Braskem S.A.
Annual Report 2013

Plain-text annual report

Annual Report 2013 CONTENT INTRODUCTION ODEBRECHT ENTREPRENEURIAL TECHNOLOGY MESSAGE FROM THE BUSINESS LEADER SUSTAINABILITY STRATEGY PROFILE GLOBAL COMPANY THE PETROCHEMICAL INDUSTRY CORPORATE GOVERNANCE COLLABORATIVE INITIATIVES AND VOLUNTARY COMMITMENTS DISTINCTIONS GROWTH STRATEGY BUSINESS AGENDA STRATEGIC OBJECTIVES STRENGTHENING THE PRODUCTION CHAIN SOLUTIONS FOR CLIENTS BRASKEM-IDESA OPPORTUNITIES IN THE USA COMPERJ RENEWABLES INNOVATION ECONOMIC AND FINANCIAL PERFORMANCE FINANCIAL RESULTS INVESTMENTS OPERATING PERFORMANCE SOCIAL DEVELOPMENT TEAM MEMBERS SUPPLIERS COMMUNITIES GOVERNMENT HEALTH, ENVIRONMENT AND SAFETY MANAGEMENT HEALTH, ENVIRONMENT AND SAFETY HIGHLIGHTS WORKPLACE HEALTH AND SAFETY CHEMICAL SAFETY PRODUCT LIABILITY ENVIRONMENT ABOUT THE REPORT ABOUT THE REPORT KEY INDICATORS 2013 SUSTAINABLE DEVELOPMENT MACRO OBJECTIVES GRI G4 CONTENT INDEX CORRELATION WITH THE GLOBAL COMPACT LIMITED ASSURANCE REPORT ISSUED BY INDEPENDENT AUDITORS CORPORATE INFORMATION CREDITS GLOSSARY ACRONYMS APPENDICES 77 78 84 88 92 95 96 98 104 104 106 125 126 127 128 134 146 148 150 152 153 154 157 5 6 8 10 19 20 24 26 32 36 39 40 42 44 46 50 52 53 54 56 59 60 64 66 INTRODUCTION G4-3 In this Annual Report, Braskem S.A. presents the challenges and results achieved by its teams in 2013. The document is also avai- lable as an application for tablets and in a PDF version. The printed version offers a summary of the year’s highlights. ODEBRECHT ENTREPRENEURIAL TECHNOLOGY G4-56 TEO – Odebrecht Entrepreneurial Technology – is the set of beliefs and practices adopted by the Odebrecht Group throughout. It is philosophical concepts made up of principles, concepts and criteria that arose from the practices of the founder of the Organization, Norberto Odebrecht. The concepts have been standardized to ensure the unity of thought and consistency of action of those who take part in the various businesses, countries and cultural contexts in which the Organization operates. In this way, it is possible to meet Clients’ needs, add value to shareholder equity, reinvest the achieved results and grow on different fronts while generating wealth. The essence of TEO is in the spirit of service: to serve with humi- lity, discipline and hard work, to win over Clients and to establish a trusting relationship with them. To learn more, go to www.braskem.com.br/site.aspx/Principles-and-Values-USA www.odebrecht.com.br/en/odebrecht-organization/teo-business-culture TEO PORTAL In 2013 Braskem developed the TEO Portal, accessible to Team Members through the corporate intranet. The portal contains articles, videos, references to TEO books, remote learning and links to other Odebrecht sites, and supports Team Members in their understanding of the philosophical concepts of Odebrecht Entrepreneurial Technology. 6 | BRASKEM | ANNUAL REPORT 2013 | INTRODUCTION INTRODUCTION | ANNUAL REPORT 2013 | BRASKEM | 7 MESSAGE FROM THE BUSINESS LEADER G4-1 The results achieved by Braskem in 2013 show improvement in the implementation of our corporate strategy, based on seeking new opportunities to better serve our Clients, from two perspectives: an increase in competitiveness along the entire production chain both in petrochemicals and plastics, and the continuity of the process of growth and internationalization of our operations, with a current focus, on the Americas. The year 2013 has proven to be challenging due to the slow reco- very of global markets, which has impacted the Brazilian economy. The consumption of thermoplastic resins grew by 8% compared to 2012, driven by sectors such as food, automotive, infrastructure and agribusiness. However, the country finished the period with a 2.3% rise in GDP, below that of most emerging economies. Although the chemical industry recorded a new record trade deficit of US$ 32 billion, the Government’s decision to eliminate PIS (Social Integration Program) and Cofins (Social Security Financing Contribu- tion) taxes on the purchase of raw materials for the first and second generation petrochemical industry had a positive impact on the industry. Implemented in May, the measure contributed to a partial recovery of the competitiveness lost during the past few years due to issues relating to the cost of raw materials, energy, infrastructure, as well as an exchange rate gap. In line with its commitment to strengthen the plastic transformation industry in Brazil, Braskem structured the Incentive Plan for the Plastic Chain (PIC), with the goal of having the Company contribute up to R$ 80 million in 2014. These resources are targeted to initiatives to support our Clients, and include a stimulus for the export of plastic manufactured goods, incentives for innovation, support for training of operations and management professionals to improve competitive- ness and, in general, to promote the advantages of plastic. In 2013, Braskem promoted internal programs designed to improve operational efficiency, investments in technology and innovation and advances in expansion projects that provided a few points worthy of note in 2013, such as a record production of ethene, at CARLOS FADIGAS Business Leader The results achieved by Braskem in 2013 show improvement in the implementation of our corporate strategy, based on see- king new opportunities to better serve our Clients, from two perspectives: an increase in competitiveness along the entire production chain, and the continuity of the process of growth and internationalization of our operations, with a current focus on the Americas. 8 | BRASKEM | ANNUAL REPORT 2013 | INTRODUCTION 3.4 million tons, and of polyethylene at 2.6 million tons. It should also be noted that the performance of the International Business Unit, represented by operations in the United States and Europe, registered an average operation rate of 91%, an increase of 2% compared to 2012. In terms of workplace safety, which is a priority for the company, the injury rate with and without lost time, which includes both Team Members and subcontractors, remained at 1.04 accidents per million hours worked, a continuation of the good performance achieved in 2012. EBITDA reached R$ 4.8 billion, an increase of 22% over 2012. The growth in dollars was 11% compared to the previous year, reaching 2.2 billion US dollars. Among the factors contributing to these results are the recovery of margins in resins and basic petroche- micals in the international market, a 6% increase in the volume of sales of thermoplastic resins to the Brazilian market, totaling 3.7 million tons, and a 3% increase in sales of polypropylene by the International Business Unit, totaling 1.8 million tons of product, in addition to the tax relief on raw materials on the domestic front. The net profit of R$ 507 million earned during 2013, reflected an all-time best operating performance for the Company along with the adoption, starting May 1, of hedge accounting, allowing for better reporting of the effects of exchange rate fluctuation on the Company’s debt and profit/loss figures. In line with the strategy of internationalization and access to com- petitive raw materials, the Braskem Idesa project for the production of polyethylene in Mexico, projected to begin operations in 2015, achieved 58% of its physical construction plan by the end of 2013. The Client relations agenda has intensified, through pre-marketing activities. In addition, in the United States, analysis has begun regarding participation in a new project for polyethylene produc- tion, known as Ascent, with the possibility of taking advantage of competitive American shale gas. In Brazil, studies continued for Comperj, a petrochemical project based on natural gas extracted from pre-salt reserves, which seeks to competitively meet the growing demand for resins on the domestic market. In December, Braskem came to an agreement – still subject to the approval of regulatory authorities – for the acquisition of a controlling interest in Solvay Indupa, which owns four PVC and soda production plants in Brazil and Argentina, which would expand the Company’s PVC pro- duction capacity by 42% and its soda capacity by more than 60%. With regard to Sustainable Development, Braskem, as a signatory of the UN Global Pact, achieved significant advances and distinctions. In 2013, the Company reached the top of the Carbon Disclosure Project, index, as the best Brazilian company in carbon manage- ment, and with an excellent level of transparency. Once again, the company reaffirmed its position in the Corporate Sustainability Index (ISE) of the PM&F Bovespa stock exchange and the Dow Jones Sus- tainability Index (DJSI) for Emerging Markets of the New York Stock Exchange. In addition to being recognized in domestic financial publications, the company’s production of resins from renewable raw materials was recognized at the start of 2014 by the United States journal Fast Company, which included us in the list of the 50 most innovative companies in the world, Braskem being the only Brazilian company included in the ranking. Braskem’s results demonstrate our teams’ willingness to confront and overcome challenges, thus rewarding the confidence placed in us by our Shareholders, especially Odebrecht and Petrobras, and by our Clients. We work together with the objective of reaching ever-higher plateaus in the financial, social and environmental fields, as determining factors for the Survival, Growth and Perpetuity of the Company. Based on its belief that plastics and chemistry help to make a better life, Braskem carries out its business with an eye to the future, ever seeking to serve better, to continue to grow and to generate wealth that can be shared by all. INTRODUCTION | ANNUAL REPORT 2013 | BRASKEM | 9 SUSTAINABILITY STRATEGY G4-18 | G4-19 | G4-20 This report covers the topics that are material to the Company’s contribution to sustainable development, as set out in its sustaina- bility strategy, as well as the challenges encountered in 2013 from this perspective. In 2010 and 2011, the strategy reflected the results of interviews held in 2009 with Braskem Leaders and with eight stakeholder groups in the Brazilian states where the Company does business: Shareholders, Clients, Team Members, Suppliers, Academia, Govern- ment, Financiers and Local Communities. Since Braskem’s profile has evolved over the last few years as a result of the expansion of its operations, a new and more com- prehensive stakeholder consultation process was carried out in the first half of 2013, to rectify and ratify the Company’s 2020 sustaina- ble development strategy. 10 | BRASKEM | ANNUAL REPORT 2013 | INTRODUCTION SCOPE OF THE PROCESS • Consultation with the executive management of Braskem, by means of 35 interviews. • Consultations with internal stakeholders: In Brazil, three wor- kshops were held, with the participation of Team Members from São Paulo (ABC region and corporate headquarters ), and Cama- çari (Bahia); in the United States, Team Members participated in the local workshop, which brought together internal and external stakeholders. • Consultations with external stakeholders: five workshops were held, in Maceió, Porto Alegre, Salvador, São Paulo and Philadel- phia. In addition to the workshops, six interviews were held with strategic stakeholders for the Braskem-Idesa project in Mexico, which included one representative from the Inter-American Development Bank (IDB), one from the International Finance Corporation (IFC), three representatives of regional and local envi- ronmental authorities, two from Government and two leaders from communities neighboring the petrochemical complex being built in the country. ONLINE SURVEY: MOTIVATION FOR ACTION In addition to consulting Braskem’s stakeholders on which sus- tainable development issues are most relevant to the Company’s activities, the online survey also asked if the Company should strengthen its contribution in this field. These results are shown in the chart below: SURVEY FINDINGS ANSWERS TO THE QUESTION “SHOULD BRASKEM INCREASE ITS CONTRIBUTION TO SUSTAINABLE DEVELOPMENT? IF SO, WHY” 20.5% Yes it should, because society will demand it, and as such, it will be necessary for the company’s survival. 1.7% It wouldn’t be necessary as the company already does enough. 15.5% Yes it should, because the company will benefit from the improvement in its intangible assets, such as its image and reputation. • An online survey taken by Braskem Leaders and Team Members, Clients, Suppliers, Local Communities, Academia, Government, trend setters (media, NGOs and trade associations) and the gene- ral public. 2,001 responses were received. • Consolidation of the results of the consultations to determine the level of importance to stakeholders of each aspect. The magnitude of Braskem’s impact and its level of control over each aspect were also evaluated. Based on this data, the Company’s sustainable development strategy for the 2013 - 2020 period was rectified and approved with the Leadership of the Company’s Business and Support Units. 62.3% Yes it should, because it’s an important way to add value to the company, through cost and risk reduction, as well as opportunity identification, contributing to the company’s perpetuity. INTRODUCTION | ANNUAL REPORT 2013 | BRASKEM | 11 STAKEHOLDERS G4-24 | G4-25 Braskem interacts with its stakeholders in many different ways, maintaining streamlined and transparent channels of communication. The definition of the categories of stakeholders involved in the process was carried out following guidelines defined by Braskem for monitoring the Company’s reputation. Several representatives from each category were invited to participate. In order to define these invitations, contact lists from Team Members who have relationships with each group were used as a reference. The online survey was sent to the Company’s contacts and announced on social media, which allowed the involvement of the general public. 12 | BRASKEM | ANNUAL REPORT 2013 | INTRODUCTION STAKEHOLDER MAP CATEGORIES OF BRASKEM’S STAKEHOLDERS STRATEGIC-POLITICAL: TRADE UNIONS, REGULATORY AGENCIES, CLASS ENTITIES, EXECUTIVE BRANCH, LEGISLATIVE BRANCH, PUBLIC PROSECUTOR’S OFFICE, ENVIRONMENTAL AGENCIES, PUBLIC/REGIONAL OPINION, NGOS, FINANCIAL MARKET ANALYSTS AND AUDITORS. SECTORIAL: COMPETITORS, SECTOR-SPECIFIC TRADE ASSOCIATIONS. MEDIA: COLUMNIST PRESS, TRADE PRESS, GENERAL PRESS, SOCIAL NETWORKS/VIRTUAL ENVIRONMENT. Types of Engagement G4-26 Meetings, Reputation Survey*. Sector fairs, Participation in sector-specific meetings. Press releases, Meetings, Interviews, Reputation Surveys*. ACADEMIA RESEARCH CENTERS, SCHOOLS, RESEARCHERS, UNIVERSITIES AND VOCATIONAL SCHOOLS. Meetings, Reputation Survey*, and Partnership projects. SUPPLIERS: RAW MATERIALS, PETROBRAS, INDIRECT MATERIALS, SERVICES AND TECHNOLOGY. FINANCIAL MARKET: CONTROLLING SHAREHOLDER, MINORITY SHAREHOLDERS, BOARD OF DIRECTORS, FINANCIAL INSTITUTIONS, DEBT PROVIDER AND BANKS. TEAM MEMBERS: TEAM MEMBERS AND CONTRACTORS. Meetings, E-mails, Internet channel with exclusive access, and Reputation Survey*. Meetings, “Investor Relations” Website, Reports, and Results conferences calls. E-mails, Internal Campaigns, Newsletters, Safety Dialogs, Destaque Award, Intranet, Reputation Survey*, Work Environment Survey (every two years), and Communication Survey (every two years). INFLUENCING PARTIES FACILITATORS IMPACTED PARTIES NEIGHBORING COMMUNITIES: RESIDENTS, LOCAL LEADERS AND PROJECT PARTNERS. Projects, Direct relationships with local representatives of the Institutional Relations team, and Reputation Survey*. SOCIETY: CLASS ABC 18+ / NATIONAL, FAMILIES OF TEAM MEMBERS. Reputation Survey*. BENEFICIARIES CLIENTS: CLIENTS OF OUR CLIENTS, END CONSUMERS, DISTRIBUTORS, CLIENTS OF OUR BUSINESS UNITS (BASIC PETROCHEMICALS, POLYMERS, VINYLS AND INTERNATIONAL UNITS). Meetings, Visits to installations, Technical and relationship events, Sector fairs, Sponsorships, Internet channel with exclusive access, Commercial support by Account Managers, Technical development roadmap and Reputation Survey*. * The Reputation Survey has been carried out every year since 2009, with the support of the Reputation Institute. The program includes a Corporate Image and Reputation Management Committee, with the participation of representatives from all areas of the Company, who are tasked with discussing the main risks and opportunities arising from the process of strengthening confidence amongst Braskem’s Stakeholders. INTRODUCTION | ANNUAL REPORT 2013 | BRASKEM | 13 MATERIALITY MATRIX G4-27 Braskem’s materiality matrix, which sets out the most relevant issues for Braskem to strengthen its contribution to sustainable development (covered by this annual report), represents the result of the extensive consultation process carried out in 2013. The aspects* set out in the Global Reporting Initiative (GRI) Reporting Guidelines (versions G3.1 and G4) were used as the basis for the consultation. 17 aspects were found to be material, and 10 Macro Objectives were defined to cover these aspects and ensure a proactive approach by the Company. MATERIAL IMPORTANCE MATRIX *Some GRI aspects were consolidated and others were broken down to improve the quality of analysis – for example, the Effluents and waste, and Emissions aspects were broken down because they were issues on which Braskem has a significant impact; the aspects of Communication and Marketing were consolidated because of the fact that Braskem is a company that does not sell directly to the public. The aspects referring to Legal Compliance were not included in the consultation since the Company does not consider them ‘optional’ and their levels of material importance for reporting are equal to the level of material importance of the issue to which they refer. The aspect of Indigenous rights was not included because there are no indications that the Braskem chain has any interaction with those Communities. High Medium 22 Braskem’s Level of Impact 6 18 Low 21 9 3 11 1 2 4 26 23 5 8 28 13 27 20 10 25 17 24 29 19 12 11b 7a Irrelevant 16 7 14 15 Irrelevant Low Medium High MATERIALITY CRITICAL HIGH MODERATE LOW Level of Importance for Stakeholders BRASKEM’S LEVEL OF CONTROL OR INFLUENCE OVER THE ASPECT MINIMUM LOW MEDIUM STRONG MATERIAL ASPECTS ENVIRONMENTAL (1) Non-renewable resources (2) Water (3) Climate change and energy (4) Air (5) Waste (6) Transportation (7) Biodiversity (7a) Biodiversity Mexico (8) Post consumption (9) Suppliers – environmental management (10) Product development – environmental SOCIAL (11) Jobs (11b) Jobs – USA (12) Freedom of association (13) Health and safety (14) Training and career (15) Equal opportunities (16) Company security guards (17) Safe use of Braskem’s products (18) Grievance mechanisms (19) Suppliers – social management ECONOMY AND GOVERNANCE (20) Economic performance (21) Community investments and relationships (22) Government assistance (23) Local suppliers (24) Free competition (25) Fraud and corruption (26) Contribution to public policy (27) Product development – social (28) Labor from local communities (29) Transparency and integrity To learn more, visit: http://www.braskem.com/site.aspx/sustainabilitymateriality 14 | BRASKEM | ANNUAL REPORT 2013 | INTRODUCTION INTRODUCTION | ANNUAL REPORT 2013 | BRASKEM | 15 MACRO OBJECTIVES FOR SUSTAINABLE DEVELOPMENT The ten macro objectives relate transversally to the three pillars of Braskem’s sustainability strategy: (i) increasingly sustainable processes and resources; (ii) increasingly sustainable portfolio of products; and (iii) solutions for society to have an increasingly sustainable lifestyle. this will allow these issues to be better articulated in the strategy. Also of note is that the issue previously addressed as ‘People’ has now been further defined as Local Development, since the materia- lity analysis indicated that this was the aspect in which Braskem’s contribution would be most significant. Some of these macro objectives were already part of Braskem’s sus- tainable development strategy. The most significant changes from the previous version were that economic and financial matters, previously considered separately, were included, and Development of Solutions and Strengthening of Practices, which were previously transversal, were made into explicit objectives. It is believed that To communicate the new macro objectives and encourage all areas of the Company to develop related goals, the Leaders’ Workshop for Sustainable Development was created, consisting of a one-day peer-led training session. Thirty Team Members were trained to be facilitators and the first Leaders’ Workshop was carried out in 2013. In 2014 all of the Leaders will be invited to participate. 16 | BRASKEM | ANNUAL REPORT 2013 | INTRODUCTION MACRO OBJECTIVES AND 2020 GOALS MATERIAL ASPECTS SAFETY Be recognized as a reference in chemical, labor and process safety in the global chemical industry. 4. Air 5. Waste 13. Health and safety 17. Safe use of Braskem’s products Environmental Social Economy and Governance ECONOMIC AND FINANCIAL RESULTS Be among the three largest producers of thermoplastic resins in the world and guarantee profitability that will sustain the perpetuity of the business, retaining the classification of Investment Grade. Additional details can be found in Growth strategy / Strategic objectives. 20. Economic performance POST CONSUMPTION Be recognized as an important agent that contributes to the recycling of plastics. 8. Post consumption 20. Economic performance RENEWABLE RESOURCES Be recognized as a leader in the manufacture of chemical products and thermoplastic resins from renewable raw materials and remain as the largest producer in the world of thermoplastic resins from renewable sources. 1. Non-renewable resources WATER EFFICIENCY Continue to be a reference in the use of water resources in the global chemical industry. 2. Water CLIMATE CHANGE Be among the best large chemical companies in the world in terms of greenhouse gas emissions (GHG) intensity and a major sequestrator of GHG emissions, as a result of the use of renewable raw materials. 3. Climate change and energy ENERGY EFFICIENCY Be among the world’s best large chemical companies in terms of energy consumption intensity and a major user of renewable energy. 3. Climate change and energy LOCAL DEVELOPMENT Be recognized by the communities surrounding our operational sites and by society in general for our contribution to the improvement of human development, as shown by achieving the reputation level of “excellent” in the Citizenship Dimension of our Reputation Survey (RepTrakTM Pulse). DEVELOPMENT OF SOLUTIONS Be recognized as a company that supports its Clients in the development of environmental and social solutions; contribute to the perception of plastic as a solution to sustainable development due to its potential to improve people’s lives. 21. Community investments and relationships 23. Local suppliers 28. Labor from local communities 10. Product development – environmental 27. Product development – social STRENGTHENING OF PRACTICES Be recognized as a business leader in Brazil, as well as a global industry leader, for our contribution to sustainable development. 24. Free competition 26. Contribution to public policy 29. Transparency and integrity INTRODUCTION | ANNUAL REPORT 2013 | BRASKEM | 17 PROFILE G4-3 | G4-4 | G4-5 | G4-6 | G4-7 | G4-8 | G4-9 | G4-13 Braskem S.A. operates in the chemical and petrochemical sector with 36 industrial units located in Brazil, the United States and Germany. The Company serves Clients in more than 70 countries on all continents, through integrated business offices located in the Americas, Europe, and Asia. GLOBAL COMPANY G4-3 | G4-4 | G4-5 | G4-6 | G4-7 | G4-8 | G4-9 | G4-13 Braskem supplies its Clients with products that are processed and transformed into articles for daily use. Among the markets it serves are the automobile industry, kitchen utensils, cleaning supplies, personal hygiene and cosmetics, packaging, electronics and home appliances, toys, clothing and shoes, civil construction, sanitation, fuel additives, agriculture and others. Formed in August, 2002 by integrating six Companies from the Odebrecht Organization and from the Mariani Group, Braskem made a series of acquisitions and led the process of consolidating the Brazilian petrochemical industry. A world-wide company, Braskem is currently the largest producer of thermoplastic resins in the Americas, with a focus on polye- thylene, polypropylene and PVC. The Company’s growth strategy rests on the pillars of strengthening the plastics production chain in Brazil, expanding internationally through asset acquisitions and the prospecting of new operational opportunities and the diversifi- cation of raw materials, increased competitiveness, innovation and technological autonomy, aligned with the commitment to promote sustainable development. 20 | BRASKEM | ANNUAL REPORT 2013 | PROFILE With 8,096 Team Members in Brazil and in other countries, Braskem possesses four business units, which autonomously coordinate their industrial, commercial, marketing, human resources, planning and controllership activities, giving it more agility in making decisions. The business units are: • Basic Petrochemicals Unit: ethylene, green ethylene, propane, chemical and aromatic intermediates, totaling approximately 30 products. • Polyolefins, Comperj, Renewables and Vinyls Unit: polyethy- lenes (low density, linear low density, high density and green polyethylene), polypropylene, PVC, soda and the Comperj project. • United States and Europe Unit: polypropylene and ultra-high molecular weight polyethylene (UTEC). UTEC resins, although manufactured in Brazil with 100% domestic technology, are almost exclusively for export to the United States and Germany. Because of this, these operations are linked to the United States and Europe Unit. • Latin America Unit: the Braskem-Idesa project in Mexico, and studies for other projects in Latin American countries. UNITED STATES PITTSBURGH MEXICO UNITED STATES Pennsylvania (1) Texas (3) West Virginia (1) GERMANY AUSTRIA NETHERLANDS GERMANY Schkopau (1) Wesseling (1) VENEZUELA COLOMBIA PERU CHILE TRIUNFO ARGENTINA BRAZIL BRAZIL Alagoas (3) Bahia (8) Rio Grande do Sul (9) Rio de Janeiro (3) São Paulo (6) SINGAPORE INDUSTRIAL UNITS ADMINISTRATIVE OFFICES Basic petrochemicals: Camaçari (BA) Duque de Caxias (RJ) Mauá (SP) Triunfo (RS) PVC and soda: Maceió (AL) Marechal Deodoro (AL) Camaçari (BA) PE: Cubatão (SP) Santo André (SP) PP: Mauá (SP) Paulínia (SP) Schkopau e Wesseling (Germany) Marcus Hook (Pennsylvania) La Porte (Texas) Oyster Creek (Texas) Seadriff (Texas) Neal (West Virginia) PE + PP: Camaçari (BA) Duque de Caxias (RJ) Triunfo (RS) Green PE: Triunfo (RS) Administrative Centers: São Paulo (management and administration offices), Philadelphia (Pennsylvania/USA) and Frankfurt (Germany) Administrative Offices: Salvador (BA) Rio de Janeiro (RJ) Porto Alegre (RS) Business offices: Germany Argentina Austria Chile Singapore Colombia United States Netherlands Mexico Peru Venezuela INNOVATION AND TECHNOLOGY Technology and Innovation Center: Triunfo (RS) Pittsburgh (USA) Partnering with external companies and laboratories for research in chemicals and polymers, from petrochemical and renewable sources PE polyethylene PP polypropylene PVC polyvinyl chloride Green PE polyethylene manufactured from sugarcane ethanol, a renewable raw material source PROFILE | ANNUAL REPORT 2013 | BRASKEM | 21 TEAM MEMBERS TOTAL AS OF 12/31/2013 8,096 Brazil 6,742 USA 624 Mexico 524 Germany 168 Business offices in other countries 38 ANNUAL PRODUCTION CAPACITY SHAREHOLDER STRUCTURE • More than 16 million tons of thermoplastic resins, basic petroche- micals and other chemical products • 200 thousand tons of green PE • Leading producer of thermoplastic resin (PE, PP e PVC) in the Americas* • Leading producer of PP in the United States • Global leader in the production of biopolymers * The installed capacities of the companies were used as the parameter instead of the annual production. Source: http://www.cmaiglobal.com/marketreports/globalplastics_polymers.aspx. Braskem’s capital stock is controlled by Odebrecht S.A., a holding of the Odebrecht Organization, with major shareholder participation by Petrobras. As of December 31, 2013, the shareholding structure of Braskem was: VOTING SHARES Others 2.9% Petrobras 47.0% Odebrecht 50.1% 22 | BRASKEM | ANNUAL REPORT 2013 | PROFILE TOTAL SHARES Learn more about Braskem, its products, industrial units and global presence at: www.braskem.com.br/site.aspx/Braskem-Profile-USA Others 20.38% BNDESPAR 5.03% Treasury 0.14% www.braskem.com.br/site.aspx/Our-Business-Usa www.braskem.com.br/site.aspx/Global-Presence-USA Petrobras 36.13% Odebrecht 38.32% PROFILE | ANNUAL REPORT 2013 | BRASKEM | 23 THE PETROCHEMICAL INDUSTRY The petrochemical field, in which Braskem does business, con- centrates its productive units, located mainly in the Middle East, the United States and Asia. They are first- and second-generation industries, according to their production. First generation industries, called “crackers”, break down naphtha or natural gas, their main raw materials, transforming them into basic petrochemical products (such as ethene, propene and butadiene) and aromatics (such as benzene, toluene and xylenes). Second- generation industries process basic petrochemical products and produce thermoplastic resins, such as polyethylenes, polyproply- lene, PVC, and others. At the leading edge of the production chain are the third gene- ration industries, the thousands of plastic transformers who manufacture consumer and industrial goods. Braskem operates as an integrated producer within the first and second generation of the petrochemical industry. The most recent scenario in the industry is characterized by the construction of new global petrochemical complexes and by strategic alliances, acquisitions, mergers and incorporations, motivated by the search for competitive raw materials and by the presence of large commodity consuming markets. The global capacity for ethane, the raw material for the production of thermoplastic resins, was 150 million tons in 2013. The global production of resins (PE, PP and PVC) was approximately 212 mil- lion tons. Braskem is responsible for 4% of the world production of resins and supplies, on average, 70% of domestic demand. For 2014, Braskem expects to encounter a moderately more favorable scenario than for the previous period, but it also expects challenges in the performance of the global economy and, espe- cially, in the petrochemical business, since its commodities are subject to price volatility stemming from political and economic conditions. Another aspect to be considered, over the short and medium term, is planning for new capacity that should come on line in the United States, the Middle East and China, which will impact prices. 24 | BRASKEM | ANNUAL REPORT 2013 | PROFILE COMPETITIVE INTEGRATION EXTRACTION RAW MATERIALS 1st GENERATION BASIC PETROCHEMICALS 2nd GENERATION THERMOPLASTIC RESINS 3rd GENERATION PLASTIC TRANSFORMERS NAPHTHA GAS ETHANOL SALT PE PP PVC ETHANE PROPENE CHLORINE/SODA PVC PIPING / CLEANING PRODUCT PACKAGING / CLOTHING / CARS PROFILE | ANNUAL REPORT 2013 | BRASKEM | 25 CORPORATE GOVERNANCE G4-34 | G4-39 Braskem conducts its business in line with Corporate Governance best practices. The Public Commitment assumed in August 2002, when the Company was created, defines as key business practices transparency, accountability and respect to Shareholders, Team Members, Clients and Society. In addition to financial statements, quarterly results reports are published with short-term situation analysis (available for consulta- tion on the site www.braskem.com.br/ri), and, at each publication, there are meetings with market analysts and investors. In 2013, quarterly information began to be summarized and communicated to our internal audience, through presentations by the Business Leader (CEO), through our internal communication channels. As it is a publicly-listed company with shares traded on the Stock Market, Braskem is subject to Law No. 6.404/79 – Brazilian Corpo- ration Law and its amendments, as well as to the standards and controls of the Brazilian Securities Commission (CVM) and BM&F Bovespa (São Paulo Stock Exchange). Outside Brazil, Braskem’s stock is also listed on the New York Stock Exchange (NYSE) and Latibex – the Latin American section of the Madrid Stock Exchange. It is therefore also subject to the requirements of the pertinent regulatory agencies, which are the Securities & Exchange Com- mission (SEC), in the United States, and the Bolsas y Mercados Españoles (BME), in Spain. In 2005, Braskem became one of the firstst Foreign Private Issuers (FPIs) in South America to meet the requirements of sections 404 and 302 of the Sarbanes-Oxley Act – SOX. The Company Manage- ment evaluated the effectiveness of internal controls over financial statements in December, 2013, according to criteria established in the Internal Control – Integrated Framework standard, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on these criteria, it concluded that the Company’s internal controls over financial statements are effective. 