SUSTAINABILITY REPORT - CENIBRA€¦ · Forest Stewardship Wood Supply Logistics Water Resources...

The futureis present inevery action

SUSTAINABILITYREPORT

2018

ABOUT THIS REPORTMATERIAL ISSUESMESSAGE FROM THE EXECUTIVE MANAGEMENTORGANIZATIONAL PROFILEMission

Vision

Principles and Values

Activities

MAIN RESULTS

79

13

1516

16

16

17

18

GOVERNANCEEthical Principles and Code of Conduct

Chain of Command and Decision-Making Structure

General Meetings of the Shareholders

Advisory Council

Executive Management

Internal Audit

Secretarial Office for Management Meetings

Compliance

Risk Management

Anticorruption Practices

Fines, Grievances, Complaints, and Lawsuits

2021

21

23

23

23

25

25

25

25

25

25

MANAGEMENT AND STRATEGYIntegrated Management System (IMS)

Certifications

Sustainability

Commitment to Sustainable Development

Strategy

Objectives and Goals

Research, Development and Innovation

COMPETITIVENESS AND ECONOMIC PERFORMANCEEconomic Scenario

Market Scenario

Forestation and Wood Supply

Pulp Production

Sales

Performance Analysis

Capital Investments

Financial Management

Wealth Generation and Distribution

Tax Incentives

2628

28

29

29

52

52

53

54

55

55

55

56

56

56

56

57

57

57

SOCIAL PERFORMANCECommunity Relationship

CENIBRA Institute

Institutional Relations

Professional Training Projects

Specific Communities

Forestation Incentive Program

Supplier Relationship

Customer Relationship

Pulp Logistics

Human Capital Management

Training and Development

Quality of Life Program - Living Better

Occupational Safety and Health

Compensation and Benefits

Relationship with Unions

5861

61

62

63

63

63

64

65

67

68

70

72

74

75

75

ENVIRONMENTAL PERFORMANCEForest Stewardship

Wood Supply Logistics

Water Resources Management

Environmental Recovery

Biodiversity

Private Natural Heritage Reserve (PNHR) - Macedonia Farm

Industrial Operations

Atmospheric Emissions

Greenhouse Gas Emission Inventory (GHG)

Water and Liquid Effluents

Solid Waste

Materials and Energy

GLOBAL REPORTING INITIATIVE (GRI STANDARDS) CONTENT INDEX

7677

77

78

78

79

82

83

83

83

85

86

87

90

ABOUT THISREPORT

CHAPTER 1

CENIBRA’s Sustainability Report is issued annually with an aim to provide our stakeholders with information about the Company’s corporate strategies and operations focused on sustainable development. This report contains consolidated data (from CENIBRA and its affiliated companies) relative to the fiscal year from 1st January through 31st December 2018 and supersedes the 2017 Sustainability Report.

The financial and economic data are disclosed in accordance with Brazil’s Securities and Exchange Commission’s regula-tions and take into consideration the directives, guidance, and interpretations issued by the Accounting Procedures Committee. Moreover, they comply with the standards is-sued by the International Accounting Standard Board (IASB). All economic and financial data were previously audited by Ernst & Young.

The reporting of non-financial data follows the guidelines of the Global Reporting Initiative (GRI), an international entity known worldwide as a benchmark in sustainability reporting. In preparing this Report, we used the latest GRI standards, which favor the monitoring of the Company’s sustainability management evolution. The report structure seeks to reach the “core” option of content definition.

The Sustainability Report was worked out in a multidisci-plinary approach under the coordination of the Governance Advisory Service (ASGOV), and relied on effective coopera-tion among the Company’s organizational units.

There were no significant changes in scope or comprehen-siveness in relation to the previous issue of this report. In the case of historical data series whose figures are different from those previously disclosed, the report provides the cor-responding explanations about data revision or changes in the measurement processes.

Suggestions or requests for additional clarification with respect to this Report should be addressed to CENIBRA’s Corporate Communication department at [email protected].

Sustainability Report 2018 1 About this Report 8

MATERIALISSUES

CHAPTER 2

Sustainability Report 2018 2 Material Issues 10

The Sustainability Report was supported by the corre-sponding Materiality Matrix, which was updated in 2019 through consultation with stakeholders and relied on support by BSD Consulting. As an initial step, an inter-nal workshop was held with an aim to get the Company’s leaders involved in the process of identifying and prior-itizing external stakeholders to be consulted and in the validation of the list of issues for the materiality test. The second stage consisted of interviews with representatives

of the shareholders, executive management, middle man-agement, customers, suppliers, community, local adminis-trations, workers unions, third sector, media, forestry part-ners, and industry experts. The work detected 27 priority subjects, taking into account their level of influence on the stakeholders’ evaluation (vertical axis of the matrix) of the importance for the Company (horizontal axis) of social, environmental, and economic impacts.

Sig

nif

ican

ce t

o s

take

ho

lder

s

Low Medium

Importance of economic, social, and environmental impacts

High

Low

Med

ium

Hig

h

Workers' health and safetyBiodiversity conservation and protectionInnovation, technology and new products

Sustainability governanceLegal compliance and managementEnergy management

Efficient raw material management

Transport and logistics managementEthics in business and grievance mechanismsCustomer satisfaction and confidenceWaste managementDevelopment of small suppliers

Emission managementAdaptation to climate change

Water and effluent managementEconomic and financial performanceSustainable forest stewardshipRegional socioeconomic development

Relationship with shareholdersInstitutional relations with governmentDiversity and inclusionLabor RelationsRespect for human rightsLand managementRaw material availability and storage capacity

Employee training and developmentSupplier evaluation and qualification


Taking the 27 priority matters as a basis, 10 Material Issues were selected as benchmarking elements for the definition of the report content and as a beacon to CENIBRA’s sustainability strategy in the coming years:

Material Issues Related GRI Topic Chapters Origin of Impact

1. Water and effluent management

103 - Management Approach303 - Water

Environmental Performance: » Water Resources and

Effluent Management

Forestry and Industrial Operations

2. Economic and financial performance

103 - Management Approach201 - Economic Performance

Economic Performance and Competitiveness: » Wealth Generation and

Distribution

Company Operations

3. Sustainable forest stewardship

103 - Management Approach308 - Environmental Assessment of Suppliers

Social Performance: » Supplier Relationship

Relationships;Purchasing Transactions

103 - Management Approach307 - Environmental Conformity

Governance: » Fines, Grievances,

Complaints, and Lawsuits

Management and Strategy: » Certifications

Environmental Performance: » Forest Stewardship and


Forestry Operations

4. Regional socioeconomic development

103 - Management Approach413 - Local Communities

Social Performance: » Community Relationship

Relationships;Job and Income Generation Projects and Programs;Forestry and Industrial Operations.

103 - Management Approach204 - Procurement Practices

Social Performance: » Supplier Relationship

Relationships;Purchasing Transactions.

103 - Management Approach203 - Direct Economic Impacts

Social Performance: » Institutional Relations

Economic Performance and Competitiveness: » Wealth Generation and

Distribution

Relationships;Impact management; Infrastructure investments;Forestry and Industrial Operations.


Material Issues Related GRI Topic Chapters Origin of Impact

5. Biodiversity conservation and protection

103 - Management Approach304 - Biodiversity

Environmental Performance: » Biodiversity


6. Emission management

103 - Management Approach305 - Emissions

Environmental Performance: » Atmospheric Emissions


7. Adaptation to climate change

103 - Management Approach305 - Emissions

Environmental Performance: » Atmospheric Emissions


8. Efficient raw material management

103 - Management Approach301 - Materials

Environmental Performance: » Materials


103 - Management Approach302 - Energy

Environmental Performance: » Energy


9. Workers’ health and safety

103 - Management Approach403 - Occupational Health and Safety

Social Performance: » Occupational Health and

Safety

Relationships;Occupational Health and Safety

10. Innovation, technology and new products

103 - Management ApproachManagement and Strategy: » Research, Development

and InnovationCompany Operations

MESSAGE FROMTHE EXECUTIVEMANAGEMENT

CHAPTER 3

Sustainability Report 2018 3 Message from the Executive Management 14

In CENIBRA’s history, 2018 may be described as a year of significantly positive results and major accomplishments. Even though it was a challenging year for Brazil, the Com-pany was prepared and strong enough to face the challeng-es, despite the country’s political and economic scenario.

The year began with all efforts aimed at enhancing the business competitiveness, in pursuit of efficient production processes, cost control, and strong financial discipline. In this respect, measures were taken to efficiently support operations throughout the year, along with employee en-gagement and dedication. Highlights included the R$1,321 million operating profit, the Company’s best result ever, and an increase in Adjusted EBITDA (cash generation) from R$ 905 million in 2017 to R$1,614 million in 2018, leading the EBITDA margin to rise from 41% to 53%. Moreover, im-portant investments in the business were completed, such as the modernization of the wood chipping system and one of the pulp bleaching lines.

We did not overlook our responsibility to remain and evolve on the road to the sustainable development of our opera-tions, either. Issues such as integrated management, busi-ness and process efficiency, product quality, concern about employees’ and contractor personnel’s safety and appreci-ation, care for the environment, support to the socioeco-nomic development of communities within the Company’s areas of operation, personnel qualification, and permanent dialogue with our stakeholders are on our strategic agenda.

Another noteworthy initiative was the organizational cli-mate and engagement survey, which involved all employ-ees. Higher than the market level, CENIBRA’s 89% Favora-bility Index consolidates its strategy of building a better and safer work environment.

The year 2018 was also marked by measures aimed at im-proving our management model, governance, and corpo-rate essence, expressed by our Mission, Vision, Principles, and Values. Among the 2018 initiatives, improvements in our “Management by Guidelines” and “Daily Routine Man-agement” programs should be highlighted, particularly the redefinition of standards for the preparation and monitor-ing of targets and their respective indicators. In addition, we have reinforced our ethics, integrity, and anti-corruption principles through continued compliance training.

2018, the year in which CENIBRA turned 45, saw our com-mitment to sustainability be further bolstered through the updating of our long-term plan set up in 2013 (CENIBRA 40-50 Plan). However challenging it may be to plan for the years ahead, we understand the necessary changes will take place gradually and we must look at reality with new lenses, adopting a pragmatic approach from the begin-ning of any action.

For CENIBRA, the future is present in every action. Our lead-ership is confident and our teams are motivated to make transformation happen. We wish to continue our history with attitudes and actions that will certainly lead to opti-mum market share, growth, and results. Because the road to sustainability is a collective construction, we will seek to attract shareholders, customers, employees, and business partners to join us in the pursuit of our objectives and imple-mentation of our actions, with an aim to share the responsi-bility for achieving excellent results and the commitment to create value for the entire production chain.

Kazuhiko KamadaCEO and

Administrative and Financial Officer Júlio César Tôrres Ribeiro

Industrial and Technical DirectorFumihiko YamadaCommercial Director

ORGANIZATIONALPROFILE

CHAPTER 4

Mission

Generate and distribute wealth in a sustainable manner by processing planted trees.

Vision

Be an everlasting company admired by everyone.

Principles and Values

» Ethics: be respectful and truthful in all relationships;

» Commitment to results: value employees engagement,

innovation, and personal skills;

» Excellence: strive for quality, reliability, and competi-

tiveness;

» Sustainability: ensure competitiveness while meeting

society’s needs and preserving the environment;

» Entrepreneurship: act today while aiming at the future.

Sustainability Report 2018 4 Organizational Profile 16

Activities

Founded on September 13, 1973 in eastern Minas Gerais, Celulose Nipo-Brasileira S.A. (CENIBRA) is a privately-held company controlled by Japan Brazil Paper and Pulp Resourc-es Development Co., Ltd. (JBP). The main shareholders of JPB are Oji Holdings Corporation and Itochu Corporation. CENIBRA’s industrial plant is located in Belo Oriente, state of Minas Gerais. It comprises two bleached short-fiber euca-lyptus pulp production lines with a total installed capacity of 1.2 million tons/year and three regional forest stewardship units, also in Minas Gerais (Guanhães, Nova Era, and Rio Doce). Moreover, it has a dedicated port terminal in Barra do Riacho (ES), in which it holds a 49% interest, and a cor-porate and commercial office in Belo Horizonte (MG), the state capital.

CENIBRA ships 98% of its production to foreign markets, mainly Asia, Europe, and North America. Distribution cen-ters and representation & sales offices are established in these areas to meet the customers’ requirements.

The industrial plant is supplied with wood from the Compa-ny’s own land and leased land, as well as from small farmers that plant eucalyptus under a Forestation Incentive Arrange-ment (the latter answered for 17% of the plant’s wood con-sumption in 2018). With a headcount of 7,618 employees and contractors’ personnel, the Company operates in 54

municipalities, where it is engaged in several social and en-vironmental projects, partnerships with local entities, and other integration and income-generating initiatives with an aim to support the region’s development.

Corporate OfficePortocelIndustrial PlantRegional Forest Stewardship Units

Markets

BRAZIL

NORTH AMERICA

EUROPE

ASIA

JAPAN

CENIBRA’S FORESTATION INCENTIVE PROGRAM FOR FARMERS IS IMPLEMENTED IN

87MUNICIPALITIES IN MINAS GERAIS

Sustainability Report 2018 4 Organizational Profile 17

MAINRESULTS

CHAPTER 5

Main Indicators 2016 2017 2018

General Data

Installed Capacity (ADt) 1,200,000 1,200,000 1,200,000

Number of Employees 4,112 4,197 4,302

Outsourced Personnel 3,227 3,243 3,316

Pulp Production (ADt) 1,200,894 1,220,638 1,200,380

Economic Dimension

Net Revenue (R$ thousand) 1,911,411 2,193,882 3,035,582

EBITDA adjusted (R$ thousand) 678,583 905,429 1,627,700

Net Profit (R$ thousand) 490,845 439,751 766,659

Total Assets (R$ thousand) 4,047,762 4,444,617 5,654,234

Stockholders’ Equity (R$ thousand) 2,826,393 3,174,180 4,341,668

Investments (R$ thousand) 1 389,149 529,308 401,056

Current Liquidity (Current Assets/Current Liabilities) 1.30 1.22 2.32

Indebtedness - Liabilities/Total Assets (%) 30.17 28.58 23.21

Return on Stockholders’ Equity (%) 17.37 13.85 17.66

Environmental Dimension

Purchased Energy Consumption (KWh/ADt) 65.18 63.44 54.23

Fuel Oil Consumption (kg/ADt) 9.46 10.40 10.91

Water Consumption (m3/ADt) 38.00 37.33 36.20

CO2 Emissions - Carbon Dioxide (kg/ADt) 2,726 3,116 3,377

SO2 Emissions - Sulfur Dioxide (kg/ADt) 5.33 0.83 0.29

TRS Emissions - Total Reduced Sulfur (kg/ADt) 0.54 0.02 0.02

Suspended Particulate Matter Emissions (kg/ADt) 1.51 1.56 1.29

COD - Chemical Oxygen Demand (kg/ADt) 9.90 8.65 9.47

TSS - Total Suspended Solids (kg/ADt) 1.52 1.42 1.42

BOD5 - Biochemical Oxygen Demand (kg/ADt) 1.11 0.87 1.01

AOX - Adsorbable Organic Halides (kg/ADt) 0.08 0.07 0.08

N - Nitrogen (kg/ADt) 0.007 0.003 0.003

P - Phosphorus (kg/ADt) 0.017 0.010 0.012

Generated solid wastes (kg/ADt) 208 208 241

Social Dimension

Turnover 2 (%) 0.71 0.72 0.65

Work Accidents in the Company 3 3 5 1

Total Events (with and without time lost) 26 28 21

Average Accident/Employee 0.006 0.006 0.006

Investment per Employee (R$) 337 230 304

Training Hours per Employee 54 54 58

Ratio 4 (%) 1.66 1.62 1.74

1 Values different from those previously disclosed due to improvements in the measuring processes.2 Dismissed Employees/Total Employees.3 With leave.4 Takes into account work hours lost due to both excused and unexcused absences/Available Hours.

Sustainability Report 2018 5 Main Results 19

GOVERNANCECHAPTER 6

Ethical Principles and Code of Conduct

CENIBRA values ethical and moral principles in its relations and respects the laws and regulations applicable to its busi-ness. Such a culture stems from the joint behavior of its employees, through the practical implementation of funda-mental values of truth, transparency, justice, loyalty, mutual appreciation, responsibility, integrity, and participation. Em-ployees formally renew their commitment to the Code of Conduct’s principles and values every year.

CENIBRA’s Code of Conduct is constantly being updated and disseminated to all employees in a continuing educa-tion process, through institutional and onboarding training of newly-hired employees. The following communication channels are made available to record suggestions, com-plaints, and grievances:

» Ethics Channel (e-mail: [email protected] or telephone +55 31 3829-5236);

» Whistleblowing Channel (e-mail: [email protected] or telephone 08002835199).

Chain of Command and Decision-Making Structure

The governance model is founded on a clear definition of the roles and duties of the Advisory Council and Executive Management in the conception, approval, implementation, monitoring, and observance of the Company’s business guidelines and applicable laws.

The adopted governance model and policies have driven the Company’s growth over its more than 45 years of histo-ry. As a result of the specific features of its structure and culture, like compliance and management by consensus, the Company’s procedures are based on principles such as transparency, equality, corporate responsibility, and ac-countability, which aim at orienting the relations among the shareholders, executive management, middle manage-ment, and stakeholders.

All members of the governance management act accord-ing to legal requirements and the conditions set out in our various internal policies are in line with the Code of Con-duct, which details our ethical principles and is applicable to all employees. These guidelines apply to all forestry and industrial operations and promote respect for the applicable legislation and human rights.

In 2018, CENIBRA introduced major changes in its chain of command and decision-making structure, including func-tional changes in its organizational units’ structures, such as:

» A new Industrial and Technical Director took over due to the retirement and resignation of the previous director;

» Set-up of a formal ombudsman body, ensuring greater transparency, security, and improvement of information received through the Ethics and Whistleblowing Channels made available by the Company;

» General restructuring of the Company’s organizational units’ functional duties, with the resulting strengthening and enhancement of synergy between processes and the respective teams;

» Replacement and new assignments for positions of governance agents in certain areas of the Company.

