Braskem S.A.
Annual Report 2016

Plain-text annual report

2 Summary 03 Message from the Business Leader 07 Braskem 15 Sustainability Strategy 24 Governance and Compliance 34 Financial Performance 45 55 Innovation Stakeholders 78 Health, Safety, and the Environment 99 GRI G4 Content Index 110 Attachments 116 Glossary 117 Corporate Information 120 Credits 2016 | Braskem | Annual Report Message from the Business Leader G4-1, G4-2, G4-SO5 Global Compact – Principle 1 2016 was one of the most the United Kingdom from the challenging times in Braskem’s European Union and the fierce history. Nevertheless, we have US presidential election. Such much to be proud of. Our occurrences, coupled with Company has accomplished China’s new growth pattern, unprecedented achievements, led to moderate growth in the result of a consistent business international trade - below 3% strategy based on international for the fifth consecutive year presence, diversification of - and to a reduction in global raw materials and constant investment. improvement of operational efficiency, competitiveness, and In Brazil, the recession scenario Governance and Compliance persisted. The GDP recorded standards. These pillars not only ensured us the resilience a strong decrease of 3.6% the (repeating level of the necessary to overcome the 3.8% drop in 2015), driven turbulence, but also proved that by reduced credit and the we are on the right track towards prolonged political-institutional a promising future of sustainable crisis, which aggravated the growth. Scenario effects of historical bottlenecks of competitiveness. was the basis for achieving a historical record of 8.5 million record EBITDA for the Company tons of basic petrochemicals, The main adversities effecting Historical Operating in both Brazilian reais (BRL 11.5 a volume 3% higher than in our activities in 2016 came Performance billion) and in dollars (US$ 3.3 2015, with an average cracker from the uncertainties in the In 2016, Braskem achieved good billion) at the end of 2016. utilization rate of 92% (the political and economic scenario, operating results thanks to the best in the historical series), an both globally and in our main gains in production efficiency It is important to note that, increase of three percentage country of operation, Brazil. and stronger integration among despite the recession in Brazil, points (p.p.) compared to the At the international level, we the industrial units in Brazil, in 2016 our Brazilian units previous year. Resin production faced a slowdown in the pace Mexico, the United States, and of basic petrochemicals and reached 4.9 million tons, up 4%. of world economic growth from Germany, and commercial offices resins recorded good operating key factors such as the exit of around the world. This formula performance. We achieved a Despite the weak demand US$ 3.3 BILLION in EBITDA at the end of 2016. 3 in the Brazilian market, we also achieved record sales results. Domestic sales of basic petrochemicals were 1.9 million tons, up 5%. Resin sales totaled 3.3 million, with a slight decrease of 1%. Our commercial strategy, however, made it possible to take advantage of opportunities in production sectors less affected by the Brazilian crisis, helping to expand our exports. In 2016, international shipments of resins from Brazil totaled 1.7 million tons, an expansion of 24% compared to 2015. Diversifying raw materials and geographic presence continued to be a priority in our global strategy. We achieved a 100% average utilization rate of the polypropylene plants in the United States and Europe, which was reflected in a 2% increase in sales volume in the respective regions compared to 2015, reaching a level of two million tons. 2016 marked the start of operation of the Petrochemical Complex in Mexico, a milestone in our internationalization process that required a US$ 5.2 billion investment, the largest amount ever invested by a industrial company with Brazilian 2016 | Braskem | Annual Report4 capital in a greenfield project which is eight times lighter than At the end of 2016, as a result abroad. In the fourth quarter, steel and ten times more durable of the full provisioning of the the average operation rate of than high density polyethylene resources established through the three polyethylene plants in (HDPE), at a competitive cost. the Global Agreement to be paid the Complex was 73%, reaching to Brazilian and international 97% in December. Polyethylene Governance and Compliance authorities in the fourth quarter production in Mexico totaled Illegal acts committed by former of 2016, the Company posted a 443,000 tons in the year. members and agents of Braskem consolidated net loss of BRL 729 It is also important to note the on information disclosed in the retained earnings in the three closing of the ten year contract context of Operation Lava-Jato. previous quarters. were confirmed in 2016, based million for the year, even after to purchase ethane imported from the United States from an As the main interested party It is important to remember that, affiliate of Enterprise Products. clarifying the case, Braskem since the second quarter of 2016, The agreement is part of a acknowledged its responsibility Braskem had already implemented project to modernize and make for those acts and regrets a wide revision project of its flexible the use of raw material past conduct. The internal Corporate Governance structure, of the petrochemical plant in investigation process