes, including whether these are specified in collective agreements G4-DMA Generic Disclosures on G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of workrelated fatalities, by region and by gender G4-DMA Generic Disclosures on G4-LA9 Average hours of training per year per employee by gender, and by employee category G4-DMA Generic Disclosures on G4-LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity G4-DMA Generic Disclosures on G4-LA13 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation G4-DMA Generic Disclosures on Information currently unavailable. Based on the materiality matrix, the company has set the goal of reorganizing its sustainability strategy, during the 2015/2016 crop year, which will lead to changes in the management of this issue , Information currently unavailable. Based on the materiality matrix, the company has set the goal of reorganizing its sustainability strategy, during the 2015/2016 crop year, which will lead to changes in the management of this issue Labor practices grievance mechanisms SUB-CATEGORY: HUMAN RIGHTS Child labor G4-LA15 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken G4-DMA Generic Disclosures on G4-LA16 Number of grievances about labor practices filed, addressed, and resolved through formal grievance mechanisms G4-DMA Generic Disclosures on G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor

53 CROP YEAR BIOSEV SUSTAINABILITY REPORT 53 SPECIFIC STANDARD DISCLOSURES Material aspects DMA and Indicators Page Omissions Forced or compulsory labor G4-DMA Generic Disclosures on External assurance 24 - Indigenous rights Supplier human rights assessment G4-HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor G4-DMA Generic Disclosures on G4-HR7,5 Total number of incidents of violations involving rights of indigenous peoples and actions taken G4-DMA Generic Disclosures on G4-HR11 Significant actual and potential negative human rights impacts in the supply chain and actions taken 24-47,5-47, Human rights grievance mechanisms SUB-CATEGORY: SOCIETY Local communities G4-DMA Generic Disclosures on G4-HR12 Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms G4-DMA Generic Disclosures on , G4-SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs 17, Supplier assessment for impacts on society G4-DMA - Generic Disclosures on G4-SO10 Significant actual and potential negative impacts on society in the supply chain and actions taken Grievance mechanisms for impacts on society G4-DMA Generic Disclosures on G4-SO11 Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms SUB-CATEGORY: PRODUCT RESPONSABILITY Customer health and safety Product and service labeling Compliance G4-DMA Generic Disclosures on G4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement G4-DMA Generic Disclosures on G4-PR3 Type of product and service information required by the organization's procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements G4-DMA Generic Disclosures on G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services Information currently unavailable. Based on the materiality matrix, the company has set the goal of reorganizing its sustainability strategy, during the 2015/2016 crop year, which will lead to changes in the management of this issue.

54 54 CROP YEAR BIOSEV SUSTAINABILITY REPORT CORPORATE INFORMATION BOARD OF DIRECTORS Claude Pierre Ehlinger CHAIRMAN Adrien Dominique Lucien Tardy VICE CHAIRPERSON Adrian Isman MEMBER André Roth MEMBER Antonio Delfim Netto INDEPENDENT MEMBER Cristiano Biagi MEMBER Neil Balfour INDEPENDENT MEMBER Philippe Jean Henri Delleur INDEPENDENT MEMBER Ricardo Barbosa Leonardos INDEPENDENT MEMBER EXECUTIVE BOARD Rui Chammas CHIEF EXECUTIVE OFFICER - CEO Daniel S, Pitta LEGAL OFFICER Enrico Biancheri COMMERCIAL OFFICER Eduardo Neves OPERATIONS OFFICER Paulo Prignolato CHIEF FINANCIAL AND INVESTOR RELATIONS OFFICER Patrick Treuer STRATEGIC PLANNING AND M&A OFFICER Ricardo Lopes AGRICULTURAL OFFICER Reginaldo Sabanai HSE AND COMPETITIVENESS OFFICER Maria Paula HR, COMMUNICATION AND SOCIAL RESPONSIBILITY OFFICER HEAD OFFICE GRI G4-5 Biosev S.A. Av. Brigadeiro Faria Lima, 1, andar São Paulo/SP CEP Telefone: (11) The preparation of this Sustainability Report involved the efforts of the entire Biosev team. Requests for clarifications regarding the content of this publication should be sent by to sustentabilidade@biosev. com GRI G4-31 CREDITS GENERAL COORDINATION AND GRI CONTENT TEXT AND EDITING TRANSLATION GRAPHIC DESIGN AND LAYOUT PHOTOGRAPHS Health, Safety and the Environment HSE Managerial area Corporate Communication Managerial area Editora Contadino Dash Ltda. / Bruce L. Rodger and Steve Yolen Multi Design Biosev image bank

55