Sustainability Report 2018 6 Governance 21

A highlight in 2019 was the implementation by CENIBRA of an important change in its command and decision-making structure. In June, a new Chief Executive Officer took over as a result of the previous Director’s retirement and res-ignation. The new CEO also temporarily holds the position of Administrative and Financial Director of the Company.

Shareholders’GeneralMeeting

Board ofDirectors

CEO

DirectorVice President

Technicaland Industrial

Director

CommercialDirector

SecretarialOffice for the

Management’sMeetings

Internal AuditDepartment

Administrativeand Finance

Director

Compliance Ombudsman

AdvisoryCouncil


General Meetings of the Shareholders

The Annual General Meeting of the Shareholders is held at CENIBRA’s headquarters within four months from the end of the previous fiscal year. Special General Meetings of the Shareholders may be convened whenever necessary for the shareholders to express their will, in the interest of the Company.

Advisory Council

The Advisory Council is a committee made up of five mem-bers chosen at the Annual General Meeting of the Share-holders for a one-year term, reelection allowed. Voting takes place every year in March. The Advisory Council’s duty is to provide Executive Management with collective guid-ance on the following matters:

» Planning of long-term measures taking into account the Brazilian and international pulp market scenario.

» Long-term production, sales, and investment policies.

» General policy with respect to dividends and capitalization of reserves.

» Mortgage of properties at CENIBRA’s convenience.

» Disposal of substantial items of CENIBRA’s properties.

» Proposals of amendment to the Articles of Association, to be submitted at the Annual General Meeting of the Shareholders.

» Relevant matters in connection with interest in companies of which CENIBRA might become a shareholder or a partner.

» General policy for land acquisition and forest planting.


Executive Management consists of five directors, namely: Director President (CEO), Director Vice President, Industrial and Technical Director, Administrative and Financial Direc-tor, and Commercial Director. Executive officers must be resident in Brazil and they may or may not be sharehold-ers. They are chosen during the Annual General Meeting of the Shareholders, and may be dismissed at any time. They are elected for a one-year term, reelection allowed. Voting takes place every year in March. Executive Management is collectively in charge of the overall management of CENI-BRA and has powers to review and make decisions on any matter of interest to the Company.

Director President (CEO): In addition to the powers and specific duties in connection with the General Meetings of the Shareholders and Executive Man-agement meetings, the Director Presi-dent has the following responsibilities:

» Representation of the Company before any federal, state, and local government agencies.

» Corporate communication processes and the Company’s social and institutional relations.

» Negotiations with workers unions and other trade associations.

» Management of the processes related to the Company’s Internal Audit.

» Management of the processes related to the Company’s legal issues.

» Corporate planning management.

» Dealing with issues raised during Executive Management meetings.

» Compliance issues.

» Process risk management.

» Management of decision-making and regulatory instruments.

» Process chain management.

Director Vice President: The Director Vice President’s duties comprise:

» Assistance to the Director President.

» Performing the duties of the Director President in the absence of the latter or when so requested by the latter.

Industrial and Technical Director: In charge of the technical management of industrial and forestry processes, com-prising:

» Forestry products.

» Pulp production.

» Forest and industrial maintenance.

» Environment and quality.

Administrative and Financial Director: Responsible for the administrative and financial management of the Company, comprising the following processes:

» Control and finance.

» Human resources.


» Procurement.

» Telecommunications and information technology.

Commercial Director: Answers for pulp sales and shipping management, including the following processes:

» Pulp sales and marketing.

» Pulp distribution logistics.

» Technical support to customers.

Executive Management relies on strategic support from sev-en Committees:

a. Crisis Management Committee: Provides Executive Management with support to properly manage crisis sit-uations in a preventive and corrective approach, aimed at avoiding deleterious repercussions and/or mitigating negative internal and external impacts from the econom-ic, environmental, social, ethical, and moral standpoints. This committee is made up of representatives with skills in the human resources, corporate communication, legal, environmental, forestry, and industrial fields.

b. Investment Analysis Committee: Provides Executive Management with support in investment analysis during the planning and implementation stages. Investment de-cision-making is based on a long-term view to deliver op-erational competitiveness under varied market scenarios. This committee is made up of representatives with skills in the economic, financial, forestry, industrial, and tech-nological fields, and investor relations.

c. Customer Support Committee: Provides Executive Management with support to ensure excellence in meet-ing possible customer requirements and actual demands. This committee is made up of representatives with skills in the commercial, environmental, quality, industrial, and research & development fields.

d. Ethics Committee: Provides Executive Management with support in compliance with the Code of Conduct, caring for proper personal and professional conduct of employees and business partners. This committee is made up of representatives with skills in the legal, cor-porate governance, human resources, forestry, and in-dustrial fields.

e. Risk Management and Compliance Committee: Pro-vides Executive Management with support in the imple-mentation of strategies and guidelines related to the cul-ture of internal controls, risk mitigation, and adherence to applicable regulations and legislation. It is made up of representative with skills in legal, audit, corporate gover-nance, information technology, environment, and quality fields, and investor relations.

f. People Management Committee: Provides Executive Management with support in strategic human resources matters related to career, talent retention, renewal and succession, motivation, organizational climate, health, and quality of life. This committee is made up of repre-sentatives with skills in the human resources, corporate planning and governance, economic, financial, forestry, and industrial fields.

g. Sustainability Committee: Provides Executive Man-agement with support in the establishment of sustain-able development guidelines and principles, taking into consideration the economic, environmental, and social aspects that might have impacts on the medium- and long-term results. This committee is made up of represen-tatives with skills in corporate planning and governance, economic, financial, forestry, industrial, social, environ-mental, and technological fields, and investor relations.

As a general rule, matters submitted to Executive Manage-ment have already been reviewed by the corresponding committees.

Composition of Governance Bodies:G

RI 4

05-1

2016 2017 2018


Gender

Men 3 3 3

Women 0 0 0

Total 3 3 3

Age Group

Under 30 years of age 0 0 0

Between 30 and 50 years of age

0 0 1

Above 50 years of age 3 3 2

Management advisory committees

Gender

Men 19 27 27

Women 2 5 5

Total 21 32 32

Age Group



11 18 15



Internal Audit

The Internal Audit department is an independent Execu-tive Management support unit in charge of reviewing and providing guidance on the company’s internal processes, as well as checking for compliance with corporate policies, regulations, and operating and control procedures adopted in the management of the Company. In addition, Internal Audit answers for the Whistleblowing System and the suit-ability of internal controls, and plays a part in the enhance-ment of productivity and loss prevention processes.

In 2018, the Internal Audit Department included Risk Man-agement indicators in its auditing planning so as to priori-tize internal controls and processes to be audited. During the year, it carried out 25 audits in connection with corpo-rate, forestry, and industrial processes, including nine spe-cial reviews related to complaints made through the Whis-tleblowing System and requests by management. Review results and the corresponding action plans are reported to Executive Management. The status of action plans is moni-tored on a monthly basis, with an aim to ensure their imple-mentation and effectiveness.

Secretarial Office for Management Meetings

The Secretarial Office for Management Meetings assists Ex-ecutive Management when holding its meetings and pre-pares the agenda in coordination with managers, covering all subjects to be discussed in a straight, objective manner. Moreover, it monitors all subjects discussed and pending decisions, aiming to ensure an effective decision-making process at the top management level.

Compliance

In 2018, CENIBRA enhanced its Compliance Program through an extensive internal campaign to disseminate the subject, using billboards, internal newspaper, a theater play, and wallpaper at work stations. A highlight was the distri-bution of the newsletter “A Word from the CEO – Interior Quality” among all employees. Additionally, onboarding training was given to newly hired employees and refresh-ment training was provided to existing employees and con-tractors’ personnel in the industrial and forestry areas. These initiatives are evidence of the governance model’s maturi-ty stage, an evolution resulting from the already existing culture of conformity. The purpose is to make clear what is expected from each one in the organizational context. Compliance actions are taken with an aim to strengthen adherence to controls and ensure their consistency with the Company’s strategy.

Risk Management

In 2018, CENIBRA reviewed and validated, along with the various organizational units, the Corporate Risk mapping of processes (considering aspects related to economic, social, environmental, legal, and image impacts) and completed its implementation in the technological platform. In its pursuit of acculturation of managers and improvement of risk mon-itoring tools, CENIBRA updated the Corporate Risk Man-agement Procedure to make it more straightforward. It also involved meetings with managers and coordinators, as well as training for facilitators directly involved in the process. The adopted method allows identifying risks, following up their assessment, and mitigating them by setting up, de-veloping, and implementing action plans, which are moni-tored from time to time. New revisions of risk plans will be conducted every two years or whenever required by each organizational unit.

Anticorruption Practices

Risks in connection with corruption, fraud, misappropria-tion, and property damage involving the Company’s pro-cesses and compliance with the Code of Conduct’s criteria are assessed by the Internal Audit department with an aim to mitigate violations. CENIBRA adopts specific policies to combat corruption and makes available a Whistleblowing Channel as a tool to record any grievances, while ensuring greater information transparency, secrecy, and confidenti-ality. In 2018, the Internal Audit department evaluated six reports of suspected fraud and misappropriation of assets, four of which were deemed valid, but they were not consid-ered corruption cases or relevant for the business.

Fines, Grievances,Complaints, and Lawsuits As a result of its permanent pursuit of excellence in all its operations, no significant fines or non-monetary sanctions were applied to CENIBRA for non-compliance with econom-ic and social regulations and laws applicable to the pulp and paper industry in 2018. Similarly, no lawsuit was filed against the Company during the reporting period in con-nection with unfair competition, trust, or monopoly, and no claims or complaints were made with respect to envi-ronmental labor practices and any kind of discrimination whatsoever.

As far as product responsibility is concerned, no significant fines or non-monetary sanctions were applied to CENIBRA for non-compliance with laws and regulations applicable to the supply and use of pulp, or substantiated complaints re-lated to breaches of customer privacy in 2018.


MANAGEMENTAND STRATEGY

CHAPTER 7

CENIBRA adopts a strategic management approach based on the concepts of Management by Guidelines and Man-agement by Routine, which give priority to results evolu-tion and make use of performance evaluation tools. In 2018, CENIBRA continued to implement its Sustainability Index (CSI) method as a support tool to assess and mea-sure process performance and define and implement more

sustainable goals in the future. This method includes the establishment of CENIBRA Sustainability Index (CSI) and its breakdown into four elements of sustainability: Economic, Social, Environmental, and Institutional. Indicators were as-signed to each element, and their weights and results make up the CSI.

ECONOMIC

Increasing profitability.

Economic PerformanceIndex – EPI (%)

Social PerformanceIndex – SPI (%)

Encouraging a fairer and moreequitable social environment.

SOCIAL

Environmental PerformanceIndex – EPI (%)

Using naturalresources efficiently.

ENVIRONMENTAL

Institutional PerformanceIndex - IPI (%)

Enhancing a culture ofsustainable development.

INSTITUTIONAL

Creating Sustainable Value CENIBRA Sustainability Index (%)

CENIBRA’s Sustainability Map

Sustainability Directive Corporate Result Indicator

Corporate Performance IndicatorCorporate Objective

Sustainability Report 2018 7 Management and Strategy 27

Integrated Management System (IMS)

CENIBRA adopts an integrated management approach to quality, environment, safety, and occupational health through its Integrated Management System (IMS), which is evaluated by means of internal audits. Auditors are vol-unteer employees selected and trained by the Company’s own management team with support by a consulting firm. To ensure compliance with IMS requirements, the follow-ing control measures are taken: internal legal compliance audits, integrated audits of suppliers, external audits by certifying entities, and critical analysis by IMS’s top man-agement, which is made up of the Industrial and Technical Director and managers from the administrative, industrial, and forestry processes. The IMS policy comprises the follow-ing commitments:

Promoting the integrated management of quality, environment, safety, occupation-al health, ethics, and social and financial responsibility as they are deemed key el-ements in the permanent pursuit of com-pliance with stakeholders’ requirements, corporate excellence, continuous improve-ment, and superior performance of the company’s processes and integrated man-agement system;

Knowing, observing, and complying with legislation, standards, regulations, and other requirements and/or commitments of mandatory or voluntary application, taking into consideration the aspects of quality, environment, ethics, social re-sponsibility, and risks and hazards related to occupational health and safety in every activity carried out by CENIBRA employees and its service providers;

Optimizing and reducing the consumption of natural resources in its processes, pre-venting, eliminating, or minimizing pollut-ing emissions and occupational disease and injury risks that could harm the environmen-tal protection and individual and collective well-being, or adversely affect the stake-holders and the Company’s or third parties’ properties;

Incorporating into the Company’s forest stewardship activities and chain of custo-dy the principles, requirements, and crite-ria established by the Forest Stewardship Council® - FSC® and the Forest Certifica-tion Program CERFLOR;

Maintaining a permanent dialogue with customers, suppliers, employees, commu-nities, and other stakeholders.

Moreover, CENIBRA encourages the engagement of its em-ployees in the improvement of production processes, with positive results in terms of personal and technical develop-ment. The following initiatives deserve to be highlighted:

CENIBRA Suggestion Program (CSP): The purpose of this program is to value the operational employees’ skills, innova-tion, contribution, and commitment to the improvement of the Company’s processes through individual suggestions. The pro-gram ended the year with 409 propositions submitted and 122 propositions awarded;

Quality Control Circles (QCC): These are groups of employees that seek self-de-velopment, propose creative solutions to operational and production problems by means of quality management tools, and provide better working conditions and quality of life. The results from the imple-mented projects include operational and productivity gains, as well as encourage-ment to teamwork, synergy among differ-ent process areas, improved work safety rates, and employee’s personal growth. In 2018, the 20th Quality Seminar was held and implemented projects delivered excel-lent return from the financial, safety, quali-ty, and environmental standpoints.

Certifications

CENIBRA’s management systems are certified to standards that attest its adherence to good practices in its production process. The Company is audited by certifying entities on a yearly basis to check for compliance with standards and ensure continuous process improvement. Such certifications ensure the availability of forest resources and business con-tinuation, enhance the relationship with stakeholders, and consolidate and upgrade CENIBRA’s image as a responsible company in the quality, social, safety, health, and environ-mental areas. CENIBRA holds the following certificates:

» Quality Management System: ISO 9001 (since 1993);

» Environmental Management System: ISO 14001 (since 1997);

» Laboratory Quality Management System: ABNT NBR ISO/IEC 17025 (since 2008);

» Forest Stewardship FSC® - Forest Stewardship Council® (since 2005);


» Forest Stewardship CERFLOR – recognized by the Programme for the Endorsement of Forest Certification (PEFC) (since 2005);

» Chain of Custody FSC® - Forest Stewardship Council® (since 2005);

» Chain of Custody CERFLOR – recognized by the Programme for the Endorsement of Forest Certification (PEFC) (since 2005).

All these standards have their own principles, criteria, indi-cators, and independent certification systems.

License number: FSC-C008495

License number: FSC-C021201

In 2018, external audits were conducted on the certification to the above-mentioned Management System standards, with the resulting recommendation to maintain the respec-tive certifications. Additionally, in an unprecedented initia-tive, an internal audit was conducted on the Forest Stew-ardship certification, which is not a mandatory requirement.

Sustainability

CENIBRA is one of the links of an extensive production chain that starts with the forest and extends to end consumers of different segments. In this context, the Company interacts with various stakeholders, including several rural communi-

ties located in the surroundings of its activities. Keeping an eye on the excellence of its processes and the relationship and dialogue with this public, the Company seeks to miti-gate its impacts and enhance its contribution to society at large. With this objective in mind, CENIBRA continuously invests in sustainable forestry practices and ecological effi-ciency of its industrial operations and logistics. The essence of the business is producing wood and pulp in a sustainable way, while respecting life.

Commitment to Sustainable Development

CENIBRA supports initiatives to promote sustainable devel-opment and integrates them into its routine operations and business strategy in order to strengthen its sustainability practice. The following are the main actions taken:

a. Global Voluntary Commitments

Global Compact: The United Nations Organization’s (UNO) Global Compact relies on the engagement of the interna-tional corporate community to advance social and environ-mental responsibility practices aiming at a more sustainable and inclusive global economy. CENIBRA is not a signatory of this initiative, but its ethical principles and code of con-duct are in line with the Global Compact principles, among which are the commitments to protect human and labor rights, environmental preservation, and the fight against corruption.

Global Compact Principles Relation to GRI Standards Pages

1Businesses should support and respect the protection of internationally proclaimed human rights.

103-2; 410-1; 411-1; 412-1; 412-2; 412-3; 414-1

25, 63, 64, 70

2Make sure that they are not complicit in human rights abuses.

103-2; 410-1; 411-1; 412-1; 412-2; 412-3; 414-1

25, 63, 64, 70

3Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.

407-1 64

4 The elimination of all forms of forced and compulsory labor. 409-1 64

5 The effective abolition of child labor. 408-1 64

6The elimination of discrimination in respect of employment and occupation.

406-1 25

7Businesses should support a precautionary approach to environmental challenges.

103-2 and all topics reported from 301-1 to 308-2

25, 64, 79, 83, 85, 86, 87, 88

8Undertake initiatives to promote greater environmental responsibility.


25, 64, 79, 83, 85, 86, 87, 88

9Encourage the development and diffusion of environmentally friendly technologies.


25, 64, 79, 83, 85, 86, 87, 88

10Businesses should work against corruption in all its forms, including extortion and bribery.

205-1 to 205-3 20, 21, 25


Sustainable Development Goals (SDGs): Similarly, the Company supports sustainable development goals, a challenge to build a fairer and more inclusive world through concrete actions and projects carried out by CENIBRA Institute.