culminated which aimed to implement a new Bahia, which predominantly in the global agreement signed Compliance Program in order to operates using naphtha. The with authorities in Brazil, the strengthen the responsible area initiative, with an investment United States, and Switzerland, with direct report to Braskem’s of BRL 380 million, will enable announced in December. Through Board of Directors and significantly the production of up to 15% of the Global Agreement, Braskem reduce the possibility of any ethylene using ethane as raw agrees to pay the amount of deviation of a similar nature to material. The new operation is BRL 3.1 billion as a fine and those identified. In addition to the expected to begin in the second indemnity, and implement initiatives already implemented half of 2017. improvements in its compliance in 2016, the program presents and internal control systems. This almost a hundred initiatives that The prospects are promising commitment will be accompanied will also be carried out throughout after we commissioned the by external monitors, appointed the course of 2017. Ultra High Molecular Weight by the Department of Justice Polyethylene (UHMWPE) plant in (DOJ), the Securities and Sustainable Development La Porte, Texas, USA, in 2016, to Exchange Commission (SEC), Braskem maintains a consistent enable better customer service in and the Federal Public Prosecutor course of action to promote North America and Europe. The (MPF - Ministério Público Federal) sustainable development. We plant was built from Braskem’s for up to three years, to ensure are proud to be the first industry own technologies, enabling compliance with the terms of the in Brazil to join the “A” List production of this product, agreement. of CDP Investor in 2016, an US$ 5.2 BILLION invested in the Mexican Petrochemical Complex “A” LIST of CDP Investor, international seal recognizes companies with standards of excellence in carbon management. 2016 | Braskem | Annual Report5 international seal that recognizes which aims to foster businesses companies with excellent carbon and initiatives for appreciation of management standards. This recovery, reinforcing Braskem’s achievement is in line with commitment to the plastic chain our engagement in different in Brazil. national and global forums linked to promoting sustainable Innovation development such as UN Global Our Company’s contribution to Compact, of which we have been a sustainable world is supported a signatory since 2007, as well by regular investments in as supporting its outstanding research and development of participation in lists such as innovative solutions capable the Dow Jones Sustainability of providing high levels of Emerging Markets Index (DJSI) productivity and reducing and the Corporate Sustainability impacts on the environment. Index (ISE) of the Brazilian Stock Innovation initiatives are the Exchange (BM&FBOVESPA). result of the joint efforts of our Technology and Innovation Among the most important Centers located at the Triunfo initiatives in 2016 is the petrochemical complex in Rio Movimento Menos Perda Grande do Sul, Brazil, and Mais Água (Less Loss More in Pittsburgh, United States, Water Movement), a water as well as our laboratories in management project aligned with Campinas, in São Paulo, Brazil, the UN Sustainable Development focused on biotechnology. In Goals initiated by the Brazilian addition, in 2016 we expanded Network of the Global Compact, our innovation structure which has Braskem and SANASA with the inauguration of the as leaders. European Technical Center, located at the Wesseling plant With a focus on generating in Germany. A highlight in more sustainable products, it is product development was the important to highlight the launch launch of a polypropylene resin of 100% recycled polypropylene named under the brand Braskem and polyethylene resins Amppleo. The new resin, used to produced from big bags and manufacture high performance sacks discarded. These initiatives foams, can withstand include the Wecycle platform, temperatures up to 100°C 2016 | Braskem | Annual Report6 without deformation and may be In Brazil, despite the consistent Concerning the dynamics of In this context, the Company’s fully recycled, aligned with our decline in inflation and rising the oil market, expectations strategy remains focused on sustainable commitments. investor confidence seen in are to maintain the agreement diversifying the raw material recent months, the challenges between OPEC members and and geographic profile as a It is also worth mentioning the of the macroeconomic scenario other producers to limit global way to mitigate the volatility of use of of I’m green™ Polyethylene for 2016 continue in 2017. supply, which may lead to an the petrochemical cycle, taking (green plastic) to produce Although resumption of growth increase in the price of oil and advantage of the synergies equipment and parts in zero is expected, the consensus is consequent increase of the between Braskem’s industrial gravity. The project was the result that it will occur at a slow and competitiveness of the gas units and commercial offices of a partnership with Made In gradual pace. based producer compared to the for both marketing products Space, a leading North American naphtha based producer. and identifying new investment company in the development In the international market, opportunities, reinforcing of 3D printers for zero gravity according to the International Concerning the