26 | BRASKEM | ANNUAL REPORT 2013 | PROFILE Braskem´s Corporate Governance model is made up as follows: Support Committees for the Board of Directors PEOPLE AND ORGANIZATION COMMITTEE (CPO) FINANCE AND INVESTMENT COMMITTEE (CFI) STRATEGY AND COMMUNICATION COMMITTEE (CEC) SHAREHOLDERS (General Assembly) BOARD OF DIRECTORS BUSINESS LEADER BOARD CLIENTS AUDITING COMMITTEE (INCREASE IN DUTIES) CORPORATE SECURITY INDEPENDENT AUDIT SUPPORT FOR THE CORPORATE GOVERNANCE AREA BOARD OF DIRECTORS EXECUTIVE DIRECTORS AUDIT COMMITTEE (base 12/31/2013) (Permanent Members) (Shareholder Representatives) Marcelo Bahia Odebrecht – Chairman of the Board of Directors José Carlos Cosenza – Vice president of the Board of Directors Alfredo Lisboa Ribeiro Tellechea Almir Guilherme Barbassa Álvaro Fernandes da Cunha Filho José Alcides Santoro Martins Luiz de Mendonça Marcela Aparecida Drehmer Newton Sérgio de Souza Patrick Horbach Fairon Roberto Zurli Machado (base 12/31/2013) Carlos Fadigas – President and CEO* Décio Fabrício Oddone da Costa* Edmundo José Correia Aires* Fernando Musa Gustavo Valverde* Luciano Nitrini Guidolin* Marcelo Arantes Marcelo Lyra do Amaral Marcelo de Oliveira Cerqueira* Mário Augusto da Silva* – Director of Finance and Investor Relations Roberto Bischoff * Statutory Directorships. (base 12/31/2013) (Permanent Members) Maria Alice Ferreira Deschamps Cavalcanti – Presidente of Auditing Committee Aluizio da Rocha Coelho Neto Antônio Luiz Vianna de Souza Ismael Campos de Abreu Manoel Mota Fonseca PROFILE | ANNUAL REPORT 2013 | BRASKEM | 27 and analyzes current corporate policies related to the capital market, social responsibility and corporate sustainability, and contributes to the creation of the CEO’s AP. Fiscal Council: the activities of the Fiscal Council are regulated by current legislation, Company Bylaws and its Terms of Reference. To meet the requirements set forth by the Sarbanes-Oxley Act – SOX, the Fiscal Council had its activities expanded in 2005, taking on the duties of an Audit Committee. The Council is a corporate body independent of the Company Management, which monitors the actions of the administra- tors with the objective of enssuring compliance with legal and statutory duties, issuing opinions, informing shareholders and monitoring internal audits. Business Leader and Executive Directors: the activities of Bras- kem´s Executive Directors are regulated by Law and by Corporate Bylaws. Executives are responsible for exercising the management of the business and the functional areas of the Company, as well as for the implementation of policies and general guidelines periodi- cally defined by the Board of Directors. As defined in Braskem’s Corporate Bylaws, the Executive Directors form a permanent body of the Company, composed of at least four and at most ten Team Members, one President and CEO, one Director of Investor Relations and remaining Executives without specific designations, elected by the Board of Directors. The President and CEO, in carrying out the role of Business Leader, is responsible for creating conditions necessary for the Survival and Growth of Braskem and for the creation and consolidation of bases for the Perpetuity of the Company. Business Security: is responsible for evaluating processes relating to the effectiveness of risk management and internal controls and their compliance with internal policies and instructions and market regulations, independently and by means of a systematic and disci- plined approach, with the objective of improving the effectiveness of operations and adding value to the business. Independent Auditors: are responsible for issuing independent opi- nions concerning Financial Statements, in accordance with current legislation. The company providing audit services is replaced at least every five years, as determined by CVM Instruction No 308/09. General Shareholders’ Meeting: the General Shareholders’ Meeting is the sovereign organ, with powers to decide upon all matters relating to the corporate objective of the Company and to make resolutions that it deems appropriate for its defense and develop- ment. Its jurisdictions, forms and functions are regulated by Law No. 6.404 - Brazilian Corporation Law and its subsequent amendments. Board of Directors: has its activities regulated by current legislation, Company Bylaws and its Terms of Reference. The Board of Directors is an autonomous collegiate body composed of 11 counselors and their respective alternates, who can be elected or removed at any time by the General Shareholders’ Meeting. The Board is active and independent, deliberating with quality and promptness in the interest of Braskem, with the purpose of adding value to Shareholders. It is accountable to the Shareholders and other stakeholders, and to society in general, with respect to the tangible and intangible assets used to conduct the Company’s business. The main responsibilities of the Board of Directors are: (a) to direct the Company’s business; (b) monitor its operation and manage- ment; (c) decide on strategic questions; (d) guide the Directors on relevant issues; (e) approve proposals for policies applicable to the Company as a whole; and (f) decide on Investments, in addition to other responsibilities set forth in the Corporate Bylaws. The Braskem Board of Directors has three Standing Committees, composed of principal counselors and their alternates, who form part of the Corporate Governance structure and whose objective is to assist and advise the Board in pre-established matters. These are: • People and Organization Committee (CPO): responsible for evaluating current policies and programs regarding People and Organization, as well as monitoring and reviewing them. • Finance and Investment Committee (CFI): evaluates new policies, monitors and analyzes current policies on the matters of financial management, insurance and guarantees, integrated risk manage- ment, among other items. The Committee is also accountable for the evaluation of investments subject to approval and for monito- ring investments and contracts with related parties, as approved by the Board of Directors, as well as participating in the creation of the Business Leader’s Action Plan (AP). • Strategy and Communication Committee (CEC): in matters of strategic direction, the CEC evaluates definitions for planning, that is, the basis for the Business Leader’s Action Plan. Regarding Communication issues, the CEC evaluates new policies, monitors 28 | BRASKEM | ANNUAL REPORT 2013 | PROFILE PROFILE | ANNUAL REPORT 2013 | BRASKEM | 29 ETHICS AND INTEGRITY G4-56 | G4-57 | G4-58 The principles and criteria that guide business actions at Braskem are consolidated in the Odebrecht Entrepreneurial Technology (TEO), which is an ethical and cultural reference shared by all of its Team Members. Braskem understands that continuous, clear and consistent commu- nication of the values of the Code is essential for guaranteeing that compliance remains a daily priority as part of standard behavior at the Company. The leaders of Braskem and representatives of its shareholders must, among their main responsibilities, ensure that the TEO and the implementation of its policies and other internal guidelines are, in fact, an ethical and cultural reference that is shared by all Team Members of the Company. Braskem has a Code of Conduct that, along with its detailing docu- ments, is a record of the concepts, principles and orientations for the conduct expected of Team Members in carrying out their duties. Braskem provides a printed version of the Code of Conduct in the local language to each Team Member when they are hired, and explains the values and principles of the Code, as part of the Intro- duction Program to the Company’s Culture. The Code of Conduct is also accessible through the corporate intranet and on the Company website – http://www.braskem.com.br/Portal/Principal/Arquivos/Download/ Upload/code_conduct_eng_24.pdf. In addition to the daily learning provided by the presence of the Educating Leader through interaction with Team Members, Braskem offers qualification and training processes focused on the principles and values of the Code of Conduct and its implementation. The Company values the Leader-Team Member relationship, conside- red to be the essence of the communication process in the Company, and, accordingly, encourages dialog between Team Members and their direct Leader if they have any questions or become aware of any violation of the Code of Conduct or of its implementation. If a Team Member or other person (for example: a Supplier or Partner) feels in any way uncomfortable with any attitude taken, a communication channel called the Braskem Ethics Line may be used. It is accessible to all groups (Team Members, Partners or otherwise) through the Internet or by a toll-free telephone connection for the purpose of receiving reports of possible violations of the Code of Con- duct and its respective implementation and/or violations of the law. 30 | BRASKEM | ANNUAL REPORT 2013 | PROFILE CODE OF CONDUCT Defines, reinforces and encourages ethical conduct, market best practices, and compliance with legal requirements and the Company’s set of policies and other guidance. CASES OF DISCRIMINATION AND MEASURES TAKEN 10 10 0 2011 13 11 2 12 4 8 2012 2013 Confirmed Cases Unfounded Cases G4-SO5 No cases of corruption involving public officials were confirmed in 2013, but one case of conflict of interest in which a Team Member sought to obtain personal gain in a relationship with Suppliers was confirmed. The Team Member, who was dismissed from Braskem, would have received benefits from the Supplier for approving their entry and permanence with Braskem. The Supplier was blocked and no longer provides services to the Company. To know more about Braskem’s governance model and mecha- nisms, see: www.braskem.com.br/site.aspx/Corporate-Governance-USA www.braskem.com.br/Portal/Principal/Arquivos/Download/Upload/code_con- duct_eng_24.pdf www.braskem.com.br/site.aspx/Ethics-Line https://ssl-w08dnn0177.websiteseguro.com/braskem1/Portal/Principal/Arquivos/ Download/Upload/Compromisso_Publico_Ingles_74.pdf PROFILE | ANNUAL REPORT 2013 | BRASKEM | 31 The Braskem Code of Conduct states that no form of retaliation shall be permitted or tolerated against a Team Member who reports, in good faith, any concern about conduct that is illegal or that does not comply with the guidelines established in the Code. The Business Security department is responsible for recording and analyzing reports in absolute confidentiality, so that the relevat Leader may become aware of the reported facts and take appro- priate measures. All reports and the results of their respective analyses are presented to and discussed by the Ethics Committee every three months. G4-HR3 | G4-HR12 In 2013, 12 complaints regarding human rights were registered. All were investigated and, in eight cases, corrective measures were adopted. Corrective measures included warnings, changes to positions that do not include leadership of persons, and dismissals. Both confirmed cases in 2012 were cases of individuals who were not acting in line with the Company’s values, creating a hostile work environment. One person was temporarily suspended and the other set improvement goals for 2013. COLLABORATIVE INITIATIVES AND VOLUNTARY COMMITMENTS G4-15 | G4-16 Braskem participates in initiatives that are aligned with the contri- bution of the business sector to sustainable development and with issues considered relevant to its stakeholders. In 2013, the asso- ciations and organizations in which the Company’s participation is considered to be strategic were defined. CDP – global sustainability program: an international non-govern- mental organization initiative, launched in 2000, with the objective of collecting and publishing data on corporate greenhouse gas emissions in over 60 countries. Braskem has supported the initiative since its launch and, in 2006, began to report its GHG emissions. In 2013, the Company reached the top of the CDP Brazil index, as the best Brazilian company in carbon management through excellence in transparency, receiving a grade of 99 on a scale of 100 in this category. The CDP is one of the world’s most respected capital market sustainability indices. All reported information may be found at www.cdp.net. 32 | BRASKEM | ANNUAL REPORT 2013 | PROFILE CEBDS – Brazilian Business Council for Sustainable Development: Braskem is one of its founding companies. The Company participates in the Climate Technical Chamber, has taken part in the Carbon Mana- gement Program in the Value Chain since 2013 and presides over the Materials Technical Chamber, choosing this group over the Water Technical Chamber, as had been planned and stated in the 2012 Annual Report. Braskem has a seat on the CEBDS board of directors. Cempre – Corporate Commitment to Recycling: a non-profit association dedicated to the promotion of recycling, with a focus on integrated waste management. Created in 1992 and maintained by private companies from various sectors, among them Braskem, Cempre performs technical research and holds seminars, distributes publications and organizes databases on the reduction, reutilization and recycling of waste. Among the activities undertaken in 2013 were discussions to define the role of business in the implemen- tation of the Brazilian National Solid Waste Policy (PNRS) and the joining together of 22 associations, known as the Corporate Coali- tion, to approve a proposal for reverse packaging logistics, one of the topics taken up by PNRS and considered relevant to Braskem. International Declaration on Cleaner Production: part of the United Nations Environment Program (UNEP), with the objective of disse- minating policies for environmentally clean production and for more sustainable production and consumption practices. Braskem was the first Brazilian company to sign the declaration in 2004. Getúlio Vargas Foundation – Companies for the Climate: a perma- nent corporate platform with the objective of mobilizing, motivating and uniting corporate leadership for the management and reduc- tion of greenhouse gases (GHG), management of climate risks and the proposal of public policies with regard to climate change. The initiative was launched by the Center for Sustainability Studies of the Getúlio Vargas Foundation in 2009, with the support of private companies. Braskem joined in 2012. Global Compact: Braskem has been a signatory of the United Nations (UN) Global Compact since 2007 and obtained, in 2013, the highest status for communicating its progress in adopting its 10 principles. Since 2008, the Company been a member of the Brazilian Network Committee of the Global Pact, and is assuming the presidency of the committee during the 2013 - 2014 biennial. In September of 2013, Braskem participated in a meeting at the UN headquarters en New York that was attended by more than a thousand executives from nearly 100 countries, for the launch of the Architects of a Better World platform, which seeks to engage business in matters of sustainability. A few weeks following the meeting at the UN, the Company promo- ted the launching of the platform in Brazil, a partnering between the Brazilian Global Compact Network, GRI and WBCSD/CEBDS, at the Bovespa. The objective of the meeting was to establish an agenda for sustainable development, as agreed to in the Letter of Commitment at Rio+20 (2012), signed by 230 corporate directors and organizations committed to the issue in Brazil. Learn more about the actions under- taken by Braskem in 2013 relating to the ten principles of the Global Compact, in the chapter About this report / Global Compact. PROFILE | ANNUAL REPORT 2013 | BRASKEM | 33 34 | BRASKEM | ANNUAL REPORT 2013 | PROFILE ICCA (International Council of Chemical Associations): Braskem belongs to the executive leadership group and participated in energy, climate change and chemical safety work groups. It also occupies a chair in internal Communication and Energy & Climate Change groups. Through Abiquim (Brazilian Chemical Industry Association) and the ACC (American Chemistry Council), Braskem participates in the following ICCA initiatives: • Responsible Care: a voluntary initiative instituted by the global chemical industry, through ICCA. Responsible Care seeks to improve the environmental management of chemical companies and of their production chain. In Brazil, the program was officially adopted by the Brazilian Chemical Industry Association (Abiquim) in April of 1992. Braskem has been a signatory of the document since that date. • GPS – Global Product Strategy: Braskem, together with Abi- quim, leads the implementation of the program in Brazil and in other Latin American countries, for the purpose of promoting awareness and dissemination of information on possible risks to workers, consumers and the environment, stemming from the production, handling and sale of chemical products. Akatu Institute: a non-governmental, non-profit organization that works hand-in-hand with society for the promotion of conscientious consumption. Braskem supports the Institute and sponsors the Edu- katu program, an initiative focused on education for sustainability, launched n 2013. More information about the Edukatu program can be found at Social Development / Communities. Trata Brazil Institute: A Civil Society and Public Interest Orga- nization, Trata Brazil has as its objective to coordinate national information and mobilization initiatives, so that Brazil can obtain universal access to basic sanitation, without which there is no health, rivers are polluted and children and human development are at risk. Braskem was one of the founders of Trata Brazil Institute, in 2007, along with Solvay Indupa, Tigre, Amanco, among others, and is a member of its Board. Brazilian Corporate Network of Lifecycle Assessment: a joint initiative of eleven Brazilian companies, the Network was officially launched in October of 2013, with the objective of discussing and researching methods for learning more about the lifecycle of products and services, disseminating the practice of Lifecycle Assessment (LCA) and offering knowledge, so that the consumer can make more sustainable choices. The Network is a voluntary grouping of companies. The founding companies are: Braskem (responsible for coordination), Norberto Odebrecht Construc- tion, Tetrapak, Danone, GE, Oxiteno, Natura, Grupo Boticário, and Embraer. One of the proposals of the Network is to act in con- junction with IBICT (Brazilian Science and Technology Information Institute) with the view to advancing the Brazilian LCA Program and the creation of a national database, to make information available which is of interest to society. World Economic Forum: an international organization whose objective is to encourage public-private cooperation, by involving corporate leaders, politicians, and academics, among others, in developing agendas for global, regional and corporate cooperation. Green Industry Platform: Braskem is the first Brazilian company to join this initiative of the United Nations Industrial Development Organization (UNIDO) and the United Nations Environment Program. The platform is designed to encourage and disseminate environ- mental, climate and social programs in the company’s operations on a world-wide level. FORUMS AND ASSOCIATIONS Braskem also participates, in an engaged and strategic way, in the following forums and associations (in alphabetical order): • Abiclor – Brazilian Associaton of Chlorine Industries • Abiquim – Brazilian Association of the Chemical Industry • Abrace – Brazilian Association of Large Industrial Con- sumers of Energy • ABRE – Brazilian Association of Packaging • ABTP – Brazilian Terminal and Port Association • ACC – American Chemistry Council • AFPM – American Fuel & Petrochemical Manufacturers • Anpei – National Research and Development Associa- tion of Innovative Companies • ASEMEXBRA – Mexican Commercial Association • Asfamas – Brazilian Association of Sanitation Material Manufacturers • Bioplastics Council • CCPS – Center for Chemical Process Safety • CNI – National Confederation of Industry • INP – Export Plastic • INP – National Plastics Institute • Ethos Institute • PVC Institute • Plastivida – Socio-environmental Plastics Institute PROFILE | ANNUAL REPORT 2013 | BRASKEM | 35 DISTINCTIONS Braskem was recognized in 2013 for its performance in the three dimensions of sustainable development: economic, social, and environmental. Check out these highlights. NATIONAL • Corporate Sustainability Index (ISE): organized by BM&F Bovespa, the index will be in effect from January 6, 2014 through January 2, 2015. The new ISE portfolio includes 51 stocks from 40 companies that represent 18 sectors and R$ 1.14 trillion in market value, equivalent to 47.16% of the total value of the companies with shares traded on the stock exchange, based on its close on November 26. Braskem belongs to ISE for the 9th straight year and reached the benchmark in the climate change category in 2013. • BM&F Bovespa’s Efficient Carbon Index (ICO2): composed of stocks of companies that participated in the iBrX-50 index and which accepted the adoption of transparency practices relating to their greenhouse gas (GHG) emissions. • GHG Protocol Brazil: the Company’s GHG emissions inventory obtained the Gold Classification for the third straight year. • Exame Magazine Sustainability Guide: for the 5th time, Bras- kem was included in the list of the country’s most sustainable companies, according to three dimension of sustainable deve- lopment – economic, social and environmental. The company received the Highlight Award in the Chemical category. • Whirlpool Sustainability Award: a Client of Braskem, Whirlpool Época Magazine Green Company Award: special recognition among the 20 companies that engage in the best environmental practices in Brazil. • Sustainability Best Practices: a ranking organized by the Benchmais Institute, which gave 4th place to the Água Viva (Living Water) water reutilization project, developed by UNIB, in Camaçari (BA). • Exame Magazine Biggest and Best Guide: ranked first among the companies in the chemical and petrochemical sector, besides earning ninth position overall among the 50 largest private com- panies in Brazil. recognized the Social Inclusion Program for Waste Collectors (the name of the program changed to ser+realizador, in December), as a practice aligned with its sustainability principles. Learn more about the program at Social Development / Communities. • IstoÉ Dinheiro Magazine: for the third time, placed first in the Chemical and Petrochemical category in Best of Dinheiro issue, for maintaining its investments and growth during a year of global crisis. • 2013 Support Award: “I’m green™” green polyethylene was the Products category winner in the ranking of sustainable products and services at the 6th Forum on Sustainable Development – Sustentar 2013. • Época Business 360º Guide: fist place in its category. Bras- kem was evaluated on its financial performance, corporate governance, innovation, vision of the future, HR practices and social-environmental responsibility. The Company also 36 | BRASKEM | ANNUAL REPORT 2013 | PROFILE International • Dow Jones Sustainability Index Emerging Markets (DJSI): for the second consecutive time, Braskem is included in the New York Stock Exchange’s Dow Jones Sustainability Index (DJSI), created in 2012. The portfolio consists of the shares of 81 companies, inclu- ding only two from the chemical industry. Of the 81 companies, 17 are Brazilian. Selection is made based on economic, environ- mental and social criteria, including strategies aimed at climate change, energy consumption, people development, knowledge management and corporate governance. • CDP – global sustainability program: Braskem was recognized as the best Brazilian company in carbon management, for excel- lence in performance and transparency, among 58 domestic companies that responded to the 2013 climate change report. • Innovative Company: the North American magazine Fast Com- pany listed Braskem as one of the 50 most innovative companies in the world. The only Brazilian company to make the ranking, the Company was selected for its research work in renewable source products such as “Green” Plastic. • Highlighted for renewable chemical products: International ranking (The 30 Hottest Companies in Biobased Chemicals for 2013-14) organized by the Biofuels Digest, a daily news website concerning biofuels, designed to recognize the main highlights in innovation in the biotechnology field. The ranking was decided based on votes from specialists in the field and on Internet public opinion (more than 100 thousand evaluations). Braskem occupies 18th place. • Kirkpatrick Chemical Engineering Achievement Award: Bras- kem was among the five global finalists, selected for its green polyethylene project. The award highlights innovative chemical engineering technology, utilized in industrial processes. • Sustainabililty Annual: Braskem is listed among the most sus- tainable companies and those with the best global performance in the chemical industry. Recognition granted by RobecoSAM’s Annual Corporate Sustainability Assessment (CSA). PROFILE | ANNUAL REPORT 2013 | BRASKEM | 37 achieved 15th place among the 250 largest companies selec- ted by the guide. • Transparency Trophy 2013: awarded by the National Association of Financial, Administration and Accounting Executives (Anefac), the award recognized best accounting practices and the most objective set of information for the market. Braskem was selec- ted, for the 5th time, in the category of open capital companies with revenues over R$ 5 billion. • Being Human Award 2013: awarded during the 39th National Conference on People Management (CONARH), in the People Management – Company category for its Operator 2020 program: • HR Management Magazine: among the 100 Best companies in IDHO – Organizational Human Development Index – and among the 50 Best Companies in Corporate Citizenship. • Innovation: Braskem is among the 15 most innovative companies in the opinion of university students in Brazil, according to a survey con- ducted by the consulting firm Universum, a talent attraction company. 15,855 higher education students in the country were surveyed. GROWTH STRATEGY Braskem works to serve Clients and generate wealth in the regions in which it is present. BUSINESS AGENDA Braskem operates in harmony with the spirit of service to Clients and of wealth generation, centered on the competitiveness of its opera- tions and on the plastics chain, seeking opportunities for innovation and for diversification in raw materials outside the country, with a focus on the Americas. One of the highlights of the corporate strategy is the petrochemi- cal project headed up by Braskem-Idesa, in an advanced state of construction in Mexico, based on gas acquired from a local company at a competitive price. At the same time, studies and negotiations are moving forward in Brazil concerning the Rio de Janeiro Petrochemical Complex (COMPERJ), also based on gas as the raw material. And, in the United States, where The Company has maintained operations since 2010, when it acquired its first polypropylene assets in that country, the intent is to operate, in the medium term, an integrated polyethylene complex based on shale gas. The most recent move by Braskem in its growth agenda, happened in December, 2013, with the signing of an agreement with the Solvay group to purchase 70.59% of the voting and total stock of Solvay Indupa, a PVC and soda producer, with industrial units in Brazil and Argentina. The value of the deal is R$ 290 million. Solvay Indupa has an annual production capacity of 540,000 tons of PVC and 350,000 tons of soda. Finalization of the purchase agreement depends on the review and approval of Brazil’s Administrative Economic Defense Council (CADE) and Argentina’s National Securities Commission (CNV). Based on this set of initiatives, Braskem is solidifying its position as a major global petrochemical company, dedicated to seeking ever-greater operational competitiveness and committed to the strengthening of its sector in Brazil. The Company’s growth agenda is aligned with the principles of sustainable development, which at Braskem translate, into ten macro objectives. Learn more in About the Report / Macro objectives of sustainable development. 40 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY Braskem is dedicated to increasingly boosting its operational competitiveness and is firmly committed to strengthening its sector in Brazil. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 41 STRATEGIC OBJECTIVES The revision of the Company strategy, previously defined in its “2020 Vision”, was approved in 2013 in response to a challenging scenario, a combination of very high competitiveness from the North American petrochemical industry (as a result of the low cost of shale gas) and challenges faced by all of Brazil’s industry, arising mainly from the gap between exchange rate fluctuations and infla- tion and the lack of infrastructure in the country. This action strategy has two main pillars: maximizing the profi- tability of the present businesses and assets and growing in the Americas, investing in new production bases and using compe- titive raw materials. In this light, technological developments, always key for the chemical industry, will focus on combining competitiveness and viable growth, including in the realm of renewable chemical products. The maximization of profitability will be achieved by: • strengthening common objectives with Clients to meet their needs by mobilizing unique resources, products and services offered by Braskem; • continually seeking opportunities for more competitive raw mate- rials for all industrial plants; • assuring competitiveness in supplying energy for operations; • intensifying measures to increase the productivity and efficiency of operations and of integrated optimization of first and second generation assets; • optimizing the allocation of capital, prioritizing operational investments with greater returns and seeking to reduce the use of capital; • supporting efforts to increase the structural competitiveness of the industry in the countries where the Company does business, especially in the petrochemical and plastics transformation chain in Brazil. 42 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY Braskem’s operating strategy is based on two main pillars: maximizing the profitability of the present businesses and assets and growing in the Americas, investing in new production bases and using competitive raw materials. Regarding growth, the focus is on: • meeting the growing demand for resins and basic petrochemical products in Brazilian markets, keeping them supplied; • expanding the production base of resins in the Americas, based on competitive raw materials; • making new opportunities of growth in renewable chemical products viable, by promoting a long-term agenda for the development of new technology paths using biomass. To these two pillars of profitability and growth, we add the basic conditions that guide Braskem’s operations. These basic conditions include: • absolute respect for workplace safety, process safety and chemi- cal safety; • responsible use, handling, production and marketing of chemical products; • training and qualifying Team Members and Leaders in the countries where Braskem does business, in order to prepare the Organization for international growth; • assigning and giving responsibility to each team for the results of its respective business; • maintaining the positive reputation that Braskem has built in the eyes of its Clients and its sphere of operation; • preserving the Company’s financial health and liquidity. Following this strategy, Braskem believes that it will enjoy a signifi- cant boost in its competitiveness, with corresponding effects on its profitability and on its Shareholders’ returns. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 43 STRENGTHENING THE PRODUCTION CHAIN G4-EC8 To aid in the development of the Brazilian market, Braskem has continued its strategy of strengthening the plastics transformation industry in the country, by means of new investment projects and innovative solutions for products and services to its Clients. In the area of investments, the Company has announced the expan- sion of one of its linear low density polyethylene (LLDPE) production lines at the Petrochemical Complex in Camaçari (BA), with an addi- tional annual capacity of 120 thousand tons. Of this total, 100,000 tons will be part of the Braskem Flexus family, the Company’s brand of metallocene-based polyethylene. The investment is approximately R$ 50 million, and the produc- tion line should begin operating during the first half of 2015. The Braskem Flexus family is designed for packaging that requires characteristics such as improved strength, shine, transparency and sealing (transformation industry in applications using special films, technical spools and industrial films). Presently Braskem’s annual production capacity for metallocene-based polyethylene is at 350 thousand tons. Another highlight in 2013 was the signing of a memorandum of understanding between Braskem and the German company Styrolution, a global leader in the styrenes segment, to evaluate the formation of a joint venture in Brazil, with a 30% - 70% share, respectively. The agreement will analyze the economic feasibility of installing an industrial plant with an annual production capacity of 100,000 tons, which would supply styrene specialties and acrylo- nitrile butadiene styrene (ABS) and styrene-acrylonitrile (SAN) to Clients in Brazil and in other countries in South America. Both ABS and SAN are imported from suppliers such as Styrolution itself. If the project is confirmed, local production will meet the growing local demand in the automotive and electrical appliances 44 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY sector in Brazil. The partnership is subject to regulatory and anti-trust approvals. As followup on the agreement signed in 2011, Basf and Braskem are continuing with the construction project of the Basf acrylic complex in Camaçari (BA). Braskem will be the supplier of propene, sodium hydroxide and utilities, in addition to investing in hookups to supply raw materials and utilities needed for the project. The acry- lics complex will meet the needs of several segments of industry, among which are paints, adhesives, diapers, mining, textiles, paper, civil construction and petroleum extraction. The factories will be operational between 2014 and 2015. Encouraged by the PIS and COFINS tax break on the purchase of first and second generation petrochemical raw materials, a measure proposed by the Federal Government which benefits about 50 companies who operate along these links of the production chain, Braskem created the Incentive Plan for the Plastic Chain (PIC) toge- ther with the plastic transformation industry. The program can be seen as a series of stimulus initiatives for stren- gthening third generation plastics activities in Brazil. Highlighted among the initiatives are special conditions for the sale of PE and PP destined for export products, stimulus for innovation and support for the training of professionals and for the management processes of companies in the field, responsible for over 340 thousand jobs in the country. With respect to the incentive plan for exporters, the goal of PIC is to double business in two years. As far as innovation is concerned, the proposal is to support the development of projects in the transforma- tion industry through specialized consulting groups, training programs and sponsorships of events in the sector. Another pillar of PIC, support for the training of professionals and for the management process of transformers, will involve the training of the labor force, technical and management discussions and access to specialized consulting. PIC also proposes re-emphasizing the promotion of and appreciation for the benefits of plastic. The intention is to work with recycling programs, Lifecycle Assessments (LCA), positioning in light of Brazi- lian National Solid Waste Policy, support for associations committed to the issues, communication and the creation of a Sector Fund for the Promotion of Plastics. Aerial image of the Camaçari Petrochemical Center (BA): investment of R$ 50 million to expand one of the PEBDL production lines HIGHLIGHTS Expansion of one of the PEBDL production lines at the Camaçari Petrochemical Center (BA). Signing of a memorandum of understanding with the German company Styrolution to analyze the economic feasibility of installing an industrial plant to supply ABS and SAN to Clients in Brazil and other South American countries. Development together with the Brazilian plastic transfor- mation industry of the Incentive Plan for the Plastic Chain (PIC). GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 45 Decks in PVC with phenolic waste particles SOLUTIONS FOR CLIENTS G4-EC8 With the commitment to serve its Clients, Braskem contributes to their having a project that is most appropriate for their needs. In this way, the Companies’ teams innovate, create solutions and propose improvements for all segments in which they operate, presenting solutions for society together with their chain of Clients. Among the Client support initiatives involving new products and improvement projects that were implemented in 2013, the follo- wing are considered highlights: PVC PVC roofing tiles: originally launched in 2010 with five lines of extrusion, the project evolved significantly in 2013. New producers entered the market, currently totaling nearly 20 extrusion lines, and the industry progressed thanks to Abitelha – the Brazilian Association of the PVC Tile Industry –, with the beginning of the Sector Quality Program (PSQ), linked to the Ministry of Cities. The completion of the first Technical Evaluation Report in the Brazilian Technical Evaluation System (SiNAT) also contributed to the evolution of the project by making it possible to use the product in construction projects financed by the Caixa Econômica Federal (Brazilian Savings Bank). PVC concrete construction system: significant progress was made in 2013. In addition to new producers entering the market, the various available technologies are progressively gaining the appro- val of the Brazilian Technical Evaluation System (SiNAT). The Global Housing system, a founding partner of Braskem on the project, received final approval from the SiNAT system in 2013, which allows the unlimited use of this technology in Brazil. 