Social and Environmental Responsibility – Synergy with the Sustainable Development Goals (SDGs)

PARTNERSHIPS WITH BEEKEEPERSProject

Objective / description

Target audience

2018 actions

CENIBRA Institute has entered into partnership agreements with beekeepers associations according to which beekeepers are granted access and allowed to use Permanent Preservation Areas and areas close to eucalyptus plantations to install beehives. This Project has great social, economic, and environmental impact, as it creates new jobs and income for beekeepers and their families, while preserving the environment. CENIBRA’s share of the output is distributed among employees, visitors, and cus-tomers. This program relies on support from local administrations, SENAR (National Rural Education Service), and EMATER (Rural Technology Support Company of Minas Gerais State).

Beekeepers from 13 associations located in areas in which the company operates.

» Beehive mapping.


FARMING PARTNERSHIPS

SCHOOL OF LIFE

Project

Project



Target audience

Target audience

2018 actions

2018 actions

This partnership among CENIBRA Institute, municipal administrations, and rural unions aims at generating income and job opportunities for family farmers and improve their living conditions by granting land areas for cultivation. EMATER (Rural Tech-nology Support Company of Minas Gerais State) provides the necessary technical support, while local administrations supply agriculture inputs and implements.

The School of Life Project for environmental education aims at raising environmental awareness and showing how to cherish nature. Implemented in 1996, the Project provides capacity-building activities to teachers from the 1st to 5th grades of public elementary schools. As a result of the Project, both teachers and students engage themselves in environmental education, urban garbage control, selective waste collection, and ecologic campaigns.

Family farmers from the municipalities of Belo Oriente, Caratinga, Coluna, Ipaba and Virginópolis.

Public school teachers in the municipalities of Senhora do Porto and Santo Antônio do Itambé.

» Soil analysis in areas under farming partnership agreements;

» Training on forestry agribusiness systems for farmers from Belo Oriente;

» Training courses on plague control and good stewardship practices;

» Assistance in land preparation, purchase of seeds, donation of fencing materials, and repair of fences on properties under the program, and technical support to farmers.

» Development of a theme focused on regional flora and wildlife, ecology, integral health, school, and community.


COMPANY-COMMUNITY INTEGRATION UNITS (UNIECO)

FAMILY FARMERS ASSOCIATION OF IPATINGA - AAGRIFIPA

Project

Project



Target audience

Target audience

2018 actions

2018 actions

The concept of Company-Community Integration Units (UNIECO) is founded on environmental education and experience cen-ters. The goal is to enhance the community’s awareness of the importance of cultural, social, and educational issues through access to reading material and digital rooms and reflection on multidisciplinary subjects such as citizenship, environment, ethics, education, and health, in line with the community’s interests. The expected outcome is an improvement in the quality of life of people attending the Project. CENIBRA has two structured units, namely: Private Natural Heritage Reserve (PNHR) Macedonia Farm in Ipaba (MG) and another unit in Peçanha (MG).

The partnership agreement between CENIBRA Institute and the Family Farming Association of Ipatinga (AAGRIFIPA) covers the purchase of equipment to increase and diversify the production of bread, cookies, cake, and pastries, increasing the members’ income. The Association relies on support from Emater and the municipal administration of Ipatinga.

Teachers, students, and community in the municipality of Peçanha.

Men and women from the municipality of Ipatinga.

» Aluminum-Lit Christmas Project - Workshop with prisoners at Peçanha penitentiary for confection of Christmas deco-ration items using recycled material;

» Fostering a feeling of respect, citizenship, and belonging among those attending the UNIECO through daily activities.

» Upgrading of the factory in line with the public health inspection report.


HANDICRAFTS HOME - MATIZES

COMMUNITY ACTION

Project

Project



Target audience

Target audience

2018 actions

2018 actions

The partnership between CENIBRA Institute and SEBRAE (Brazilian Micro and Small Business Support Service) enabled the Matizes Project to participate in Sebrae’s Handicrafts Program in Ipatinga, Minas Gerais. This was a joint initiative by Ipatinga’s Development Agency, the Municipal Administration, and local artisans (Group of Artisans of Ipatinga Matizes).

A partnership between CENIBRA Institute and Unileste (University Center of Eastern Minas Gerais) provides consulting services to three community associations in the town of Periquito (MG). The target is to develop and formalize group interaction and learning, and support the organization of entities involved in job and income generation for families in these communities.

Men and women from the municipality of Ipatinga.

Women from the district of São Sebastião do Baixio, municipality of Periquito.

» Participation in the 4th Steel Valley Tourism Fair;

» Exhibition and sales of products in school fairs and street markets in Ipatinga;

» Participation in CENIBRA’s Culture Week Fair;

» Decoration of Santa Claus House in Ipatinga.

» Capacity-building workshop on pricing, equipment layout, and internal regulation;

» Guidance on and follow-up of the application of funds allocated by Furnas;

» Organization of the Association’s documentation.


COTTA’S BAKERY ASSOCIATION

HANDICRAFT GROUP OF CACHOEIRA ESCURA - GRACE

Project

Project



Target audience

Target audience

2018 actions

2018 actions

CENIBRA Institute entered into a partnership with Cotas Community Association, Peçanha (MG), to develop a social project whose purpose is to provide training and capacity building to community members. It also contributes to the purchase of equip-ment and construction of facilities in accordance with public health regulations applicable to bakery production and sales. Baked goods are produced by women from the community and sold in the region of Peçanha.

The GRACE handicrafts project is the result of a partnership involving CENIBRA Institute, SEBRAE, Ágape Welfare Association, and craftswomen from Cachoeira Escura. Its purpose is to foster the use of primary treatment pulp fiber as a raw material for handcrafts with a focus on culture as a transformation factor. In addition, the project has become an environmental benchmark in the use of an industrial by-product to produce sustainable goods. GRACE craftswomen have participated in several fairs and events to sell their products and develop new partnerships.

Women from the town of Peçanha.

Men and women from the municipality of Belo Oriente.


» Support by CENIBRA Institute to enhance productivity and increase production.

» Psychosocial intervention workshops;


» Participation in the 4th Steel Valley Tourism Fair;

» Organization of the Association’s administrative structure;

» Construction of a space for handicraft production.


SOLIDARITY TASTE

WEAVERS OF BRUMAL

Project

Project



Target audience

Target audience

2018 actions

2018 actions

The Solidarity Taste project contributes to local, integrated, and sustainable development by strengthening the Solidarity Econ-omy Group of Açucena (MG). Capacity-building courses are given in partnership with CENIBRA Institute and the municipal administration of Açucena to improve the business management.

This project is an initiative of the local administration and the Residents’ Association of Brumal, along with CENIBRA Institute, to develop and value the local culture through woven handicraft items. With an aim to foster job and income generation, several items are produced, including: rugs, cushions, purses, table cloths, and door stops.

Men and women from the municipality of Açucena.

Women from the municipality of Santa Bárbara (Brumal).

» Training to improve and increase the output;

» Expansion of the production and sales area;

» Donation of equipment to improve and increase the output.

» Meetings with participants to follow up the handicraft work and raise issues to be worked out with the whole group;

» Purchase of equipment;


» Participation in the Santa Bárbara Multi-sectoral Fair.


HEALTH CAMPAIGNS

ENVIRONMENT AND ARTS

Project

Project



Target audience

Target audience

2018 actions

2018 actions

Disease prevention campaigns and actions (shows and lectures).

The purpose of the Environment and Arts Project is to encourage new reflexive human/education/culture/environment relations for the construction of a critical consciousness through theater plays and lectures on forest fires and myths and truths about eucalyptus forests.

Youths and teenagers from seven towns where the Company operates.

Communities of Antônio Dias, Cantagalo, Catas Altas, Ferros, Guanhães, Iapu, Mesquita, Naque and Peçanha.

» Dynamics on the subjects addressed by the theater play and workshop.

» Nine sessions were held in nine municipalities.


CENIBRA MOBILE

OPEN DOORS

Project

Project



Target audience

Target audience

2018 actions

2018 actions

Besides disseminating information about products manufactured from eucalyptus and the socio-environmental projects in which CENIBRA is engaged, the CENIBRA Mobile Project promotes environmental education in communities and at the Compa-ny. It helps create citizens that are aware of the importance of environmental preservation and provides information on social, economic, and environmental actions of a forest-based enterprise. CENIBRA’s Mobile Community Integration Unit is a vehicle equipped with the necessary infrastructure for the presentation of theater plays, shows, videos, and lectures.

Visits to the Private Natural Heritage Reserve (PNHR) Macedonia Farm, where visitors are given information about socio-envi-ronmental education (Mutum Project) and walk along an ecological trail. Moreover, the industrial plant, seedlings nursery, and operational units are open to scheduled visits, giving the company an opportunity to highlight the environmental, economic, and social importance of a forest-based industry.

Participation in fairs in Belo Horizonte (Expo Minas), Timóteo (Expo Inox), and in schools of Belo Oriente and Ipaba.

Teachers, students, and communities in several municipalities.

» Participation in fairs and campaigns;

» Exhibition in schools.

» Visit by public school students and teachers to the Butterfly Valley, environmental conservation unit in Catas Altas, Macedonia Farm (Ipaba), and the industrial plan (Belo Oriente).


ACTION AND CITIZENSHIPProject


Target audience

2018 actions

A partnership involving CENIBRA, local administrations, and educational institutions, the project is a social promotion initiative comprising educational, leisure, and health-related activities with an aim to further enhance the Company/community relationship.

Students and communities from 18 municipalities in the Nova Era, Guanhães and Rio Doce Regional Units.

» Change in the Project format;

» Integration with the municipal departments of Health, Education and Welfare in the various Municipalities, as well as with the state Civil and Military Police;

» Activities focused on well-being, recreation, health, culture, and environment.

CULTURAL PROJECTSProject


Target audience

2018 actions

Sponsorship of cultural projects with an aim to upgrade education and enhance access to culture in the towns where the com-pany operates, under the Culture Incentive Act.

16 communities and municipalities within CENIBRA’s area of operation.

» Cultural presentations to the community;

» Introduction to music;

» Encouragement to reading and cultural production;

» Reinforcement to the importance of reading as a development tool;

» Construction of cultural space based on a concept of sustainable architecture for cultural actions.


EFFECTIVE COUNCIL – CHILDHOOD AND ADOLESCENCE

SPORTS

Project

Project



Target audience

Target audience

2018 actions

2018 actions

CENIBRA allocates part of its income tax to the Childhood and Adolescence Fund and encourages its employees to allocate the legal 6% deduction from their income tax to the Fund. The proceeds help maintain the Effective Council, which provides training to the Municipal Councils for the Rights of the Children and Adolescents and strengthens the role of such councils in the management of funds, control of public policies, and monitoring of and influence on the public budget.

Encouraging sports practice, social integration, and recreation through the Sports Incentive Act and company funds. The project provides children and teens with classes in judo, volleyball, soccer, indoor soccer, and jiu-jitsu. In addition, the project provides all resources required, such as uniforms, balls, mats, and instructors.

Municipal Children and Adolescents Rights Councils, Guardianship Advisers, and Social Operators in the System for the Assurance of the Children and Adolescents Rights in 56 municipalities.

Children and teens in the municipalities of Antônio Dias, Belo Oriente, Guanhães, Naque, Ipatinga, Periquito and Santana do Paraíso.

» Creation of the Effective Council Program;

» Seminars, symposiums, and training courses to representatives of municipalities participating in the project;

» Questionnaire survey on the situation of the system of guaranteeing the rights of children and adolescents in the mu-nicipalities in which the project operates.

» Participation in competitions, exchanges, and festivals;

» Graduation of participating students.


FAMILY FARMING - UNAIR

JORGES

Project

Project



Target audience

Target audience

2018 actions

2018 actions

In partnership with UNAIR - Family Farmers Association of Iapu, CENIBRA Institute has promoted job and income generation through donation of a tomato processing machine and a banana ripening chamber. The objective is to improve the work con-ditions and ensure greater opportunities to local farmers under federal incentive programs.

CENIBRA Institute entered into a partnership with the Jorges Community Association of Peçanha (MG) to conduct actions aiming at job and income generation by giving training to community members. It has also helped to implement a community vegetable garden and build a shed for the production of seasonal and produce items to be marketed in the region of Peçanha.

Men and women from the municipality of Iapu.

Men and women from the municipality of Peçanha.

» Production and sales monitoring;

» Capacity-building courses.

» Support to cultural rescue activities and recognition as a remnant Quilombola community.


INDAIÁ

SEPTIC TANKS

Project

Project



Target audience

Target audience

2018 actions

2018 actions

Founded on the cultural and economic specificities of the region of Antônio Dias (MG), CENIBRA Institute entered into a part-nership agreement with the local Handcrafters’ Association and University Center of Eastern Minas Gerais (Unileste) to organize and promote job and income generating activities, in addition to structuring a sustainable Indaiá straw stewardship plan.

CENIBRA Institute entered into a partnership with the municipal administrations of Divinolândia de Minas (MG) and Ipatinga (MG) to build septic tanks. This initiative is part of a municipal project to revitalize local water streams and improve water quality and availability based on education, sanitation, and environmental recovery. Septic tanks are built in the communities in accor-dance with a design developed by Embrapa Instrumentação Agropecuária, an agency of the Agriculture Ministry.

Craftswomen from the municipality of Antônio Dias.

Families from the communities of Braúnas and Virgolândia.

» Meetings with craftswomen to monitor the handicraft work development and identify demands to be addressed with the group;

» Consulting by SEBRAE on the Culture of Cooperation;


» Participation in the 29th National Handicraft Fair in Belo Horizonte;

» Exhibition and sales of products in the 4th Steel Valley Tourism Fair.

» Donation of materials to build septic tanks.


PROFESSIONAL EDUCATION

MULTIFUNCTION PARK

Project

Project



Target audience

Target audience

2018 actions

2018 actions

A partnership among CENIBRA, CENIBRA Institute, SENAR, SEBRAE, associations, and suppliers from the municipalities of Belo Oriente, Joanésia, Mesquita, Naque and Periquito (all in the state of Minas Gerais) provides guidance, training, and monitoring to improve and grow local businesses. The work plan includes sales techniques, financial management, and business prospecting.

The Multifunction Park comprises a playground, a space for the elderly, jogging track, football fields, restrooms, and water fountains, in addition to extensive green areas. A library and a theater are being built. The Park is used mainly by the community of Cachoeira Escura and communities around CENIBRA’s plant.

Associations and small businessmen from the municipalities of Belo Oriente, Joanésia, Mesquita and Periquito.

Communities from the municipality of Belo Oriente and other municipalities around the industrial plant.

» Implementation of the supplier qualification plan by Sebrae in Belo Oriente;

» Courses given by SENAR in Belo Oriente, Joanésia, Mesquita, Naque, and Periquito.

» Execution of the Living Park Program, including sports, cultural, and leisure activities involving the entire community.


EFFECTIVE COUNCIL – THE ELDERLY

SEWING FACTORY – NEIGHBORHOOD ASSOCIATION OF AVIAÇÃO - AMA

Project

Project


Target audience

Target audience

2018 actions

2018 actions

CENIBRA assigns up to 1% of its Income Tax to the Elderly Fund. The funds are used to implement the Excellence Council Proj-ect, a partnership with the Ágape Welfare Association. The project provides training to the Municipal Councils for the Rights of the Elderly and strengthens the role of such councils in the management of funds, control of public policies, and monitoring of and influence on the public budget.


CENIBRA Institute entered into a partnership with AMA to encourage job and income generation in the community of Aviação, municipality of Belo Oriente (MG), including training and donation of machinery for a sewing factory.

Members of municipal councils for the Rights of the Elderly, elderly and managers from 10 municipalities.

Men and women from the municipality of Belo Oriente.

» Creation of the Effective Council Program;

» Seminar, symposiums, and training courses;

» Survey on the elderly in the municipality of Belo Oriente.

» Training on planning and entity organization;

» Donation of equipment to expand and improve the production.


ALLIANCE OF GOOD PROJECT

PALM HEART PROJECT

Project

Project



Target audience

Target audience

2018 actions

2018 actions

CENIBRA Institute entered into a partnership with CAIS (House of Arts and Social Inclusion), Coronel Fabriciano (MG), with an aim to prevent crimes through planned, continued actions intended to strengthen community and family ties, training, and income generation initiatives.

Partnership among SEBRAE, CENIBRA Institute, municipal administrations of Ipatinga and Inhapim, and Coopeleste (Cooperative of Dairy Producers and Exporters of East Minas Gerais) to organize and structure the Cooperative to become a large supplier of peach palm heart as an alternative source of income for family farmers and small producers in the Steel Valley Metropolitan Belt.

Mothers of students participating in the Alliance of Good Project.

Regional palm heart producers from Belo Oriente, Bugre, Caratinga, Coronel Fabriciano, Iapu, Inhapim, Ipatinga, and Marliéria.

» Provision of training to women.

» Technical mission to Barro Alegre Farm (large-scale production);

» Engagement of technical consulting and monitoring services at properties;

» Contract with the Federal University of Viçosa for a market study.


FLOUR OF INDAIÁProject


Target audience

2018 actions

CENIBRA Institute entered into a partnership with the United Quilombos Association of Barro Preto and Indaiá to build a shed and purchase shelves and a packing machine to produce manioc flour.

Quilombola families from the municipality of Antônio Dias.

» Beginning of partnership agreement.

FAMILY FARMING - COCAIS DOS ARRUDASProject


Target audience

2018 actions

CENIBRA Institute entered into a partnership with the Residents’ Association of Santa Vitória de Cocais dos Arrudas, Emater, and the municipal administration of Coronel Fabriciano (MG) to provide technical support to small farmers and purchase soil correction agents.

Family farmers from the city of Coronel Fabriciano.

» Purchase of agricultural silicon;

» Distribution of soil correction agent;

» Technical support to producers;

» Soil analyses.


BOM JARDIM DE TRONQUEIRAS

FRUIT PULP FROM PEDRA REDONDA

Project

Project



Target audience

Target audience

2018 actions

2018 actions

CENIBRA Institute entered into a partnership with the Community Association of Bom Jardim, Peçanha (MG), to carry out ac-tions intended to promote job and income generation and enhance collective well-being.

CENIBRA Institute entered into a partnership with the Municipal Administration of Coroaci and the Family Farmers Association of Pedra Redonda to set up a fruit pulp factory with an aim to diversify income and generate jobs for farmers from the Pedra Redonda community.

Men and women from the municipality of Peçanha.

Family farmers from Coroaci.

» Construction of a space for meetings and training courses.

» Beginning of construction of a space to install a small fruit pulp factory.


LIVING MARKETProject


Target audience

2018 actions

Partnership between CENIBRA Institute, the Municipal Administration of Sabinópolis and the Handicrafters and Marketers As-sociation of Sabinópolis to implement the Living Fair project with an aim to work with the entire production chain, from planting to sales of products to final consumers, resulting in additional income to participants.

Marketers of Sabinópolis.

» Purchase of stalls and workshop on proper product exhibition at the Market.

ARTS AND FAIR IN THE SQUARE - FEIRARTEProject


Target audience

2018 actions

In 2018, CENIBRA Institute entered into a partnership with the Municipal Administration of Mesquita and the Rural Workers Union of Mesquita to upgrade the Arts and Fair in the Square project (FEIRARTE) through the purchase of stalls for exhibition and sales of local handicraft and produce.

Marketers of Mesquita.

» Purchase of stalls for exhibition of local handicraft and produce.


SOCIAL FISH FARMS

THE ART OF HANDS

Project

Project



Target audience

Target audience

2018 actions

2018 actions

Partnership between CENIBRA Institute, the Municipal Administration of Periquito (MG) and the Fishers and Friends of Doce Riv-er Association (APARD) to improve the working conditions of fishers from the Pedra Corrida community and provide equipment to increase the income of participant families.

Partnership between CENIBRA Institute and the Municipal Administration of Naque (MG) for a handicraft capacity-building proj-ect. Ninety women will have new job and income generation opportunities. Participation in regional and local fair for handicraft exhibition and sales.

Fishermen from the municipality of Periquito.

Women from the municipality of Naque.

» Beginning of partnership upon the agreement signature in 2018;

» Upgrading of the production area and fishermen accommodations;

» Purchase of equipment to improve the production.


» Capacity-building workshops;

» Completion of the training course;

» Participation in CENIBRA’s Culture Week Fair and exhibition in the municipality of Naque.


ASSOCIATION OF RECYCLABLE MATERIAL COLLECTORS OF BELO ORIENTE - ASCABEO

Project


Target audience

2018 actions

Partnership between CENIBRA Institute and the Municipal Administration of Belo Oriente (MG) and the Association of Recy-clable Material Collectors of Belo Oriente (ASCABEO) to build a containment wall at the recyclable material screening shed. Recyclable paper was donated to increase collectors’ income.

Waste collectors form the municipality of Belo Oriente.

» Donation of recyclable paper;

» Donation of timber and other materials to build walls and sheds for screening and storage of recycled items.

CLEAN TOWNProject


Target audience

2018 actions

Partnership between CENIBRA Institute, the Municipal Administration of Ipaba and Ebenezer Welfare to provide support to horse-drawn cart drivers who collect debris and waste in the town of Ipaba (MG) and take them to intermediary stockyards. These workers’ income stems from the transportation of disposed materials and items, keeping the town cleaner.

Horse-drawn cart drivers from the municipality of Ipaba.

» Beginning of partnership with Ebenezer Welfare and Municipal Administration of Ipaba;

» Revamp of horse-drawn carts.


SOCIAL SEWING

YOUNG ENTREPRENEURSHIP CENTER - NEJ

Project

Project



Target audience

Target audience

2018 actions

2018 actions

Partnership between CENIBRA Institute and the Municipal Administration of Pingo D’Água for patchwork handicraft and sew-ing capacity-building project to enhance professionalization and job and income generation. Particpating women are trained and qualified to improve their activity and income. They learned how to make clothing and handicrafts.

Partnership between CENIBRA Institute, the Municipal Administration of Belo Oriente (MG) and SEBRAE (Brazilian Micro and Small Business Support Service) for the implementation of a technical administration and management course using SEBRAE’s proprietary method of young entrepreneurship and promotion of socio-economic development in the municipality of Belo Oriente.

Women from the municipality of Pingo D’Água.

Youths from the municipality of Belo Oriente.

» Beginning of partnership agreement;

» Capacity-building course for women at the patchwork and sewing workshops.


» Student selection;

» Inaugural class of technical course;

» Conduction of the first course module;

» Promotion of events: Corporate Breakfast and Companies of Minas Gerais;

» Promotion of the Social Entrepreneur’s Legacy.


b. National Voluntary Commitments

Charter of Principles of the Brazilian Tree Industry (Ibá) Association: The Association’s objective is to foster a reflection on initiatives and practices that legitimate the sustainability attributes of the planted tree industry and its commitments to a greener economy. The Charter sets forth ethical, governance, and corporate responsibility principles, as well as good practices to be adopted by the different segments in the planted tree production chain.

Forestry Dialogue: Created in 2005 in Brazil, the Forest-ry Dialogue gathers together forestry-related companies and environmental organizations with an aim to dissemi-nate economically-feasible actions and enhance the scale of efforts and results in terms of environment conservation. CENIBRA joined the National Dialogue in 2005 and the Re-gional Minas Gerais Forum in 2009.

Moreover, CENIBRA is a member of the following entities and associations:

Entity / Association CENIBRA Representative Position

Ibá - Brazilian Tree Industry Júlio César Tôrres Ribeiro Member of the Deliberative Council

Ibá - Brazilian Tree Industry Leida Hermsdorff Horst GomesMember of the Communication Committee

Ibá - Brazilian Tree Industry Adermo Oscar CostaMember of the International Trade Committee

Ibá - Brazilian Tree Industry Vitor Alderico de Menezes MarquesMember of the Government Relations Committee

AMS - Forestry Association of Minas Gerais

José Márcio Cardoso Member of the Management

FIEMG - Industry Federation of the State of Minas Gerais

Júlio César Tôrres Ribeiro Member of the Strategic Board

Minas for Peace Institute Adermo Oscar Costa Deputy Member of the Audit Committee

ABTCP - Brazilian Technical Pulp & Paper Association

Ronaldo Neves Ribeiro Member of the Executive Council

Brazilian Forestry Dialogue Jacinto Moreira Lana Member of the Coordination Board

IPEF - Forest Research Institute José Márcio Cardoso Member of the Board of Directors

Sinpapel - Pulp, Paper and Cardboard Association of the State of Minas Gerais

Adermo Oscar Costa Market Director

Valia - Vale do Rio Doce Social Security Foundation

Vitor Alderico de Menezes Marques Member of the Deliberative Council


Strategy

In 2018, CENIBRA reaffirmed its commitment to sustainabil-ity by updating its long-term “CENIBRA 40-50 Plan” to bea-con the Company’s path over the next five years. Worked out in a participative approach, this plan is the outcome of a number of debates involving different organizational areas. The works were coordinated by the Sustainability Commit-tee with the support of a team dedicated to incorporating sustainability into the Company’s management and pro-cesses.

Based on the principle that the future is uncertain and changes are inevitable, the team in charge reviewed the

The initiatives and programs directly related to the material issues 6 (Emissions Management), 7 (Adaptation to Climate Change), and 8 (Efficient Energy Use) were dealt with under process management in the following sections: “Atmospheric Emissions” (pages 83 to 85) and “Materials and Energy” (pages 87 to 89).

main challenges in terms of sustainability and the business existence. It was a challenging process that put together the interdisciplinary views of different internal leaderships in connection with economic, social and environmental is-sues. A large number of ideas and shared points of view resulted in the updating of the Plan with 13 long-term com-mitments.

Objectives and Goals

In 2018, CENIBRA established business sustainability objec-tives, which were unfolded in goals for the whole company, the most important of which are listed below:

Element Corporate objective Material issue Goal Accomplishment

EconomicProfitabilityincrease

Financial and Economic Performance

Total pulp cost reductionGoal achieved: 100.67%

Product quality improvementGoal not achieved: 91.90%

Increasing the yearly pulp output beyond the budget

Goal not achieved: 99.92%

SocialFostering a fairer social environment and equality

Employee Healthand Safety

Extend the Safe Behavior Program up to September 2018

Goal achieved: 100.00%

Regional Socioeconomic Development

Reaching 40% of procurement from local suppliers in 2018


Creating self-sustainability indicators for projects implemented by the Company up to October 2018


AmbientalEfficient use of natural resources

Water and Effluent Management

Reduction of in-take water consumption (m3/Adt)


Sustainable Forest Stewardship

Biodiversity Conservation and Protection

Preparation of stewardship plans for conservation of water springs that are socially relevant up to November 2018


InstitucionalStrengthening of a culture of sustainable development

Innovation, Technology and New Products

Updating the CNB 40-50 Plan up to September 2018



Research, Development and Innovation

CENIBRA continued to allocate funds and resources to con-duct studies on the improvement of wood quality, forest productivity increase, and industrial production process efficiency. Such efforts take the form of activities at the Company’s laboratory and partnerships with universities, suppliers, and research institutes. Among the main projects carried out in 2018, the following stand out:

» Forest protection, soil, quality, and genetic improvement studies;

» Harvesting studies (operational development and mechanization);

» Characterization of commercial clones (2018 pre-harvesting);

» pH adjustment strategy in the D0 stage;

» Study on alternatives to control the white liquor sulfidity and assess the effects of its variation on the production process (pulping, pre-bleaching, and bleaching stages);

» Study on the use of magnesium hydroxide to partially replace sodium hydroxide in the control of pH in the alkaline stages of bleaching;

» Study on the removal of chloride and potassium salts from electrostatic precipitators’ ash in recovery boilers;

» Studies on the self-purification of the Doce River.

In addition, CENIBRA has invested in information technolo-gy resources to ensure its production and managerial com-petitiveness. Among the main projects carried out in this area in 2018, the following were a highlight:

Launch of the CENIBRA APP for cell phones;

Intranet upgrading with the creation of the Corporate Portal;

Implementation of the Sociall System for the management of the CENIBRA Institute’s actions – Corporate Social Investment;

Upgrading of the Forest Process Management system through the implementation of forest mobility in the harvest and infrastructure areas;

Improvements in the SAP Document Management System (DMS);;

Implementation of phase two of the electronic monitoring service at regional offices;

Implementation of the electronic monitoring service around the perimeter of the Seedlings Nursery;

Implementation of two modules of the SPED Digital Bookkeeping System: Digital Bookkeeping System for Tax, Social Security, and Labor Obligations (eSocial) and the Digital Tax Withholding and Other Tax Information System (Reinf);

Improvements to the Laboratory Information Management System (LIMS) solution;

Deployment of a disaster recovery site.


CHAPTER 8

COMPETITIVENESSAND ECONOMICPERFORMANCE

Economic Scenario

2018 started with encouraging economic outlooks, es-pecially after overcoming one of the biggest recessions in Brazilian history. However, favorable market expectations turned around in the first half of the year as increasing un-employment, high personal loan interest rates, declining family consumption, stagnant economic agenda, low public investments, and the lack of progress in the Social Security Reform, a key component for the restructuring of govern-ment accounts, took center stage. Furthermore, the road transport shutdown due to a truckers’ strike driven by high fuel prices played a leading role in reducing the Brazilian Gross Domestic Product (GDP) during all quarters after the stoppage. In short, it was an odd year.

In the international scenario, investor confidence dropped as industrial output and global trade slowed down as a re-sult mainly of the U.S. application of trade tariffs to China and the subsequent retaliation of the world’s second-largest economy, causing the Chinese economic growth to slack-en. Supported by the government’s tax easement, the U.S. grew at a strong pace in 2018, favoring a rise in local inter-est rates. Large, emerging economies did not keep up with the vigorous U.S. growth and felt the effects of the U.S. dollar appreciation.

According to the IMF (International Monetary Fund), emerg-ing and developing countries will be the engine driving global economic growth in 2019, mainly South Africa and India. In the case of Brazil, the IMF forecasts advances with the implementation of new policies, such as the approval of the Social Security Reform and a possible deepening of the Labor Reform.

Market Scenario

The global pulp market experienced constant demand in 2018, resulting in an upward price move in almost every month throughout the year. Important factors were the re-strictions imposed by the Chinese government on issuing im-port licenses for low-quality recycled paper and the surprising halt of road transport in Brazil (truck drivers’ strike) in the second quarter, which led to a setback in pulp output. Ac-cording to industry analysts, the world demand for eucalyp-tus pulp grew 5.1% in 2018 when compared to the previous year. Among the major world markets, Asia (Japan excluded) grew 9.6%, followed by Latin America (Brazil excluded) with 8.3%, Europe with 5.9%, and Japan with 1.0%. Estimates point to a 3.6% growth in demand for eucalyptus pulp by 2022, while supply is expected to grow just 2.4% (source: Pulp and Paper Products Council, November 2018).

Forestation and Wood Supply

The handled area totaled 16,300 hectares of eucalyptus for-ests, with 8,700 hectares planted and 7,600 hectares regen-erated. The seedling nursery produced 13.8 million seedlings, having reached a rooting rate of 87.4%, which indicates a highly efficient seedling production process. A number of im-portant actions were taken in the operational area aimed at lowering costs and improving forestry processes.

CUBIC METERS,MILLION

IN 2018, THE TOTAL VOLUME OF WOOD DELIVERED TO THE PLANT WAS

OUT OF WHICH 83% ORIGINATED FROM CENIBRA’S OWN FORESTS AND THE REMAINING 17% FROM PLANTATIONS UNDER THE FORESTATION INCENTIVE PROGRAM

4.7

Sustainability Report 2018 8 Competitiveness and Economic Performance 55

Pulp Production

CENIBRA’s pulp output totaled 1,200,380 tons in 2018, which is lower than the budget figure. This result was influ-enced by the stoppage of road transport (truckers’ strike) in the second quarter of the year and caused a production loss of 22,538 tons. Over the following quarters, the Compa-ny endeavored to recover output and maintain operational stability, which delivered a positive result. Finished product quality reached 95.8% of the index previously set as the Earnings and Profit Sharing Program criterion. The higher use of debarked wood and increased recovery boiler effi-ciency contributed to lower specific consumption of wood and fuel oil, respectively, when compared to the budget for the year.

Sales

CENIBRA’s sales totaled 1.201 million tons in 2018, in line with the budget. Export shipments amounted to 1.172 mil-lion tons, or 98% of the overall sales, whereas the domestic market took 29,000 tons. From a sales strategy point of view, it was possible to allocate important volumes to mar-kets that, despite the logistics challenges, provided a bet-ter financial return and manage inventories so as to ensure regular supply to all domestic and international customers. In terms of final use, the sanitary paper segment answered for 54% of the 2018 sales, followed by special papers with 40%, and printing & writing and packaging with 3% each.

Performance Analysis

The net operating revenue amounted to R$ 3,036 million, a 38.87% jump from the 2017 figures, driven by a higher net average price in U.S. dollars and the appreciation of the U.S. currency against the Brazilian Real. The R$ 767 million net income was 74.33% higher than that of the previous year. Cash generation (adjusted EBITDA) ended the year at R$ 1,614 million, up 78.22% from the 2017 EBITDA of R$ 905 million. The performance of these indicators is also ex-plained by factors that impacted the net operating revenue.

Capital Investments

CENIBRA’s capital investments amounted to R$401 million in 2018. The following projects and investments stand out:

» Investment in forest formation – forestry process;

» Harvesting equipment modernization;

» Modernization of the bleaching process;

» New Chipping Line;

» Bark washing system;

» Exchange of superheater pipes in recovery boilers #2 and 3;

» Exchange of the 3rd effect evaporator’s upper cap;

» Automatic cutting system for the drier of pulp machines #1, 2 and 3.

Production Growth (in 1,000 ADt)

1,199 1,2011,221

1,200

1,093

2014 2015 2016 2017 2018

Sales Breakdown

2%Domestic

Market

11%NorthAmerica

0%LatinAmerica

41%Europe

46%Asia


Financial Management

CENIBRA achieved solid financial liquidity in 2018. The cash and cash equivalents position at 2018 yearend was R$ 692 million, a staggering 549.49% growth from the 2017 lev-el. Such an increase in Brazilian currency stems from the indebtedness reduction policy implemented by the Compa-ny’s shareholders, which led to “zero debt”.

Wealth Generation and Distribution

Tax Incentives

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Figures in R$ thousand

2018 Value Added Distribution 1,582,145

Personnel and Charges 345,084

Taxes, fees and contributions 360,760

Accrued interests and rentals 109,642

Retained earnings 766,659

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Figures in R$ thousand 2016 2017 2018

Tax incentives related to sponsorships and support actions1 2,304 4,585 12,559

Innovation Act (deduction of research and technological innovation expenditures from the Income Tax and Social Contribution calculation basis)2 1,260 1,171 1,715

Workers’ Nourishment Program (PAT)3 1,008 3,055 7,369

Payroll taxation relief program4 28,483 29,906 15,956

Total 33,055 38,717 37,599

1 Income tax incentive relative to the Culture Incentive Act, Sports Act, National Elderly Fund, Children’s and Teenagers’ Rights Fund, PRONON/PRONAS;2 Innovation Act: Expenditures related to technological innovation research & development can be excluded from the Income Tax and Social Contribution calculation basis - Act 11.196/2005, Art. 17 I, art. 19; 3 Corporate income tax incentive relative to the Workers’ Nourishment Program;4 Act no.12.546 of December 14, 2011, as amended by the Provisional Measure 582 of September 20, 2012, and enacted as Act 12.794 in April 2013, includes the pulp industry in the payroll tax reduction system.


SOCIALPERFORMANCE

CHAPTER 9

CENIBRA disseminates its values and principles with an aim to enhance sustainability awareness with a focus on ethics and transparency, while taking into account its stakeholders’ requirements and realities.

CommunitiesSustainability

(partnership and respect in social

actions)

Market & mediaCorporate communicationwith ethics, transparency

and respect for the journalists.