46 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY Raffia sacks for Holcim ready-mix concrete Decks in PVC with phenolic waste particles: developed in part- nership with the Client Pertech, it deals with a technology for the production of decking in expanded PVC, with the incorporation of phenolic waste particles originating in the Client’s own production processes. Besides being sustainable, through the use of waste in the formulation of the product, the decking produced with this technology has proven to be durable. PVC House Contest: a public competition, launched by Braskem and the Architects of Brazil Institute, that proposes the creation of a design for a house that prioritizes the use of plastics, and primarily PVC, as construction elements. In addition to receiving an award in money, the winning project will be built in 2014, at the PVC indus- trial unit in Alagoas. 44 projects have been entered, representing 15 Brazilian states. PRODUCTS WITH SOCIO-ENVIRONMENTAL IMPROVEMENTS G4-EN7 | G4-EN27 In 2013, three new grades of the Maxio Family, composed of products that provide Braskem’s Clients with increased productivity, reduced energy and/or raw material con- sumption, were launched. • KM 6150HC Grade: designed especially for plastic furniture and technical parts. Its increased rigidity together with its impact resistance, in market tests, allowed for a 12% reduction in the weight of monoblock plastic chairs while still maintaining their structural characteristics and increasing their resistance to impact breakage. • RP 141 Grade: provided a 9% reduction in energy consumption in the industrial process of the Client, who reduced their consumption from 770.7 kWh/t to 702.0 kWh/t. This gain was obtained mainly due to a reduction in the process temperatures needed (from 240 °C to 200 °C). • H 105 Grade: provided an 8% reduction in the cycle time, which went from 4.9 s to 4.5 s, increasing productivity and reducing the relative environmental impact of the operations. This gain was also obtai- ned due to a reduction in the process temperatures needed, this time from 230 °C to 195 °C. In the vinyls sector, the PVC panels and door and window frames market has progressively substituted lead-salt based stabilizers with calcium / zinc alternatives, which minimizes the environmental impact of the final disposal of these products at the end of their lifecycles. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 47 Polypropylene for the outdoor furniture segment Polypropylene for the shrink wrap segment PP Raffia sacks for Holcim ready-mix concrete: allows preparation of the product while inside the sack itself, by adding water to the concrete mix (gravel, sand and cement). Furnished with extended straps to be used as handles for moving the sack during preparation of the product. Partnership between Braskem, Embrasa (Brazilian Packaging) and Holcim Brazil, the manufacturer of the product. Polypropylene for the automotive industry: in the continual effort to serve our Clients and to meet the requirements of the sector, Braskem expanded its line of PP resins to be applied in automotive compounds. Polypropylene for the outdoor furniture industry: Improved PP resin to give it greater rigidity and impact resistance than the previous product. The new product avoids process losses for the Clients, since it lends itself better to the mechanical performance properties required for the application. Expanded polyethylene sheets PE Odebrecht Braskem Design Challenge: Odebrecht Properties and Braskem held the Design Challenge,, open to university students majoring in Design. The objective was to create the furniture for the social lounge area of the Odebrecht Building in São Paulo. The winning items were produced by Tramontina, a Client of Braskem, and may be commercially reproduced. Youths from four different colleges with product design courses participated. 48 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY Polypropylene for the agrochemical industry: adaptation of PE resins utilized in the blown packaging sector for agrochemical products, with a view to meeting the market’s rigid requirements of resistance and safety. Polypropylene for the shrink wrap film industry: a new resin to satisfy the packaging market for wrapping cans and bottles. This resin guarantees a compact package, without holes and marks on the surface. Beer can lids: Colonia Beer launched the first beer cans with plastic lids, to guarantee the hygienic protection of the product, an innova- tive solution on a global level developed by the Brazilian Packaging Company and Braskem. A Lifecycle Assessment (LCA) of the lids is underway, as well as partnering with recycling collectors’ coopera- tives in the state of Paraná, where the product is manufactured, for training in collection and recycling incentives. Expanded polyethylene sheets: a solution for civil construction, which reduces noise between floors and is to be applied between the slab and the floor underlayment. Cacao drying stoves Beer can lids Plastic silo bags Cacau drying units: in plastic film greenhouses, drying is not carried out by the burning of wood, rather, by solar energy, which makes the process sustainable, in addition to increasing quality and saving time. The technology was developed by Braskem and its partners for the members of the Fine Cocoa Agroindustrial Cooperative (Coo- perbahia). At the end of their useful lifecycle, the plastic film and screen may be recycled. Plastic silo bags: developed in partnership with Pacifil Brazil, plastic silo bags are large bags made of polyethylene, capable of storing about 200 tons of grain per bag and need no type of physical support structure and are easily handled as they are loaded. In this type of silo, grain may be stored for up to two years, since, inside the bag, an atmosphere is created without oxygen, which impedes the development of pestilences and insects, thus guaranteeing the quality of the product and avoiding a loss in its final value. The product may be totally recycled. LIFECYCLE ASSESSMENT Lifecycle Assessment (LCA) has become the main tool for evaluating sustainability issues in Braskem’s value chain, strategic for the Company and of interest to its stakehol- ders, especially Clients. At present, there are 38 studies in Braskem’s LCA pipeline, 19 of which concluded, 11 under way and eight awaiting consideration. Example of a study concluded and reviewed in 2013: cho- colate milk packaging – developed in conjunction with the International Council of Chemical Associations (ICCA), the study was utilized for the development of a pilot project for measuring greenhouse gases avoided through the use of the plastic. Two other finalized studies which are under external review compare the environmental impact of disposable plastic (PP) 200 ml and 500 ml cups with other materials. 200 ml cups: a comparison to reusable alternatives (glass, ceramic), for serving water in a corporate environment. The study was developed with Clients. 500 ml cups: the study compared disposable PP cups with paper cups used to serve drinks in fast food outlets. The results of the study, which was developed with data from Clients, showed a better environmental performance of the plastic cups in most impact categories evaluated. These studies are availa- ble upon request through the Braskem website, www.braskem.com/site.aspx/braskem-internacional Braskem´s goal is to involve all of its business units in Lifecycle Assessment studies by training Team Members in life cycle concepts. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 49 BRASKEM-IDESA G4-EC8 | G4-EN14 | G4-SO1 | G4-SO2 The Company’s largest investment in production capacity at present is in Mexico, where it is developing the Ethylene XII project in asso- ciation with the local petrochemical company Idesa – a joint venture between Braskem and Idesa, with a 75% - 25% share, respectively. The petrochemical complex for the integrated production of polye- thylene in the region of Coatzacoalcos, Nanchital municipality, in the state of Veracruz, reached, in 2013, approximately 10 thousand wor- kers employed in its construction (about 90% of whom are residents of neighboring communities) and 58% of project completion, falling short of the 68% projected. This gap does not compromise the gene- ral timeline. More than 90% of the engineering work for the project has been completed and 97% of the equipment has already been purchased from manufacturers in ten different countries. Operations are set to begin in 2015. At the end of July, the Braskem-Idesa subsidiary received US$ 1.5 bil- lion, representing the first installment of the financing set up in 2012, with the support of a multinational pool composed of seven main banks and credit agencies (three development banks, two export agencies and two multilateral agencies) and ten commercial banks. Total financing is for US$ 3.2 billion, for the construction and operation of the petrochemical complex. The withdrawal of the first installment allowed for the payment of anticipated investments by controlling Shareholders, which, in Braskem’s case, came to US$ 649 million. 50 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY Hiring of personnel to operate at the complex is well on its way. At the beginning of 2013, the number had reached 120 new hires. By the end of the year the total was 524. Among these, 150 are recently graduated young people from Mexican technical schools and universities, who were trained for nine months in the operation and maintenance of the complex. Training was performed by the Sou- thwest Veracruz Technological University with the support of SENAI (Brazilian Industrial Learning Service). For the operational phase, approximately 700 direct jobs and 2,300 indirect jobs are foreseen. In 2013, pre-marketing activities were intensified, having been ini- tiated a year before, and have their sight on marketing products and forming relationships with more than one hundred active Clients. The products being sold are manufactured by Braskem in Brazil as well as being imported from other countries. The goal for 2014 is to expand this customer base even more and continue the evaluation of commercial processes and logistics necessary to meet the needs of the Mexican market. The project in Mexico was conceived according to the three pillars of sustainable development – economic, social and environmental. The reduction of environmental impact is guaranteed by the mitiga- ting actions already taken and reported in Braskem’s 2012 Annual Report (http://rao2012.braskem.com/relatorio.asp?subrelatorio=28&idioma=in) and by the use of new technologies in systems and processes. In terms of social responsibility and relationships with neighboring Communities, communication activities have been undertaken since the beginning of the project, to inform people about project LEARN MORE • In addition to meeting legal environmental requirements, Braskem has supported its material and service suppliers in their compliance with such obligations. • The main environmental impacts arising from the petrochemical complex and identified by local stakehol- ders are the generation of noise and dust, the increase in vehicle traffic and the loss of biodiversity. For each of these, management and control measures are adopted. Among them, the Participative Environmental Monitoring Program. In all, 20 events have been held, with 153 local residents taking part. • In 2013, more than 400 seedlings of the Miqueliana Ceratozamia plant, which is in danger of extinction and found in the area where the Mexican complex is being built, were returned to nature. All of the plants found at the beginning of the project were relocated to another area and additional seeds were planted in greenhouses. The two thousand seedlings and small plants found today represent five times the population originally identified. • Communication channels with local Communities (community visits by the project’s social team, Open Houses and Community Meetings), initiated by Braskem -Idesa, should remain active following the beginning of operational activities, in 2015. • Although the petrochemical complex is located near a densely populated region, activities have not needed to be interrupted over the two years of work due to Community complaints. • In 2013, Braskem-Idesa invested around US$ 300 thou- sand in social projects. Also in Latin America – Besides the Braskem-Idesa project, other opportunities for investment in Latin America are being analyzed by Braskem in Peru, Venezuela and Bolivia, with several studies underway. For additional information on Braskem-Idesa, go to www.braskem.com.mx. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 51 Petrochemical complex in Mexico: 10,000 workers employed for the construction work and 58% from the installed project progress, the associated impacts, and mitigating actions, as well as the characteristics of the petrochemical complex and its benefits for the local and national economy. Handicraft workshops are also held, which generate additional income for families. Creating income generation opportunities for the local population is the challenge that arises in Community Relations in 2014. The ten thousand jobs at the peak of construction will begin to decline, and the workers will be demobilized after the completion of construc- tion. The subsidiary is working on identifying business opportunities for the local Communitiesto supply services which will be necessary once the complex begins operations, such as food services, trans- portation, production cooperatives and others, therefore generating job and income opportunities in a sustainable manner. The Braskem-Idesa project will have an ethylene cracker and three polymerization plants. The plant will use natural gas ethylene, a competitive raw material which will be supplied by Pemex (Mexi- can state-owned petroleum and gas) through a guaranteed 20-year contract . The annual production capacity will be 1 million tons of high and low density polyethylene, which represents two thirds of the total PE imported by the country. With the Mexican project, Braskem proceeds with its growth stra- tegy, that seeks to internationalize its industrial operations and its sources of competitive raw materials. OPPORTUNITIES IN THE USA In accordance with its growth and competitiveness strategy, Braskem has been studying the possibility of participating in a greenfield project in the state of West Virginia, in the United States, consisting of a petrochemical center for obtaining ethene, integrated with the production of polyethylene, based on shale gas, currently the most competitive raw material for the industry on a global level. The project’s business model, which should involve the participation of a group of investors, is currently being evaluated and, if its viabi- lity is confirmed, it will be submitted for review by Braskem’s Board of Directors. The Company must preserve its financial capacity in order to implement other strategic projects in Brazil, the main one being Comperj - Petrochemical Complex of Rio de Janeiro. New partnership – Braskem and Siluria Technologies have signed a collaboration agreement with the intent to implement a new tech- nology for the direct conversion of methane, the main component of natural gas into ethene. Siluria Technologies, with headquarters in the United States, is a pioneer in the commercial production of fuels and chemical products made from natural gas. The studies will seek to identify commercial prospects for the tech- nology in Braskem’s ethene-based plants and are aligned with the Company’s raw material diversification strategy. The demonstration plant will be constructed by Siluria, with an investment of US$ 15 million, and should begin operations by the end of 2014. 52 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY COMPERJ is a priority for Braskem since it guarantees supply to meet the growing demand for thermoplastic resins in the Brazilian market. COMPERJ The feasibility studies conducted for COMPERJ (Rio de Janeiro Petro- chemical Complex), based on competitive indicators, are aligned with Braskem’s growth strategy in Brazil, with an increased stake in the local market and the strengthening of the petrochemical and plastics chain. Throughout 2013, the Company has advanced to the FEL 2 stage of the project, that is, its definitive configuration, which includes nego- tiations with Petrobras, a partner in the undertaking, with respect to the supply of raw material (gas). As happened in 2012, the techno- logies to be utilized, specific products and other necessary aspects were considered, in order to define the scale of the industrial units that will have to be built. Developed in Rio de Janeiro, the project has at its disposal its own team of approximately 50 people, in addition to third parties. Comperj is a priority for Braskem, because it promises to meet the growing demand for thermoplastic resins in the Brazilian market. The expectation for 2014 is the conclusion of the project design in order to make a decision on the investment in 2015. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 53 RENEWABLES Braskem continued to implement its strategy of investing in biopolymers, of prioritizing a portfolio to meet the demands of its Clients, as well as researching and developing products and new paths that utilize renewable sources of raw materials. The strategy foresees establishing Brazil as the country with the greatest poten- tial for meeting the world-wide demand for green plastic. The performance of green polyethylene (Green PE), a biopolymer produced from 100% renewable raw material, sugar cane, excee- ded that of the year 2012, increasing the volume of sales, with a focus on Brazil and the United States, and of applications / products offered to consumers. Sales to European countries remained stable in 2013, with the deceleration of certain commercial projects underway, possibly due to the economic crisis still underway, which inhibited Clients from paying the higher price of Green PE. About 60% of Green PE production was exported during the reporting period. The expectation for 2014 is that sales in Brazil will increase, with new contracts coming in. It bears mentioning that, because of a change in the scenario in Europe following the crisis of 2008, legislation in European countries, which anticipates a 10% utilization of biofuels by 2020, is being reevaluated. In addition to this, Brazil lost the GSP (Generalized System of Prefe- rences) that it had with Europe, raising taxes on the import of ETBE (a bioadditive for gasoline, manufactured by Braskem since 2009 and exported entirely to Europe) from 2% to 5.5%, beginning in January, 2014, causing the Company to see a negative impact on the com- mercial performance of this product. Therefore, Braskem decided to convert the Triunfo ETBE plant to MTBE and keep it flexible to produce both products, to be prepared to choose what to produce in accordance with fluctuations in the market. The Camaçari plant continues to produce ETBE, but is also ready to convert its production to MTBE if necessary. The expense to make the two plants completely convertible was US$ 250 thousand in Triunfo and US$ 150 thousand in Camaçari (process underway). Because of the characteristics of the plants, Braskem may opt to produce ETBE 50% of the time and MTBE the other 50%, to take advantage of seasonal fluctuations in the European market. Since both assets continue in normal production, whether producing ETBE or MTBE, there was no impact on Team Members, that is, there were no layoffs because of this decision. 54 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY DEVELOPMENTS IN GREEN PRODUCTS In 2013, Braskem invested in connections between the factories at the Triunfo Petrochemical Complex (RS) and in the acquisition of equipment in order to expand its portfolio of renewable products, launching a line of low density polyethylene (LDPE) at the start of 2014. The annual production of the new resin will be approximately 30,000 tons. With properties and applications identical to traditional polyethylene (packaging and plastic film) the new resin adds value to the product by being manufactured from a renewable source, ethene derived from sugar cane, allowing carbon to be captured. Tetra Pak, which has used green plastic in its cardboard packaging lids since 2011, will use green LDPE in all of its packaging produced in Brazil starting in 2014. There will be nearly 13 billion units per year, consisting of 82% material from a renewable source. The expansion of the line of green products reinforces the Com- pany’s commitment to the reduction of greenhouse gas emissions, one of the characteristics of products made from sugar cane ethene. THE “I’M GREENTM” LABEL In order to identify products that use green plastic, and to help the consumer to recognize them, Braskem provides clients with the “I’m greenTM” label. Green PE is used in certain products of more than 50 Clients, among them Embalixo, Faber-Castell, Johnson & Johnson, Kimberly-Clark, Natura, Tetra Pak, Tigre and Walmart. Among the brands that began to use green plastic in 2013 are: • Adimax: a line of Super Premium Natural Formula dog and cat food; • Panvel: a chain of pharmacies in Brazil, with an exclu- sive line of cosmetics, used the product in Panvel Vert; • Luvex: new packaging for their protective hand cream (PPE– Personal Protective Equipment) and sunscreens; • Pilecco Nobre Alimentos: rice packaging; • NobelPack: promotional bags; • Unipac: agrochemicals. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 55 INNOVATION Braskem’s activities in Innovation and Technology (I&T) take short-, medium- and long-term perspectives, with a focus on meeting Client demands and proposing new solutions that bring added value to society through its products and processes. Such efforts are also conducive to the objective of supporting the Company’s business expansion projects, in accordance with the sustainable development agenda. To carry out its studies and research, Braskem has its own team composed of 323 specialized professionals, and supports two Tech- nology and Innovation Centers, one in Triunfo (RS) and the other in Pittsburgh (USA), with 24 innovation laboratories and eight pilot plants. The Company also acts in partnership with external compa- nies and laboratories for research in chemicals and polymers, from petrochemical and renewable sources. Highlighted projects for the renewable raw material derivatives seg- ment: Braskem has signed an agreement with Genomatica, a North American biotechnology research company, for the joint develop- ment of green butadiene. The goal is, preferably, to meet the needs of the synthetic rubber market. Through the contract announced in December, 2013, if results prove successful, the construction of a pilot plant and a demo plant is anticipated over the next few years. This will be a long-term project, since it involves research and development activities. Thirteen new products were added to Braskem’s portfolio in 2013, among which the following are highlighted: polyethylene for the agrochemical field and for the shrink-wrap market; polypropylene for the automotive industry and for the outdoor furniture sector. Learn more in Solutions for Clients. The Company continues with its work on the semi-industrial UTEC (ultra high molecular weight polyethylene) fiber plant in Camaçari (BA), where 1.2 tons of the product was produced for testing of an application in bullet-proof vests and cables for pre-salt oil platforms. One of the characteristics of UTEC fiber is its high resistance to impacts and to abrasive wear. In Innovation management, all research teams are utilizing a single system for project control, with comparable metrics and para- meters, which facilitates the consolidation of data by number of 56 | BRASKEM | ANNUAL REPORT 2013 | GROWTH STRATEGY projects underway, resources employed, researchers involved, and innovation by business area, among other information. The system adopted facilitates reporting to public agencies and financiers. HIGHLIGHTS Also worthy of mention is the holding of Braskem’s 1st Global Technology and Innovation Conference, with 170 Team Members participating from Brazil, the United States and Europe. The confe- rence was held in Rio Grande do Sul and was designed to promote greater synergy among the Innovation and Technology teams from the various locations. 90 scientific articles were presented, written by Team Members who work in the field of polymer technology and innovation, renewables and basic petrochemicals, as well as lectures by international academicians. In addition, the Plastic-to-fuel to feedstocks Workshop (a meeting on the use of plastic as a raw material for fuel) was held, bringing together different sectors involved in the plastics chain (manufactu- rers, Government, trade associations) to discuss the proper disposal of plastic after-use waste and to study alternative solutions, in addition to creating a permanent agenda on the issue. PATENTS 652 589 63 445 415 30 764 652 112 2011* 2012** 2013 Submitted during the year Documents submitted in previous years * 2011: patents registered from assets acquired during the period in the United States and Europe are not included. ** 2012: patents registered from the latest assets acquired by Braskem are included. Data relating to the patents published in the 2012 Annual Report were revised as a result of alterations in the patent document control system. • Expenditures in 2013 were on the order of R$ 200 million (in 2012 they were R$ 188 million). • 19% of the Company’s revenue generated by the Polyolefins Unit in 2013 was based on new products developed in the last three years by the Innovation department. • 480 Clients were supported by the Innovation Technology Center in Triunfo, through 15 thousand support analyses. • 300 Clients were supported by the Innovation Technology Center in the United States. • 274 projects are in the Company’s pipeline to meet the needs of the various business areas. • 112 new patent applications were filed, making a total of 764 patent documents in Brazil, the United States, Europe and Asia, the majority of which are related to technolo- gies that use renewable raw materials. GROWTH STRATEGY | ANNUAL REPORT 2013 | BRASKEM | 57 ECONOMIC AND FINANCIAL PERFORMANCE Braskem’s sales volume grew 6% and its net revenue was R$ 41 billion, 13% more than in 2012. FINANCIAL RESULTS G4-9 In a still challenging year, the global economy showed signs of reco- very, signaled by better performance in the USA and by indications that the Euro zone was beginning to emerge from the crisis. China’s GDP, on the other hand, grew in line with market expectations, producing an increase of 7.7% in 2013. This panorama aided in the recovery of profitability in the world petrochemical industry, and the spreads for thermoplastic resins and for the principal basic petro- chemicals expanded by 28% and 12%, respectively. In this scenario, the consolidated net revenues of R$ 41 billion represent growth of 13% over 2012. EBITDA (earnings before taxes, interest, depreciation and amortization) in reais, totaling R$ 4.8 bil- lion, also exceeded projections and represented an increase of 22% over the previous period. In dollars, the EBITDA was US$ 2.2 billion, 11% above that reached in 2012. 60 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE Relevant factors for the year’s results: (i) a better mix of sales of thermoplastic resins; (ii) an improvement of petrochemical margins in the international market; (iii) the devaluation of the real; and (iv) the PIS and Cofins tax break on the purchase of first and second generation petrochemical raw materials, allowing for a partial reco- very of competitiveness for the Brazilian petrochemical industry. The net profit was R$ 507 million, reflecting the improved operational performance during the period and the company’s adoption, starting in May, of hedge accounting, which explains better the effects of exchange rate variations on the Company’s debt and profit. GOVERNMENTAL INCENTIVES G4-EC4 R$ 756 mi R$ 468 mi R$ 1.5 mi R$ 6.5 mi R$ 265 mi R$ 4 mi R$ 46 mi R$ 5 mi R$ 41 mi R$ 261 mi R$ 280 mi 2011 2012 2013 Tax incentives / credits* Grants for investments, research and development** Awards** Financial assistance from ECAs (export credit agencies)*** R$ 47.8 bi (US$ 22.1 bi) R$ 41 bi (US$ 19 bi) R$ 4.8 bi (US$ 2.2 bi) 2013* * Reduction of income tax for industrial plants in Bahia and Alagoas, Reintegra Program (since 2011) and ICMS tax incentives, granted by the Government of Alagoas, through the Alagoas State Integrated Development Program – Prodesin. ** Finep Award. ***Risk insurance transaction carried out with Nippon Export and Investment Insurance (NEXI, a Japanese agency) for investment in maintenance and in the butadiene project. ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 61 REVENUE R$ 38.9 bi (US$ 23.2 bi) R$ 32.5 bi (US$ 19.4 bi) R$ 3.7 bi (US$ 2.2 bi) 2011 Consolidated gross revenue Consolidated net revenue EBITDA R$ 42.1 bi (US$ 21.6 bi) R$ 36.2 bi (US$ 18.5 bi) R$ 4 bi (US$ 2 bi) 2012 HEDGE ACCOUNTING Braskem has its cash flow generation strongly pegged to the dollar. With practically 100% of its revenues tied, directly or indirectly, to the dollar, and about 80% of its costs also linked to the North American currency, the Company feels that keeping a significant part of its debt in dollars is a “natural hedge”. As a result of the above, which Braskem considers appropriate and in agreement with its Financial Management Policy, the effects of exchange rate gaps have an impact on its financial results, the accounting of which must be in reals. By regularly exporting part of its production and with the objective of better reflecting exchange rate fluctuations in its results, the Company decided to designate, starting on May 1st, part of its liabilities in dollars as a hedge against its future exports. DEBT PROFILE On December 31, 2013, Braskem reported consolidated gross debt of US$ 7.9 billion and net debt of US$ 6.4 billion, a reduction of 7% from the amounts reported for 2012. Net debt tied to the dollar was 75%. On December 31, 2013, the average debt term was 15.5 years. Taking into account only the part of the debt in dollars, the average term goes up to 20.7 years. The 11% growth of the EBITDA (US$ 2.2 billion) and the reduction in net debt made it so that financial leverage, measured by the ratio of net debt / EBITDA, measured in dollars, closed the year 2013 at 2.87 times, a reduction of 12% compared to the previous year. In reals, the leverage was 3.09 times, with a decrease of 8%. RISK RATING In 2013, Braskem maintained its Investment Grade according to grades given by the three major global risk rating agencies. Moody’s and Fitch Rating put Braskem’s rating at “Baa3” and “BBB-”, res- pectively, with a negative outlook. This grade reflects the positive impact of the tax break on raw materials, since this improves the Company’s cash flow, profitability and capacity to invest in diversifi- cation projects. Standard & Poor’s, in a report published in July, also kept the “BBB-” rating and a stable outlook for Braskem. The agency maintained its confidence in the Company’s reduction of leverage, as a result of the recovery of international spreads and the Brazilian Govern- ment’s measures to stimulate the industry. MOODY’S Baa3 FITCH RATINGS -BBB STANDARD POOR’S & -BBB 62 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED G4-EC1 DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED (+) Direct economic value generated a) Revenues (-) Economic value distributed b) Operating costs, including payments to Suppliers c) Team Member wages and benefits d) Payments to providers of capital e) Payments to Government f) Community investments (=) Economic value retained 2013 (R$ million) 2012 (R$ million) 2011 (R$ million) 47,981 47,981 45,006 40,048 861 2,525 1,573 17,5 2,975 43,897 43,897 43,698 37,331 808 4,391 1,156 13 199 40,422 40,422 40,247 33,553 762 4,224 1,692 16 175 ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 63 INVESTMENTS In line with the investment strategy of obtaining returns above capital cost, Braskem disbursed R$ 2.7 billion (compound interest is not included) in 2013, 21% above the initial estimate. The deviation from what was initially planned is explained, mainly, by the project in Mexico. The main factors were: • early payment, due to the arrival and assembly of large equip- ment at the site; • delay by the Mexican Government in the process of refunding VAT (Value Added Tax) on the purchase of equipment; • The remainder will go to all other projects underway, such as the conversion of the polyethylene production lines in Bahia, to expand their capability for metallocene-based LLDPE, the studies relating to Comperj and the production, in Camaçari (BA), of styrene specialties and copolymers of acrylonitrile butadiene styrene (ABS) and styrene-acrylonitrile (SAN), and the completion of construction of the pipeline for the future supply of propene to the acrylic complex in Bahia. • the effect of converting investments from dollars to reals, which is the Company’s working currency. INVESTMENTS IN 2013 (R$ MILLION) Comperj / other investments 75 Productivity / HES (Health, Environment and Safety) 194 Mexico 1,098 Maintenance / Replacement /Others 1,354 It must be emphasized that Braskem continues to maintain its financial discipline, and this deviation from what was initially planned, does not represent a cost increase in the total investment of the project. To maintain the reliability and the high level of efficiency of its assets, Braskem disbursed R$ 1.4 billion for maintenance, including investments in HES and the expense of the scheduled maintenance shut-down in Camaçari (BA) in the fourth quarter of 2013. For 2014, the estimated investment is R$ 2.7 billion, distributed as follows: • about 25% will be disbursed for the construction of the new petrochemical complex in Mexico; • 60% is earmarked for maintenance, productivity improvement and the reliability of assets, which include the scheduled maintenance shutdowns of the crackers in Rio Grande do Sul and São Paulo; 64 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 65 OPERATING PERFORMANCE In 2013, the Brazilian thermoplastic resins market showed an 8% increase over the previous year, reaching approximately 5.4 million tons. The demand was positively influenced by the replenishment of stocks in the chain throughout the first half of the year, and by good performance in certain sectors, such as agribusiness, the auto- motive industry and infrastructure. In line with its growth strategy and commitment to the domestic market, Braskem’s resin sales in Brazil totaled 3.7 million tons, representing 6% growth compared to 2012. The Company’s market share was 68%. During a year in which petrochemical centers were operating at an average rate of 90%, Braskem showed a record production of 3.4 million tons of ethylene. The scheduled maintenance shut-down of 66 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE one of the Camaçari cracker lines and the interruption of production, arising from electric energy supply problems in August were offset by the high rate of operation in the first half of the year. Ethane and propane sales totaled 924 million tons, in line with 2012. In the case of butadiene, sales increased by 7%, reflecting the 100 thousand ton expansion that went into operation in June of 2012. Total sales of BTX, on the other hand, decreased by 2%, reflecting the lower production volume from one period to the next. With 6% growth compared to 2012, resin sales in Brazil totaled 3.7 million tons. The Company’ share in the Brazilian market was 68%. ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 67 ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 67 Santo André UNIB (SP): increase in the industrial excellence indicators at the UNIBs due to the improvements implemented For further information regarding the strategy of adding value to the naphtha cracker chains, access the 2012 Annual Report at this link http://rao2012.braskem.com/relatorio.asp?subrelatorio=35 UNIB´s actions are based on three pillars. The first is designed to strengthen core ethene and propene operations, with operational efficiency and competitiveness. The second seeks to add value to cracker chains, extracting from them co-products such as the deri- vatives C4 (butadiene) and C5 (DCPD, PIPS, isoprene), increasingly scarce in the Americas and with price levels trending upward on the international market. And, whenever possible, to attract industrial investments to Brazil based on local transformation of chains or coproducts into products of increased added value. The third facet points toward a medium-term horizon and seeks to open the way for chemical specialties, a niche with greater margins of contribution. BASIC PETROCHEMICALS In 2013, the average rate of operation of Braskem’s crackers was 89%, in line with the previous year. Indicators that measure indus- trial excellence had a positive turn as a result of improvements implemented as the year progressed, with regard to inputs and catalysts, automation and process modernization, improvements in energy efficiency and reliability of productive processes, and initia- tives focused on Health, Safety and the Environment. Altogether, these projects received investments on the order of R$ 95 million. The Basic Petrochemical Unit (UNIB) continued its strategy of adding value to the naphtha cracker chains, by identifying new opportuni- ties to better serve Clients and strengthen the production chain of plastics in Brazil. According to this strategy, UNIB keeps a series of projects on its docket: (1) investment in infrastructure, to provide materials and utilities to the acrylics complex being built by Basf in Camaçari; (2) partnering with the Client to make local use of the butadiene produced by Braskem; (3) the signing of a memorandum of understanding with Styrolution, to analyze the viability of a pro- ject to produce ABS and SAN in Brazil; and (4) options for improving the understanding of the Clients’ perception of the importance of Braskem’s products within the chemical chain, which adds value to the sector (Pricing project). 68 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE BASIC PETROCHEMICALS TONS PRODUCTION 6,010,227 BTX* 1,165,437 BUTADIENE 314,534 PROPENE 1,411,098 ETHENE 3,119,158 SALES 1,856,128 BTX* 983,815 BUTADIENE 311,542 ETHENE/PROPENE 872,313 PRODUCTION 6,404,466 PRODUCTION 6,486,105 BTX* 1,246,517 BUTADIENE 355,703 PROPENE 1,472,488 ETHENE 3,329,758 BTX* 1,217,831 BUTADIENE 389,854 PROPENE 1,505,595 ETHENE 3,372,825 SALES 2,351,120 BTX* 1,059,479 BUTADIENE 357,001 ETHENE/PROPENE 934,640 SALES 2,342,346 BTX* 1,036,147 BUTADIENE 381,764 ETHENE/PROPENE 924,435 2011 2012 2013 Ethene – Production Ethene/Propene – Sales Propene – Production Butadiene – Sales Butadiene – Production BTX* – Sales BTX* – Production * BTX: benzene, toluene, para-xylene, ortho-xylene. Note: On average, 48% of basic petrochemical sales go to Braskem’s second- generation units. The remaining 52% are sold on the market. Laboratory analysis at UNIB, in Santo André (SP): increase in the industrial excellence indicators at the UNIBs due to the improvements implemented ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 69 PP operational unit, in Paulínia (SP): polyolefin (PE and PP) sales volume totaled 3 million tons Also in polyolefins, there was an improvement in the results for polypropylene, but business was impacted by the significant volume of imports. In response to this issue, Braskem initiated a commercial defense process, with investigations of dumping with regard to imports coming from India, South Africa and South Korea. Among the fastest growing segments of the Brazilian transforma- tion industry which influenced the sales of PP, are the following: rigid packaging (margarine, cream cheese, buckets), raffia sacks, to meet the needs of agroindustry (packaging for seeds, fertilizers, sugar for export) and compounds for the automotive industry (the demand for PP for automobile parts is growing). Of particular impor- tance is the fact that the products of the Maxio line, launched at the end of 2012 and differentiated both competitively and environ- mentally, were well accepted, and sales grew about 30% over the course of 2013. Further information about the Maxio line is found in Solutions for Clients/Environmentally improved products. POLYOLEFINS (PE AND PP) Brazilian demand for polyolefins (PE and PP) was 4.1 million tons in 2013, 7% above the previous year. Braskem’s sales volume, in turn, increased of 5%, coming to a total of 3 million tons with a market share of 74%. To improve the competitiveness of its products and preserve its market share, the Company operates on different fronts, such as continuous investments in operational efficiency, cost reduction and institutional actions to correct tax inequalities compared to imports. Among polyethylenes, sales were driven by the flexible films segment, primarily those intended to be used in plastic bags, which regained their market in 2013, special films, intended for use in food and pet food packaging, and the roto-molding sector for the manufacture of hollow items such as water tanks. Polyethylene also began to be utilized in the manufacture of drain pipes, in infras- tructure projects, and new grades of resins were developed. As a highlight, Braskem approved the expansion of the production capa- city of metallocene in Camaçari – more information may be found at Growth strategy / Strengthening the production chain. 70 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE POLYOLEFINS TONS INTERNAL MARKET 2,674,747 EXTERNAL MARKET 1,303,409 TOTAL PRODUCTION 4,186,095 TOTAL SALES PE 2,406,695 PE 2,539,476 TOTAL PRODUCTION 3,956,629 PE 2,391,136 TOTAL SALES 3,978,156 PE 881,762 PE 1,524,933 INTERNAL MARKET 2,901,509 EXTERNAL MARKET 1,277,328 TOTALS PRODUCTION 4,207,431 TOTAI SALES PE 2,530,005 PE 2,580,290 TOTAL SALES 4,178,837 PE 861,834 PE 1,668,171 TOTAL SALES 4,124,538 PE 778,052 PE 1,765,661 INTERNAL MARKET 3,034,587 EXTERNAL MARKET 1,089,951 TOTAL SALES PE 2,543,713 PP 872,313 PP 421,647 PP 1,565,493 PP 1,149,814 TOTAL SALES PP 1,571,461 PP 1,646,619 PP 1,233,338 PP 415,494 TOTAL SALES PP 1,648,832 PP 1,627,141 PP 1,268,926 TOTAL SALES PP 1,580,825 2011 PP – Production PE – Production 2012 2013 PP – Sales to internal market PE – Sales to internal market PP – Sales to external market PE – Sales to external market Team Members at the PE unit in Cubatão (SP): PE sales were driven by the flexible film, special film and roto-molding segments ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 71 VINYLS The demand for PVC and soda remained high on the Brazilian market, led by the civil construction segment, in the case of PVC, and by the paper and cellulose industry, in the case of soda. Among the industrial highlights, the PVC plant in Camaçari broke a production record, with 240 thousand tons. The Alagoas unit, which started operations in 2012, has not yet reached its projected perfor- mance level on the order of 288 thousand tons for 2013. The main reasons were technological adjustments needed to reach maximum potential for the plant, shut-down for maintenance of the VCM plant (raw material for the production of PVC) and interruptions in the supply of electrical energy in the region. To supply the market, Bras- kem imported about 48 thousand tons of PVC in 2013. In the commercial domain, the 14% increase in total sales volume – for a portfolio of more than 370 active Clients – was a record. As for the relationship with its Clients, Braskem was recognized as best Supplier by Cenibra, a paper and cellulose company. Among the projects underway in the Vinyls area, we should emphasize the work performed to replace asbestos diaphragm cell technology with synthetic diaphragm cells in the chlorine and soda production process, conforming to phased-in regulatory requirements with a deadline yet to be defined. The project made 30% progress, corresponding to 131 cells, and should be completed by 2015. The vinyls area is also studying alternatives for generating steam for the PVC plant in Alagoas, based on eucalyptus biomass, in partnership with the Renewable Energies of Brazil (ERB) company. The project establishes a contract for a 20-year supply of steam and stipulates that investment, operation and maintenance is to be the responsibility of the partner. The biomass unit should begin operating in 2016. VINYLS TONS PRODUCTION 1,704,809 LIQUID SODA 366,923 SALES 853,891 LIQUID SODA 414,996 PVC 438,895 PVC 483,995 PRODUCTION 1,972,931 LIQUID SODA 450,589 SALES 1,024,976 PRODUCTION 2,125,185 LIQUID SODA 464,052 LIQUID SODA 437,334 SALES 1,105,272 LIQUID SODA 468,765 PVC 497,366 PVC 560,924 PVC 582,579 PVC 636,507 2011 2012 2013 PVC – Production PVC – Sales to internal market Liquid soda – Production Liquid soda – Sales to internal market 72 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 73 UNITED STATES AND EUROPE The United States and Europe Business Unit which began to repre- sent the UTEC (ultra-high molecular weight polyethylene) business in 2013, reached a sales volume of almost 1.8 million tons of polypropylene – 3% higher than 2012 – and 24.1 thousand tons of UTEC over the period. In the USA, Braskem has held its leadership position in the PP market, with a market share around 18%, and a sales volume greater than the Company’s production capacity in the country, which is 15.9%. There was significant improvement in the reliability of the industrial units, which raised the utilization rate to 91%. Taking advantage of synergies with plants acquired in 2011 made it possible to reallocate production lines in the units, with an increase of capacity and a reduc- tion in costs. There was improvement, also, in stock management, which reduced storage volumes and costs. In Europe, the year was challenging for business as a result of the macroeconomic scenario and an increase in the importing of polypro- pylene from other regions, especially the Middle East, putting a price and demand squeeze on local producers. For 2014, a moderate recovery of the Euro Zone economy is expected, but challenges in the local petrochemical industry will probably continue, as a result of strong competition from imports. As for its relationship with its Clients, Braskem participated in the K Trade Fair, the largest event in the global petrochemical industry, held every three years in Germany. It was an opportunity to gain exposure for the brand and rub elbows with European Clients. The inclusion of the UTEC business by the United States and Europe Unit created conditions for viability studies for transferring the production of resin to the USA, which is its major buyer. UTEC resins, although manufactured in Brazil with 100% domestic technology, are almost exclusively for export to the United States and Germany. 74 | BRASKEM | ANNUAL REPORT 2013 | ECONOMIC AND FINANCIAL PERFORMANCE USA AND EUROPE TONS PP PRODUCTION 1,010,183 PP SALES 1,016,823 2011 PP – Production PP – Sales PP PRODUCTION 1,756,732 PP SALES 1,744,104 PP PRODUCTION 1,785,938 PP SALES 1,790,693 2012 2013 ECONOMIC AND FINANCIAL PERFORMANCE | ANNUAL REPORT 2013 | BRASKEM | 75 SOCIAL DEVELOPMENT Actions and initiatives focused on Team Members, Suppliers, Communities, the Government and society in general. Leader-Team Member relationship - the essence of the Braskem communication process operators to work in the Braskem-Idesa petrochemical complex beginning in 2015, when industrial activities will start up at the Mexican complex. Further developing the strategy of rolling out sustainability knowledge through peer-led initiatives, which began with the Sus- tainability Competencies Development Program,which took place from 2011 to 2012, thirty people were trained to deliver the Lea- ders for Sustainable Development Workshops. In 2014, all Braskem Leaders will be invited to participate. Most of the educational activities are carried out in Brazil, but cour- ses and workshops were also offered to teams in the United States, Germany and Mexico, especially in the areas of strengthening TEO, the company’s corporate culture, and the development of specific competencies, such as leadership. Focused on training young professionals, the Young Partner Pro- gram for interns and trainees is carried out at all locations except Germany. For Team Members in Brazil approaching the end of their careers, Braskem offers Horizon, a voluntary program which prepares and supports professionals and their families for their post- career transition. TEAM MEMBERS At Braskem, the focus of people development is through on-the-job learning, based on the relationship with Leaders and by overco- ming the challenges in each Team Member’s scope of work. In line with this approach, the Company values self-development and the pursuit of personal and professional growth. In 2013, investment in education for teams in Brazil, the United States, Germany and Mexico was approximately R$ 21 million. The education and development programs are planned to support the Company’s growth process, fostering the required competen- cies, to ensure a motivating environment and to strengthen the corporate culture. Accordingly, in 2013 about 300 Team Members completed the Development Program for Team Leaders (PDLE) implemented in the previous year with the aim of strengthening the Team Leader’s role as an educator. Team Members from junior management level and above participated in the program. One of the highlights in people development was the partnership signed with Petrobras University to carry out two-year professional improvement programs, for 70 engineers, in the fields of Petrochemi- cal Processing Engineering and Mechanical Maintenance Engineering. The Operator 2020 program was also continued; the objective of this program is to train and develop technical-level professionals (operation, maintenance, laboratories), who currently represent over 45% of Braskem’s workforce. The program is also training 78 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT People development is achieved through work and by overcoming challenges PERFORMANCE AND CAREER MANAGEMENT DISTINCTION AWARD As an initiative designed to encourage creativity, spirit of service To consolidate decentralization and strengthen and the pursuit of knowledge, the Distinction Award is held the partnership between Leaders and their annually in Braskem and is open to all Team Members. In 2013, teams, Team Members participate in an annual 303 projects were developed by teams, bringing together a total performance management process called the of 1,073 Team Members. There were four categories – Continuous PMEJ (Plan/Negotiate, Monitor, Evaluate and Improvement, Adding Value to the Client, Innovative Solutions and Judge) cycle, whereby goals and expected perfor- HES (Health, Environment and Safety) – and prizes were awarded mance for the period are established. to first through third place in each category. Please see below the winner in each category. Results are monitored periodically, which creates an opportunity for Leaders and Team Members to discuss progress achieved so farand any adjustments needed. At the end of the year, performance reviews take place, and final results are evaluated. The final step, judgement, is a con- sequence of this process, and is when the Leader decides on the Team Member’s career progres- sion. At Braskem’s units in Brazil and in the United States, the evaluation process is well established. In Germany, the first cycle took place in 2013. Category Project Name Units where the project was developed Continuous Improvement Increased reliability in maritime logistics for raw material at PP5 plant Polyolefins, Comperj, Renewables and Vinyls Unit Adding Value to the Client Expanded PVC Decks – Beauty and performance together in a new product Polyolefins, Comperj, Renewables and Vinyls Unit Innovative Solutions Innovation of UTEC application to support piping Investments HES SIL – Safety Integrity Level - checking and increasing process safety Basic petrochemicals SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 79 WORK ENVIRONMENT SURVEY The initiatives and activities planned for Braskem’s internal public aim to support the Company’s business and growth, through the personal and professional development of its Team Members, in a motivating work environment built on mutual trust, leading to Braskem’s being perceived as the best company to work for in the chemical and petrochemical sector. Thus, the Company conducts an online survey every two years to listen to people and identify the strengths and improvement oppor- tunities of the work environment. Participation is voluntary, and anonymity preserved. Participation in the 2013 survey was 77%, meaning that nearly 6000 people answered the questionnaire, which confirms everyone’s commitment to an even better work environment. The previous study, carried out in 2011, achieved a 69% response rate. The general satisfaction rate grew by six percentage points from 62% to 68%, for the Company view (that is, perception of the company overall), and increased five percentage points, from 66% to 71%, for the Area view (that is, Team Member’s perception of the area in which they work). The results indicate progress in all the dimensions assessed, including additional questions specific to Braskem’s reality, according to the methodology of the Great Place to Work Institute. The additional questions refer to the relationship between Leaders and their teams, remuneration, strategy, vision, planning and change management. The strengths identified by the 2013 survey include pride of belon- ging, understanding of company strategy, camaradarie and the following aspects of the relationship between Leaders and their teams: confidence, knowledge and information sharing, autonomy and delegation to teams. 80 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT Motivating work environment, built based on relationships of trust Opportunities for improvement showed progress over the 2011 study, but there is still room for further improvement. These include: • strengthening discipline in the performance appraisal cycle, crea- ting more opportunities for dialog and broadening the practice of giving feedback; • Relationship between Leaders and their team: although there were significant improvements on the previous study, there is still room for improvement in the practice of the company culture, Odebrecht Entrepreneurial Technology (TEO). SATISFACTION RATES (%) 76% 68% 67% 62% 62% 60% 77% 72% 72% 68% 67% 66% 2011 Credibility Respect Impartiality 2013 Pride Friendliness General / additional questions Notes: The 2013 survey was sent to Team Members at all of the Company’s sites, including commercial offices outside Brazil. In 2011, the survey was not sent to teams in Germany, as there were no operations in that country Actions and activities planned for Braskem’s internal public: support for businesses and for the Company’s growth through the personal and professional development of its Team Members TEAM MEMBERS’ PROFILE Braskem had a total of 8,096 Team Members at the end of 2013. Of this total, 6,742 were working at industrial units and offices in five Brazilian states, 624 in the United States, 524 in Mexico, 168 in Germany and 38 at commercial offices in other countries. This total includes members of quantiQ, the distributor of chemical and petrochemical products controlled by Braskem. However, members of this subsidiary are not included in the detailed GRI indicators, as in 2013 there was an intention to sell it, which did not happen as the Company changed its decision. TEAM MEMBERS’ PROFILE IN 2012 TEAM MEMBERS’ PROFILE IN 2013 G4-10 Country Region Men Women Total Brazil South 82% (1,460) 18% (314) Southeast 74% (1,735) 26% (601) Northeast 82% (1,910) 18% (433) Subtotal 79% (5,105) 21% (1,348) United States 82% (510) 18% (114) Germany Mexico 64% (108) 36% (60) 84% (440) 16% (84) International offices 53% (20) 47% (18) 1,774 2,336 2,343 6,453 624 168 524 38 Country Region Men Women Total Total 79% (6,183) 21% (1,624) 7,807 Brazil United States Germany 80% (5,202) 20% (1,300) 6,502 84% (499) 36% (53) 16% (95) 64% (94) 594 147 Total Braskem 79% (5,754) 21% (1,489) 7,243* Notes: there were only three members working part-time (all women based in the U.S.). Fewer than 1% of the Team Members had temporary contracts in 2012. The data include countries where Braskem maintains production operations. Braskem’s database does not track minority groups. Notes: a) There are only 13 members working part-time (two women in the U.S., one in Mexico and ten men in Germany). b) Fewer than 1% of members have fixed-term contracts. c) These figures do not include quantiQ, a subsidiary of Braskem, because the Braskem intended to sell it in 2013, and also does not include the international sales offices. d) Braskem is reviewing its system for monitoring the number of Partners (contrac- tors). For this reason, reliable data could not be obtained in 2013. There were no operational changes to the Company nor outsourcing of new services on a national scale. Therefore, it is believed that the number and profile of Partners did not changed significantly in 2013. SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 81 NEW HIRES AND DISMISSALS G4-LA1 In 2013, Braskem hired 1,049 people in the countries where it opera- tes. Given that 633 people left the company, 416 new employment positions were created, most of them in Mexico, in preparation for the start-up of the new plant in 2015. The total turnover rate (excluding quantiQ and business offices) was 10.8%, above the result of the previous two years, 8%. The increase is primarily due to the large number of new hires in Mexico. Hiring and dismissals data broken down by region and gender, following the GRI standard, is presented in the appendices. REMUNERATION Braskem has a competitive remuneration system for its members, with the goal of attracting and retaining qualified professionals, as well as to allow collective and personalized remuneration manage- ment, regardless of gender, race or color. The remuneration strategy is linked to factors and considerations that make it more equitable (pay proportionally to skills, job trai- ning and contribution to results), competitive (in line with market standards), efficient (in terms of cost to the Company) and safe (committed to business continuity). As the goals are met for the short, medium and long terms, greater results are generated for the Company, which, in turn, distributes them as fixed remuneration in the short-term, variable in the medium-term and as incentives in the long-term, if applicable. This cycle allows the Company to grow and develop in the quest for its perpetuity. As a large company with a remuneration level above the market ave- rage, Braskem believes it is contributing to job creation and the growth and development of its local Communities. See in the chart below the comparison between the lowest wage offered by the Company and the minimum wage in the areas where it does business. 82 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT COMPARATIVE DATA: RELATIONSHIP BETWEEN THE LOWEST STARTING WAGE AT BRASKEM AND THE LOCAL MINIMUM WAGE G4-EC5 3.31 3.9 2.9 2.2 1.7 1.4 1.2 2.4 1.7 1.9 2 1.7 1.6 2.3 2.3 1.8 1.7 1.6 2011 São Paulo United States 2012 2013 Rio de Janeiro Bahia Alagoas Rio Grande do Sul Mexico Notes: (1) does not include data from Germany, because there is no minimum wage in that country; (2) Brazil’s minimum wage = wage floor for the category as per union agreement (*amount relating to the 2012 agreement since the 2013 negotiation had not been concluded at the closing of this indicator); (3) minimum wage in the U.S. and Mexico = national minimum wage. SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 83 PERCENTAGE OF PURCHASES FROM DOMESTIC SUPPLIERS BY COUNTRY G4-EC9 Brazil Domestic suppliers 78% United States Domestic suppliers 99% Germany Domestic suppliers 96% Foreign suppliers 22% Foreign suppliers 1% Foreign suppliers 4% SUPPLIERS Braskem’s Suppliers are required to follow the commitments to professional and ethical behavior expressed in the Company’s Code of Conduct, which sets out the Company’s processes and approach. Suppliers also have access to the Ethics Line Channel, so that they may contribute with information to reinforce the transparency and confidence that should exist in such relationships. The Braskem portal has a dedicated page for this subject: http://www.braskem.com.br/ site.aspx/suppliers Due to Braskem’s decentralized structure, supplier management follows the same pattern, meaning that each area is responsible for its own spend analysis, quality of products and services purchased, adherence to codes of ethics and conduct, legal regulations and requirements relating to Health, Environment and Safety (HES). With regard to this topic in particular, Braskem has a robust HES culture, which permeates relationships with Suppliers, which are further supported by the Sustainable Development area. According to Braskem’s purchasing policy, only Suppliers who can demonstrate strong economic and financial health are contracted. Moreover, they must be in compliance with regulatory and tax obli- gations and have proven technical and administrative qualifications. G4-12 Braskem’s supply chain can be better understood through the following diagram. The company has slightly over 12,000 suppliers, broken down in the diagram according to the Company’s most significant purchase categories. In the topics that follow, management highlights are shown for each of the main areas responsible for Suppliers. 84 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT SUPPLY CHAIN G4-12 NAPHTHA AND ETHANE CONDENSATE, PROPANE AND HLR MACHINERY, EQUIPMENT AND INSTALLATIONS SOLVENTS AND ADDITIVES ENERGY TECHNICAL AND RELATED SERVICES WATER AND DISPOSAL OF WASTE AND EFFLUENTS CLIENTS ETHANOL LOGISTICS, STORAGE AND DISPATCH CORRELATION WITH MACRO OBJECTIVES SUPPLIER NUMBERS RESOURCES SPENT Safety Renewable resources Water efficiency Climate change Energy efficiency Local development Strengthening of sustainable development practices 22.8% TECHNICAL AND RELATED SERVICES 4.8% REMAINDER* 0.6% WATER AND DISPOSAL OF WASTE AND EFFLUENTS 4.6% LOGISTICS, STORAGE AND DISPATCH 2.8% TECHNICAL AND RELATED SERVICES 4.6% ENERGY 6.1% MACHINERY, EQUIPMENT AND INSTALLATIONS 1.8% SOLVENTS AND ADDITIVES 72.4% MACHINERY, EQUIPMENT AND INSTALLATIONS 1.2% ETHANOL 78.2% NAPHTHA AND ETHANE CONDENSATE, PROPANE AND HLR SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 85 STRATEGIC RAW MATERIALS LOGISTICS FOSSIL-BASED FEEDSTOCKS The acquisition of raw materials (naphtha, condensate, ethane, propane and HLR) is the item of greatest impact in the cost of goods sold by Braskem. The main naphtha supplier is Petrobras, a Braskem Shareholder. Therefore, engagement actions on sustainability are not considered necessary, since there is an alignment of values among the companies. In relationships with other Suppliers, for which Braskem is not a significant customer, there is little room to influence practices. To minimize supply issues, the Company main- tains contracts for all its strategic raw materials. The Logistics teams count on the support of HES professionals to manage the social and environmental issues critical to these operations, including protection of human rights. The Supplier must demonstrate commitment and ability to manage HES, Quality and Productivity requirements, which are monitored and assessed through Braskem’s Supplier performance analysis system and by the Brazilian Chemical Association’s (Abiquim) Evaluation System for Safety, Health, Environment and Quality. The Company holds monthly meetings to obtain feedback and annual campaigns to raise awareness. ETHANOL The ethanol Suppliers sign a document whereby they undertake to follow the Code of Conduct for Braskem’s Ethanol Suppliers, which draws on good practices for social and environmental management in the segment. This document stipulates, for example, that no forced or child labor will be used and, as of 2014, fire will not be used in areas where harvesting can be mechanized. Ninety-eight percent of the ethanol volume purchased by the Com- pany in 2013 was acquired from mills that had signed the Code of Conduct (in 2012 the percentage was 95%), exceeding the goal of 90% for the period. Performance in relation to the Code is monitored through third party audits carried. Following the approach established to manage the Code, the 2012 audit results were shared with the Suppliers, who will work on the improvement opportunities for the next cycle. As the audits are valid for two years, the next round will be held in 2014, when the improvements will be assessed. For information about the 2012audit results , see the Annual Report for the period at: http://rao2012.braskem.com/relatorio.asp?subrelatorio=47&idioma=in. Each team has its own assessment methods based on its specific needs. In propene logistics, the Accidents / Incidents Prevention Index (PI) is used, as is the Service Level Agreement - SLA, a tool that is also employed by the chlorine-soda team. In Basic Petro- chemicals, adherence to programs like Smart Eye on the Road and Carrier of Lives is assessed. Monthly review meetings and planning of corrective actions are scheduled with Resin Logistics Providers whose results are found to be below the target Supplier Performance Index. Those that fail to meet the target for three consecutive months are removed from the Company’s list of carriers. Other programs that are assessed in connection with this area are Smart Eye on the Road, Carrier of Lives and On the Right Track, which cover driver awareness and accident prevention. Annual audits are held by Braskem teams at the carriers’ head offices, in addition to Abiquim’s biennial audit of all carriers that have their certificate. For the transport of dangerous goods, Braskem has a contract with the leading company in chemical and environmental emergencies in Brazilian road transportation – SUATRANS, which performs audits at the service headquarters and simulations on major cargo trucking routes. This way, full support is guaranteed in emergency situations of dangerous goods transport, in accordance with the Brazilian Regulatory Standards, thereby strengthening Braskem’s operations in the social and environmental fields. 86 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT For information about the Supplier Performance Index, please see the 2012 Annual Report at: http://rao2012.braskem.com/relatorio.asp?subrelatorio=48&idioma=in For information about the program On the Right Track, please visit: http://www.braskem.com.br/site.aspx/braskem-voluntary-commitments http://www.namaocerta.org.br/ing_index.php For information about the program Eye on the Road, please visit: http://canais.abiquim.org.br/olhovivo/o-programa.asp For information about the program Carrier of Lives, please visit: www.vidaurgente.org.br/site/int_projetos-int.php?codigo=107 PROCUREMENT The Procurement area is responsible for contracting a significant number of Suppliers to provide industrial and administrative servi- ces, as well as materials and supplies used across the Company’s business units. With Braskem’s growth and globalization, the Procu- rement area has worked on the global analysis of supplier markets so as to meet the Company’s needs, focusing on synergies among its business units. 