Third sectorComprehensive partnership with

reputable NGOs to promote sustainable

actions

UnionsEthics, transparencyand dialogue in the

negotiations on behalf

of employees

CompetitorsEthics and respect, in compliance with

both local and international laws, regulations, and

rules

Customers Quality product,

safety, and customer solution

development

Suppliers and Forestry PartnersBest management

practices in the production chain

Managementand Employees

Professional Development, health, work safety, and

dialogue

ShareholdersKnowledge and

technology exchange

Environmental Agencies

Dialogue and guidance to comply with the

environmental legislation, with a sustainable vision

GovernmentsPartnerships to

support the regional,state and national

development

Sustainability Report 2018 9 Social Performance 59

Dialogue with stakeholders is the foundation of CENIBRA’s sustainability. For that purpose, the Company makes use of a variety of communication media and tools, as listed in the following table:

Media / Tool Title Description Periodicity

Bulletin Board CENIBRA AconteceRelease of corporate information on boards placed in areas of heavy pedestrian traffic at the Plant and Regional Units.

Weekly

Printed newspaper

FIBRA

Newspaper oriented to employees, the media, service providers, shareholders, suppliers, educational institutions, public entities and communities. It covers the Company's main forestry and industrial activities.

Bimonthly

Internetwww.cenibra.com.br www.institutocenibra.org.br

On-line communication to provide the external audience with information about the Company’s processes and social investments.

-

Internet

www.twitter.com/cenibrawww.facebook/cenibrahttps://plus.google.com/+celulosenipobrasileiracenibrahttps://www.instagram.com/cenibra_celulose/

CENIBRA’s corporate profile on the social networks to disclose institutional information and the Company’s position with respect to corporate matters.

-

Intranet Corporate PortalDepartment Portal

Internal on-line communication channel. The intranet platform provides employees with access to regulatory documents, corporate data, operating information, and other corporate management systems.

-

Digital notices -Corporate e-mail with specific information about the Company’s procedures and actions.

-

Newsletter CENIBRA NewsOn-line bulletin sent to those who have signed up on CENIBRA website. It provides a summary of the main actions taken by the Company and CENIBRA Institute.

Semimonthly

Vídeos -Corporate videos on industrial and forestry safety training, equipment tests, and specific activities by the Company departments.

-

TelephoneTalk to CENIBRA - Toll-free phone

Community-oriented communication channel through a toll-free phone number.

-

Special Publications

Interação Newspaper - CENIBRA and Community

Publication oriented to employees, the media, educational institutions, local administrations, city councils, and communities in the company’s areas of operation. The periodical releases information about CENIBRA’s institutional relations with communities and CENIBRA Institute’s projects.

Quarterly

Communication Campaigns

-Integrated communication actions to disseminate corporate messages in line with the Company’s institutional positioning.

-

Corporate Events

-Events to maintain the organizational climate and foster both in-company and external integration/relationship.

-

Visitor’s Reception

-Visit to CENIBRA’s facilities to provide the visitors with information about the Company’s industrial, forestry, administrative, and social-environmental activities.

-


Community Relationship

CENIBRA carries out its operations in 54 municipalities in Minas Gerais and is aware of the influence of its activities on local communities. The Company presence gives rise to numerous opportunities for local social and economic de-velopment, job and income generation, professional quali-fication, and support to a number of programs in the areas of education, culture, sports, and others.

CENIBRA Institute

CENIBRA relies on CENIBRA Institute to support its social initiatives, particularly the management, impact evaluation, and implementation of projects. For the past 17 years, the Institute has been responsible for the Company’s social ori-entation and qualification of its social investments. It has been engaged in 50 socio-environmental projects in the fields of education, environment, digital inclusion, job and income generation, cultural rescue, sports, and citizenship. In addition to its own projects, the Institute also supports a number of initiatives by civil society organizations and the executive, legislative, and judicial branches.

In 2018, the Institute carried out a number of public in-frastructure works in partnership with municipalities and conducted several cultural and sports projects in the com-munities in which it operates with an aim to value and im-prove relations with various segments of society. Local de-mands were met and funds and sponsorships were made available under federal incentive laws. Initiatives in the areas of health, education, economic and socio-cultural develop-ment, environment, sports, and citizenship are estimated to directly and indirectly impact around 100,000 people in municipalities in which the Company operates.

2018 External Social Investiments

20%

10%

2%

3%

10%13%

41%

Economic Development

Sports

Childhood and Adolescence Funds

Sociocultural

Environment

Health

Education

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DescriptionValues in

R$ million

Sociocultural 6.60

Environment 2.11

Health 1.62

Education 0.46

Economic Development 0.29

Sports 1.57

Childhood and Adolescence Funds 3.19

Others 0.08

Total 15.92


Institutional Relations

CENIBRA recognizes the significant impacts of its operations on the socioeconomic and environmental dynamics of com-munities located within its area of influence. In this sense, it has created a number of tools to manage the impacts of its operations and promote an effective relationship with communities. Such tools are:

» Communication with Stakeholders: Any complaint submitted through the Company’s communication channels is given transparent, methodical attention and is recorded in the Quality Management System. This system issues a notice to the manager in charge of the sector that gave rise to the complaint for proper treatment. The complainant is given access to information about the actions underway during the entire treatment process. Once the proposed action plan has been completed, the complainant is visited by an employee from the Corporate Communication department to check the solution effectiveness, and the complainant can declare whether the measures taken were satisfactory or not. Moreover, statistics are prepared about the complaints in order to provide input for continuous improvement of controls and production processes;

» Corporate Group for Communication with Stakeholders: Several other companies, particularly in the mining and steel industry, operate in the same towns and cities in which CENIBRA carries out its activities. Thus, in order to make partnerships feasible, a Corporate Group for Communication with Stakeholders was set up. Its members are officers in charge of such activity in each of the companies. The objective is to share strategic information about the relationship with communities and community leaders, which creates a good opportunity for the development of closer institutional relations among the companies and sharing the costs to meet the community requirements. Group meetings are held when necessary;

» Toll-free Phone – Talk to CENIBRA: Communication channel made available to the community for effective access to the Company. The toll-free number 0800-2831291 can be used to provide information about forest fires, whereas the number 0800-2833829 is used for information about wood sale and transportation, ”How’s my Driving” program, and other information;

» “Knowing CENIBRA” Project: Speeches about the Company and its forestry activities, with a focus on the myths and truths about eucalyptus, are given to students from the 6th to the 9th grades. After the speech, the students are invited to prepare an essay to record their understanding of the speech content and their impressions about the information given. The best essay gets an award;

» Technical, Economic, Environmental, Social, Safety and Occupational Health Planning: This is a multidisciplinary planning tool that seeks to minimize the impacts of forestry activities on both the communities and the environment.

CENIBRA’s Management System includes formal proce-dures covering the entire relationship with neighboring communities in a structured manner:

» Procedure for Communication with Stakeholders;

» Procedure for Communication with Communities;

» Press Service Procedure.

As far as the development and impact of infrastructure investments are concerned, CENIBRA entered into part-nerships with local administrations in the municipalities in which it operates and invested R$3.5 million in 2018. These funds were allocated to access ways and road improvement works, including asphalt paving of three kilometers in the municipality of Antônio Dias (Minas Gerais) at a cost of R$3.4 million. In addition, the Company invested around R$7.5 million in logistic infrastructure (external roads), com-prising bridges, prime coat, and road maintenance. Such investments have effectively contributed to smooth the so-cial-economic flows and the interaction between the com-munities and neighboring towns.


Professional Training Projects

CENIBRA is engaged in actions intended for professional training and labor qualification as part of its social responsi-bility approach. Highlights are:

Young Apprentice Program: This Program is a partner-ship between CENIBRA and SENAI (Brazil’s Industrial Ap-prenticeship Service) in the Steel Valley with the objective of giving the apprentices (youths from 16 to 24 years of age) their first professional opportunity. In 2018, 36 young apprentices were hosted by CENIBRA for hands-on training in industrial electric installations, administrative processes, industrial mechanical maintenance, IT, and computer and network installation and maintenance. Theoretical classes were given by SENAI;

Professional of the Future - CENIBRA Internship Pro-gram: This program offers technical and college students the opportunity of consolidating their academic education by means of practical activities in their respective fields of in-terest, which adds value to their professional development. CENIBRA has entered into agreements with approximately 60 educational institutions, comprising 35 different cours-es in several fields. Based on a differentiated development plan, this Program includes a number of development and training activities and permanent follow-up by a supervi-sor, besides offering students the opportunity of present-ing their projects during a Technical Internship Seminar. In 2018, 74 interns participated in the program in 146 differ-ent development and training activities.

Specific Communities

CENIBRA’s land is not occupied by quilombolas or indige-nous communities, but the company has a good relation-ship with and respect for those communities located in the municipalities where it operates. CENIBRA promotes events in the communities through partnerships, on top of also providing support through sponsorships and donations.

Forestation Incentive Program

Since 1985, CENIBRA’s Forestation Incentive Program for Farmers brings farmers into the Company’s production chain as wood suppliers. Aiming to strengthen CENIBRA’s role of economic, social and environmental development agent in the regions where it operates, this Program adopts criteria for technology transfer (services and inputs), financ-ing and technical assistance to wood production.

Such long-term partnerships allow integrating the commu-nity into the forestry business, contribute to job and income generation, result in a better quality of life, and favor envi-ronmental preservation and countryside development.

They also mitigate land concentration, enable local activi-ties, and create and diversify income-generation opportu-nities for farmers. In addition, they bring resources to the municipalities in which the program is implemented, foster compliance with applicable legislation and workers’ rights, and enhance relationships with neighbors and commu-nities. Currently, 663 farmers participate in the program through 1,133 contracts.


Supplier Relationship

CENIBRA relies on a diversified and extensive supply chain, from small farmers to large Brazilian and multinational com-panies. It includes suppliers of materials, equipment, raw materials, chemicals, and utilities, as well as logistics and service providers. Negotiations and contracting comply with the applicable qualification, evaluation, and selection crite-ria, particularly in the case of strategic supply chain players.

At CENIBRA, the appreciation of companies located within its area of operations is a permanent concern, as this is an effective way of enhancing community development and quality of life.

MILLION

IN 2017, CENIBRA’S PURCHASES FROM LOCALLY-BASED SUPPLIERS AMOUNTED TO R$

(73% OF THE OVERALL EXPENDITURES)

1,107

CENIBRA works to build relationships based on ethics and long-term partnerships with its suppliers, and encourages them to adopt sustainability practices and spread informa-tion and knowledge about this matter among all parties of the value chain. It must be pointed out that all contracting and procurement procedures describe the applicable prac-tices in detail. Any company that meets the product or ser-vice quality requirements and the registration criteria and whose values are similar to CENIBRA’s is a potential supplier. Among the main selection parameters, the following are worthy of mention:

» Environment: Any supplier whose operations involve environmental risks shall only be selected upon submission of all applicable licenses, particularly those related to natural resources and environment preservation;

» Labor Practices: All contracts include provisions relative to enforcement of the rights stipulated in the Consolidated Labor Act (CLT) and occupational health and safety practices according to CENIBRA regulations;

» Human Rights: All contracts include provisions relative to human rights, like non-discrimination under any excuse, either on grounds of race, gender, skin color, age, religion or any other reason, including disability, provided there is no hindrance to the performance of the required tasks and no risk to the employee’s physical integrity;

» Sociais: Prevention of any potential impact on society in accordance with the list of selection aspects, such as environment, labor practices, and human rights.

In order to develop and qualify its suppliers, CENIBRA has set forth measures to control the process, with the con-sequent cost reduction, higher user confidence, improved quality and safety, and lower risk of inappropriate service. Supplier qualification and evaluation are among the most important measures.

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Figures in R$ thousand 2016 2017 2018

Spending with locally-based suppliers* 624,570 860,136 1,107,112

Total spending with suppliers 1,247,094 1,379,922 1,524,339

Percentage of purchases from locally-based suppliers 50 62 73

*Place = State of Minas Gerais


The qualification program aims at providing evidence that the supplier complies with CENIBRA’s quality requirements. It also covers legal aspects, tax and labor compliance, and the supplier’s economic, financial, and technical capabili-ties. The entire process is designed to qualify the supplier to participate in tenders for the procurement of materials and services, as well as to ensure its status as a registered supplier. Both current and new suppliers go through the qualification process.

In addition, suppliers are evaluated once a year by contract managers and procurement analysts, including criteria such as socio-environmental responsibility, safety, human re-sources, and quality. Those suppliers that stand out accord-ing to such criteria are granted the “Outstanding Supplier” award by CENIBRA, as recognition for their good perfor-mance.

CENIBRA adopts an integrated auditing approach to assess its suppliers. Such audits are conducted in accordance with Procedure P0556 (criteria for supplier selection, qualifica-tion, monitoring, and re-evaluation). If necessary, improve-ment opportunities and non-conformities in relation to the audited parameters are recorded in the audit report.

In 2018, CENIBRA evaluated 93 suppliers through integrat-ed auditing and did not identify significant negative im-pacts, either potential or actual, as far as environment, labor practices, human rights, and social aspects are concerned.

Moreover, there was no record of a supplier identified as a risk in terms of child labor and forced or compulsory labor in 2018. CENIBRA takes the necessary measures to prevent such kind of risk. Inspections are conducted from time to time by human resources specialists and work safety and nurse technicians to monitor the employees’ work condi-tions, including accommodations, sanitary facilities, meals, protection equipment, and working period.

In addition, CENIBRA is certified to different standards, whose principles and criteria specifically address labor and occupational health and safety issues. Such principles and criteria are a benchmark for the yearly certification mainte-nance audits, when compliance by the Company is checked.

It must be pointed out that CENIBRA ensures its suppliers the right to freedom of association and collective bargain-ing, in an approach of respect and ethics in line with the Company’s Code of Conduct.

Customer Relationship

CENIBRA seeks to have a transparent, long-lasting rela-tionship with its customers along the entire service chain. Through its Commercial Mission, the Company adopts, both internally and externally, three pillars to support this relationship:

» Excellent quality in every aspect;

» Quick (efficient) response to customers;

» Ensured supply.

Evaluated aspects

Number of suppliers

evaluated

Numberof non-

conformities

Environmental impacts

63 4

Labor practices 88 91

Practices (occupational health)

88 180

Practices (safety) 88 248

All non-conformities are dealt with through the e-Suppli-er system, through which the auditor who has recorded a non-conformity may follow up and approve the correspond-ing correction.


For these three pillars to remain solid and meet both the Company and the customers’ expectations, one fundamen-tal aspect must be there: close relationship.

The following structure is in place to meet the customers’ requirements:

a. Customer Technical Support Committee: Provides Ex-ecutive Management with support to ensure excellence in meeting possible customer requirements and actual de-mands. This committee is made up of representatives with skills in the commercial, environmental, quality, industrial, and research & development fields:

» Evaluating and proposing alternatives to meet the customers’ demands and expectations related to CENIBRA’s product and service quality;

» Proposing research and studies for the improvement of processes and products;

» Assessing risks and opportunities related to market trends and potential demands with respect to technical, environmental, legal, and social requirements, eco labels, and others.

b. Customer Technical Support Group: CENIBRA has a multidisciplinary technical support team to handle custom-ers’ requests, questions, complaints, and specifications, as well as develop projects and studies in partnership with customers. Although customer technical support func-tions have been in place since the Company started its operations, the formalization of the Customer Technical Support Group in 2017 made the members’ goals and re-sponsibilities clearer.

c. Sales offices: Visit to customers, sales contract negoti-ations, inventory management, technical support, and other commercial routines are among the sales offices’ main duties.

As far as product use is concerned, CENIBRA provides its customers with a Material Safety Data Sheet (MSDS) con-taining technical information about safety, storage, and handling. There were no records of non-conformity with regulations and voluntary codes in connection with impacts caused by products and services on customers’ health and safety in 2018. It must be pointed out that CENIBRA’s prod-uct is odorless, neutral, and non-polluting.

By conducting research laboratory studies, the Company is always endeavoring to mitigate any negative impacts that may threaten its customers or the environment. Throughout the year, CENIBRA makes visits to customers to enrich the information exchange and improve communication.

CENIBRA’s pulp bales feature the Company’s logo, product description, ISO 9001 and ISO 14001 certification stamps, lot number (through which it is possible to track down in-formation such as production date, quality, and other data), as well as a bar code, which contains full information. In-formation on FSC® and Cerflor/PEFC certifications are not shown on pulp bales. Instead, statements are included in the sales documents (DANFE/Invoice) according to the type

of product the customer bought.

In order to constantly increase customer satisfaction, a sur-vey is conducted every two years and its results are used as guidance for the implementation of both preventive and corrective measures. Such surveys assess the performance of sales servicing, pulp integrity and characteristics, envi-ronmental requirements, quality of logistics and technical services, and trouble-shooting effectiveness. The customers make the evaluations and state their level of satisfaction and the importance of each item. Moreover, the customers rank CENIBRA among the other world pulp & paper indus-try players.

Pulp Logistics

Pulp Transportation (by road)

CENIBRA has a long-term contract with a reputable trans-port company, whose fleet is made up of new vehicles sub-ject to strict pollution emission and maintenance controls. It means that the vehicles are technologically in line with the most recent Brazilian regulations issued by the corre-sponding agencies. The transportation service providers are evaluated from time to time according to sustainability and safety parameters.

Pulp Transportation (railway)

Periodic measurements are made of the gas emission levels to ensure compliance with legislation. Biofuel already an-swers for 5% of the fuel consumption.


Pulp Transportation (maritime):

CENIBRA charters the most modern ships dedicated to for-est-related products. These ships are fueled with low sulfur content fuels in line with the legislation in force.

Human Capital Management

The Company’s core guideline in 2018 was to act as a trans-formation agent aiming at process excellence through mod-ern management practices with respect to talent identifica-tion and training and professional development programs. As support to this process, CENIBRA relied on suitable tools and practices to ensure employees’ physical integrity and good working conditions. The outcome was the achieve-ment of an 89% Favorability Index, according to an Orga-nizational Climate and Engagement Survey. Higher than the market level, this figure reflects employees’ good per-ception of product quality and work safety and stresses the role played by the straightforwardness of and trust in the communication process, management models, and people management policy.