2013 was impacted by rising costs, both of services and strategic imported feedstocks, because of labor cost rises and the depre- ciation of the Brazilian Real against the US Dollar. The impact was minimized by the policy of ongoing partnership and support for development of new Suppliers and technology, as well as the rene- wal of supply agreements. The Procurement area’s action plan included efforts to identify improvement opportunities arising from the Company’s growth and its presence on the European and American continents. SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 87 COMMUNITIES Braskem’s goal in relation to the Communities surrounding its ope- rations is to improve human development overall, which includes productive social inclusion as well as environmental and cultural aspects. It relies, for this purpose, on a Corporate Social Responsibility team and regional Team Members from the Institutional Relations area, who act as the link between local Communities and the Company. The social projects developed are set out below. To learn more about how Braskem manages the impacts of its operations on the Communities surrounding the industrial sites, please visit Health, Environment, and safety management/ Impacts on Communities. SOCIAL PROJECTS G4-EC7 | G4-SO1 From 2011 to 2013, the management of Corporate Community Investments developed by Braskem has evolved to enable the concentration of efforts on initiatives aimed toward greater social impact. Thus, the portfolio of social projects went from 30 less- comprehensive initiatives, conducted in 2011, to 12 projects better aligned to the proposed objectives and able to generate more benefits to society. Corporate Community Investment Projects: carried out through voluntary private investment in social projects focused on addres- sing public interest matters, through initiatives that planned and monitored systematically. The strategy of the projects is focused on high impact results and social transformation that can be perpe- tuated through Community involvement. The three main projects promoted in Brazil in 2013 were Edukatu, Forest Factory and ser+realizador. • Edukatu: carried as a partnership between Braskem and Akatu Institute (an NGO that is active in promoting consumer aware- ness). Edukatu is a platform for networking and learning debates on responsible consumption between students and teachers of Brazilian elementary schools, with space dedicated to the use and disposal of plastic. To get to know Edukatu’s online platform, please visit http://edukatu.org.br/ (available in Portuguese only). Results obtained in 2013: 1,516 people from 583 schools in 27 States of Brazil and 191 universities, NGOs and municipal depart- ments participated in the platform, running 94 projects and other activities. In addition, more than 3,000 people gained greater awareness through participation in campaigns and events. 88 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT • Forest Factory: a project that focuses on the environmental education and capacity-building, jointly developed with the Forest Factory Institute (an NGO dedicated to the production and planting of seedlings of Atlantic Forest species, with emphasis on refores- tation of springs and riparian woods). The project resulted in the production of around 100 thousand seedlings in 2013, 70% less than in 2012; this reduction was due to surplus stocks available for planting from the previous year. Production and planting sites: São João Forest, greenhouse and head office of the Forest Factory at Sauípe Park (BA); Amizade Park in Paulínia (SP); Taquara Park in Duque de Caxias (RJ) Escola Park in Santo André (SP), a tree nursery inaugurated in 2013. More than 10,000 people took part in the environmental education actions in 2013 (up from 1,250 in 2012) and 517 people were trained (vs. 143 in 2012). The Forest Factory project achieved recognition from UNESCO for the conservation of biodiversity and sustainable development. Forest Factory: over 10,000 people took part in the environmental education actions G4-EN28 • Ser+realizador: Launched in December 2013, during the 4th edition of Expocatadores (Brazilian congress for waste collectors), the brand unifies Braskem’s social projects aimed at promoting social and economic inclusion and entrepreneurship of those working with recyclable materials, contributing to the efficiency of solid waste management and environmental sustainability in its areas of operation. Ser+realizador is carried out in the Brazilian states where Braskem has an industrial presence: Alagoas, Bahia, São Paulo, Rio Grande do Sul and Rio de Janeiro (launched in 2013 in partnership with the SuperVia concessionaire, control- led by Odebrecht TransPort). The Company’s first initiative to support recycling projects dates back to 2009, in Rio Grande do Sul. Projects then began to be consolidated and expanded to other states, enabling the professional development of waste collectors and enhancement of cooperatives’ materials sorting and processing approaches. Through a nationwide partnership with Sebrae, consulting and training is offered to cooperatives, as well as investments in infrastructure and equipment. Results achieved in 2013: 511 waste collectors were trained, and the 202 that have been supported by Braskem for more than one year have increased their income. Cooperatives estimated to have sent about 477,000 kg of waste to recycling, of which 10% was classified as plastic waste. Two cooperatives - The Coolabore and Recicla Rio Networks - were licensed in Cataforte 3, a program of the Brazilian National Development Bank (BNDES), through which they will each receive investments of approximately R$ 5 million. In addition, more than 23 thousand people gained greater awa- reness through technical visits to cooperatives and recyclers, as well as through educational activities in schools, residential areas and events. SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 89 Social projects carried out using tax-incentives: these sponsorship projects are supported by Braskem in order to generate positive impacts on education, sports and culture. About 15 projects were supported in 2013 using this approach. Among them were the Frontiers of Thought, a space for conferences and debates led by thinkers, scientists and guest artists; Architects of the Future, the main forum in Brazil dealing with the design and management of cities, whose main theme is the architecture and transformation of urban life; and the Art of Recycling, consisting of exhibition panels, videos, works of artists and testimonials whereby visitors can learn about the daily lives of people in the recycling universe (several locations in São Paulo). Forest Factory: 1,000 seedlings planted in 2013 Odebrecht Foundation: supported the Integrated Development and Growth with Sustainability Program in the Mosaic of Environmental Protection Areas of the Southern Bahia Lowlands (PDCIS), fostered by the Odebrecht Foundation. The PDCIS’ challenge is to turn a rural area with extensive environmental assets into a prosperous and dynamic region, by helping talented youth stay in the area through productive social inclusion. Actions involving 805 Communities were carried out, directly benefiting 23,000 people and indirectly another 85,000. Theinitiatives include support for: (1) Cooperative of Cas- sava Starch Producers of the State of Bahia, where 109 cooperative members achieved an average monthly income of R$ 1,000, (2) the Rural Family House of President Tancredo Neves, which benefits 95 young rural entrepreneurs and, through the Land Access Fund provides financial assistance to young people, and (3) the Land Conservation Organization, which reached the end of 2013 with 854 families being trained, 49 acres of forests recovered and 57 springs preserved/restored. To learn more about the Foundation’s projects, please visit: http://www.fundacaoodebrecht.org.br/PDCIS/en/Apresentacao/ 90 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT Ser+realizador: social and economic insertion of recyclable material collectors Focus on Mexico: Community Production Projects Braskem-Idesa is carrying out five production projects in the Communities surrounding its site, involving around 100 people. The projects are: cleaning products, fish farms, poultry farms, uniforms, and recycled materials. The initial results are expected in 2014. To learn about all of Braskem´s social projects, please visit www.braskem.com.br/site.aspx/Society INVESTMENT Braskem’s Social investment in Brazil in 2013 totaled R$ 17.5 million, consisting of: • Corporate Community Investment Projects: R$ 6.3 million • donation to the Odebrecht Foundation: R$ 7 million • sponsorships complemented by tax incentives (public interest projects): R$ 3.8 million tax incentive plus R$ 400,000 of match funding Complementing this total, 414 Team Members donated more than R$ 712,000 through the program Tribute to the Future, directing a deductible portion of their Income Tax to social projects. SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 91 Based on the tripling of the country’s existing recycling structure and in connection with the implementation of curbside collection, which falls exclusively under the authority of municipal governments, the proposal was submitted to the Government in December of 2012. In June of 2013, the Environment Ministry issued its opinion and recom- mendations. The Coalition filed a new position in August, and three months later the Ministry issued a contrary opinion, which reopened negotiations among the parties. On March 10, 2014, the Coalition submitted a further revised proposal. Post-consumer plastics is a strategic issue for Braskem and its stakeholders. The social project named “ser+realizador”, developed to support recycling cooperatives, is a way to contribute (see Social Development / Communities). The NSWP theme is also part of the Company’s agenda in con- junction with its Clients. An example of a positive result is the partnership among Braskem, the Brazilian Packaging Society, Colônia Beer and WiseWaste (a product development company that uses waste as raw material), which, in 2013, structured the project for recycling the plastic seals from the new Colônia Beer packaging, manufactured with Braskem’s resins. The pilot recycling project involves information to consumers, providing collection points and training of waste collectors cooperatives. The goal is the return of recycled plastic to the industry itself, which will produce new plastic materials therefrom, closing the product cycle. Braskem’s fronts of institutional operations: international forums and sec- tor-specific associations for debating topics such as climate change, responsibility of the business sector when proposing paths for the promotion of sustainable development and the defense of the competitiveness of the chemical and plastic production chain. GOVERNMENT For Braskem, the concept of sustainable development includes, in addition to activities in the economic, social and environmental spheres, the active contribution with governments and civil society representatives to the formulation of public policy and other initiati- ves aimed at a broad approach to sustainability. With this view, the Company has participated in international forums, engaging in the debate on climate change and the responsibility of the corporate sector to propose ways to promote sustainable development (please see Collaborative initiatives and voluntary commitments). Another public affairs matter to which Braskem has contributed, through industry associations, is market defense for the chemical and plastic value chains. In this context, the Company maintained its leadership position on several initiatives focused on strengthe- ning domestic production against imports that have increasingly expanded their market share in Brazil. These include commercial defense and tax reduction measures, among others, aimed at both Braskem products and those of the plastics value chain. The approval of the Special Chemical Industry System (known as Reiq) by the Federal Government in 2013 is an example of a suc- cessful request posed by the petrochemical sector. Implementation required nearly two years of meetings, discussions and arguments with the technical teams of the legislative and executive branches. The Reiq provides for the exemption of PIS-COFINS tax for the purchase of raw materials for the first and second generation of petrochemicals, benefiting about 50 companies, including Braskem. Another major topic under discussion in the environmental sphere is the Brazilian National Solid Waste Policy (NSWP), now in force, with implementation points still under debate. The topic that most directly affects the plastic production chain is reverse logistics, a mechanism whereby businesses and municipalities must contribute to the collection and recycling of packaging materials and ensure proper disposal of waste. With this focus in mind, Braskem has become a member of the Enterprise Coalition, a group of 21 associations linked to three busi- ness sectors, which account for about 75% of the packaging market in Brazil. The Coalition developed a proposal for achieving the goals set by the Federal Government to reduce the volume of dry recycla- ble waste disposed of in landfills. 92 | BRASKEM | ANNUAL REPORT 2013 | SOCIAL DEVELOPMENT SOCIAL DEVELOPMENT | ANNUAL REPORT 2013 | BRASKEM | 93 HEALTH, ENVIRONMENT AND SAFETY MANAGEMENT Management efficiency allows for advances in HES. HEALTH, ENVIRONMENT AND SAFETY HIGHLIGHTS The areas of Health (Occupational Hygiene and Health), Environment and Safety (Occupatio- nal and Process) (HES) are managed in Braskem through an integrated approach. Therefore, health and safety programs have been brought together in this report in the same chapter as environmental activities and results. Among the 2013 highlights is the fact that the Company maintained its best ever injury rate: 1.04 accidents (with and without lost time) per million person-hours worked. Twenty-one industrial plants with a total of 17.7 million person-hours worked without registering any lost-time accidents in 2013, an improvement over 2012, a year in which this result was obtained at 16 plants. Considering the eco-efficiency indicators, the best-ever result was achieved in waste genera- tion. The rest experienced an increase of up to 3% from 2012 to 2013, however, comparing the 2013 results with 2002, all except water consumption obtained significant reductions. To promote continuous improvement in HES results, Braskem invested R$ 178 million on 386 projects, as shown in the table below: INVESTMENT Environment R$ 26.8 millions 61 projects Health R$ 19.2 millions 31 projects Safety R$ 132.1 millions 294 projects 96 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT The Company uses the ISI – Investment Sustainability Index – to support investment decisions. Factors such as water consumption, effluent generation, recycling, energy consumption, waste genera- tion and CO2 emissions are considered, to allow the prioritization of projects with measurable environmental gains. Health, Environment and Safety activities are integrated in the SEMPRE system – Excellence in HES –, a management program created in 2005 to prevent and minimize risks, as well as personal, environmental and materials losses. SEMPRE is composed of 16 Stra- tegic Elements, a set of guidelines and requirements to be followed by Team Members and Third parties in all units of the Company. In order to guarantee compliance with the norms, teams are trained and internal audits are periodically performed, with action plans being set out to address gaps. The implementation of these action plans is monitored by Health, Environment and Safety Committees. Five stages of implementation of the norms, guidelines and requi- rements of SEMPRE are defined for the industrial sites, focusing on workplace and process safety, environment and occupational health. Each site has set out a plan for how it will progress in the stages of implementation by 2018, taking into account the profile of its operations and related risks. In 2013, SEMPRE audits were carried out in every unit of Braskem, in conjunction with the Integrated Management System (IMS), including barrier inspections, which enabled progress in Process Safety mana- gement. All plants reached the planned stage of progress. GOLDEN RULES With a view to reinforce internal discipline and the concept of safety as an essential value in day-to-day decision-making, behaviors and attitudes, Braskem has a set of nine Golden Rules. These rules were created to save lives, strengthen the culture of prevention and seek continuous improvement. The Company’s Industrial Committee monitors the applica- tion of the rules and shares lessons learned. The rules are implemented in all sites in Brazil. For more information about the Golden Rules, visit http://rao2012.braskem.com/relatorio.asp?relatorio=77&idioma=in ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 97 WORKPLACE HEALTH AND SAFETY G4-LA5 Committees composed of managers and representatives of their teams monitor the issues referring to the occupational health and safety of the Team Members. In the industrial units and offices in Brazil, there are also internal Accident Prevention Comissions (Cipa), in line with Federal law. A third type of committee is organized by the corporate HES area and has the participation of representatives from the units in the country, to address issues such as chemical safety, impacts and risks. In the units in the United States, although there are no associated legal requirements, committees are formed by Team Members with a view to enhance HES conditions, based on Braskem’s SEMPRE and Braskem+ guidelines. Local plants are registered and certified in the VPP (Voluntary Protection Program), supported by OSHA (Occu- pational Safety and Health Administration), the North American certifying agency which focuses on occupational safety and health. With regard to VPP, Braskem sets up a committee of Team Members that acts in programs to improve HES conditions. In the German plants there is no specific committee to deal with HES matters, which are handled in a decentralized manner. Results are ensured through local unit management. WORK-RELATED ACCIDENTS G-4 LA6 In 2013, no fatal work-related accidents occurred. Considering Team Members and Partners per million person-hours worked (PHW), the injury rate was 1.04 accidents (with and without lost time) per million person-hours worked (the goal was 0.80). The lost time injury rate was 0.39 (0.35 in 2012), and the severity rate was 32.24 (30.79 in 2012). Eleven of the people involved in the 16 lost time accidents which occurred in 2013 had returned to their work activi- ties by December 31. 98 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT SEVERITY RATE DAYS LOST AND DEDUCTED FROM LTIS 1,000,000 HOURS WORKED 260.18* 268.48* 184.19* 77.69* 109.68* 31.01* 30.79* 52.7* 41.17* 50.94* 67.08* 32.24* 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: the severity rate was recalculated in 2010, in compliance with national and international technical norms (ABNT / NBR – 14280 and OSHA, respectively). *Values adjusted to follow the revised severity rate calculation approach. Workplace safety, a priority for Braskem INJURY FREQUENCY RATE 10.07 3.06 7.01 8.49 2.45 6.04 7.52 2.18 5.34 6.53 1.7 4.83 4.93 1.07 3.86 4.85 1.7 3.15 6.13 0.66 5.47 4.63 1.01 3.62 2.02 0.62 1.4 1.16 0.55 0.61 1.04 0.35 0.69 1.04 0.39 0.65 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 No lost time (per million PHW) With lost time (per million PHW) ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 99 OCCUPATIONAL HYGIENE AND HEALTH There were no cases of occupational deaths or illnesses in 2013, nor was there absenteeism associated with such illnesses. A relevant effort was the creation of the Strategic Plan of Action for the Conti- nuous Improvement of Benzene Management, the actions of which are approximately 75% concluded, such as the setting up of best practices for associated risk management. Also in 2013, the Strategic Occupational Hygiene and Health Plan was created and validated for 2014 and 2015, which calls for actions in line with corporate HES goals, such as the implementation of the Six Sigma project for reduction of occupational illnesses and the continual improvement of the Workplace Quality of Life Program. PROCESS SAFETY G4-SO2 2013 was marked by the integration of barrier audit processes and systemic requirements such as the SEMPRE implementation criteria for Process Safety. With the increased rigor, diversity and scope of the indicators assessed, these initiatives allowed the identification of the best process safety management and results improvement opportunities over the short, medium and long term. The following process safety risk management results were obtai- ned in Braskem’s industrial operations in 2013: • barrier audits were carried out in all of the Company’s plants, meeting the goals set out for the progress of the stages of imple- mentation of SEMPRE; • investment of R$ 30 million on projects to minimize 44 high potential risk scenarios across Braskem’s plants; 100 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT • development and availability of 120 SRM licenses, a process risk analysis software with direct interface with SAP and Meridium (barrier integrity and reliability monitoring system). The new tool will allow productivity gains of around 30% in the performance of risk analyses; • creation of the integrated quantitative risk analyses group in Brazil, obtaining direct gains of over R$ 3 million and indirect gains of R$ 20 million in reduction of corporate risks; • definition of the new risk management strategy at Braskem, with an optimization of 30% in quantitative risk analyses. In line with international standards, the process is expected to secure R$ 1 million per year, through increased efficiency in mapping and management of risk scenarios, with direct corporate gains, such as prioritizing recommendations and identifying non-essential investments, as well as gains in the lifecycle of the plants; Workplace exercises at the Triunfo Technology and Innovation Center (RS) • definition of the process safety targets for 2014 and subsequent years, focusing on the Tier 1 event frequency rate, which corres- ponds to the most serious level of process accidents, according to technical criteria such as amount leaked, damage generated and link to process. Monitoring of the number of events of this type and their severity rate; • detailed analysis of the main process safety events, allowing spe- cific investment and management actions required in subsequent years to be identified. Strategy and governance of process safety in logistics will be conso- lidated in 2014, according to the systemic model of Braskem’s HES. The strategy will consider actions developed in previous years for the various logistics modes. RISK RATING Activities were continued to meet Braskem’s commitment of promoting continuous improvement in the risk rating (an index for process safety defined by insurance companies), so as to reach, by 2015, a Company average of at least 90 points, with all plants above standard as stipulated by the Company’s leadership. External audits performed in 2013 on the industrial plants, by insurers and reinsurers involved in the insurance program, indicate an improvement in the Company’s risk rating, with emphasis on Braskem plants in the United States and Europe. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 101 Maceió Green Belt (AL): protection of the Communities IMPACTS ON COMMUNITIES G4-SO2 The main potential impacts on Communities surrounding industrial units are linked to the consumption of natural resources, generation of effluent and waste, atmospheric emissions and the transport and use of our final product. On the local level, the Company has a monitoring program based on legal requirements, with a pro-active approach. All potentially impacted natural resources, such as air, water (surface and underground) and soil, are monitored. Devia- tions in any of the readings result in immediate actions. One common situation at all the plants is the operation of flares, an important safety device, used as a last line of defense for the emergency release of gases at the industrial units. Their function is to thermally destroy, in a safe and controlled way, any gases gene- rated in the production process, in emergency situations, to avoid their being released directly into the atmosphere or reaching nearby persons or equipment. As a result of the burning, however, certain products, such as carbon monoxide, hydrogen or particulate matter, may be formed, depending on the control of the process and the load placed on the equipment. An so, the flame may appear visually high and with the potential of releasing black smoke. Impacts in the various stages of the product life cycle are managed by means of actions such as the use of process technologies that reduce emissions to air, the monitoring of resource consumption rates and waste generation, and the proper treatment and disposal of effluent and waste. Specific risk analysis tools are used, with the necessary risk mitigation measures being taken. In certain regions, Braskem’s units are surrounded by a green belt, a further level of protection, which keeps people at a distance, thus reducing their exposure to risks. The green belt also protects species of the local fauna and flora and absorbs particulate matter from the plant, improving air quality. 102 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT OPEN DOORS G4-SO1 All of Braskem’s units have mechanisms for engaging the local Community, such as Community Consulting Councils, toll-free telephone numbers, Community Alert and Local Emergency Preparation Program (Apell), among others. The communication process with Communities is ongoing, which allows them to set forth their needs. The issues most often addressed are: safety (including evasion procedures in case of an emergency), environmental impacts and planned improvement actions. Social and environmental impact studies are performed at the beginning of the operation, as part of the licensing process. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 103 CHEMICAL SAFETY PRODUCT LIABILITY G4-PR1 Impacts on health and safety caused by Braskem’s products (due to their flammability, toxicity and corrosiveness) are evaluated in every phase of their lifecycle. HEALTH AND SAFETY IN HANDLING G4-PR2 In 2013, 23 non-conformities were documented regarding product safety, 19 of which were considered minor, being cases of incom- plete or non-submission of documentation for polymer resins, which are non-hazardous products. All other non-conformities were cases of safety in the handling of products. An action plan was defined to deal with the above-mentioned issues in 2014. There were no fines or penalties related to non-compliance. G4-PR1 | G4-PR2 | G4-PR3 | G4-PR4 Braskem continues partnering with Abiquim in the implementation of the GPS (Global Product Strategy), supporting companies in the safe management of their chemical products. The GPS is an initia- tive of the ICCA (International Council of Chemical Associations) to promote the recognition and communication of risks to people and the environment, resulting from the use of chemical products. In compliance with the REACH (Register Evaluation Authorization and Restriction of Chemicals) system, required for products sold in Europe, in 2013, the toluene evaluation report was issued within the scope of the CORAP (Community Rolling Action Plan). The CORAP is a committee that designates the Member State that will evaluate substances under evaluation status by the ECHA (Euro- pean Chemical Agency). In the case of toluene, the Member State was Finland. The conclusion and the opinion issued by the Finnish chemical agency (Tukes) were positive, and toluene maintains its present status as a registered substance, with no need for alteration of its means of commercialization. In 2014, the work of evaluation of MTBE and 1.3 butadiene will begin and in 2015, of ortho-, meta- and para-xylenes. Substances with restrictions or recommendations for substitution on a global level were identified and mapped for validation by the substitution plans. 104 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT LABELING AND PRODUCT INFORMATION FOR CLIENTS G4-PR3 In Brazil, the Chemical Product Safety Data Sheets and the labeling of Braskem products are prepared on the basis of Brazilian standard NBR 14725. All of the safety sheets for products manufactured and marketed by Braskem are updated and made publicly available on the Internet, at the following address: www.braskem.com.br/site.aspx/Products-Usa-Eng The safety sheets cover instructions for transporting, handling and disposing of the product. Inspection programs, internal and external audits, SEMPRE audits and action plans resulting from the findings of these audits are designed to guarantee the imple- mentation of the guidance set out in these sheets. In Brazil, there are also internal guidelines and procedures which establish the practices to be applied. No information on outsourcing or component origin are included, as there are no associated legal requirements and substances with potential significant socio-environmental impact are not used (for example, conflict minerals , i.e. those that come from regions where human rights in mining, transport or commercialization are disrespected). In the USA, the MSDS (Material Safety Data Sheet) is used and in Germany, the SDS (Safety Data Sheet). Both are items required by the regulatory agency in the USA (OSHA) and by the relevant gui- deline of the European Union (REACH), based on the GHS - Globally Harmonized System of Classification and Labeling of Chemicals, created by the UN. G4-PR4 With regard to product labeling and information, there were no cases of non-compliance with regulations which resulted in warnings or fines, nor were there cases of non-conformity to voluntary codes. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 105 ENVIRONMENT Braskem continued its investments and its implementation of initia- tives to reduce the generation of liquid effluent and waste, as well as of the consumption of energy and water, and the intensity of its GHG emissions. In terms of environmental performance, with the exception of waste generation, all other eco-indicators remained stable or showed inferior performance as compared to that of the previous year, as follows: • Generation of liquid effluents: 1.22m³/t (1.17 in 2012) • generation of solid, liquid and viscous waste: 2.20 kg/t (2.28 in 2012) • Energy consumption: 10.67 GJ/t (10.55 in 2012) • Greenhouse gas emission: 0.63 tCO2e/t (equal to 2012) • Water consumption: 4.30 m³/t (4.23 in 2012) As for the reuse of water, the Company showed significant advan- ces. Some regions with water stress are being less impacted thanks to these initiatives. Water stress is a phenomenon that occurs when human water consumption is greater than 40% of the renewable fresh water sources of any determined watershed. The environmental performance of Braskem in 2013 was impacted by general maintenance shut-downs of industrial plants and by the interruption of electricity supply (blackouts) in Brazil. WATER: USE AND DISPOSAL G4-EN8 | G4-EN10 Braskem manages water consumption by monitoring its intensity of use, that is, the ratio between water consumption and production. Improvement activities carried out throughout the year were not enough to reduce this indicator, which reached 4.3 m3/t of manu- factured product in 2013, an increase of 1.7% over the previous year. The result was 0.2% above target. WATER CONSUMPTION – m³/t (1) 4,25 4,26 4,29 4,14 3,97 3,83 4,50 4,48 4,15 3,83 4,23 4,30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (1) The water consumption intensity index was not audited, while the Total Water Withdrawal by Source data, presented in the table below, was. This is because the two values have different collection bases and mechanisms. The index takes into account only water used in production processes, divided by total production, excluding fini- shed product transferred internally within Braskem. In absolute terms, Braskem consumed 70.8 million m³ of water, 67.8 million m3 of which were consumed by Brazilian plants and 3 million m3 by the international units consumed. In addition to the maintenance shut-downs, the consumption of water was impacted in the South and Southwest regions of Brazil as warmer climate than expected led to an elevated rate of evaporation in the cooling towers. 106 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT Water and effluent treatment plant at the PP unit in Santo André (SP) The water used by Braskem comes from different sources. In 2013, water withdrawal by source presented the following profile: TOTAL WATER WITHDRAWAL BY SOURCE (1) G4-EN8 Water withdrawal (2) Brazil United States Germany Total Total volume of ground water withdrawn (m3/year) 7,170,735 10,848 Total volume of rain water directly collected and stored (m3/year) Total volume of effluents collected from other organizations (m3/year) 80,469 359,960 — — — — — 7,181,583 80,469 359,960 Total volume withdrawn from municipal water supplies or others (m3/year) 26,941,210 2,284,496 55,604 29,281,310 Total volume of surface water withdrawn, including wetlands, rivers, lakes and oceans (m3/year) 43,238,034 274,742 275,460 43,788,236 Steam purchased from sources outside the company (t) (3) 1,386,310 149,295 22,842 1,558,447 Total volume of water withdrawn (all sources) (m3/year) 79,176,718 2,719,381 353,906 82,250,005 Water transferred to other companies (m3/year) 11,392,267 3,561 — 11,395,828 Total water consumption 67,784,451 2,715,820 353,906 70,854,177 (1) The total withdrawn is the sum of all water brought to the Company’s property and originating at various sources (surface, ground, rain and municipal water supply system), for any use. (2) Not all water withdrawn by the Company is consumed internally, as Braskem sells part of the water it withdraws. (3) Data reported in tons of steam. In 2012, information was collected on water sources significantly affected by Braskem’s withdrawal in Brazil (see http://rao2012.braskem.com/relatorio.asp?subrelatorio=41&idioma=in). In potentially critical regions, water reuse projects are being develo- ped (see following section). Braskem’s operations in Germany and the USA do not significantly affect watersheds. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 107 Braskem consumes 65% of the capacity of Aquapolo, which reduces the demand for drinking water when supplying the Capuava petrochemical center in Mauá (SP) WATER REUSE The Aquapolo Ambiental and Agua Viva projects, developed in 2012 with Braskem’s support, for the reuse of effluents, presented the following results in 2013: • Aquapolo Ambiental: a partnership between SABESP (the Sao Paulo municipal water company) and Odebrecht Environmental. The implementation of this industrial water reuse project was made possible by Braskem, which is consuming 65% of Aquapo- lo’s capacity, reducing its demand for potable water in the supply of the Capuava petrochemical complex in Mauá (SP). Almost all the water used at the UNIB 3 plant, in the ABC region of Sao Paulo, comes from waste water. This means that, in 2013, the Company avoided withdrawing almost 10 billion liters of water from natural resources. • Água Viva: developed in partnership with Cetrel, which deals in the area of effluents and residues in the Camaçari (Bahia) complex, Água Viva’s goal is to allow the reuse of rain water and treated waste water. The Água Viva project has been maturing, improving the quality of the water supplied. The Aquapolo and Agua Viva projects, among others, allowed the reuse of 13 billion liters of water in 2013, which is equivalent to the water consumption of 178 thousand people. 108 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT PERCENTAGE AND TOTAL VOLUME OF WATER RECYCLED AND REUSED G4-EN10 Braskem measures the percentage of water recycled and reused in its operations by means of two indicators. The first focuses on the effort applied in the development of projects which aim to recover effluent sent to treatment, so that it can be used in the industrial process, or projects to improve the internal process, recovering any discarded water. Effluents from outside the plant which are treated and utilized in Braskem’s processes are also taken into account, as in the case of Aquapolo (by reusing, the Company does not need to collect water from natural resources). This indicator has been monitored monthly by the industrial plants, since 2012, and does not take into consi- deration forms of reuse inherent to the production process, such as recycling of condensates already existing since the beginning of the operation of the plant and recycling in cooling towers. WATER REUSE NOT COUNTING INHERENT PROCESS REUSE 18.5% 12,927,516 2013 6.4% 4,206,222 2012 Volume of water recycled / reused by Braskem (m3 / year) Percentage of water recycled / reused compared to the total volume of water consumed by Braskem WATER REUSE PERCENTAGE OF WATER USED THAT ORIGINATED FROM REUSE OR RECYCLING 15.65 16.29 16.64 16.89 17.94 17.30 17.26 3.82 3.69 4.34 4.67 5.47 6.01 6.75 5.03 5.28 6.02 21.16 21.09 22.17 19.6 21.2 18.5 14.83 9.72 6.39 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC AVERAGE 2013 2012 The second indicator considers all recycling that occurs at the plants, whether or not it is inherent to the production process, with the exception of recycling in cooling towers. This indicator has been measured on an annual basis, as a result of applying GRI guidelines. WATER REUSE COUNTING INHERENT PROCESS REUSE 29.45% 20,528,984 23.80% 18.49% 14,502,604 15,970,232 2011 2012 2013 Volume of water recycled / reused by Braskem m3 / year Percentage of water recycled / reused compared to the total volume of water consumed by Braskem WATER CONSERVATION In addition to seeking solutions to increase water efficiency in its operations, partnering of Braskem with its Clients results in products that make life better. Here are a few examples of solutions that help save water: • Mulching: the use of this plastic covering in agriculture aids in retaining humidity in the soil, providing water and energy savings in irrigation; • Water tanks: in places where water is scarce, water tanks made of HDPE help to store this natural resource in an economical and safe manner, keeping it fit for consumption for a longer time; • Geomembranes: these make the soil impermeable and impede the contamination of the water table. They are widely used in building dams or diverting rivers, for the purpose of storing or taking water to regions where it is scarce. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 109 Wastewater treatment plant at the PVC unit in Maceió (AL) GENERATION OF LIQUID EFFLUENTS 1,94 1,74 1,50 1,40 1,44 1,40 1,34 1,28 1,32 1,24 1,17 1,22 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: planned and unplanned discharges of effluents include all sewage, not just the portion related to production, since it is impossible to directly measure and/ or estimate the non-industrial portion in most industrial plants. This index takes into account total liquid effluents divided by total production, excluding finished products transferred internally within Braskem. EFFLUENTS G4-EN22 All effluents generated by Braskem are treated before they are returned to the environment, including those that cannot be returned directly to the waterways. In such situations, specific procedures are used after treatment, such as disposal to the ground. Specifications of treated effluents are specific to each region and are normally defined in the operating licenses of each unit, or by environmental legislation, considering local, state and federal policies. The Company’s rate of liquid effluent generation in 2013 was 1.22 m3/t of manufactured product, which represents an increase of 4.3% compared to 2012. In 2013, Braskem generated 19.7 million m³ of effluents, 72% of which was organic (organic + sanitary) and 28% inorganic – 18.3 million m3 were generated by Brazilian plants and 1.4 million m3 in the United States and Europe. The 2013 generation target was met, which means that Braskem avoided generating 0.5 million m3 of effluents compared to what it would have generated in 2013 (in a business-as-usual scenario). Braskem’s discharge of effluents in 2013 was distributed among its regions of operation as indicated in the table below. The 2012 data may be consulted in the appendices. 110 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT TOTAL DISCHARGE OF WATER, CLASSIFIED BY QUALITY AND DESTINATION (2013) Location Destination of effluent Volume of effluent discharged (m³/year) Treatment method Biochemical oxygen demand in discharge (BOD) (kg/year) Total suspended solids in discharge (TSS) (kg/year) Other significant quality parameters (kg/year) BRAZIL Rio de Janeiro Coelho Canal 676,405 Biological 52,615 43,278 NA(1) Bahia Cetrel - External Wastewater Treatment Plant 8,039,242 Pretreatment with water and oil separators and biological treatment at CETREL 879,526 169,808 0.12 kg of Hg in CS 2 and 1,102 kg of EDC 37,150 kg of Oils and Greases in PVC 1 Alagoas Ocean 4,267,463 Neutralization / Aerobic process (activated sludge) 8 55 NA(1) Rio Grande do Sul SITEL - External Wastewater Treatment Plant 3,094,638 Pretreatment with water and oil separators and primary, secondary (biological) and tertiary treatment at SITEL 594,579 476,184 DQO at UNIB 2 RS: 1,510,508 kg Ponte Funda Creek 98,529 Sent for external treatment NA(1) Perequê River 321,100 Water and oil separator and primary treatment by decantation and filtering 27 NA(1) 0 NA(1) NA(1) Tamanduateí River 2,036,312 Conventional Primary and physical, physical-chemical and biological 33,948 492 Oils and fats in UNIB 3 CK and IN, respectively: 26,941 kg and 161 kg São Paulo USA La Porte Marcus Hook Houston navigation canal Delaware River via POTW 175,216 243,489 Primary treatment and coloration Primary treatment, biological and coloration Primary treatment and coloration NR(2) NR(2) NR(2) <10mg/L <10mg/L NR(2) Neal Big Sandy River 399,120 8,3 mg/L 17,8 mg/L Seadrift Victoria Barge Canal 308,275 External treatment Oyster Creek Oyster Creek 108,956 External treatment NR(2) NR(2) GERMANY Schkopau Saale River 73,759 External treatment NR(2) Wesseling Rhine River 112,538 Primary and biological treatment 17 mg/L NR(2) NR(2) NR(2) NR(2) Notes: (1) NA: data not available as it is not a legal requirement; (2) NR: parameters not reported since they are insignificant. (3) Generation of liquid effluents at the UNIB 1 (Bahia) plant presented an increase in cooling tower drainage due to the impact of the quality of reused water. NR(2) NR(2) NR(2) NR(2) NR(2) ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 111 ENERGY AND CLIMATE CHANGE (GHG MANAGEMENT) ENERGY G4-EN3 | G4-EN5 | G4-EN6 Several initiatives associated with the Energy Efficiency macro objective were implemented in 2013 (see highlights below), some of which were designed to optimize the efficiency of operational processes, through better use of resources and fuels, considering type and quality, as well as medium and long term actions to adapt production processes. In spite of all efforts, the energy consumption index was 10.67 GJ/t of manufactured product, which represents an increase of 0.2% over the previous year. The result was 3 % above the annual target. ENERGY INTENSITY G4-EN5 In 2013, 173 million GJ of energy were used to manufacture pro- ducts(1) across Braskem, of which 9% consisted of electrical energy, 15% natural gas, 3% coal and 73% other fuels. (1) The remainder is used in vehicles and flare gas, which does not produce energy. ENERGY CONSUMPTION – GJ/t 11.90 11.47 11.55 11.46 11.47 11.12 11.83 11.27 10.65 10.77 10.67 10.55 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: this index takes into account only energy used for production processes, divided by total production, excluding finished product transferred internally within Braskem. HIGHLIGHTS OF ENERGY EFFICIENCY INITIATIVES G4-EN6 • Improvements in productivity and energy optimization in pyrolysis furnaces in the UNIBs, generating financial savings of R$ 33 million. • Improvements in the boilers at the UNIBs, such as the reactivation of soot blowers and control of excess air, gene- rating savings of R$ 1,3 million. • Improvements in turbogenerators in the UNIBs, gene- rating savings of R$ 7 million. 112 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT G4-EN3 From 2011 to 2013, Braskem used the following fuels in Brazil: ENERGY CONSUMPTION BY BRASKEM (1) (BROKEN DOWN BY SOURCE) Non-renewable energy sources (GJ) Coal Direct Natural gas Fuel distilled from crude oil (2) Indirect Electricity (3) Steam Subtotal non-renewable sources Renewable energy sources (GJ) Direct Ethanol Hydrogen Flare gas green ethene Biodiesel Indirect Electricity (3) Subtotal renewable sources Total 2013 2012 2011 6,336,223 16,958,117 145,071,431 6,483,423 23,293,820 142,120,194 4,941,701 22,671,597 128,704,117 4,168,729 5,521,483 4,588,233 172,534,500 177,418,920 160,905,648 682,110 669,663 373,101 10,490 16,145,415 17,880,779 190,415,279 879 520,709 443,505 1,928 16,479,988 17,447,008 194,865,928 1,145 414,955 834,549 1,475 14,888,035 16,140,158 177,045,806 (1) This detailed energy data does not include operations in the United States and Germany, due to difficulties in data collection. They will be reported as of 2014. (2) The following are included: gasoline, diesel, LPG, CNG, LNG, butane, propane, ethane etc. (3) In the 2011 data,, electricity was classified as non-renewable and renewable sources in the same proportion as was found in 2012, due to the lack of data. This is a conservative estimate, given that the use of non-renewable sources in the Brazilian energy matrix increased in 2012. All steam was considered to have come from non -renewable sources. In 2013, the information available in the 2013 Brazilian National Energy Balance (base year 2012) was used to break down electricity between non-re- newable and renewable sources. Braskem’s increase of coal consumption has occurred in a planned and controlled manner. To increase consumption, the Company has been negotiating with its Supplier to obtain a better quality coal, with lower ash content (greater heating value) and less sulfur. The basic premise followed in the increase of coal consumption is that the amount of sulfur dioxide and nitrogen oxide emissions, as well as the concentration of particulate matter must not exceed the envi- ronmental standards defined for the region. Following this premise, Braskem may increase the use of a more economically viable fuel, which also creates jobs in its state of origin (Rio Grande do Sul). Also worthy of note is the increase in the consumption of rene- wables, for example, ethanol, hydrogen and electricity from renewable sources. This generates important positive impacts in Braskem’s GHG emissions. About 80% of Braskem’s energy consumption occurs at its Basic Petrochemical units (UNIBs). Improvements that reduced energy consumption generated savings of R$ 102 million over the period (see “Highlights of energy efficiency initiatives”). As a result of these improvements, Braskem avoided consuming 7.8 million gigajoules in the year. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 113 GREENHOUSE GAS EMISSION MANAGEMENT G4-EN15 | G4-EN16 | G4-EN18 | G4-EN19 In line with the Climate Change macro objective, in 2013, initiatives to reduce the intensity of greenhouse gas (GHG) emissions were implemented in the area of industrial operations, and in market and product development. The carbon intensity remained at the same level as 2012 (0.63tCO2e/t) and reached a reduction of 12.5% com- pared to the 2008 base year. GHG emission intensity, considering only scope 1, showed a posi- tive performance, even with events that impacted the Company’s energy consumption, such as the blackout in the Brazilian Northeast in September. Considering only the scope 2 emission intensity, the results were negatively impacted by the increase in the Brazilian grid factor, due to the operation of thermal power stations as a result of dry weather conditions. Thus, the GHG emissions intensity, scopes 1 + 2, mantained the same performance as the previous year, due to the increased efficiency of the Company’s carbon management. Braskem’s 8th corporate GHG emissions inventory, for the base year 2013, includes all categories of the three scopes applicable to the operations: direct emissions, originating from the process, and indirect emissions, relating to both the purchase of energy, for all the industrial plants and corporate centers, and all other major goods and services. The inventory is performed in accordance with the GHG Protocol methodology, verified by KPMG, an independent third party. As of 2013, all of the Company’s process emissions, and not only GHG emissions, were covered. Also in 2013, an emissions data manage- ment system was implanted, integrated with Braskem’s data system, increasing the reliability of the GHG emissions inventory. As the IPCC released updated emissions factors, GHG emissions have been reported using both the updated and the previous fac- tors. To analyse the trend over the years, the values calculated with the previous factors should be used. In 2014, once the historic data is updated with the new factors, all values will be reported using only these. 114 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT GREENHOUSE GAS EMISSIONS INTENSITY (GHG) G4-EN18 0.72 0.68 0.64 0.62 0.63 0.63/0.63 2008 2009 2010 2011 2012 2013(1) IEmission Intensity (Scope 1 + 2) (tCO2e/t marketable products) (1) Results for 2013 are shown in two version, the first with the conversion factor from before 2014 (to allow for direct comparison with other years) and the second, in italics, with the 2014 conversion factor. Note: Braskem calculates its GHG emissions intensity dividing GHG emissions scopes 1 and 2 by total production. This basis is different from the one applied in the other eco-indicators of intensity, in which finished products transferred internally within Bras- kem are not considered. GHG MANAGEMENT DISTINCTIONS • The GHG emissions inventory obtained the Gold Classification for the third straight year in the Brazilian Program of the GHG Protocol. • Braskem was listed on ICO2 and on ISE, sustainability indices of the Sao Paulo Stock Exchange (BM&FBo- vespa), achieving the benchmark position in the Climate Change dimension of the ISE. • The Company was recognized by the CDP as the best of the 58 Brazilian companies that participated, both in terms of carbon performance and disclosure. GHG EMISSIONS G4-EN15 | G4-EN16 Emission Sources Direct Emissions (Scope 1) Combustion emissions Fugitive emissions Waste disposal effluent Treatment (internal) Total Scope 1 Indirect Emissions (Scope 2) Total Scope 2 (energy purchases) Other indirect emissions (Scope 3) Total Scope 3 2013(1) Emissions (tCO2e) 2012 3,580,128 / 3,571,598 6,142,638 / 6,177,130 20,420 / 22,293 9,743,186 / 9,771,021 3,305,001 6,236,106 23,617 9,564,723 2011 3,068,989 5,954,759 23,155 9,046,917 874,146 / 874,146 770,519 872,257 11,512,889 / 10,112,901 11,999,834 11,347,227 (1) Results for 2013 are shown in two versions, the first using the conversion factor from before 2014 (to allow for direct comparison with other years) and the second, in italics, using the 2014 conversion factor. Note: GHG emissions are shown in metric tons of CO2 equivalent, independent of any GHG trades such as purchases, sales or transfers of offsets or licenses. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 115 To improve its GHG emissions performance, Braskem carried out 35 initiatives in 2013 in Brazil, leading to an emission reduction of almost 90 thousand tons of CO2e in the year. See the list of initiati- ves in the appendices. Impact of the changes in emissions factors • The impact of the Brazilian national grid increased significantly in 2013 (about 44%), bringing about a significant rise in scope 2 emissions. These emissions grew by 13% compared to 2012. The increase in the national grid is a result of increased use of thermoelectric power stations in Brazil during the period, as a result of dry weather. • Revisions in GWPs (international conversion factors) negatively impacted Braskem’s emissions, but in intensity, the impact was less than 1%. Every year Braskem has been strengthening its efforts to engage stakeholders across its value chain on climate change, seeking to raise awareness and further understanding of this matter. With a greater focus on Suppliers, it has been enhancing its initiati- ves in conjunction with the CDP Supply Chain, focusing on large suppliers, and with CEBDS (Brazilian Business Council for Sustaina- ble Development), focusing on small and medium suppliers. These initiatives aim to build capacity, interest and motivation for GHG emissions inventories to be issued, with energy consumption and emission reduction opportunities being identified. The following table on other indirect emissions summarizes the scope 3 emissions data collected by Braskem – these are the emissions that occur outside the Company’s operations, in its value chain. 116 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT OTHER INDIRECT GREENHOUSE GAS EMISSIONS (GHG) (SCOPE 3) G4-EN17 Emission Sources (1) Emissions (tCO2e) 2013(3) 2012 2011(2) 1 – Acquired goods and services 6,274,001 / 6,279,823 6,088,693 5,655,642 2 – Capital assets 3 – Activities relating to fuels and energy 4 – Upstream transportation 5 – Waste generated by operations 6 – Business travel 7 – Employee Commuting (to and from work) 8 – Operation of rented assets 9 – Downstream transportation 10 – Processing of sold products 12 – Final disposal of sold products 15 – Investments Total Scope 3 98,382 / 98,382 530,279 / 530,280 289,464 / 321,168 40,787 / 44,202 4,701 / 4,699 12,030 / 12,042 2,873 / 2,875 313,048 / 292,875 3,395,802 / 3,395,802 550,794 / 550,794 727 / 730 159,997 494,165 659,512 71,430 8,080 7,285 4,482 766,816 2,970,324 531,195 237,855 43,582 404,524 169,112 111,485 9,605 8,192 4,814 587,748 3,552,457 800,066 nd 11,512,889 / 11,533,672 12,001,846 11,347,227 ni: not inventoried (1) Each category presents a set of possible emission sources; numbering is in the order presented by the GHG Protocol Corporate Value Chain Standard. Categories 11, 13 and 14 do not apply to Braskem. Any GHG trades, such as purchases, sales or transfers of offsets or licenses are excluded. (2) Emissions for 2011 were estimated for the international units, based on the 2012 intensity, because of the lack of availability of actual data. (3) Results for 2013 are shown in two versions, the first using the conversion factor from before 2014 (to allow for direct comparison with other years) and the second, in italics, using the 2014 conversion factor. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 117 Braskem is working in conjunction with Suppliers to obtain the better quality coal, which has led to significant gains for the Com- pany. Among them, a highlight is the increase in the consumption of this resource to the detriment of others that are less competitive, with the guarantee that atmospheric emissions will remain at pre- sent levels. In 2013, Braskem began a See Balance® study that will compare coal to several other fuels, in terms of the sustainability aspects associated to its use. CARBON FOOTPRINT In 2012, Braskem published the carbon footprint of five fami- lies of products (HDPE, LDPE, LLDPE, PP and PVC) (see results in the 2012 Annual Report: http://rao2012.braskem.com/relatorio. asp?subrelatorio=42&idioma=in). The carbon footprint allows one to evaluate the total greenhouse gas (HG) emissions, that is, it shows the amount of carbon dioxide equivalent released in the production of any determined product. Knowing the carbon footprint of its products helps the Company compare them with other alternatives, as well as identify the stages responsible for the highest levels of GHG emissions in the production chain and make business decisions. The data will also have benefits for Clients, the plastics transformation industry, who can then calcu- late the carbon footprint of their products. Other emissions G4-EN20 | G4-EN21 In addition to GHG emissions, Braskem also manages other atmos- pheric emissions for which it is responsible, substances that destroy the ozone layer and local pollutants (NOx, SOx, etc). See data in Appendices. RISKS AND OPPORTUNITIES G4-EC2 Financial implications and other risks and opportunities for Braskem, as a result of climate change, are related to different factors, such as the Brazilian National Policy on Climate Change, the fees or costs of carbon, emissions reporting, standards and regulations for product efficiency and the supply chain. These were described in the Annual Report for 2012 – http://rao2012.braskem.com/relatorio.asp?subrelatorio=42 &idioma=in. In 2013, new factors were identified and are described below. Industry Plan (Brazil) – Details of the GHG Work Plan for Industry were approved in a meeting of the Industry Plan Technical Commit- tee (CTPIn), instituted at the federal level to create a plan to reduce production-related GHG emissions. This is part of the National Policy on Climate Change and is included in the Greater Brazil Plan, created to promote the development of Brazilian industry and tech- nology. The plan provides financing at lower than average interest rates, as well as fiscal incentives to businesses who commit to GHG reduction goals. The objective is to reduce projected emissions by 5% by 2020, in specific sectors. Initially, the aluminum, lime, cement, iron and steel, paper and cellulose, chemical and glass sectors have been included. Carbon tax – The legislative branch of the USA is considering a tax on carbon. Resources received would be earmarked for the deve- lopment of clean technologies and compensation for consumers, in case product prices increase. Although there is little chance of it being approved in its original form, the bill indicates that climate change continues to be a relevant international issue. In addition to its operational improvement efforts, Braskem also contributes to the mitigation of emissions by manufacturing products from renewable feedstocks. Coal and the energy grid in Rio Grande do Sul – Coal reserves in the south of Brazil, estimated at 23 billion tons, can guarantee the supply for a very large thermoelectric complex. During the present Ten-Year Energy Expansion Plan, which goes to 2019, it would be possible to increase thermoelectric generation from mineral coal from the present 1,765 megawatts to nearly 4,500 megawatts, as long as no barriers to its participation in auctions planned to meet demand for the period are created. Over the last two years, mineral coal-fuelled projects were barred from participating in new energy auctions. 118 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 119 WASTE In 2013, the rate of solid, liquid and viscous waste generation was 2.20 kg/t of manufactured product, representing an improvement of 3.5% compared to the previous year. After identifying the types of waste generated, Braskem seeks solutions for those that may be used for composting, reuse, recycling or recovery, turning certain industrial waste into business opportunities, which improves this indicator’s results. In 2013, Braskem was able to recover 7.5 million kg of waste generated, which is equal to 21% of all waste gene- rated in the year (same calculation base as the waste generation intensity indicator). WASTE GENERATION – Kg/t 5.78 4.52 3.53 3.28 3.41 3.38 3.10 2.67 2.40 2.21 2.28 2.20 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: this index was not audited, however the disposal data presented in the “TOTAL WEIGHT OF WASTE, CLASSIFIED BY TYPE AND METHOD OF DISPOSAL” table was, because these datasets use different collection mechanisms. The index takes into account waste generated, divided by total production, excluding finished product transferred internally within Braskem. TOTAL WEIGHT OF WASTE, CLASSIFIED BY TYPE AND METHOD OF DISPOSAL G4-EN23 Waste (thousands of kg) Hazardous waste Non-hazardous waste Hazardous waste Non-hazardous waste Hazardous waste Non-hazardous waste 2013 2012 2011 Composting Reuse Recycling Recovery (including energy) Incineration Sanitary/industrial landfill Underground injection of waste On-site storage Others (1) Total 112 136 1,611 2,077 17,071 2,157 — 186 4,501 27,851 194 154 18,247 1,092 192 8,995 8,568 1 5,149 42,592 409 130 3,208 3,573 10,632 5,049 — 334 4,040 36,519 125 115 4,529 592 920 9,063 1,933 140 — 17,417 697 158 2,659 2,730 13,795 2,842 — 388 2,329 25,597 277 15 4,920 704 27 8,334 279 15,040 1,889 31,485 (1) Others: autoclave; vacuum thermal demercuration; co-processing of waste in rotating clinker furnaces for cement manufacturing; decontamination of soil by thermal desorption. Waste generation at the plants is not proportional to production. It is affected by seasonal events, such as maintenance shut-downs, equipment cleaning, among others. 120 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT SIGNIFICANT SPILLS G4-EN24 Two significant spills were recorded in 2013. In both cases there was an environmental impact and the environmental authorities were notified. Braskem acts pro-actively to mitigate potential and actual impacts caused by spills in its plants. SIGNIFICANT SPILLS(1) LOCATION DESCRIPTION VOLUME (L) MATERIAL SPILLED IMPACT AND CORRECTIVE ACTIONS Rio Grande do Sul Spill in the product lines and drainage network of effluents at the green ethane unit. Under investigation. It has not yet been possible to determine the volume, as the spill was chronic and there were still primary sources at the finalization of this reporting. Ethanol The analysis of a sample of wells in the site periphery did not show signs of contamination. In 2014 an investigation will be carried out in the operational area (where the contamination is concentrated), to demarcate the plumes. An instrument-based method for inspecting the subterranean network (PIG) is being evaluated for the identification of the spill points. Bahia(2) Explosion followed by a fire on the Golden Miller ship, docked at the public gas loading terminal in the port of Aratu- Candeias, as it was completing a load of propane. The fire may have been fed by fuel oils and lubricants in the reliquefying unit (compressor house). Two of the crew members had minor injuries. 18 big bags with nearly 400 kg of oily waste had been logged. The total has still not been made available by the responsible party (assembler) Oils (hydraulic, diesel and fuel) from the ship, as a result of water used for fire-fighting entering the tanks. Tthere was no loss in the propane and/or butadiene tanks (products sold by Braskem). The effects vary in intensity, type, and duration, based on several factors. Containment and removal measures are underway. Air quality monitoring in the area does not indicate any impact. Fishing was suspended for two day at the event site , for the protection of individuals. (1) Spills reported to the environmental authorities are considered significant if they caused contamination of the soil and the subsoil, and if there a provision of financial resources was made to treat the problem. (2) Although Braskem is not responsible for this event, it has been mentioned as the Companyis a participant of the Port’s Integrated Emergency Plan. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 121 ENVIRONMENTAL PROTECTION To control potential environmental impacts, Braskem has a management system designed to conform to all pertinent laws for atmospheric emissions, industrial effluents and solid waste. In addition, the Company carries out semi-annual groundwater, surface water, sediment, atmospheric emission and air quality, and fauna and flora monitoring activities at the environmental areas adjacent to the complexes in Rio Grande do Sul, Alagoas and Bahia. ENVIRONMENTAL PROTECTION INVESTMENTS AND EXPENSES G4-EN31 In 2013, Braskem made the following environmental protection expenditures: TOTAL INVESTMENTS AND EXPENSES RELATED TO ENVIRONMENTAL PROTECTION, CLASSIFIED BY TYPE (THOUSANDS OF BRAZILIAN REALS/YEAR) G4-EN31 80,832 17,730 49,000 943 2,292 147,718 12,994 18,776 45,200 158 435 195,683 26,800 35,399 59,402 46,000 568 6,504 190,700 Treatment of effluents and waste disposal Emissions treatment Environmental Licenses Depreciation and expenses with maintenance and operation, including materials, services and expenses with personnel for this purpose Environmental liabilities (total cleaning costs, including those related to spill remediation actions) Other environmental management costs(1) Investments in the environment 2011 2012 2013 (1) Energy and water for administrative areas, environmental monitoring that include groundwater management, extra expenses for green purchases, external certification of management systems, external services and other costs, personnel for general environmental management activities, personnel used for education and training. Note: investments in the environment began to be reported in 2013. 122 | BRASKEM | ANNUAL REPORT 2013 | ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT Monitoring of the ground water, surface water, sediments, atmospheric emission, air quality and fauna and flora takes place at the environmental stations located adjacent to the centers in RS, AL and BA Habitats protected or restored in the vicinity of the plants in Brazil G4-EN13 Social, environmental, educational and cultural projects are carried out in protected areas and around the Company’s industrial units, in regions rich in biodiversity. The Company therefore identifies, moni- tors and reports the risks associated with its industrial activities, to prevent and/or minimize their potential impact. Between 2011 and 2013, 972 hectares have been protected and 50 hectares restored. ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT | ANNUAL REPORT 2013 | BRASKEM | 123 ABOUT THE REPORT This Braskem Annual Report was prepared in accordance with the Core level of the Global Reporting Initiative (GRI) G4 Reporting Guidelines. ABOUT THE REPORT This Braskem Annual Report was prepared in accordance with the Core level of the Global Reporting Initiative (GRI) G4 Reporting Guidelines. Information about consultations with stakeholders of the Company and the identification of relevant issues for publication are described in the introduction of this document. Considerations: • The data published refer to Braskem’s operations, located in Brazil, the United States and Germany, for the period from January 1 to December 31, 2013. • Data referring to the Ethylene XXI project (Braskem-Idesa), in Mexico, were included in the indicators of Social Development / Team Members, since the number of Team Members is significant and also in the biodiversity data, an issue defined as material only in that country. Other material results were presented as well. • As was the case with the 2012 report, the operations of quantiQ, a company controlled by Braskem, and which was being offered for sale during most of 2013, were not consolidated. This decision was reviewed due to market timing concerns, and therefore con- solidation will be begun in future reports. The number of Team Members is small compared to Braskem’s total workforce (3.5% of the total). • Also not taken into account in this report are the assets resulting from the acquisition of two plants in Brazil and two in Argentina from Solvay, which occurred in December 2013, as it is still subject to approval by market regulatory authorities in both countries. The external assurance of this report was carried out by KPMG. • Data referring to business offices were reported only in the G4-10 profile item, because their Team Members represent 0.5% of the Company’s workforce. CONTACT INFORMATION FOR QUESTIONS, SUGGESTIONS OR CRITICISMS Mailing address: Rua Lemos Monteiro, 120 – Butantã – São Paulo (SP) Edifício Odebrecht São Paulo – CEP 05501 - 050 Electronic addresses: imprensa@braskem.com.br and braskem-ri@braskem.com.br. 126 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT KEY INDICATORS 2013 ECONOMIC DEVELOPMENT Production - Main Products (t) PE PP PVC Caustic Soda Basic Petrochemicals Consolidated net revenue (R$ billions) EBITDA (R$ billions) Total investment (R$ billions) Patents applications (total accumulated in 2013: 764) SOCIO-ENVIRONMENTAL DEVELOPMENT(3) 2013 2012 2011 2,580,290 3,413,079 582,579 437,334 6,486,105 41 4.8 2.7 112 2,539,476 3,403,351 497,366 450,589 6,404,589 36.2 4 1.7 63(2) 2,391,136 2,575,676 438,895 366,923 6,010,227 32.5 3.7 2.1 30(1) 2011 6,934 1.16 10.77 Number of Team Members(4) Injury frequency rate (with and without lost time, Team Members and Partners, per million person-hours worked) Energy consumption (GJ/t of product) 2013 8,096 1.04 10.62 2012 7,364 1.04 10.59 Total energy consumption for production (GJ)(1) 190,415,279 194,865,928 177,045,806 GHG emissions (tCO2e/t of product) Direct GHG emissions (scope 1) (tCO2e) Indirect GHG emissions (scope 2) (tCO2e) Indirect GHG emissions by Third parties (scope 3) (tCO2e) Water consumption for production (m³/t product) Total water consumption (m³/year) Generation of liquid effluents (m³/t of product) Total generation of liquid effluents (m³/year) Generation of solid, liquid and viscous waste (kg/t of product) Total generation of hazardous waste (thousands of kg) Total generation of non-hazardous waste (thousands of kg) Corporate Community investment (R$ million)(1) Volume of ethanol acquired from refineries signatories of the Code of Conduct (%) 0.63 / 0.63 9,743,186 874,146 0.63 9,564,458 782,603 10,092,119 11,764,492 4.30 4.23 0.62 8,871,695 216,240 7,134,076 4.48 70,854,177 71,250,390 80,837,490(5) 1.22 1.17 19,735,053 21,061,530(1) 2.20 27,850 42,592 17.5 98 2.28 36,519 17,417 12.6 95 1.32 nd 2.67 25,597(1) 31,485(1) 16 85 (1) German and USA operations not included. (2) Data revised as a result of changes to the patent document control system. (3) Socio-environmental data for the project in Mexico are reported only in terms of the number of Team Members, given that the project is still in the construction phase. (4) Data for 2011 do not include Germany. Data for 2013 include quantiQ and Team Members already hired for future operations in Mexico. All years include international business offices. (5) Does not include Germany. ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 127 SUSTAINABLE DEVELOPMENT MACRO OBJECTIVES MACRO OBJECTIVE 2020 GOAL INITIATIVES BY 2015 PROGRESS IN 2013 Safety Be recognized as a reference in chemical, labor and process safety in the global chemical industry 2012-2015: lead the implementation of GPS – Global Product Strategy in Latin America. • No fatal work-related accidents recorded and best ever injury rate maintained: 1.04 accidents (with and without lost time) per million person-hours worked. 2012-2015: promote continual improvement in the risk rating, an index for process safety, defined by insurance companies, so as to reach an average of at least 90 points in Braskem, with all plants being above standard. 2014-2015: identify alternatives to replace substances that deplete the ozone layer. 