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Number of employees 2016 2017 2018

Executive management 3 3 3

Middle Management 22 22 22

Heads and Coordinators

31 32 32

Technicians and supervisors

328 337 333

Administrative 145 146 149

Operational 3,583 3,657 3,715

Trainees 0 0 48

Total 4,112 4,197 4,302

Number of outsourced personnel 2016 2017 2018

Total 3,227 3,243 3,316

Job placement programs 2016 2017 2018

Young Apprentice 32 36 34

Interns 85 87 74

Total 117 123 108

Work period 2016 2017 2018

Full-time * 4,144 4,233 4,336

Part-time ** 85 87 74

Total 4,229 4,320 4,410

* Young Apprentice + employees** Interns


Ratios of standard entry level wage compared to local mini-mum wage at significant locations of operation:

Proportion of senior management hired from the local com-munity at significant locations of operation:

Note: CENIBRA’s senior management is made up of five Ex-ecutive Directors. Three out of the five positions are current-ly occupied, and they have been defined by shareholders.

Total number and rates of new employee hires and employ-ee turnover by age group and gender:

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Figures in R$ 2016 2017 2018

Entry level wage 1,037 1,064 1,111

Minimum wage 880 937 954

Percentage 18 14 16

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2016 2017 2018

Number of senior management employees recruited from the local community*

0 0 1

Number of senior management em-ployees hired by the company

5 5 5

Percentage 0 0 20

*Place = State of Minas Gerais

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Number of new employee hires by age group 2016 2017 2018



110 175 115


Total 258 406 383

Number of new employee hires by gender 2016 2017 2018

Women 14 18 13

Men 244 388 370

Total 258 406 383

Turnover rate by age group 2016 2017 2018



202 134 116


Total 460 321 279

Turnover rate by gender 2016 2017 2018

Women 65 35 19

Men 395 286 260

Total 460 321 279


Return to work and retention rates after parental leave, by gender:

Training and Development

CENIBRA has reaped the benefits of constant training and highly qualified employees in the form of increasing effi-ciency. The main catalysts of this process are the “Strategic People Management” and “Managerial Development” Pro-grams.

The former offers growth opportunities and prepares ta-lented people to take over managerial and strategic posi-tions, aimed at ensuring the business sustainability, while the latter enhances team commitment by encouraging the leaders’ self-knowledge and creating more effective leader-ship behaviors.

Training was given in 2018 with a focus on the “Strategic People Management” and “Managerial Development” pro-grams, as follows:

» Specialization in Pulp and Paper: Employees are trained to meet the labor market requirements by updating their knowledge and techniques in industrial development and projects, and enhancing their potential for technological dissemination and performance in the Company. Thirty people completed this course in 2018;

» MBA in Business Management: Development of a strategic vision and personal communication, planning, and leadership skills. The course also seeks to structure and synthesize information related to the administration area and provide participants with the necessary tools for more efficient decision making;

» Skills Development: This program’s purpose is to lead participants to reflect on the importance of interpersonal relationships and teamwork in the performance of their roles in the Company. Self-knowledge and communication techniques to facilitate relationships were presented;

» Experiential Outdoor Training: Based on experiential outdoor activities, this training brings benefits such as problem-solving, education of reason and emotion, teamwork, leadership development, and fostering strategic thinking;

» Coaching: Development of specific skills for performance (achievement of goals) and career (personal satisfaction) improvement;

» Organizational Culture: Promotes the alignment of Brazilian and Japanese cultures with a focus on diversity, skills, values, and behaviors.

In 2018, the Company continued the training focused on the Compliance Program, work safety, and technical qua-lification.

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2016 2017 2018

Number of employees that were entitled to parental leave

Men 121 143 138

Women 29 27 22

Total 150 170 160

Number of employees that took parental leave

Men 121 143 138

Women 29 27 22

Total 150 170 160

Number of employees who returned to work after parental leave ended

Men 121 143 137

Women 21 18 17

Total 142 161 154

Number of employees who returned to work after parental leave ended who were still employed 12 months after their return to work

Men 120 138 131

Women 27 24 15

Total 147 162 146

Return to work rate of employees who took parental leave (%)

Men 100 100 99

Women 72 67 77

Retention rate of employees who took parental leave (%)

Men 99 97 95

Women 93 89 68


Average hours of training in 2018 per employee and by employee category:G

RI 4

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Employee Category GenderTotal hours of

training

Total employees by

categoryHours per employee

Executive ManagementWomen 0 0 0

Men 151 3 50

Middle Managers and AdvisorsWomen 0 0 0

Men 1,632 22 74

Heads and CoordinatorsWomen 201 3 67

Men 4,457 29 154

Technicians and SupervisorsWomen 6,277 75 84

Men 26,974 258 105

AdministrativeWomen 1,957 71 28

Men 2,515 78 32

OperationalWomen 11,515 233 49

Men 169,598 3,482 49

ApprenticesWomen 4,360 15 291

Men 10,537 21 502

TraineesWomen 444 5 89

Men 5,382 43 125

InternsWomen 4,240 34 125

Men 5,959 46 130

Total 256,199 4,418 58


Quality of Life Program – Living Better

The Program continued in 2018 in its objective of creating a culture of quality of life as an important value for employees, their families, and outsourced personnel. The Living Better Program puts a focus on activities that foster a change in people’s behavior and life style in such areas as health, education, leisure, and interpersonal relationships.

SPORTS INCENTIVE PROJECT

STORK PROJECT

TEENAGER PROJECT

Encouragement and support to the company teams of football, women’s volley, tennis (SESI Project), and races.

The project’s purpose is to gather together pregnant women (both employees and employees’ wives) for speeches about pregnancy, labor, and care with the com-ing baby with an aim to lessen the stress and facilitate the understanding of the process of change through which the cou-ple and family members go, to everyone’s benefit. More than 100 people attended the Project activities in 2018.

This Project enables teenagers to reflect on their values and attitudes, which contributes to their personal growth and better family relation-ships. As a differential in 2018, the Program included visits to universities in the region in which the Company operates.


FAMILY/COMPANY INTEGRATION PROJECT

LIVE LIFE PROJECT

This project aims at providing the neces-sary conditions for employees’ families to participate in the Company’s social life, including visits to the Seedling Nursery and information about the pulp produc-tion process, social and environmental projects, and the Company’s health plan.

This project’s objective is to prepare employees and their families for the retirement period.


Occupational Safety and Health

CENIBRA is committed to its employees and outsourced personnel’s health and safety. In this respect, it has imple-mented actions in line with the best market practices aimed at preventing occupational diseases and incidents. Such ac-tions strengthen the Company’s Occupational Health and Safety System, whose structure is based on the Employment Ministry’s Regulatory Standards, ABNT (Brazilian Technical Standards Association), standard OHSAS 18001, and sustai-nable forest stewardship certifications.

CENIBRA encourages and values the actions taken by the Internal Accident Prevention Committee and the Internal Rural Work Accident Prevention Committee with a view to reinforce the safety culture among employees. Contractors’ personnel also are encouraged to participate in such formal committees to foster good occupational safety and health practices and achieve the zero accident target. These com-mittees hold meetings from time to time to review work accidents, propose preventive and corrective actions, and establish measures to improve health and safety conditions for both employees and outsourced workers. They rely on support by the Specialized Work Medicine and Safety Engi-neering Service and the Specialized Work Safety and Health Service. All occupational health and safety actions taken in the forestry and industrial processes rely on support of top management and middle managers.

In 2018, a lost-time work accident was recorded. The cor-responding Lost-Time Work Accident Frequency rate was 0.12. In addition, there were 20 no-time-lost work acci-dents, resulting in a Frequency Rate of 2.40. CENIBRA en-ded the year with a significant reduction in work accident indicators. CENIBRA maintains a team of specialized occupational he-alth professionals made up of doctors, nurses, nursing tech-nicians, dentist, speech therapist, ergonomist, and physical education instructor. This team systematically monitors em-ployees’ health through the Occupational Health Medical Control Program, periodically conducts occupational medi-cal examinations on all employees, studies the ergonomi-cs of workplaces and work environments, and implements improvements as required and indicated by such studies. In addition, CENIBRA grants employees a comprehensive he-alth plan, extended to legal dependents. This plan includes medical, dental, pharmaceutical, and hospital assistance. CENIBRA currently has 11,801 lives in its health plan and 577 accredited service providers in its area of operation.

Formal agreements with unions cover matters related to workers’ health and safety, and they have specific clauses on the provision and use of Personal Protection Equipment (PPE). Moreover, CENIBRA and unions have a common com-mitment to join forces to disseminate the importance of complying with occupational health and safety regulations.

CENIBRA provides capacity-building activities and training in occupational health and safety to all employees, aiming to ensure proper, safe execution of all activities and com-

plying with all applicable legal and technical requirements. Among the many training courses offered by the Company, the following are worthy of mention:

Safe Behavior Workshop: In an effort to enhance employee awareness of the im-portance of being motivated to perform their everyday activities in a safe way, the Company continued this program, which began in 2017. The Workshop addressed a number of topics, including the Recording Near Misses and Right to Refuse to Work programs, feedback on safety solutions, in-creased risk perception, active care, and the importance of safe behavior;

Safety Leadership: In line with the safe behavior program, this training was pro-vided to leaders in the production and maintenance areas, seeking to make them aware of the importance of being motivat-ed to perform their daily activities safely;

Emergency Response Plan and Hazard-ous Product Storage and Handling: Pro-vided to the entire work safety team and areas involved in the Emergency Response Plan, this training aimed to qualify those di-rectly and indirectly involved in actions un-der the emergency assistance plan and draw attention to risks when handling chemicals;

Work Accident Prevention (SIPAT) Week: The Company sought to raise em-ployees’ awareness by highlighting the family as an essential element of safety;

Employment Ministry’s Regulation No. 13 - Safety in Boiler, Pressure Vessel, and Pipeline Operation: The objective of this course was to facilitate contact with specialists in this field, who described in detail the premises taken into account in the 1994, 2013 and 2017 revisions of the Employment Ministry’s Regulation No. 13 on Safety in Boiler, Pressure Vessel, and Pipeline Operation.

Compensation and Benefits

CENIBRA’s compensation policy is based on collective bar-gaining agreements and yearly market surveys conducted by the industry players’ Human Resources Group. In addi-tion to fixed remuneration, the Company offers incentive programs linked to the achievement of established goals, including Earnings and Profit Sharing. With an aim to im-prove its employees’ quality of life, CENIBRA offers addi-tional benefits, like school kit, day-care allowance, gifts, Christmas baskets, cafeteria meals, transport, school ex-pense reimbursement, and private pension fund.


Benefits provided to employees:

Relationship with Unions

CENIBRA’s employees are represented by unions and be-nefit from collective bargaining agreements and similar contracts. Matters like collective bargaining, base date, definition of work shifts, and many other demands are negotiated directly between the Company and unions on behalf of their members. Bargaining agreement provisions are strictly fulfilled by the Company. Union representatives participate in the employees committee that negotiates the Earnings and Profit Sharing items.

CENIBRA adopts a modern labor relations system founded on dialogue, ethics, and transparency in the relationship with the workers’ unions. Accordingly, when hiring new employees, CENIBRA informs them about the unions that represent their professional categories and that they may chose to be a member of one of these unions. The Com-pany does not dismiss or adopt any kind of retaliation against employees who take over a management position in unions to which they are a member. These professionals are ensured all legal labor rights during the period they hold a management position in a union.

Except for executive management, all CENIBRA employees are covered by collective bargaining agreements.

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Figures in R$ thousand

2016 2017 2018

Christmas baskets 582 603 727

Toys 139 150 153

School kit 144 252 120

Medical and Dental Assistance

15,716 17,538 18,251

Meals / Basic food basket

28,291 30,210 35,683

Private Pension Fund 5,104 5,239 5,275

Funeral and Life Insurance

308 263 703

Transportation 22,852 23,363 23,466

Day Care Allowance 162 172 166

Quality of Life Program

125 148 254

Total 73,423 77,938 84,798


ENVIRONMENTALPERFORMANCE

CHAPTER 10

The definition of environmental guidelines takes into consi-deration the need for ensuring proper operation of the in-dustrial plant and the Integrated Management System (IMS) in line with international quality (ISO 9001), environmental (ISO 14001) and forest stewardship standards.

Forest Stewardship

The overall objective of the Forest Stewardship Plan con-sists of defining actions to be taken by the Company to ensure both the current and future production capability founded on the following assumptions: growth with pro-fitability, socio-environmental development, technological development, organizational modernization, and quality improvement.

CENIBRA’s land totals 253,665.84 hectares, allocated as follows: » 123,385.85 hectares of commercial plantations

(eucalyptus).;

» 7,477.52 hectares of land on stand-by;

» 89.48 hectares of land available for plantation;

» 105,445.72 hectares of Legal Reserves, Permanent Preservation areas, and native vegetation;

» 17,267.27 hectares for infrastructure and other uses.


CENIBRA always looks for feasible, low environmental im-pact alternatives to convey wood up to its industrial plant. In 2018, 20% of the 4.7 million cubic meters of wood deliv-ered to the plant were transported by rail. This is equivalent to saving approximately 22,000 road train travels and means less interference in the communities, lower CO2 emissions, and less road traffic. The remaining 80% of wood volume was shipped to CENIBRA plant by truck, as the road sys-tem is Brazil’s main means of transportation. Transportation is carried out by specialized contractors, and important fac-tors in this activity are transportation safety, respect for the communities, use of suitable trucks, and compliance with environmental legislation and requirements. The average distance from the forests to the plant was 110.4 km in 2018. Out of the total wood volume, 83% originated from CENIBRA’s own land and the remaining 17% from plantations under the Forestation Incentive Program.

Significant environmental impacts of wood transportation (by road):

» Fuel oil: Aspect relative to the use of a non-renewable natural resource in trucks employed in the transportation, loading and discharge of wood, and earthmoving machines used in road construction and maintenance. Mitigation: This impact is monitored through the anal-

ysis of specific fuel consumption by trucks and earth-moving machines, driveability systems, use of wood hauling trucks below five years of age, optimization of implement transportation assembly with the lightest tare, which leads to a reduction in fuel consumption, a fuel monitoring network that enables action to be taken at the origin (plantations), satellite monitoring of wood hauling trucks, and construction of deviations and cloverleaves to reduce the Average Distance of Transport (ADT) with the resulting reduction in fuel oil consumption;

» Particulate matter emissions: Aspect relative to the emission of black fumes by trucks and equipment used in transportation and infrastructure.Mitigation: This item is monitored by means of black smoke emission measurement using the Ringelmann scale and in terms of compliance with contractual clauses and submission of technical evaluation reports for each vehicle;

» Noise pollution: Aspect relative to the generation of noise by machines and equipment, which causes discomfort to communities. Mitigation: The Corporate Communication area re-ceives complaints from communities and submits them to the Company’s logistic department for checking and corrective actions;

» Water use: Aspect relative to the use of a natural resource to wet the roads and reduce dust generated by truck traffic.Mitigation: Daily control of water intake for the forestry process, use of a water spray system in the tank trucks, road paving, use of soil stabilizers and anti-dust agents (on a trial basis) to improve the ground load supporting capability and reduce dust generation, and installation of water sprays at railroad wood stockyards with an aim to significantly reduce water consumption;

» Lubrication oil leaks: Aspect relative to soil contamination.Mitigation: Use of vacuum pumps in harvesting ma-chines (harvesters and forwarders) and containment basins, and removal of contaminated soil for proper disposal;

» Use of gravel: Aspect relative to the reduction of a non-renewable natural resource.Mitigation: Reuse of material used in forest projects in previous years, purchase of blast furnace slag, improve-ment in construction methods based on material par-ticle size studies and definition of compaction degree, reuse of crushed stone removed from railroads, recov-ery of gravel pits by means of revegetation through hy-drosowing, and construction of settling tanks;

» Earthmoving: Aspect relative to the possibility of erosion.Mitigation: Construction of suitable slopes, gabion walls, revegetation, stockades, and other measures.

Sustainability Report 2018 10 Environmental Performance 77

Water Resources Management

CENIBRA is an important water producer in its more than 105,000 hectares of native vegetation land, with the number of springs and fountainheads estimated at more than 4,500. They are properly protected and usually represent the only source of water for dozens of farmers and rural communi-ties. Additionally, water used by the Company in its operatio-nal processes is covered by the corresponding water intake grants, which, along with institutional initiatives and measu-res intended to enhance the scale of environmental recovery in the Doce River Basin, are significant indicators of business sustainability.

In 2018, water resource monitoring continued to be carried out through Unileste (University Center of Eastern Minas Gerais). The study cycle compares runoffs under different stewardship conditions, such as stream slope, percentage of eucalyptus plantation, percentage of conservation areas, density of roads, classes of soil slope, altitude, and opera-tions in watercourses. Comparing the quality and quantity of water runoff under varied conditions indicates which ope-rations and stewardship intensities have a greater effect on water resources, in addition to providing inputs to work out impact mitigation or elimination actions. This monitoring is carried out on a monthly basis and includes two hydrogra-phic micro-basins where quantitative monitoring is already conducted. The following main parameters are monitored: rainfall, water stream flow, and groundwater level.

Referenced quantitative data are used in bio-monitoring analyses by Unileste’s Environmental Engineering Depart-ment, resulting in inputs for more complex analyses of the results. The most recent results do not provide any evidence of significant impacts of the Company’s forest operations on the water resources in the areas where it operates.

Environmental Recovery

Preserving the environmental quality of CENIBRA’s forests and lands ensures the sustainability of its business. By adop-ting this vision, the Company has been engaged in an envi-ronmental recovery program that includes native vegetation enrichment, restoration of landscape near communities, erosion control, maintenance of roads and fire protection clearing, and environmental monitoring. In 2018, work was carried out on 446 hectares, which involved the eradication of eucalyptus in legal reserves and permanent preservation areas undergoing environmental recovery and planting of 36,410 seedlings of 40 different native species.