2012-2015: keep the waste generation rate stable and remain as a sector reference. June 2015: start of the Ethylene XXI project (Braskem-Idesa, in Mexico), with a capacity of 1 million tons of gas-based PE. • Implementation of the annual audit framework of SEMPRE – Braskem’s Integrated Health, Environment and Safety System. • Elimination of 41 potential high-risk scenarios. • R$ 151 million invested in workplace safety, process safety and health. • Creation of the integrated quantitative risk analysis group in Brazil, obtaining direct gains of over R$ 3 million and indirect gains of R$ 20 million in reduction of corporate risks. • Best historical result in waste generation intensity, accumulating a 62% improvement from 2002 to 2013. 7.5 million kg of waste was re-used (21% of the total). • Braskem-Idesa reached 58% completion of the construction phase. Although the plan was for 68% completion, this is not expected to delay the beginning of operations. Approximately 10 thousand persons worked on the project in 2013 – 90% of whom are from neighboring Communities. • Acquisition (subject to the approval of the regulatory authorities) from Solvay, of two plants in Brazil and two in Argentina, which will increase the production capacity for PVC by 42% and of soda by more than 60%. • Announcement of the expansion of a linear low density polyethylene (LLDPE) production line at the Petrochemical Complex in Camaçari (Bahia), with an additional annual capacity of 120 thousand tons. Of this total, 100 thousand tons will be part of the Braskem Flexus family, the Company’s brand of metallocene-based polyethylene. Economic and financial results Be among the three largest producers of thermoplastic resins in the world and guarantee profitability that will sustain the perpetuity of the business, retaining the classification of Investment Grade. Additional details can be found in Growth strategy / Strategic objectives. 128 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT MACRO OBJECTIVE 2020 GOAL INITIATIVES BY 2015 PROGRESS IN 2013 Post consumption Be recognized as an important agent that contributes to the recycling of plastics. 2012-2015: to define a business and partnership model for the first energy recovery (from recycled waste) unit in Brazil. 2012-2015: strengthen the socio- environmental project which supports 15 mechanical recycling cooperatives in the Brazilian states of Rio Grande do Sul, Sao Paulo, Rio de Janeiro, Bahia and Alagoas. 2013-2015: make the Energy Valuation Unit (UVE) in Mauá (Sao Paulo/Brazil) viable, in partnership with Odebrecht Environmental. 2012-2013: continue to support the chemical recycling project. Renewable resources Be recognized as a leader in the manufacture of chemical products and thermoplastic resins from renewable raw materials and remain as the largest producer in the world of thermoplastic resins from renewable sources. 2012-2015: continuation of projects in Innovation and Technology (I&T) for new products and processes based on raw materials from renewable sources. 2014-2015: launch a sustainability management model for Starch Suppliers. • Review of Braskem’s position regarding recycling. Mechanical recycling has become a priority, followed by chemical recycling and energy recovery. • Lecture cycle was completed on the subject of the Brazilian National Solid Waste Policy (PNRS) s to train commercial teams. 65 Team Members took part in 2013. • Conclusion of research on chemical recycling technologies, with the support of the University of Rio de Janeiro-UFRJ. • Investment to connect factories in the Petrochemical complex in Triunfo (Rio Grande do Sul/Brazil) and equipment acquisition to launch the low density green polyethylene (LDPE) line at the beginning of 2014. The annual production of the new resin will be nearly 30,000 tons. • Signed agreement with Genomatica, a North American biotechnology research company, for the joint development of bio-based butadiene. If the partnership yields positive results, a pilot plant and demo plant will be built over the coming years. • 2013 Sustain Award: “I’m green™” green polyethylene was the winner in the Products categoryof the sustainable products and services ranking of the 6th Forum for Sustainable Development – Sustain 2013. • Even with the increase on 2012 in the volume of ethanol acquired for the production of Green PE, a high percentage of supply from signatories of Braskem’s Code of Conduct for Ethanol Suppliers was maintained – with an average of 98% for the year, exceeding the goal of 90%. Refineries representing 85% of the ethanol purchased between July, 2011 and June, 2012 were audited by third parties. ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 129 MACRO OBJECTIVE 2020 GOAL INITIATIVES BY 2015 PROGRESS IN 2013 Water efficiency Continue to be a reference in the use of water resources in the global chemical industry. 2012-2015: continue improving Braskem’s water use rate and percentage of water reuse. 2012-2015: give continuity to remediation projects. Braskem’s remediation management process focuses on the prevention of liabilities and the mitigation of detected possible problems. New projects present improvement mechanisms to eliminate impacts. 2012-2015: reduce the intensity of emissions. 2012-2015: maintain progress in CDP’s “transparency” and “results” categories. 2012-2015: obtain our first carbon credits (deadline extended because of the instability of the carbon market and the decline in credit attractiveness). Climate change Be amongst the best large chemical companies in the world in terms of greenhouse gas emissions (GHG) intensity and a major sequestrator of GHG emissions, as a result of the use of renewable raw materials. • Aquapolo and Agua Viva water reuse projects operated throughout the year, allowing Braskem to avoid extracting 13 billion liters of water from the environment. This volume is the equivalent of that consumed by 178 thousand people. • The liquid effluent generation indicator improved by 38% over the 2002 to 2013 period, but the water consumption rate increased 3% in the same period. • The intensity of GHG emissions (scopes 1 and 2) maintained the same performance as the previous year. • Braskem’s greenhouse gas emissions inventory, audited by a third party, obtained the gold classification in the GHG Protocol Brazil for the third straight year. • Braskem reached the position of CDP Brazil leader in 2013, with a score of 99% in transparency and an A in results. • New projects to expand our offer of green products underway (see Renewable Resources, in this table). Energy efficiency Be amongst the world’s best large chemical companies in terms of energy consumption intensity and a major user ofrenewable energy. 2012-2015: continue to reduce our energy consumption intensity. 2012-2016: continue to evaluate the viability of the energy cogeneration from biomass and urban solid waste. • In spite of efforts spent, the energy consumption rate was 10.61 GJ/t of manufactured products, 3% above the annual goal, representing an increase of 0.2% compared to the previous year. However, this rate shows an overall improvement of 12% between 2002 and 2013. 130 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT MACRO OBJECTIVE 2020 GOAL INITIATIVES BY 2015 PROGRESS IN 2013 Local development Be recognized by the communities surrounding our operational sites and by society in general for our contribution to the improvement of human development, as shown by achieving the reputation level of “excellent” in the Citizenship Dimension of our Reputation Survey (RepTrakTM Pulse). 2012-2015: take the social inclusion through recycling program to the national level in Brazil, strengthening the mechanical recycling of plastic. • Braskem’s 2013 Social investments in Brazil: R$17.5 million, R$7 million of which were donated to the Odebrecht Foundation, R$ 6.3 million invested in corporate community investment projects, R$ 3.8 million in state-incentivised sponsorships and R$ 400 thousand corresponding to match funding. 2012-2015: review Corporate Community Investment programs, to ensure they are aligned with Braskem’s core contributions for the improvement of the Human Development Index (HDI), as well as the Global Compact and the Millennium Goals, in each location where the Company does business. • Secured over R$ 4 million of external resources for Brazilian social projects , from BNDES, Porto Alegre City, Bunge, SEBRAE, Cargill Foundation, among others. • Formalized the General Cooperation Agreement between Braskem and Sebrae, opening up the investment of 30% by Braskem and 70% by SEBRAE, to encourage the development of small businesses, cooperatives and associations with potential to strengthen the plastics value chain. • Ser+realizador – Social Inclusion through Recycling project: expansion of the project to Rio de Janeiro with the inauguration of a sorting station, in partnership with SuperVia (Odebrecht TransPort company); 100% of the waste collectors that were supported for over a year increased their income; 84 cart drivers in Porto Alegre were relocatedto new jobs; 511 waste collectors were trained; 23 thousand persons participated in awareness raising technical visits to co-operatives and recyclers. • Forest Factory: more than 122 thousand seedlings produced; 16.8 ha of planted area with over 100 thousand of the seedlings produced; 517 persons trained and more than 10,000 people participated in awareness raising activities. • Edukatu – Learning Network for Responsible Consumption and Sustainability: garnered institutional support from the Brazilian Ministry of the Environment and the Ministry of Education; 1,516 persons participated in the Network, from 583 schools in 27 Brazilian states and 191 Universities, NGOs and municipal offices; more than 3 thousand people participated in responsible consumption awareness raising activities. ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 131 MACRO OBJECTIVE 2020 GOAL INITIATIVES BY 2015 PROGRESS IN 2013 Development of Solutions Be recognized as a company that supports its Clients in the development of environmental and social solutions; contribute to the perception of plastic as a solution to sustainable development due to its potential to improve people’s lives. 2013-2014: progress in the use of the LCA tool with over 12 studies (Green PE, raffia sacks, chocolate milk packaging, social and environmental assessment of Bahiamido – a corn starch production cooperative –, beer can lids, 200-ml disposable cups and 500-ml fastfood cups, surgical kits, bubbledeck, Vitopaper and manholes). 2014-2015: launch the program to promote the image of plastic. 2014-2015: launching of the program to identify environmental and social gains in each market development. • Life Cycle Assessment (LCA) studies being carried out in all Business Units. Of the 38 studies in the pipeline, 19 of them were concluded, 11 are under way and eight are in planning stages. • Inaugural event of the Brazilian Corporate LCA Network, a forum led by Braskem designed to disseminate the use of the LCA tool and the creation of a Brazilian Database (Brazilian LCA Program). • Developed and published a video covering LCA concepts (see http://www.youtube.com/ watch?v=HBWeH8FLzPg) • Concluded the LCA guide for executives, in partnership with other companies. 132 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT MACRO OBJECTIVE 2020 GOAL INITIATIVES BY 2015 PROGRESS IN 2013 Strengthening of practices Be recognized as a corporate leader in Brazil, as well as a global industry leader, for our contribution to sustainable development. 2013-2015: continue to be a part of the DJSI Emerging Markets Index. 2013-2015: become a benchmark in Environment and Climate Management in ISE. • Braskem listed on the Dow Jones Sustainability Index Emerging Markets, the leading index used by investors interested in companies committed to sustainable development, both for the 2012 – 2013 period as well as the 2013 – 2014 period. As part of this analysis, Braskem was also included in the 2014 edition of the RobecoSAM Sustainability Yearbook, which recognizes the most sustainable companies in every industry in the world. 2013-2015: structured management in organizations that focus on sustainable development. 2013-2015: to continue to contribute to the definition and implementation of public policies (examples: PNRS (Brazilian National Solid Waste Policy), Chemical Safety and Global Compact for Sustainable Development). • Braskem was listed for the 9th time in a row on the Corporate Sustainability Index (ISE), with an above average score on the index and in a benchmark position in the climate change category. For the third time in a row, the Company is also listed on the ICO2, which measures transparency and efficiency of GHG emissions of the companies on the IBrX-50. Both the ISE and the ICO2 are BM&FBovespa market indexes. • Braskem was recognized for its actions in sustainability, by the following media outlets: Exame Magazine’s Sustainability Guide, Amanhã Magazine, Environmental Analysis and Época Magazine’s Business Annual. • Creation of the Technical Chamber of Materials on CEBDS, with Braskem presiding, to promote life cycle thinking, innovation in the development of new solutions and appropriate management of waste. • In addition to assuming the presidency of the Brazilian Global Compact Committee, Braskem is now part of a group of LEAD companies, created by the UN to promote corporate attention to the practice of Global Compact Principles. • Support when elaborating the chemical industry contributions guide for the ICCA Energy Climate Change group and participation in COP19, a United Nations multilateral conference on climate change, representing the ICCA in an event that discussed avoided carbon emissions. ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 133 GRI G4 CONTENT INDEX GENERAL STANDARD DISCLOSURES Indicator Description STRATEGY AND ANALYSES Response and/or Location External Assurance G4-1 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 Company. Message from the Business Leader ORGANIZATIONAL PROFILE G4-3 G4-4 G4-5 G4-6 G4-7 G4-8 G4-9 G4-10 G4-11 Name of the organization. Introduction Primary brands, products, and/or services. Location of the organization’s head office. Number of countries in which the organization operates and the names of the countries where its main operations are located or are particularly relevant to the sustainability issues brought up in the report. Nature and legal form of ownership. Markets served (including geographic breakdown, sectors served and types of clients/beneficiaries). Size of the organization, including the number of employees and operations, net sales, total capitalization (debt and net equity), products or services rendered. Total number of employees by employment contract, gender, and region. Percentage of employees covered under a collective bargaining agreement. Profile Profile Profile Profile Profile Profile Economic and Financial Performance Team Members profile Third-party data were not provided, as the data recording system needs to be improved. This information will be published in the 2014 Annual Report. 99.5% of the Team Members in Brazil, 56% in Mexico, 39% in Germany, and 10% in the USA are covered by collective bargaining agreements. G4-12 Organization’s supply chain. Suppliers The symbols used identify the procedures that have been applied to carry out Assurance: Procedures (f) Procedures (a) and (e) Procedures (a), (b) and (c) See the description of each procedure in the Limited Assurance Report of the Independent Auditors, on page 148. 134 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT GENERAL STANDARD DISCLOSURES Indicator Description ORGANIZATIONAL PROFILE Response and/or Location External Assurance G4-13 Main changes during the period covered by the report with respect to size, structure, share structure or participation, or the organization’s suppliers, including: changes to the location of operations (openings, closing or expansion of installations); changes to the capital structure and other activities aimed at capital formation, preservation or alteration; changes to the location of suppliers or involving supplier relations, including the screening and exclusion process. Profile G4-14 Description of whether and how the precautionary principle is addressed by the organization. G4-15 G4-16 Externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses. Memberships in associations (such as industry associations) and national or international advocacy organizations in which the organization: holds a position on the governance body; participates in projects or committees; provides substantive funding beyond routine membership dues; views membership as strategic. IDENTIFIED MATERIAL ASPECTS AND LIMITS In principle, and in accordance with its Health, Safety, Environment, Quality, and Productivity Policy, Braskem does not produce, handle, utilize, market, transport, or dispose of any product unless it can do so in a safe manner and with a minimal impact on the environment. Collaborative initiatives and voluntary commitments Obs: the above-mentioned associations are voluntary and multi-stakeholder in nature. Collaborative initiatives and voluntary commitments Obs: the above-mentioned associations are voluntary and multi-stakeholder in nature. G4-17 G4-18 G4-19 G4-20 a. List of all entities included in the consolidated financial statements or equivalent documents in the organization. B. Indicate whether any of the entities included in the consolidated financial statements or equivalent documents in the organization were not covered by the report. a. See Note 2.1.2.a of the Financial Statements, available at http:// www.braskem-ri.com.br/Download. aspx?File=6ooA4fBcIiTNZ4HqLgHEfw== b. See About This Report Process for defining the content of the report and the limits of the aspects included: Process for implementing the principles for defining the content of the report. Sustainability strategy Material aspects identified in the process of defining the content of the report. Sustainability strategy For each material aspect, describe the scope of that aspect within the organization, taking into account: (1) whether the aspect is material for the organization; (2) if the aspect is not material for the entire operational structure of the organization (divisions, operating units, subsidiaries and joint ventures), select one of the following two approaches and present: (i) operational structures included in the G4-17 indicator for which the aspect is not material, or (ii) operational structures for which the aspect is material; (3) any specific limitation relating to the scope of the aspect in the organization. Sustainability strategy ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 135 GENERAL STANDARD DISCLOSURES Indicator Description Response and/or Location External Assurance IDENTIFIED MATERIAL ASPECTS AND LIMITS For each material aspect, describe its scope outside of the organization, taking into account: (1) whether the aspect is material outside of the organization; (2) if so, identify the entities/elements for which the aspect is material and indicate their geographical location; (3) describe any specific limitations relating to the scope of the aspect outside of the organization. Consequences of any reformulations of data provided in previous reports, and the reasons for such reformulations (such as mergers and acquisitions, changes to the accounting period or base year, to the nature of the business or to measurement methods). Significant changes from previous reporting periods in the Scope and Aspect Boundaries. G4-21 G4-22 G4-23 The following macro objectives are material outside of the organization: Climate change, Post-consumption, Local development and Safety (safe use of the product). Braskem monitors indicators associated with these subjects outside of the organization provided that the third-party database is available and reliable. Examples of monitored data: scope 3 emissions, plastics recycled by supported recycling cooperatives, benefits to partners of social investments, and safe use of the products. The entities are geographically widespread, with the exception of local development, which is focused in the communities surrounding Braskem operations. About the report Specific restatements of performance indicators compared to previous reports are reported in the notes for each indicator. ENGAGEMENT OF STAKEHOLDERS G4-24 G4-25 G4-26 G4-27 Listing of stakeholders engaged by the organization. Sustainability strategy Basis for identification and selection of stakeholders with whom to engage. Sustainability strategy Approaches to engaging stakeholders, including frequency of engagement by stakeholder type and group, indicating whether any engagement in particular was promoted as part of the report preparation process. Principal issues and concerns that have been raised through stakeholder engagement, and the measures adopted by the organization to deal with them, including as part of the preparation of the report. Stakeholder groups that presented each of the above-mentioned issues and concerns. Sustainability strategy Sustainability strategy 136 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT GENERAL STANDARD DISCLOSURES Indicator Description Response and/or Location External Assurance REPORT PROFILE G4-28 G4-29 G4-30 G4-31 G4-32 G4-33 Governance G4-34 G4-39 Period covered by the report (for example, accounting year or calendar year), for the information presented. About the report Date of the most recent previous report (if any). Frequency with which reports are issued (annually, biannually, etc.). 2012 Annual Contact data in the event of questions relating to the report or its content. About the report Table identifying the location of the report data, specifying: (1) the “in accordance“ option chosen by the organization, (2) external verification (if any). Policy and practice relating to the search for external verification for the report; relationship between the organization and the party responsible for external verification; whether the highest governing body or the Leadership are involved in the search for external verification of the report. GRI G4 Content Index KPMG Report External verification is carried out at the request of the Leadership and is included in the set of annual goals of the Leadership responsible for preparation of the report. The organization's governing structure, including committees that report to the highest governing body responsible for specific tasks, such as advisement of the board of directors in connection with decision-making that has economic, environmental, and social impacts. Indicate whether the chair of the highest governing body is also an executive director (and if so, indicate his or her function in the organization's management and the reason for holding both positions). Corporate governance The chairman of the board of directors is not an executive director. Ethics and integrity G4-56 G4-57 G4-58 Values, principles, standards, and norms of behavior in the organization, such as codes of conduct and ethics. Odebrecht Entrepreneurial Technology Corporate governance /Ethics and integrity Describe the internal and external mechanisms adopted by the organization to request guidance regarding ethical behavior that complies with legislation, such as communication channels (for example: ombudsman). Describe the internal and external mechanisms adopted by the organization to report concerns regarding unethical behavior or behavior that does not comply with legislation, and matters relating to organizational integrity, such as communicating concerns through hierarchical channels, mechanisms for reporting irregularities, or reporting channels. Corporate governance /Ethics and integrity Corporate governance /Ethics and integrity ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 137 SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance Material Aspects: All Macro Objectives: All G4-DMA Disclosures on management approach Material Aspects: Economic performance Macro Objectives: Economic and financial results G4-EC1 Direct economic value generated and distributed G4-EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change a. Materiality of Aspects: http://www.braskem. com/sustainabilitymateriality b. Management, targets and initiatives About the report / Sustainable development macro objectives, and http://www.braskem.com.br/ site.aspx/braskem-voluntary-commitments c. Management evaluation: Social Development. Team Members. Performance Management Economic and Financial Performance Energy and climate change (GHG management)/Risks and opportunities Additional information about this indicator is available in the CDP 2013 report at https://www.cdproject.net/ sites/2013/35/2135/Investor%20CDP%20 2013/Pages/DisclosureView.aspx G4-EC4 Financial assistance received from government Economic and Financial Performance The data is not broken down by country, as no significant aid is received outside of Brazil. Material Aspects: Market Presence Macro Objectives: Local development G4-EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation Team Members/Remuneration Breakdown by gender is not provided as Braskem’s standard entry level wage is the same for men and women. G4-EC6 Proportion of senior management hired from the local community at significant Locations of operation Half of the leaders in Brazil are local, meaning that they were born in the same state in which they are currently located. The state with the greatest number of local leaders is Rio Grande do Sul, 70%, followed by Bahia, 56%, São Paulo, 49%, Alagoas, 25% and Rio de Janeiro, 11%. In Germany, The United States, and Mexico, the representation of local leaders is 48%, 25% and 35%, respectively. Braskem considers senior management to consist of all positions above Manager. The symbols used identify the procedures that have been applied to carry out Assurance: Procedures (f) Procedures (a) and (e) Procedures (a), (b) and (c) See the description of each procedure in the Limited Assurance Report of the Independent Auditors, on page 148. 138 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance Material Aspects: Indirect Economic Impacts Macro Objectives: Local Development G4-EC7 Development and impact of infrastructure investments and services supported Communities G4-EC8 Significant indirect economic impacts, including the extent of impacts Solutions for Clients and Development of expansion projects This information is not broken down because all investments were in kind (donated money or equipment) and all services offered were free. Material Aspects: Purchasing Practices Macro Objectives: Local Development G4-EC9 Proportion of spending on local suppliers at significant locations of operation Suppliers Braskem has defined local suppliers to be those who are located in the same country as the Braskem unit that acquired its products or services. Material Aspects: Materials Macro Objectives: Renewable resources G4-EN1 Materials used by weight or volume G4-EN2 Percentage of materials used that are recycled input materials The values used are not disclosed, as this is commercially sensitive information. The principal non-renewable* direct materials used by Braskem are: naphtha, condensate, etano, propane, HLR, and sodium chloride. Braskem also uses ethanol manufactured from sugar cane to produce ethylene from a renewable source, thus reducing its demand for non-renewable resources. *Direct materials: those present in the final product. Non-renewable materials: resources that are not renewed at the same rate at which they are consumed, such as minerals, metals, petroleum, coal, gas, etc. Braskem´s strategy for replacing virgin raw materials consists of investment in renewable raw materials; as a result, no raw materials are obtained from recycling. At any rate, re-use is maximized at the industrial plants through the use of return flows in the productive process, which is the equivalent of internal recycling. For the future, investments are being made in energy and chemical recycling. ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 139 SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance Material Aspects: Energy Macro Objectives: Energy efficiency G4-EN3 Energy consumption within the organization Energy and climate change (GHG management) It has not yet been possible to report this indicator for the international plants due to the difficulty of obtaining data in the necessary format. Deadline for inclusion: 2014. G4-EN5 Energy intensity G4-EN6 Reduction of energy consumption G4-EN7 Reductions in energy requirements of products and services Material Aspects: Water Macro Objectives: Water efficiency G4-EN8 Total water withdrawal by source Energy and climate change (GHG management) Energy and climate change The calculation of reductions was carried out based on the difference between fuel consumption before implementation of the initiative and fuel consumption after the implementation of the initiatives. Solutions for Clients Reductions are estimated by comparing the ‘before’ and ‘after’ scenarios for the use of the resins in question. Water Water G4-EN9 G4-EN10 Water sources significantly affected by withdrawal of water Percentage and total volume of water recycled and reused Water Material Aspects: Biodiversity Macro Objectives: n/a (material only for Mexico) G4-EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas The main impact of Braskem´s operations on biodiversity takes place when new units are built in areas where there was no previous industrial activity, such as in Mexico, where Braskem-Idesa built a petrochemical complex. The measures to reduce impacts on local biodiversity were described in the 2012 Annual Report (http://rao2012.braskem. com/relatorio.asp?subrelatorio=44). The current status is described in, Development of expansion projects G4-EN13 Habitats protected or restored Environmental protection G4-EN14 Total number of iucn red list species and national conservation list species with habitats in areas affected by operations, by level of extinction risk There is only one species at risk of extinction affected by Braskem´s operations, the Ceratozamia miqueliana (flora, status critical), in Mexico. Development of expansion projects 140 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance Material Aspects: Emissions Macro Objectives: Climate change G4-EN15 G4-EN16 Direct greenhouse gas (ghg) emissions (scope 1) Energy indirect greenhouse gas (ghg) emissions (scope 2) G4-EN17 Other indirect greenhouse gas (ghg) emissions (scope 3) G4-EN18 Greenhouse gas (ghg) emissions intensity G4-EN19 Reduction of greenhouse gas (ghg) emissions Macro Objectives: Climate change, Safety Energy and climate change Braskem reports data from operations at which it has operating control. To become familiar with the complete methodology, see the Braskem report made to the Brazilian GHG Protocol Program: http:// registropublicodeemissoes.com.br/index. php/participant/41 Energy and climate change (GHG management) Energy and climate change (GHG management) G4-EN20 Emissions of ozone-depleting substances (ods) Energy and climate change (GHG management) Macro Objectives: Energy, Safety G4-EN21 NOX, SOX, and other significant air emissions Energy and climate change (GHG management) Material Aspects: Effluents and waste Macro Objectives: Water efficiency G4-EN22 Total water discharge by quality and destination Water: use and disposal Macro Objectives: Safety G4-EN23 Total weight of waste by type and disposal method Waste G4-EN24 Total number and volume of significant spills Waste ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 141 SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance Material Aspects: Products and services Macro Objectives: Application development G4-EN27 Extent of impact mitigation of environmental impacts of products and services Solutions for Clients Macro Objectives: Post consumption G4-EN28 Percentage of products sold and their packaging materials that are reclaimed by category Material Aspects: Conformity Macro Objectives: Strengthening of practices G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for non- compliance with environmental laws and regulations Braskem works with waste collector cooperatives in Brazil to encourage recycling of its products and packaging. See the volumes recycled in, Communities. These volumes still do not represent a significant percentage of the total sold by Braskem. The Company was not sentenced to pay any fines or to comply with any non- monetary sanctions during the period in question. For the purposes of this report, the same materiality criterion was adopted as was used in the Reference Form instituted by the Securities Commission (“CVM”) under the terms of Normative Ruling CVM 480/2009 – R$ 60 million. For environmental matters, the value of R$ 10 MM was adopted. Material Aspects: General Macro Objectives: Climate change, energy, water G4-EN31 Total environmental protection expenditures and investments by type Environmental protection Material Aspects: Employment Macro Objectives: Economic and financial results G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region Team Members/New hires and dismissals 142 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance The data recording system for health and safety does not break down the data by gender. The method used to monitor absenteeism is being revised, and therefore it was not possible to obtain this item of data. Deadline for inclusion: Annual Report 2015 Material Aspects: Workplace Health and Safety Macro Objectives: Safety G4-LA5 Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety programs Workplace health and safety G4-LA6 Type of injury and injury rates, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender Workplace health and safety Material Aspects: Local communities Macro Objectives: Local Development G4-SO1 G4-SO2 Percentage of operations with implemented local community engagement, impact assessments, and development programs Growth strategy/Braskem-IDESA Communities Process safety/Impacts on Communities Operations with significant actual and potential negative impacts on local communities Growth strategy/Braskem-IDESA; Process safety/Impacts on Communities Material Aspects: Anti-corruption measures Macro Objectives: Strengthening of practices G4-SO5 Confirmed incidents of corruption and actions taken Corporate governance /Ethics and integrity Material Aspects: Public Policies Macro Objectives: Strengthening of practices G4-SO6 Total value of political contributions by country and recipient/beneficiary The area of Public Policy is material for operations in Brazil. Because 2013 was not an election year, only insignificant amounts were donated. The total donations made by the Company in the most recent election year are available on the Open Policy site: http://www.politicaaberta.org/ entidade/42150391000170/BRASKEM_S/A ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 143 SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance Material Aspects: Unfair Competition Macro Objectives: Strengthening of practices G4-SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes Zero Material Aspects: Conformity Macro Objectives: Strengthening of practices The Company was not sentenced to pay any fines or to comply with any non-monetary sanctions during the period in question. For the purposes of this report, the same materiality criterion was adopted as was used in the Reference Form instituted by the Securities Commission (“CVM”) under the terms of Normative Ruling CVM 480/2009 – R$ 60 million. For environmental matters, the value of R$ 10 MM was adopted. G4-SO8 Monetary value of significant fines and total number of non-monetary sanctions for non- compliance with laws and regulations Material Aspects: Client Health and Safety Macro Objectives: Safety G4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement Chemical safety/Product Responsibility G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes Material Aspects: Labeling of Products and Services Macro Objectives: Safety G4-PR3 G4-PR4 Type of product and service information required by the organization’s procedures for product and service information and labeling and percentage of significant product and service categories subject to such information requirements Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes Chemical safety/Product Responsibility Chemical safety/Product Responsibility Chemical safety/Product Responsibility 144 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT SPECIFIC STANDARD DISCLOSURES Indicator Description Response and/or Location Omissions External Assurance Material Aspects: Marketing Communications Macro Objectives: Strengthening of practices G4-PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes Zero Material Aspects: Conformity Macro Objectives: Strengthening of practices The Company was not sentenced to pay any fines or to comply with any non- monetary sanctions during the period in question. For the purposes of this report, the same materiality criterion was adopted as was used in the Reference Form instituted by the Securities Commission (“CVM”) under the terms of Normative Ruling CVM 480/2009 – R$ 60 million. For environmental matters, the value of R$ 10 MM was adopted. G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services Material Aspects: Non-discrimination Macro Objectives: n/a, additional indicator G4-HR3 Total number of incidents of discrimination and corrective actions taken Corporate governance /Ethics and integrity Material Aspects: Mechanism for reporting human rights complaints and claims Macro Objectives: n/a, additional indicator G4-HR12 Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms Corporate governance /Ethics and integrity The symbols used identify the procedures that have been applied to carry out Assurance: Procedures (f) Procedures (a) and (e) Procedures (a), (b) and (c) See the description of each procedure in the Limited Assurance Report of the Independent Auditors, on page 148. ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 145 CORRELATION WITH THE GLOBAL COMPACT GLOBAL PACT PRINCIPLES CHAPTER AND RELATED GRI INDICATORS REPORTED BY BRASKEM Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights Corporate governance /Ethics and integrity Safety of processes G4-HR12, G4-SO1, G4-SO2 Principle 2 Make sure that they are not complicit in human rights abuses Corporate governance /Ethics and integrity Suppliers Principle 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining Corporate governance /Ethics and integrity Regarding the report/Index G4-11 Principle 4 The elimination of all forms of forced and compulsory labour Corporate governance /Ethics and integrity Strategic suppliers/raw materials Principle 5 The effective abolition of child labour Principle 6 The elimination of discrimination in respect of employment and occupation Principle 7 Businesses should support a precautionary approach to environmental challenges Principle 8 Undertake initiatives to promote greater environmental responsibility Corporate governance /Ethics and integrity Strategic suppliers/raw materials Team Members / Team Member profile Team Members/Compensation Team Members/Hiring and layoffs Corporate governance /Ethics and integrity G4-10, G4-EC5, G4-EC6, G4-LA1, G4-HR3 Energy and climate change Solutions for Clients Environmental, health, and safety management G4-EC2, G4-EN1, G4-EN3, G4-EN8, G4-EN15, G4-EN16, G4-EN17, G4-EN20, G4- EN21, G4-EN27, G4-EN31 Environmental, health and safety management Solutions for Clients G4-EN1, G4-EN2, G4-EN3, G4-EN5, G4-EN6, G4-EN7, G4-EN8, G4-EN9, G4-EN10, G4-EN11, G4-EN12, G4-EN13, G4-EN14, G4-EN15, G4-EN16, G4-EN17, G4-EN18M G4-EN19, G4-EN20, G4-EN21, G4-EN22, G4-EN23, G4-EN24, G4-EN27, G4-EN28, G4-EN29, G4-EN31 Principle 9 Encourage the development and diffusion of environmentally friendly technologies Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery Solutions for Clients Environmental, health, and safety management G4-EN6, G4-EN7, G4-EN19, G4-EN27, G4-EN-31 Odebrecht Entrepreneurial Technology Corporate governance /Ethics and integrity G4-56, G4-SO5, G4-SO6 146 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 147 LIMITED ASSURANCE REPORT ISSUED BY INDEPENDENT AUDITORS To the Directors and Officers of Braskem S/A São Paulo - SP INTRODUCTION We have been engaged by Braskem S/A (“Braskem”) to apply limited assurance procedures on the sustainability information dis- closed in Braskem’s 2013 Annual Report, related to the year ended December 31st, 2013. RESPONSIBILITIES OF BRASKEM’S MANAGEMENT The management of Braskem is responsible for preparing and adequately presenting the information in the 2013 Annual Report in accordance with the Global Reporting Initiative (GRI) Sustainabi- lity Reporting Guidelines (GRI-G4) as well as the internal controls determined necessary to ensure this information is free from material misstatement, resulting from fraud or error. INDEPENDENT AUDITORS’ RESPONSIBILITY Our responsibility is to express a conclusion about the information in the 2013 Annual Report based on the limited assurance engage- ment conducted in accordance with Technical Communication (TC) 07/2012 approved by the Federal Accounting Council and prepared in accordance with NBC TO 3000 (Assurance Engagements Other Than Audits and Reviews), issued by the Brazilian Federal Accoun- ting Council - CFC, which is the equivalent to international standard ISAE 3000 issued by the International Federation of Accountants applicable to Non-Financial Historical Information. These standards require compliance with ethical requirements, including indepen- dence ones and also that the engagement is conducted to provide limited assurance that the information in the 2013 Annual Report, taken as a whole, is free from material misstatement. 148 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT A limited assurance engagement conducted in accordance with NBC TO 3000 (ISAE 3000) consists mainly of questioning the manage- ment of Braskem and other professionals of the Company involved in the preparation of the information disclosed in the 2013 Annual Report and applying analytical procedures to obtain evidence that allows us to make a limited assurance conclusion about the sustainability information taken as a whole. A limited assurance engagement also requires additional procedures when the indepen- dent auditor learns of issues which lead them to believe that the information disclosed in the Annual Report 2013 taken as a whole could present material misstatement. The selected procedures were based on our understanding of the issues related to the compilation, materiality and presentation of the information disclosed in the 2013 Annual Report, other engagement circumstances and considerations regarding areas and procedures associated with the material sustainability information disclosed where material misstatement could exist. The procedures consisted of: (a) planning: consideration of the materiality of aspects to Bras- kem’s activities, relevance of the information disclosed, amount of quantitative and qualitative information and operational systems and internal controls that served as a basis for preparation of the information in the Annual Report 2013. This analysis defined the indicators to be tested in detail; (b) understanding the reporting process and management of material aspects and performance indicators; (c) analysis of processes for the preparation of the 2013 Annual Report and its structure and content, based on the Principles for Defining Report Content and Quality of the Global Reporting Initia- tive - GRI (GRI-G4); (d) evaluation of non-financial indicators: • understanding the calculation methodology and procedures for the compilation of indicators through interviews with managers responsible for preparing the information; • application of analytical procedures on the quantitative information and questions about qualitative information and their correlation with indicators disclosed in the 2013 Annual Report; • analysis of evidence supporting the indicators; • visits to four of Braskem’s operational units for application of these procedures, as well as of items (b) and (c); (e) plausibility analysis of the reasons for omissions of performance indicators associated with topics and aspects identified as material through the Company’s materiality assessment; and (f) comparison of financial indicators with the financial statements and/or accounting records. Nonfinancial data is subject to more inherent limitations than financial data, due to the nature and diversity of the methods used to determine, calculate or estimate this data. Qualitative interpretations of the data’s materiality and accuracy are subject to individual presumptions and judgments. Additionally, we did not examine data regarding prior periods to assess the adequacy of policies, practices and sustainability performance, nor future projections data. CONCLUSION Based on the procedures carried out, described in this report, we have not identified any relevant information that leads us to believe that the information in Braskem’s 2013Annual Report is not fairly stated in all material respects in accordance with the Global Repor- ting Initiative Sustainability Reporting Guidelines (GRI-G4), and with its source records and files. We believe the information, evidence and results we have obtained are sufficient and appropriate to provide a basis for our limited conclusion. KPMG Risk Advisory Services Ltda. CRC 2SP023233/O-4 São Paulo, May 23, 2014 SCOPE AND LIMITATIONS The procedures applied in a limited assurance engagement are substantially less extensive than those applied in a reasonable assurance engagement. Therefore, we cannot ensure we are aware of all the issues that would have been identified in a reasonable assurance engagement, which aims to issue an opinion. If we had conducted a reasonable assurance engagement, we may have identified other issues and possible misstatements within the infor- mation presented in the Annual Report 2013. Eduardo V. Cipullo Accountant CRC 1SP135597/O-6 ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 149 SOUTH ALAGOAS PP 1 RS BR 386 KM 419 – III Polo Petroquímico, Via Oeste – Lote 5, Triunfo, RS, CEP: 95853-000 CS 1 AL Avenida Assis Chateaubriand, 5260,Bairro Pontal da Barra, Maceió, AL, CEP: 57010-500 CORPORATE INFORMATION Addresses and contact information for the Braskem industrial and commercial units. BRAZIL SOUTHEAST UNIB 3 CK ABC Avenida Presidente Costa e Silva, 1178, Pq. Capuava – Santo André, SP, CEP: 09270-901 Phone: 55 11 4478-1515 UNIB 3 IN ABC Rua da União, 765, Jardim Sonia Maria – Mauá, SP, CEP: 09380-900 Phone: 55 11 4977-2020 UN PE 7 ABC Avenida Presidente Costa e Silva, 400, Pq. Capuava – Santo André, SP, CEP: 09270-000 Phone: 55 11 4478-4000 UN PP 4 ABC Avenida Ayrton Senna da Silva, 2700, Jardim Oratório – Mauá, SP, CEP: 09380-901 Phone: 55 11 3583-2200 UN PE 8 CUB Rodovia Cônego Domenico Rangoni – SP 055, s/n – Km 266 – Pista Oeste – Cubatão, SP, CEP: 11573-903 Phone: 55 13 3362-9000 / Fax: 55 13 3362-9004 UNIB 2 RS BR 386, Rod. Tabaí/Canoas, km 419, Via de Contorno 850, Triunfo, RS, CEP: 95853-000 PP 2 / PE 5 RS BR 386 KM 419 Lote 4, Polo Petroquímico do Sul, Triunfo, RS, CEP: 95853-000 PE 4 RS BR 386 – Rodovia Tabaí/Canoas – Km 419, Via de Contorno, 1216 – Polo Petroquímico, Triunfo, RS, CEP: 95853-000 PE 5 RS BR 386 km 419 Lote 04, Polo Petroquímico, Triunfo, RS, CEP: 95853-000 PE 6 RS BR 386 – Rodovia Tabaí-Canoas – Km 419, Via de Contorno 1178 – Polo Petroquímico, Lote 29 – Passo Raso – Triunfo, RS, CEP: 95853-000 UNIB 4 and PE 9 DCX Rua Marumbi, 1001, Campos Elíseos – Duque de Caxias, RJ, CEP: 25221-000 Phone: 55 21 2187-8883 RS Office Av. Soledade, 550, 2 andar, Petrópolis, Porto Alegre, RS, CEP: 90470-340 Phone: 55 51 3216-2626 SC Office Rua Professor Luis Sanches Bezerra da Trindade, 69, Salas 101 e 102, Centro, Florianópolis, SC, CEP: 88015-160 Phone: 55 48 3821-7600 / Fax: 55 48 3821-1169 UN PP 5 DCX Rua Marumbi, 1400, Campos Elíseos – Duque de Caxias, RJ, CEP: 25221-000 Phone: 55 21 2173-4100 UN PP 3 PLN Avenida Wagner Samara, 1280, Bairro Cascata – Paulínia, SP, CEP: 13140-000 Phone: 55 19 3344-6700 RJ Office Rua Buenos Aires, 15, 9º e 10º andar, Edifício Buenos Aires Corporate, Rio de Janeiro, RJ, CEP: 20061-002 Phone: 55 21 2157-7760 / Fax: 55 21 2157-7719 SP Office – Head Office Rua Lemos Monteiro, 120, Edifício Odebrecht São Paulo – Butantã, CEP: 05501-050 – São Paulo, SP Brasil Phone: 55 11 3576-9000 / Fax: 55 11 3576-9073 SP Office – Villa Lobos Avenida das Nações Unidas, 4.777, 10º andar, Edifício Villa Lobos, Pinheiros, São Paulo, CEP: 05477-000 Phone: 55 11 3576-9000 150 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT PVC 2 AL Rodovia Divaldo Suruagy – Km 12 – Via II, Polo Cloroquímico de Alagoas, Marechal Deodoro, AL, CEP: 57160-000 Mining Av. Maj Goes Monteiro, 2889, Mutange, Maceio, AL, CEP: 57017-515 Cinal Rodovia Divaldo Suruagy, Km 12, Via 06 - Polo Cloroquímico, Marechal Deodoro, AL, CEP: 57160-000 BAHIA UNIB 1 BA Rua Eteno, 1561, Copec, Polo de Camaçari, Camaçari, BA, CEP: 42810-000 PE 1 BA Rua Eteno, 1582, Copec, Polo de Camaçari, Camaçari, BA, CEP: 42810-000 PE 2 BA Rua Hidrogênio, nº 3520, COPEC, Polo de Cama- çari, Camaçari, BA, CEP: 42810-280 PVC 1 BA Rua Hidrogênio, 3342, COPEC, Polo de Camaçari, Camaçari, BA, CEP: 42810-280 PE 3 BA Rua Benzeno, 2391, COPEC, Polo de Camaçari, Camaçari, BA, CEP: 42810-020 CS 2 BA Rua Oxigênio, 765, COPEC, Polo de Camaçari, Camaçari, BA, CEP: 42810-270 BA Office Av. Antônio Carlos Magalhães, 3244, Edf. Thomé de Souza, 21º andar, Salvador, BA, CEP: 41820-000 UNITED STATES GERMANY OTHER COUNTRIES U.S. Head Office 1735 Market Street, 28th floor, Philadelphia, PA 19103 Phone: 1 215 831-3100 La Porte Plant 8811 Strang Road, La Porte, TX 77571 Phone: 1 281 476-0303 / Fax: 1 281 930-2070 German Head Office An der Welle 4, 60322 Frankfurt am Main Phone: 49 69 427 299 200 PP 11 Wesseling Werk Wesseling, Rodenkirchnerstrasse 400, 50389 Wesseling Phone: 49 3222 1090 356 Marcus Hook Plant P.O. Box 432, Marcus Hook, PA 19061 Phone: 1 610 497-8850 / Fax: 1 610 494-3792 PP 12 Schkopau Werk Schkopau, PF 1163, 06201 Merseburg Phone: 49 3222 1090 245 Neal Plant 200 Big Sandy Road, Kenova, WV 25530 Phone: 1 304 453-1371 / Fax: 1 304 453-5916 Technology and Innovation Center 550 Technology Drive, Pittsburgh, PA 15219 Phone: 1 412 208-8100 / Fax: 1 412 20-88205 Houston Sales Office Basic Petrochemicals produced in Brazil, 5100 Westheimer Rd – Suite 495, Houston, TX 77056 Phone: 1 713 255-4747 / Fax: 1 713 255-4740 Seadrift Plant P.O. Box 105, Port Lavaca, TX 77979 Phone: 1 361 487-1100 Oyster Creek Plant P.O. Box 2168, Freeport, TX 77542 Phone: 1 979 705-2650 MEXICO Braskem Idesa SAPI, Boulevard Manuel Avila Camacho 36, Piso 24 Col. Bosques de Chapultepec, CP 11000 México D. ARGENTINA Braskem Argentina S.R.L., Carlos Pellegrini, 1.149, 7º piso, C1009ABW – Ciudad Autónoma de Buenos Aires Phone: 54 11 5275-6600 / Fax: 54 11 5275-6699 VENEZUELA Av. Río Caura – Torre Humboldt, Piso 19, Oficina 1901, Urb. Prados del Este, Caracas 1080 Phone: +58 (212) 976-5025 PERU Av. Victor Andres Belaúnde No. 280 Of. 603, San Isidro, Lima 27 Phone: +51 (1) 442-4241 COLOMBIA Capital Park – Centro Empresarial, Calle 93 – 11A – 28 – Sala 302, Bogotá Phone: 0057-1-589-7077 CHILE Av. Nueva Tajamar, 481, WTC Torre Norte – Oficina 301, Las Condes – Santiago Phone: 0056-2-482-7000 / Fax: 0056-02-482-7010 NETHERLANDS Braskem Europe BV, Beursplein, 37 – 3.011 AA, Kamer 859, PO Box 30128, 3001 DC, Rotterdam Phone: 31 10 205-2943 / Fax: 31 10 205-2949 SINGAPORE 8 EU TONG SEN STREET #22-89, The Central, 059818 – Singapore Phone: +65 6671 0431 / Fax: +65 6671 0439 ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 151 CREDITS Vice president of Institutional Relations and Sustainable Development Marcelo Lyra do Amaral Corporate Communication Officer André Vieira Sustainable Development Officer Jorge Soto Health, Environment and Safety Officer Rita de Cássia Volponi Carvalho Sustainable Development Supervisors Mario Pino, Sonia Chapman, André Leonel Leal, Luiz Gustavo Ortega, Ediane Monteggia, Luiz Carlos Xavier, Renata Ballve Ebert and Yuki Kabe Health, Environment and Safety Supervisors Mauro Machado Junior, André Virgulino, Mayla Salmeron, Sandro Franca and Paulo Santana External Communication Supervisor Filipe Xavier Content and design production Versal Editores Web development Agência Dinamite Editing Thereza Martins Verification KPMG Photos Julio Bittencourt e Régis Filho Translation Spanish – Lionbridge English – Lionbridge 152 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT GLOSSARY Above standard: above standard – one of the company classifi- cation categories used by insurance companies, based on process safety risk criteria. Joint venture: an association among companies for the purpose of expanding their economic bases for business activities. Biodiversity: variety and variability that exist among living orga- nisms and the ecological complexities in which they occur. Such diversity includes ecosystems, animals, plants, fungi, microorga- nisms and genetic diversity. Biopolymer: a thermoplastic resin produced from renewable raw materials. Materiality: relevance, relevant issues PIC: Incentive Plan for the Plastic Chain Scope 1: direct emissions of greenhouse gases, coming from sources that belong to or are controlled by the Company, such as emissions from combustion in boilers, furnaces or vehicles belonging to or controlled by the Company. Crackers: industrial installations in which naphta is transformed into derivatives such as ethene, propene and other coproducts. Scope 2: emissions of greenhouse gases originating from the acqui- sition of electrical or thermal energy consumed by the Company. Ecoefficiency: the ratio between the use of resources needed for the manufacture of a certain product and the volume produced. Expresses productivity from the environmental point of view. Eco-indicators: environmental performance indicators GHG Protocol: a program designed to encourage companies to create and publish their inventories of greenhouse gases. Greenfield: a term to identify projects that start from scratch, that is, that are a start-up development of an enterprise (literally meaning a “green field”). Scope 3: indirect greenhouse gas emissions. Involves all other emissions resulting from the direct activities of the Company, but which occur in sources that do not belong to or are not controlled by the Company. Six Sigma: Six Sigma – a set of practices developed to improve processes. Stakeholders: target groups, interested parties, relationship audien- ces – these are groups or audiences with which Braskem maintains some type of relationship with regard to its corporate operations and activities. Green Plastic: an expression used to identify resins produced by Bras- kem from renewable source raw material, in this case, sugar cane. Team Members: a term used in the companies of the Odebrecht Organization, among them Braskem, to refer to their employees. Investment grade: investment grade – a classification attributed to companies or countries considered to be good payers. ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 153 ACRONYMS Abiquim: Brazilian Chemical Industry Association ETBE: Ethyl Terc-Butyl Ether (gasoline additive) MTBE: Methyl Terc-Butyl Ether (gasoline additive) ABS: acrylonitrile butadiene styrene ACC: American Chemistry Council LCA: Life Cycle Assessment BBB-: represents an “investment grade”, that is, a classification that characterizes a company or country for investors. The classification is made by risk agencies and represents the ability to pay debts on time. FEL: a method for analyzing the viability of projects from the technical, economical and market point of view. CMDS: chemical product safety information sheet AP: Action Program PDCIS: Integrated and Sustainable Deve- lopment Program for the Mosaic of Environmentally Protected Areas of the Southern Lowlands of Bahia GHG: greenhouse gases GDP: Gross Domestic Product Gj: Gigajoules PE: polyethylene LPG: liquid petroleum gas LLDPE: linear low-density polyethylene BM&FBovespa: Stock Market, Commodities and Futures GPS: Global Product Strategy BNDES: National Bank of Economic and Social Development Bank BNDESPAR: National Economic and Social Development Bank Shares GRI: Global Reporting Initiative (a net- work that created the global standard methodology for economic, social and environmental performance reports for organizations) Green PE: polyethylene produced from a renewable source of raw material (sugar cane) PNRS: Brazilian National Solid Waste Policy PP: polypropylene RTO: workplace accident requiring time off GWP: Global Warming Potential PVC: polyvinyl chloride CDP: global sustainability program PHW: person-hours worked CEBDS: Brazilian Business Council for Sustai- nable Development ICCA: International Council of Chemical Associations Cempre: Corporate Commitment to Recycling, a non-profit association dedica- ted to the promotion of recycling, with a focus on integrated waste management. CO2: carbon dioxide CO2e: carbon dioxide equivalent (the sum of emissions of all greenhouse gases con- verted to CO2) EBITDA: Earnings before interest, taxes, depreciation and amortization Idesa: a Mexican petrochemical company SPI: Supplier Performance Index HDI: Human Development Index IPCC: Intergovernmental Panel of Climate Change (UN) PSI: Private Social Investments kWh/t: kilowatt-hours per ton REACH: Register Evaluation Authorization and Restriction of Chemicals RepTrakTM Pulse: a method for studying the reputation and expectations of companies and organizations NRTO: workplace accident not requiring time off SAN: styrene acrylonitrile SAP: integrated operations, business, and corporate activities management software Sebrae: Brazilian Support Service for Micro and Small Companies kg/t: kilograms per ton THC: Total Hydrocarbons 154 | BRASKEM | ANNUAL REPORT 2013 | ABOUT THE REPORT SEMPRE – Excelence in HES: Braskem’s Health, Environment and Safety manage- ment program designed to prevent and minimize risks as well as personal, environ- mental and material losses. HES: Health, Environment and Safety SHEQAS: Health, Environment and Safety and Quality Assessment System. TEO: Odebrecht Entrepreneurial Techno- logy – a system of beliefs and values of the Odebrecht Organization IR: injury rate UNIB: Basic Petrochemicals Unit UNPol: Polymers Unit UTEC: Braskem’s own brand of ultra-high molecular weight resin UNUSE: United States and Europe Unit UNVin: Vinyls Unit ABOUT THE REPORT | ANNUAL REPORT 2013 | BRASKEM | 155 APPENDICES APPENDICES NEW HIRES AND DISMISSALS G4-LA1 NEW HIRES IN 2013 Country Region Under 30 years From 30 to 50 years Brazil South Southeast Northeast 59 69 56 Sub-total 184 USA Germany México Total Global* 20 7 200 411 35 75 54 164 25 9 154 352 Men Over 50 years 2 4 5 11 3 0 2 16 DISMISSALS IN 2013 Women Sub-total Rate Under 30 years From 30 to 50 years Over 50 years Sub-total Rate Total 96 148 115 359 48 16 356 779 6.6% 8.5% 6.0% 7.0% 9.4% 14.8% 80.9% 21 53 25 99 10 4 47 6 40 17 63 11 10 21 12.6% 160 105 0 2 0 2 3 0 0 5 Total Rate 6.9% 10.4% 6.7% 8.1% 11.6% 17.9% 8.6% 15.8% 9.7% 12.2% 21.1% 23.3% 123 243 157 523 72 30 27 95 42 164 24 14 68 81.0% 424 80.9% 270 16.8% 1049 13.5% Under 30 years From 30 to 50 years Men Over 50 years Women Sub-total Rate Under 30 years From 30 to 50 years Over 50 years Sub-total Rate Total 15 25 16 56 19 4 6 85 31 88 75 194 11 0 0 60 57 64 181 11 0 0 106 170 155 431 41 4 6 7.3% 9.8% 8.1% 8.4% 8.0% 3.7% 1.4% 11 28 11 50 1 1 2 205 192 482 7.8% 54 9 52 17 78 4 3 0 85 3 3 2 8 4 0 0 23 83 30 7.3% 13.8% 6.9% 136 10.1% 9 4 2 7.9% 6.7% 2.4% 129 253 185 567 50 8 8 12 151 9.4% 633 Country Region Brazil South Southeast Northeast Sub-total USA Germany México Total Global* Total Rate 7.3% 10.8% 7.9% 8.8% 8.1% 4.8% 1.5% 8.2% 158 | BRASKEM | ANNUAL REPORT 2013 | APPENDIXES TOTAL TURNOVER RATE – 2013 Country Region Men Women Total Brazil South Southeast Northeast Sub-total USA Germany México Total Global* 6.9% 9.2% 7.1% 7.7% 8.7% 9.3% 41.1% 10.2% 8.0% 14.8% 8.3% 11.1% 14.5% 15.0% 41.7% 13.1% 7.1% 10.6% 7.3% 8.4% 9.8% 11.3% 41.2% 10.8% NEW HIRES IN 2012 Men Women Country Region Under 30 years From 30 to 50 years Over 50 years Sub-total Under 30 years From 30 to 50 years Over 50 years Sub-total Total Brazil South Southeast Northeast Sub-total Texas USA Pennsylvania West Virginia Sub-total Germany 30 69 45 144 0 7 0 7 8 Total Team Members 159 8 43 14 65 0 12 0 12 17 94 0 0 0 0 2 1 0 3 0 3 38 112 59 209 2 20 0 22 25 81 63 51 195 2 14 3 19 4 25 72 60 157 4 27 5 36 11 256 218 204 2 5 4 11 0 11 2 13 0 24 108 140 115 363 6 52 10 68 15 146 252 174 572 8 72 10 90 40 446 702 DISMISSALS IN 2012 Country Region Men Women South Southeast Northeast Sub-total Brazil USA Germany Total Team Members 77 155 120 352 2 1 355 23 59 32 114 1 0 115 Note: the data exclude international sales offices and quantiQ. APPENDIXES | ANNUAL REPORT 2013 | BRASKEM | 159 EFFLUENTS G4-EN22 TOTAL DISCHARGE OF WATER, BY QUALITY AND DESTINATION - BRAZIL (2012) Location Destination of effluent Volume of effluent discharged (m³/year) Treatment method Biochemical oxygen demand at discharge (BOD) (kg/year)* Total suspended solids at discharge (TSS) (kg/year)* Other significant quality parameters (kg/year)* Rio de Janeiro Bahia Coelho Canal 709,449 Biological 7,350 71 Biological Treatment Plant UNIB4 76,626 BIOX / biological treatment Not available Not available Cetrel Wastewater Treatment Plant 6,309,717 Biological treatment pretreatment with water and oil separators 931,759 213,816 Not available 1.91 mercury 1,910,000 chloride 12,922 dichloroethane 40,090 oils and fats phosphate, zinc, chrome, cyclohexane and methylene chloride (data not available) Alagoas Ocean 3,681,672 Neutralization / Aerobic Process (activated sludge) 831,294 305,211 Not available Rio Grande do Sul SITEL - External Wastewater Treatment Plant 1,034,008 Stabilization ponds 1,758 26,884 1,272 oils and fats REPLAN - External Wastewater Treatment Plant 878 Not available Not available Not available Not available São Paulo Perequê River 94,827 Primary 9,231 51 5,988 oils and fats Tamanduateí River** 8,761,353 Physical, physical- chemical and biological 316,477 1,293 3,155 oils and fats Notes: *Partial data. Since 2012 was the first year this indicator was collected, it was not possible to obtain complete data for all quality indicators at all industrial plants. It was also not possible to collect data for the units in the USA and Germany. ** In preparation for the change in wastewater classification at the polyethylene and basic petrochemicals plants in the ABC region of Greater São Paulo, improvements were made to the wastewater measurements systems in 2012. Improvements in the treatment systems were found to be necessary to ensure compliance with the regula- tions applicable as of 2013. These improvements began to be implemented in 2012. 160 | BRASKEM | ANNUAL REPORT 2013 | APPENDIXES APPENDIXES | ANNUAL REPORT 2013 | BRASKEM | 161 ENERGY AND CLIMATE CHANGE (GHG MANAGEMENT) G4-EN19 REDUCTION OF GREENHOUSE GAS (GHG) EMISSIONS State Type of Emissions Voluntary or Mandatory Reduction of Emissions Initiative Reduction of Emissions (t CO2e) Economic Return (thousands of Brazilian Reals per year) Generation of electricity, steam or heat Voluntary Reduction in the energy index in Aromatics (area 23 and 04). 13 1,195 Reduction in the amount of gas burned in the UNIB flare: PE 4 (RS) stopped burning its flare in UNIB 2 (RS), 114.2 tons of gas due to the standardization of the procedure of sending the off-gas from PE4 Spherilene to UNIB. 114 Not available Reduction in the technical index of monomer of PP1 (RS), reducing purges to the flare. 10,660 Not available 389 Not available Reduction in the consumption of steam in PP2 (RS) by the creation of the steam control algorithm for deactivating the catalyst. Reduction of the consumption of steam for the PL2 flare at UNIB 2 (RS). Reduction in the consumption of EE at PP 1 (RS) by reducing the operation time of pumps P-5301A/B in parallel. Increased performance of recycling compressor at PP 2 (RS), reducing purges to flare. Increased recovery of exhaust energy from the gas turbine at UNIB 2 (RS). Gains in availability of plant PP2: reduction of plant shutdowns, which reduced the need for purges to the flare. Reduction in the consumption of GC in the pyrolysis furnaces (111F01, 111F02, 111F05, 111F06 and 11F09) and smoke tests at UNIB 1 (RS). Reduction in the consumption of EE of the cooling tower pumps at PP 2 (RS). 5 28 191 1 199 19 236 Reuse of the Low Pressure Condensate of Olefins 2 without Polishing, at UNIB 2 (RS). 3 1,330 Not available Not available 431 Not available Not available Not available Not available Optimization of the operation/regeneration cycle of 50PK502, reducing purges to the flare at PP 2 RS. 17 Not available Rio Grande do Sul Other process fuels (ex. flare) Other process fuels (ex. flare) Generation of electricity, steam or heat Generation of electricity, steam or heat Generation of electricity, steam or heat Other process fuels (ex. flare) Generation of electricity, steam or heat Other process fuels (ex. flare) Generation of electricity, steam or heat Generation of electricity, steam or heat Generation of electricity, steam or heat Other process fuels (ex. flare) Voluntary Voluntary Voluntary Voluntary Voluntary Voluntary Voluntary Voluntary Voluntary Voluntary Voluntary Voluntary 162 | BRASKEM | ANNUAL REPORT 2013 | APPENDIXES REDUCTION OF GREENHOUSE GAS (GHG) EMISSIONS State Type of Emissions Voluntary or Mandatory Reduction of Emissions Initiative Reduction of Emissions (t CO2e) Economic Return (thousands of Brazilian Reals per year) Generation of electricity, steam or heat Voluntary Deactivation of air conditioning system (EB-901) - EA-990A/B - PHASE 2 at UNIB 3 (ABC). Not available 1,289 Generation of electricity, steam or heat Voluntary Gains in cleaning of convection for pyrolysis furnaces at UNIB 3 (ABC). Not available 1,677 Generation of electricity, steam or heat Voluntary Energy optimization of columns DA-209/DA-211/ DA-210N and DA-1205 at UNIB 3 (ABC). Not available 4,274 São Paulo Generation of electricity, steam or heat Voluntary Reactivation of the soot-blowing systems at UNIB 3 (ABC). Generation of electricity, steam or heat Voluntary Recovery of energy in the hot area – phase 2 at UNIB 3 (ABC). Generation of electricity, steam or heat Voluntary Reduction in fuel gas consumption in furnaces of A-400/450 at UNIB 3 (ABC). Not available 1,079 Not available 6,055 Not available 1,508 Rio de Janeiro Generation of electricity, steam or heat Voluntary Reduction in steam consumption at UNIB 3 (ABC). Not available 3,046 Generation of electricity, steam or heat Voluntary Optimization of furnace operation – compatibility of charging at UNIB 4 (DCX). Not available 1,644 Generation of electricity, steam or heat Voluntary Recovery of energy from low pressure condensate at UNIB 4 (DCX). Not available 1,271 Generation of electricity, steam or heat Voluntary Reduction of excess O2 in furnace burns during C9+ - part 2 burn at UNIB 4 (DCX). Not available 227 Generation of electricity, steam or heat Voluntary Reduction in NG with improved efficiency of furnaces at UNIB 4 (DCX) Not available 4,413 Generation of electricity, steam or heat Voluntary Equationing of the heat balance at UNIB (BA) in TG-E. 41,081 576 Generation of electricity, steam or heat Voluntary Generation of electricity, steam or heat Voluntary Bahia Reduction in electrical energy consumption: underway, change in the anode technology, substituting Runner anodes with SLM. This is not an investment, but an action to improve the cell maintenance routine. Continuation of the Six Sigma project for the reduction of steam consumption by 15 kgf/cm² g, in the polymer plant. In 2013, there was a reduction of 7,938.76t, by using this system to identify and implement actions for the purpose of optimizing consumption and reducing losses in the field. Generation of electricity, steam or heat Voluntary Reduction in energy consumption of the C8 Loop (phase II). Generation of electricity, steam or heat Voluntary Energy optimization of the Catalytic Reform Unit at UNIB 1 (BA). 247 Not available 1,272 5,303 13,609 2,168 5,681 723 Generation of electricity, steam or heat Voluntary Energy optimization of block C4 at UNIB 1 (BA). 4,894 Not available Generation of electricity, steam or heat Voluntary Generation of electricity, steam or heat Voluntary Alagoas TOTAL Other Initiatives at UNIB 1 (BA): reduction of energy consumption in Isoprene / profitability boost of BTX block / energy optimization of the Stripper column DA-401. Deactivation of A-711 - distilling of Raw DCE to control pressure, in the opening of the PV711011 the vent gases of the distillation column were sent to be incinerated at A-714, at CS 1 (AL). 9,800 Not available 13 Not available 88,471 38,210 Note: the amounts invested in the initiatives were not reported. Some gains were also not reported. APPENDIXES | ANNUAL REPORT 2013 | BRASKEM | 163 OTHER EMISSIONS EMISSION OF OZONE-DEPLETING SUBSTANCES (ODS) EMISSIONS OF NOX, SOX AND OTHER SIGNIFICANT ATMOSPHERIC EMISSIONS EN20 In 2013, Braskem consumed HCFC 22 and HCFC 141b gases, both shown in Appendix C, Group I of the CONAMA 267/2000 Resolution. Braskem does not use substances from Appendices A and B. ATMOSPHERIC EMISSIONS EN21 The industrial plants have been systematically reducing the use of these substances. 2013 EMISSIONS HCFC 22 175.7 t HCFC 141b 4.8 t (tons)(1) NOx SOx Particulate matter Volatile organic compounds Carbon monoxide (CO) THC Toxic air pollutant 2013 12,157 6,582 1,547 2,707 3,412 2,696 549 2012 8,756 5,880 1,088 1,756 2,076 5,045 142 (1) ) In 2012, data was reported only from La Porte, Marcus Hook and Neal, among the Braskem units in the USA. No atmospheric emissions data were made available from the units in Germany. The 2013 data refer to the following unis: UNIB 1, UNIB 2, UNIB 3, UNIB 4, PE2, PE7, PP4, CS1, CS2, PVC 1, PVC 2 and the units in the United States and in Germany. The UNIB4 data do not include emissions from the flare. Two factors influenced these results in 2013: all plants with signifi- cant emissions submitted their data, and energy consumption in the year was higher. 164 | BRASKEM | ANNUAL REPORT 2013 | APPENDIXES 

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