On top of promoting environmental recovery in its proper-ties, CENIBRA has entered into a number of partnerships with the ultimate objective of increasing water availability and improve water quality in the municipalities within its area of operation. A good example is the Living Water Pro-ject, which consists of fencing Permanent Preservation Areas containing waterheads in the Suaçuí Pequeno River basin, municipality of Peçanha (MG). This project is a partnership with the Municipal Administration of Peçanha, the State Fo-

rest Institute, the company Metalúrgica Moran, and farmers. One hundred eighty water springs in third-party lands have been fenced, which greatly contributes to the environmental protection of water sources to supply Peçanha.

Biodiversity

Biodiversity conservation and protection are some of CENIBRA’s sustainability strategy priorities. The Company’s biodiversity asset consists of around 105,000 hectares of forests that sustain varied wildlife and abundant water resources, and CENIBRA is engaged in several initiatives in line with its In-tegrated Management System (IMS) to preserve it. Guide-lines and goals are references for the development of envi-ronmental projects to monitor and improve the Company’s environmental performance, as well as to ensure that the necessary resources will be allocated, the responsibilities identified, and the results monitored and critically evaluated.


Legal aspects, impact assessment, surveys and monitoring, and society’s and academic and scientific communities’ demands are among the parameters taken into account when defining such projects and establishing their priori-ties. Some examples are the flora and fauna monitoring projects, endangered bird reintroduction program, native vegetation stewardship (including enrichment by planting native species seedlings and control of invasive plants and weeds), recovery of eroded areas, illegal hunting and fishing

prevention, measures against forest fires and wood theft, environmental education program, support to studies con-ducted by universities and research centers, sustainable use of native forest resources, and development of ecotourism activities in a beautiful wild scenario.

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas:

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2016 2017 2018

Conservation Unit UC UC UC

Geographic Location MG MG MG

Position in relation to protected area (in the area, adjacent to or containing portions of protected areas) and areas of high biodiversity value outside protected areas

103,384 103,462 105,446

Size of operation site in km2 (*) (**) 2,540 2,540 2,540

Biodiversity value characterized by:

• The attribute of the protected areas and areas of high biodiversity value outside protected areas (terrestrial, freshwater, or maritime ecosystem);

• Listing of protected status (e.g.: IUCN Category, Ramsar Convention, national legislation, Natura 2000 website, etc.).

Terrestrial ecosystemCONAMA 392/2006:

Regeneration stages

Initial = 6%Medium = 48%

Advanced = 41%Others = 5%


Regeneration stages




Regeneration stages



(*) Measuring unit = ha (hectare) (**) Aggregate of permanent preservation and reserve areas.


The disclosed figures refer to areas covered by native fo-rests and take into consideration the aggregate of perma-nent preservation areas and legal reserve areas in CENIBRA properties. Such figures increased from 2017 to 2018 due

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Area/Project

Size (hectares) Location

Status (at the end of the reporting period)

If restored, were the results of the remediation measures approved by external specialists?

Partnerships (to protect or restore)

2016

Reserve and Permanent Preservation Area

103,384Minas Gerais

Forests predominantly in medium and advanced stages of regeneration

Yes, the entire environmental recovery work is based on scientific guidance from universities and validated by certifying entities and environmental licensing agencies

Environmental Police of Minas GeraisFederal University of ViçosaMG State Institute of ForestsUnileste - University Center Eastern Minas GeraisState Park of Rio DoceRelictos FoundationWildlife Research and Stewardship Society - Crax

2017


103,462Minas Gerais




2018


105,446Minas Gerais




to land use reclassification, particularly with respect to the designation of swamps and marshes as permanent preser-vation areas.

Habitats protected or restored:


The biodiversity values determined by means of monitoring activities are similar to those found in full protection con-servation units and much higher than those found in other land uses prevailing in the region in which the company operates. The operations do not cause any significant, per-ceptible impacts in terms of biodiversity reduction. Althou-gh certain aspects of the production process could affect biodiversity, like atmospheric emissions and noise, environ-mental monitoring does not point to negative effects as far biodiversity is concerned.

Types of impact:

» Construction or use of manufacturing plants, mines, and transport infrastructure: The industrial site is surrounded by a green belt, and the plant size is relatively small when compared to the whole land area, for which reason its effects on biodiversity are not significant. The transport infrastructure is characterized by low intensity of use and low-speed traffic, which poses no threat to wildlife;

» Pollution: Emissions by the manufacturing process are isolated events and do not influence biodiversity of protected areas and areas of high biodiversity value. Forestry process emissions are characterized by low intensity and short duration, as they occur only at the end of a forest cycle (seven years) and, therefore, do not pose a threat to biodiversity;

» Introduction of invasive species: Although eucalyptus is not native to the local ecosystem, it is not deemed an invasive species. Moreover, the adopted stewardship practices include extensive control of invasive herbaceous species, particularly when compared to other land uses in the region in which the Company operates;

» Reduction of species: Biodiversity monitoring shows that species richness in the Company’s properties has increased over time;

» Habitat conversion: Habitat conversion takes place in two different ways on Company land: conversion of degraded areas into planted forests and conversion of degraded areas into native forests. Both cases result in improved biodiversity conservation;

» Changes in ecological processes outside the natural range of variation: The ecosystem in the region where CENIBRA’s land is located was originally a native forest. Therefore, cultivating trees is the activity that is most similar to the original conditions when compared to short-cycle annual crops with intensive use of natural resources and the consequent environmental impacts. For this reason, tree cultivation keeps the ecological processes within their natural ranges of variation.

Direct and indirect impacts:

The direct and indirect impacts of activities carried out at CENIBRA’s properties on biodiversity are predominantly positive in comparison with other forms of cultivation (pasture and intensive agriculture), particularly due to the maintenance of a high proportion of protected areas and the low intensity, extent, and duration of environmental impacts.

» Species affected: Species whose habitats are forests and that benefit from the adopted stewardship practices and the maintenance of extensive protected areas;

» Extent of areas impacted: The positive impacts spread across the whole property, which is characterized by low environmental impact stewardship and high percentage of protected areas;

» Duration of impacts: Impact duration is limited to one-seventh of the time, when the harvesting and plantation renewal processes take place;

» Reversibility of impacts: Impacts are highly reversible because the large proportion of protected areas and impact concentration in seven-year intervals ensure high ecosystem resilience and provide conditions that favor the recovery and protection of both vegetation and wildlife populations once impacts cease.


Total number of IUCN (International Union for Conserva-tion of Nature Red) List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk:

The indicator “Number of endangered species” for the Company’s preserved areas has remained unchanged. This figure is influenced by protection and conservation actions and by the comprehensiveness of the monitoring sampling as well. This indicator attests the good quality of CENIBRA’s stewardship practices and the effectiveness of its protection and conservation measures. CENIBRA’s main conservation strategies related to nature, natural resources, and endan-gered species are as follows:

» Maintenance of a high percentage of preserved areas: Native vegetation areas in wood production lands correspond to 40% of the total area on average, including legal reserve areas, permanent preservation areas, and other preserved areas;

» Formation of ecological corridors: Measures to increase the connectivity among the native vegetation remnants in order to improve the wildlife survival conditions by facilitating genetic flows, enlarging the habitats, and providing access to water;

» Use of low environmental impact stewardship practices: As wood harvesting and plantation renewal activities are concentrated at 7-year intervals, low-intensity forest stewardship creates very favorable conditions for biodiversity conservation, on top of providing a long period for re-adaptation of species;

» Environmental education: Projects oriented to employees, outsourced personnel, and communities in the Company’s area of operation; public school teachers and students are a preferred audience. The program makes available training courses, interpretative visits, and recreational activities to enhance awareness of the importance of wildlife and vegetation conservation and the sustainable use of natural resources;

» Species reintroduction project: This project started in 1990 with the purpose of reproducing bird species in danger of extinction and reintroducing them in the original ecosystem, which increases their chances of survival;

» Property security and protection against hunting: Security system made up of monitors equipped with motorized means of transportation and communication system to prevent hunting, illegal fishing, native tree cutting, plant collection, and animal capture; it also provides property security;

» Forest Fire Prevention and Fighting System: The forest fire fighting and prevention system consists of watch towers equipped with high-resolution, long-range cameras for real-time monitoring, closed-circuit TV monitoring teams, fire brigades, fire detection devices, communication facilities, and firefighting equipment.

Private Natural Heritage Reserve (PNHR) - Macedonia Farm

Located on the right bank of Doce River, in the municipality of Ipaba, eastern Minas Gerais, the farm has a total area of approximately 3,000 hectares, out of which around 50% are native woods. The rest of the area is planted with eu-calyptus trees using state-of-the-art techniques to produce wood while preserving the production capability of the en-vironment. Macedonia Farm’s protected area is one of the main Atlantic Forest remnants in the state of Minas Gerais. Part of this farm (560 hectares) is recognized by the Brazi-lian Environment and Renewable Resources Institute (IBA-MA) as a Private Natural Heritage Reserve (PNHR).

A pioneering endangered bird reintroduction program, the Mutum Project has been developed at Macedonia Farm over the past 29 years. It relies on a technical and scientific coo-peration agreement between CENIBRA and Crax (Sociedade de Pesquisa do Manejo e da Reprodução da Fauna Silvestre) and has already reintroduced 480 birds belonging to species such as solitary tinamou (Tinamus solitarius), spot-winged wood-quail (Odontophorus capueira), yellow-legged tina-

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Endangered Wildlife

CategoryList

State National IUCN

Critically endangered

6 2 0

Endangered 10 4 5

Vulnerable 12 10 4

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Endangered Vegetation

CategoryList

State National IUCN

Critically endangered

0 0 0

Endangered 1 2 4

Vulnerable 2 3 6


mou (Crytpturellus n. noctivagus), brown tinamou (Crytp-turellus obsoletus), dusky-legged guan (Penelope obscura bronzina), black-fronted piping guan (Aburria jacutinga)., and red-billed curassow (Crax blumembachii).

In 2018, field monitoring campaigns detected a number of bird births in the wild at PNHR Macedonia, including nine red-billed curassows, three solitary tinamous, and six black--fronted piping guans, totaling 293 chicks born in the wild since the project began. The actual number is estimated to be much bigger because the Macedonia Farm forests are connected to other CENIBRA’s preserved areas, which ena-bles bird dispersion into other regions.


Atmospheric Emissions

CENIBRA monitors the atmospheric emissions generated by its production process to ensure they comply with the appli-cable legislation, standards, and requirements. In 2018, SOx and particulate matter emissions were significantly reduced

as a result of the implementation of projects for moderni-zing and optimizing the production process and environ-mental control equipment. Targets in line with the revised environmental legislation will be set for the coming years.

Greenhouse Gas Emission Inventory (GHG)

Direct Greenhouse Gas (GHG) emissions (scope 1):

GR

I 305

-7

Weight of emissions (t) 2016 2017 2018

NOx 1,082 1,065 1,154

SOx 6,540 1,013 352

Particulate matter 1,860 1,900 1,545

Total 9,482 3,978 3,051

GR

I 305

-1

In tons of CO2 2016 2017 2018

Generation of electricity, heat or steam

160,149 150,246 155,073

Transportation of materials, products and wastes

23,433 32,397 38,853

Total direct emissions

183,582 182,643 193,926


Greenhouse gas emissions have shown a trend toward sta-bilization in the past few years, due mainly to the imple-mentation of energy matrix optimization projects. Howe-ver, the consumption of fossil fuels, especially fuel oil and natural gas, increased in 2018 as a result of the start-up of several new processes. Diesel oil consumption also rose in view of more intense use of the fleet in support of forestry and industrial activities. All these circumstances had a direct effect on the increase of direct emissions.

Energy indirect greenhouse gas (GHG) emissions (scope 2):

Other indirect greenhouse gas (GHG) emissions (scope 3):

Greenhouse gas (GHG) emissions intensity:

GR

I 305

-2 In tons of CO2 2016 2017 2018

Purchased Electric Power 6,394 7,209 5,052

GR

I 305

-3

In tons of CO2 2016 2017 2018

Emissions1 31,352 33,634 36,461

Biogenic emissions2 1,978 2,861 3,341

Total other indirect emissions 33,330 36,495 39,802

1 Transportation of chemicals, third parties’ transport activities, transportation of pulp to the port, etc.;2 Non-fossil fuel.

GR

I 305

-4

In tons of CO2 2016 2017 2018

Scope 1 183,582 182,643 193,926

Scope 2 6,394 7,209 5,052

Scope 3 33,330 36,495 39,802

Total 223,306 226,347 238,780


GR

I 303

-4

Total water withdrawal

2016 2017 2018

Total effluent generated (m³)

49,320,717 48,813,111 46,496,152

Specific effluent generation (m³/ADt)

41.07 39.99 38.73

Reduction of greenhouse gas (GHG) emissions:

The Brazilian environmental legislation in force does not stipulate clear GHG emission reduction goals. In this con-text, CENIBRA does not participate in emission reduction programs that stipulate reduction goals. Nevertheless, the Company is engaged in continuous improvement measures aiming at reduced emissions and optimized process control in line with its focus on environmental sustainability.

Emissions of ozone-depleting substances (ODS):

Water and Liquid Effluents

CENIBRA adopts minimization of impacts caused by its processes and continuous optimization of such processes as environmental policy premises. In this respect, the wa-ter intake volume for the production processes has been reduced year in, year out through operational optimization and investments in modernization of the existing processes. Water is taken from several sources to feed the forestry and industrial processes. All such sources are located within the Doce River basin.

The impact of surface water intake to feed the industrial plant is minimized through the discharge of treated ef-fluents in the Doce River, with just 5% evaporation losses. Therefore, the impact of CENIBRA’s process on river wa-ter availability has little significance. Another impact to be taken into account is the discharge of organic load in the receptor body, which is also minimized through the effluent treatment system, in order to ensure compliance with all quality standards as required by the environmental legisla-tion in force. Moreover, biomonitoring measurements of the Doce River waters do not indicate any changes in the aquatic wildlife and vegetation due to effluent discharge.

In 2018, the specific water consumption was 36.20 m3/ADt, which is lower than the previous year’s consumption of 37.33 m3/ADt.

GR

I 305

-5 In tons of CO2 2016 2017 2018

Voluntary reductions

(6,718) 939 (11,282)

GR

I 305

-6 In tons of ODS 2016 2017 2018

1.5 1.7 1.9

GR

I 303

-3

Total water withdrawal

2016 2017 2018

Total water intake (m³)

50,158,893 50,677,821 47,154,682

Specific intake (m³/ADt)

41.77 41.52 39.28

GR

I 303

-5

Total water consumption

2016 2017 2018

Water consumption (m³)

838,176 1,864,710 658,529


CENIBRA monitors its liquid effluents to ensure they are dis-posed in line with the applicable legislation (limits of emis-sion and water body quality change). The Company dispo-ses water into a 900-kilometer-long body of water in the Doce River Basin, whose watershed is located chiefly (more than 90%) within the Atlantic Forest biome. Such disposal complies with the Brazilian regulations. This body of wa-ter is not designated as a locally or internationally protec-ted area and does not feature any outstanding biodiversity value or legally protected species.

Total water discharge by quality and destination:

No significant leakage was recorded in 2018. The industrial plant’s rainwater collection system is divided into networks according to zones in which water collectors drain water from the networks. Notwithstanding, all areas subject to some kind of effluent leakage or spillage are provided with impermeable coating and fitted with troughs to channel le-aks into the Biological Treatment Station.

The Doce River has been considerably changed by the de-creasing precipitation since 2014, with rainfall below the historical average for the region. This condition was further aggravated by the discharge of thousands of tons of slurry from a tailings dam belonging to a mining company located in Mariana in 2015. As a result, the Doce River biodiver-sity has been extensively affected, with significant losses, especially in the population of fish and other trophic chain organisms.

Solid Waste

Waste management is one of the tools intended to mediate a sustainable production-nature relationship, including the implementation of policies aimed at reducing, recycling, reusing, treating, and appropriately disposing of materials generated by activities across the entire process. In 2018, there was a remarkable increase in the amount of materials recycled, most of it involving reuse of waste from infras-tructure modernization works carried out in recent years. The amount of materials disposed of in the industrial land-fill also increased, which is attributable to the final disposal of waste from the sludge dewatering system at the water treatment station, which has reached its full capacity. This system allows recovering part of the water previously re-turned to the Doce River, which greatly reduced the water intake requirement.

GR

I 306

-1

Year Discharge Quantity (m³) Treatment Quality Disposal

2016 Planned 48,456,073 Activated SludgeBetter than the standard (regulation)

Doce River


Doce River


Doce River


Total weight of waste by type and disposal method:

Hazardous waste amounted to 262 tons in 2018, collected from several sources, especially the forestry processes, and conveyed to the hazardous waste cell. Such waste generation was mainly associated with the implementation of industrial process modernization projects. On the other hand, 284 tons of this kind of waste were shipped for co-processing.

Materials and Energy

Materials

Materials used by weight or volume:

GR

I 306

-2

Non-hazardous wastes (t) 2016 2017 2018

Composting 219,904 211,324 252,055

Recycling 35,508 40,265 72,554

Industrial landfill 1,475 3,872 8,018

Total 256,887 255,461 332,627

Hazardous wastes (t) 2016 2017 2018

Co-processing 204 240 284

GR

I 301

-1

Raw materials (t) 2016 2017 2018

Eucalyptus wood for pulp production* 2,309,319 2,349,016 2,297,125

Chemicals (t) 2016 2017 2018

Quicklime 13,401 11,673 17,912

Sodium hydroxide 29,451 28,972 30,276

Total 42,852 40,645 48,188

(*) Based on the specific wood consumption, delivered works.


Energy

CENIBRA’s pulp production is based on a sustainable ener-gy matrix that uses mainly renewable thermal energy (black liquor and forest biomass) and low carbon-intensive fuels, like natural gas. Almost all energy produced by CENIBRA comes from by-products from the production process.

Energy consumption within the organization:

Energy consumption outside the organization:

GR

I 302

-1

Non-Renewable Thermal Energy (GJ) 2016 2017 2018

Natural Gas 1,834,833 1,678,406 1,752,110

Diesel Oil 9 - 18

Fuel Oils 459,486 510,728 527,880

Total 2,294,328 2,189,134 2,280,008

Renewable Thermal Energy (GJ) 2016 2017 2018

Black Liquor 24,217,922 24,971,532 24,578,552

Forest Biomass 2,983,185 3,186,947 2,864,552

Hydrogen 61,842 84,236 84,103

Methanol (Evaporation) - 183,504 209,650

Total 27,262,949 28,426,219 27,736,857

Total Thermal Energy 29,557,277 30,615,353 30,016,865

Generated Electric Power (GJ) 2016 2017 2018

Value 2,680,986 2,709,051 2,696,286

- Originated from the burning of renewable fuel % 98.34 98.22 98.11

- Originated from the burning of non-renewable fuel % 1.66 1.78 1.89

Consumed Electric Power (GJ) 2016 2017 2018

Value 2,943,112 2,988,961 2,930,656

GR

I 302

-2 Indirect Energy (GJ) 2016 2017 2018

Purchased Electric Power 282,439 279,910 234,369


Energy Intensity:

Reduction in energy consumption:

A reduction in electric and thermal energy consumption was seen after the start-up of the Bleaching Line #3 in 2018.

GR

I 302

-3 Energy Intensity (GJ/ADt) 2016 2017 2018

Total energy consumed 22.42 25.31 25.20

GR

I 302

-4

Energy Saved (GJ) 2016 2017 2018

Process redesign 0 0 644,029

Change in employee behavior 0 0 0

Total 0 0 644,029


GLOBAL REPORTING INITIATIVE (GRI STANDARDS) CONTENT INDEX

CHAPTER 11

CONTENT INDEX - GRI STANDARDS (102-55) Core Option

Content Summary - GRI Standards Page Comments

GENERAL

Organizational Profile

102-1. Name of the organization. 17

102-2. Activities, brands, products, and/or services, including an explanation of any products that are disputed or banned.

17

CENIBRA does not sell banned products or products that are questioned by its stakeholders or are subject to public dispute.

102-3. Location of the organization’s headquarters. 17

102-4. Number of countries where the organization operates, and the names of countries where it has significant operations and/or that are relevant to the topics covered in the report.

17

102-5. Nature of ownership and legal form. 17

102-6. Markets served (including geographic locations, sectors served and types of customers and beneficiaries).

17

102-7. Scale of the organization (including number of employees, number of operations, net sales, and quantity of products or services provided).

17

102-8. Information on employees and other workers (total number of employees by employment contract, gender, employment type. Total number of personnel split in employees and outsourced workers, gender and region).

68

102-9. Supply chain. 64

102-10. Significant changes to the organization and its supply chain. 21

As highlight in 2019 was the implementation by CENIBRA of a major change in its command and decision-making structure. In June, a new Chief Executive Officer took over as a result of the previous Director’s retirement and resignation. The new CEO also temporarily holds the position of Administrative and Financial Director of the Company.

102-11. How the organization applies the Precautionary Principle or approach.

25

Sustainability Report 2018 11 Global Reporting Initiative (GRI Standards) Content Index) 91


102-12. A list of externally-developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes, or which it endorses.

29, 51

102-13. Main memberships of industry or other associations (e.g., trade associations), and national or international advocacy organizations.

29, 51

Strategy

102-14. 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 its strategy for addressing sustainability.

14

102-15. A description of key impacts, risks, and opportunities. 25

Ethics and Integrity

102-16. A description of the organization’s values, principles, standards, and norms of behavior, such as codes of conduct.

16, 20

102-17. Mechanisms for advice and concerns about ethics. 20

Governance

102-18. Governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental, and social topics.

20

Stakeholder Engagement

102-40. List of stakeholder groups engaged by the organization. 9

102-41. Percentage of total employees covered by collective bargaining agreements.

75

102-42. Basis for identifying and selecting stakeholders with whom to engage.

9

102-43. 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.

9

102-44. Key topics and concerns that have been raised through stakeholder engagement, including how the organization has responded to those key topics and concerns, including through its reporting. The stakeholder groups that raised each of the key topics and concerns.

9



Reporting Practice

102-45. Entities included in the consolidated financial statements. 7

102-46. Defining report content and topic Boundaries. 9

102-47. A list of the material topics identified in the process for defining report content.

9

102-48. The effect of any restatements of information given in previous reports, and the reasons for such restatements.

7

102-49. Significant changes from previous reporting periods in the list of material topics and topic Boundaries.

7

102-50. Reporting period for the information provided (such as fiscal year or calendar year).

7

102-51. Date of the most recent previous report, if applicable. 7

102-52. Reporting cycle (annual, biannually, etc.). 7

102-53. The contact point for questions regarding the report or its contents. 7

102-54. Option chosen by the organization to prepare the report (core or comprehensive option).

7

102-55. GRI content index. 90

102-56. A description of the organization’s policy and current practice with regard to seeking external assurance for the report. Indicate a reference to the external assurance report, statements, or opinions. If not included in the assurance report accompanying the sustainability report, a description of what has been assured and on what basis. Describe the relationship between the organization and the assurance provider and whether the highest governance body or senior executives are involved in seeking external assurance for the organization’s sustainability report.

7

MANAGEMENT APPROACH

103-1. Explanation of the material topic and its Boundary inside and outside the organization (an explanation of why the topic is deemed material and the boundary for such material topic).

11

103-2. The management approach and its components with respect to environmental impacts, labor practices, human rights and impacts on society.

25



ECONOMIC PERFORMANCE INDICATORS

Economic performance

201-1. Direct economic value generated and distributed, including revenues, operating costs, employee wages and benefits, payments to providers of capital, payments to governments.

57

201-2. Financial implications and other risks and opportunities due to climate change.

CENIBRA does not specifically analyze the financial implications for the operations due to climate change. However, it carries out routine control and monitoring actions, which provide inputs on the operating impacts arising from heavy rains, storms, and other relevant natural phenomena.

201-3. Coverage of the organization’s defined benefit plan obligations. 75

201-4. Significant financial assistance received from government. 57

Market Presence

202-1. Range of ratios of standard entry level wage (by gender) compared to local minimum wage at significant locations of operation.

69

202-2. Proportion of senior management hired from the local community at significant locations of operation.

69

Indirect Economic Impacts

203-1. Development and impact of investments in infrastructure and services provided.

62

203-2. Significant indirect economic impacts, including impact extent. 61

Procurement Practices

204-1. Proportion of spending on local suppliers at significant locations of operation.

64

Anti-corruption

205-1. Total number and percentage of operations assessed for risks related to corruption and significant risks identified.

25



205-2. Communication and training about anti-corruption policies and procedures.

25

205-3. Confirmed incidents of corruption and actions taken. 25

Anti-competitive Behavior

206-1. Total number of legal actions in connection with unfair competition, trust and monopoly, and their outcomes.

25

ENVIRONMENTAL PERFORMANCE INDICATORS

Materials

301-1. Materials used by weight or volume. 87

301-2. Percentage of materials used that are recycled input materials to manufacture the organization’s primary products.

-

CENIBRA does not make use of recycled materials in its industrial process. Specific inputs, such as part of the diluted sulfuric acid for effluent pH correction and lubrication oils, are reused. Forestry activities make use of industrial wastes, such as dregs, grits, biological sludge and eucalyptus bark for soil fertilization and pH correction.

301-3. Percentage of products sold and their packaging materials that are reclaimed by product category.

- Not reported.

Energy

302-1. Energy consumption within the organization. 88

302-2. Energy consumption outside of the organization. 88

302-3. Energy intensity. 88

302-4. Reduction of energy consumption. 89

302-5. Reductions in energy requirements of products and services. 89

According to the monitoring of refinability parameters over the past three years, there was not remarkable variation in customers’ (paper manufacturers) energy requirement.Note: Occasional variations occur due to variations in both wood quality and processing (characteristics of fibers to be refined).



Water and Effluents

303-1. Interactions with water as a shared resource. Not reported.

303-2. Management of impacts related to water disposal. 85

303-3. Percentage and total volume of recycled and reused water. 85

303-4. Water disposal 85

303-5. Water consumption 85

Biodiversity

304-1. Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

79

304-2. Significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

79

304-3. Habitats protected or restored. 80

304-4. IUCN Red List species and national conservation list species with habitats in areas affected by the organization’s operations by level of extinction risk (critically endangered, endangered, vulnerable, near threatened or least concern).

82

Emissions

305-1. Direct (Scope 1) GHG emissions. 83

305-2. Energy indirect (Scope 2) greenhouse gas (GHG) emissions from purchased energy.

84

305-3. Other indirect (Scope 3) greenhouse gas (GHG) emissions. 84

305-4. Greenhouse gas (GHG) emissions intensity. 84

305-5. Reduction of greenhouse gas (GHG) emissions. 85

305-6. Emissions of ozone-depleting substances (ODS). 85

305-7. Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions.

83

Effluents and Wastes

306-1. Water discharge by quality and destination. 86



306-2. Weight of waste by type and disposal method. 87

306-3. Total number and total volume of recorded significant spills. 86

No significant leakage was recorded in the reporting period. The industrial plant’s rainwater collection system is divided into networks according to zones in which water collectors drain water from the networks. Notwithstanding, all areas subject to some kind of effluent leakage or spillage are provided with impermeable coating and fitted with troughs to channel leaks into the Biological Treatment Station.

306-4. Weight of wastes transported, imported, exported or treated that are deemed hazardous according to the Basel Convention – Annexes I, II, III and VIII, and percentage of hazardous waste shipped internationally.

87

306-5. Identification, size, protection status and biodiversity value of water bodies and related habitats that water discharges and runoff caused by the organization.

85, 86

Environmental Compliance

307-1. Monetary value of significant fines and total number of non-monetary sanctions applied as a result of non-compliance with environmental laws and regulations.

25

Supplier Environmental Assessment

308-1. Percentage of new suppliers that were screened using environmental criteria.

64

308-2. Significant actual and potential negative environmental impacts identified in the supply chain and actions taken.

64



SOCIAL PERFORMANCE INDICATORS

Employment

401-1. Total number and rate of new employee hires and turnover by age group, gender and region.

69

401-2. Benefits provided to full-time employees that are not provided to temporary or part-time employees by significant locations of operation.

75

401-3. Return to work and retention rates of employees that took parental leave, by gender.

70

Labor/Management Relations

402-1. Minimum notice periods regarding operational changes and whether this is specified in collective agreements.

-

With a view to proper union and labor relations, in the event of significant operational changes, employees and unions are given notice and get involved to the extent and for the length of time required for change implementation.

Occupational Health and Safety

403-1. Statement on whether an occupational health and safety management system is in place, including whether the system was implemented due to legal requirements, as a result of risk management and/or the management system’s regulations/guidelines, and description of the scope of workers, activities and workplace cover by the management system or not covered, if any.

74



403-2. Description of processes used in hazard identification, risk assessment and incident investigation; how the organization ensures the quality of such processes; how the results of such processes are used to evaluate and continuously improve the management system; description of processes for workers to report work-related risks; description of policies regarding the Right to Refuse to Work under conditions considered by workers as potentially causing injuries or diseases and how such workers are protected against retaliation. Description of processes used to investigate work-related incidents, including processes to identify hazards and assess risks in connection with incidents.

-

CENIBRA has written, formal procedures that are available to all employees under the motto: “IF SOMETHING CANNOT BE DONE SAFELY, DON’T DO IT”. Existing hazards and risks at each organizational unit are described in specific spreadsheets as a means of following up and monitoring the required controls.

Should hazardous conditions or near misses be detected in processes and workplaces or during the execution of an activity, a formal method based on written procedures and specific forms is in place to record the problem and the measures to solve it, without necessarily identifying the reporting employee. In cases in which an employee faces or is put in serious, imminent risk of accident, another written, formal procedure entitles him or her to the Right to Refuse to Work. Should the manager and the subordinate employee fail to reach a common solution to the problem, technical professionals from the Work Safety department should participate, analyze the situation, and provide guidance on proper actions to be taken.

The Occupational Health and Safety management focuses mainly on prevention. A formal, written procedure sets out an investigation and review method to address incidents and accidents.

403-3. How the organization keeps secrecy of personal information related to workers’ health and their use of any occupational health services, and how the organization makes sure such information will not be used for any favorable or unfavorable condition in their treatment.

74



403-4. Description of consultation to and participation of workers in the development, implementation and evaluation of the occupational health and safety management system and description of formal joint management-worker health and safety committees, their responsibilities, attendance to meetings, decision-making power, and whether workers are not represented by such committees.

74

403-5. Employee training on occupational health and safety. 74

403-6. Employee health promotion. 74

403-7. Prevention and mitigation of impacts on occupational health and safety directly related to commercial relationships.

74

403-8. Employees covered by occupational health and safety management. 74

403-9. Work-related injuries. 74

403-10. Work-related health problems. 74

Training and Education

404-1. Average hours of training per year per employee by gender and employee category.

71

404-2. Skills management and learning programs that contribute to enhance employee skills and transition assistance programs to facilitate continued employability and the management of career endings resulting from retirement or termination of employment.

72

404-3. Percentage of employees receiving regular performance and career development reviews by gender and employee category.

-

In 2018, 96% of the employees covered by the Management by Competence Program received formal performance analysis and 16% received career development reviews.

Diversity and Equal Opportunity

405-1. Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity.

24

405-2. Ratio of the basic salary and remuneration of women to men for each employee category, by significant locations of operation.

68 Not reported.

Non-Discrimination

406-1. Total number of incidents of discrimination and corrective actions taken.

25



Freedom of Association and Collective Bargaining

407-1. Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights.

65

Child Labor

408-1. 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.

65

Forced or Compulsory Labor

409-1. Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.

64

Security Practices

410-1. Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations and whether training requirements also apply to third-party organizations providing security personnel.

64

Indigenous and Traditional Peoples’ Rights

411-1.Total number of incidents of violations involving rights of indigenous people and actions taken.

63There are no records of violation of indigenous rights at CENIBRA.

Human Rights Assessment

412-1. Total number and percentage of operations that have been subject to human rights reviews or impact assessments.

64

412-2. Total number of hours devoted to training on human rights policies or procedures concerning aspects of human rights that are relevant to the organization’s operations, including percentage of employees trained.

-

CENIBRA has adopted an institutionalized approach to training on the Code of Conduct, Right to Refuse to Work, Compliance, Assertive Communication and Harassment, Professional Relations, and Professional Ethics. In total, 7,941 man-hours of training were given in 2018. Eighty-five percent of current employees took part in training activities on these topics.

412-3 Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening and the definition used for “significant investment agreements”.

64



Local Community

413-1. Percentage of operations with implemented local community engagement, impact assessments, and development programs, public disclosure of results of environmental and social impact assessments, and formal local community grievance processes.

62

413-2. Operations with significant actual and potential negative impacts on local communities.

62

Supplier Social Assessment

414-1. Percentage of new suppliers that were screened using social criteria (which includes human rights and impacts on society).

64

414-2. Significant actual and potential negative social impacts in the supply chain and actions taken, number of suppliers assessed for social impacts and suppliers identified as having significant actual and potential negative social impacts, and improvements agreed upon as a result of such assessment. Description of relationships that were terminated as a result of assessment, and why.

65

Public Policies

415-1. Total value of financial contributions to politicians and political parties by country and recipient/beneficiary. If applicable, how the monetary value of in-kind contributions was estimated.

-

CENIBRA is not linked to political parties, but it adopts a cross-party policy of supporting politicians committed to sustainable development, ethical values, and improved public governance. Any occasional financial contribution is made in full compliance with the electoral legislation in force.

Customer Health and Safety

416-1. Percentage of significant product and service categories for which health and safety impacts are assessed for improvement.

67

416-2. Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle and that resulted in the application of fine/penalty or warning, by type of outcome.

67

Marketing and Labeling

417-1. Type of product and service information required by the organization’s procedures and percentage of significant products and services subject to such information requirements, including outsourcing of product or service components, content, especially with respect to substances that may cause social or environmental impact, safe product use, product disposal and environmental impacts.

67



417-2. Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes, including incidents of non-compliance that have resulted in fines or penalties, incidents of non-compliance with emission rules that have resulted in warning, and non-compliance with voluntary codes.

-

There are no records of non-conformity with the regulations and voluntary codes in connection with information disclosure and pulp labeling.

417-3. Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes, and that have resulted in fine/penalty or warning.

-

There are no records of non-conformity with the regulations and voluntary codes in connection with marketing communication, advertising, and sponsorship.

Customer Privacy

418-1. Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data, including complaints from third parties and substantiated by the organization and regulatory agencies.

25

Social and Economic Compliance

419-1. Monetary value and number of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations in the social and economic area. Description of the context in which such significant fines and non-monetary sanctions were applied.

25


INFORMATION SOURCES

People responsible for the disclosed information

Social

Human Resources DepartmentVander José Duque Saldanha / [email protected]

Corporate Communication and Institutional Relations / CENIBRA InstituteLeida Hermsdorff Horst Gomes / [email protected]

Environmental

Quality and Environment DepartmentSandro Morais Santos / [email protected]

Economic and Financial

Controller and Finance DepartmentVitor Alderico de Menezes Marques / [email protected]

Assistant to the CEOToshiki Kurahashi / [email protected]

Financial StatementsOldair de Souza Mourão / [email protected]

Independent AuditorsErnst & Young

Rogério Xavier Magalhães

CREDITS

General CoordinationCorporate Communication and Institutional Relations

Written by:Governance Advisory Service

Editing and Graphic DesignCafé c/ Design

TranslationLuiz Otávio de Oliveira Ferreira

RevisionRilson de Sales Bicalho

PicturesEdmar Silva

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