petrochemical petrochemical activity in order operation and a supplier for the Monetary Fund (IMF), market, new polyethylene to guarantee the operational North American Space Agency the outlook for advanced capacities in the United States efficiency, productivity, and (NASA). This is one of the essential economies improved for 2017 may pressure the spreads of competitiveness of units in advances for a possible mission to and 2018, due to stronger polyethylene in the international all regions, with emphasis on Mars and we are very proud to be economic activity in the second market whithin the period stabilizing production at the part of this epic moment. half of 2016 and projected beginning in the end of 2017 Petrochemical Complex in fiscal stimulus in the United and continuing mainly in Mexico. We are also committed Perspectives States. For emerging markets 2018, with expected recovery to continuously improving Despite the adversities, 2016 was and developing economies in beginning in 2019. Regarding the compliance program and a year that once again proved general, prospects for growth the other resins (PP and PVC), governance practices, maintaining the soundness of Braskem’s have marginally worsened, expectations are to maintain financial soundness, and cost operations. We are a strong with positive reviews for China the spreads at sustainable discipline. Thus, we continue Company, committed to the growth and negative for countries levels, especially in the North on the mission of building an of the regions where we operate, such as Mexico, influenced by American polypropylene market, increasingly global Company. and firm in our commitment to uncertainties regarding the where there is no new capacity contributing to the sustainable election of Donald Trump in the beginning operation until the Enjoy your reading development of the planet. United States. end of this decade. Fernando Musa 2016 | Braskem | Annual Report 01. Braskem G4-6, G4-9, G4-12 41 INDUSTRIAL UNITS 29 IN BRAZIL, SIX IN THE UNITED STATES, FOUR IN MEXICO, TWO IN GERMANY 7 PRODUCTION OF OVER 20 million TONS/YEAR OF THERMOPLASTIC RESINS AND OTHER CHEMICAL PRODUCTS 100 EXPORT TO CLIENTS IN APPROXIMATELY 100 COUNTRIES 7,6k TEAM MEMBERS WORLDWIDE OVER 8k SUPPLIERS WORLDWIDE 96,4 THOUSANDS PEOPLE IMPACTED BY THE PRIVATE SOCIAL INVESTMENT PROJECTS BRL 11.5 BILLION OF EBITDA BRL2.9 BILLION INVESTED 334 INNOVATION PROJECTS UNDER DEVELOPMENT WORTH US$ 2.6 BILLION1 1 Risk-adjusted net present value of the company’s project portfolio up to December 2016 GROSS REVENUE OF BRL 55.4 BILLION 10 NEW APPLICATIONS AND 73 PATENT EXTENSIONS. THROUGHOUT ITS HISTORY, BRASKEM HAS FILED 1,030 PATENT-RELATED DOCUMENTS 2016 | Braskem | Annual Report200 KILO TONS OF I’M GREENTM Braskem’s green plastic produced from sugar cane. 8 With annual production of over 20 million tons, Braskem is now the largest petrochemical company in the Americas and is fifth in the companies from the Odebrecht Group2 and the Mariani Group, Braskem3 has over 7,600 Team Members and is one of the few Mexico, in the latter through a joint venture with the Mexican company Idesa. world in production capacity of petrochemicals in the world to G4-6 thermoplastic resins (polyethylene, maintain integrated operations for polypropylene, and polyvinyl producing basic petrochemicals Associated with diversifying chloride) and basic petrochemicals and thermoplastic resins, which its raw materials matrix and (such as ethylene, propylene, provides competitive advantages creating new sustainable butadiene, and others). Braskem is also a global manufacturer of biopolymers, with annual production capacity of 200,000 tons of I’m green™ Polyethylene (green from gains operational efficiency4. in scale G4-4, G4-7, G4-9 and chemical and plastic solutions, Braskem’s growth strategy is based on strengthening its relationship with its Clients, developing the petrochemical plastic) produced from sugar cane, Its global performance profile and plastic chains, searching for a 100% renewable origin. enables the Company to export operational efficiency, and on G4-3, G4-4 to Clients in approximately internationalization, the latter 100 countries and to operate through geographic expansion in 16 regional offices and 41 focused on the Americas. All Established in August 2002, industrial units located in Brazil, without giving up the safety and as a result of the merger of six the United States, Germany, and quality standards of its products. Principles and Values G4-56 Focusing on sustainable growth, Braskem sustains an organizational culture common to all its operations: A set of shared principles, concepts, and criteria that promote efficiency and clarity in interactions between Leaders and Subordinates, and seek to ensure business coherence in its various Businesses. TO LEARN MORE, VISIT www.braskem.com 2 Copene, OPP, Trikem, Proppet, Nitrocarbono, and Polialden 3 In order to identify the entities included in the consolidated financial statements and entities not covered by the report, we reference the Parent Company’s financial statements prepared in accordance with accounting practices adopted in Brazil, in compliance with the provisions of Law 6,404/76 (“ Lei das S/A - Corporation Law”) and subsequent adjustments, and the standards issued by the CPC and in accordance with the International Financial Reporting Standards (IFRS) issued by the IASB, and are being published together with the consolidated financial statements [G4-7, G4-17] 4 In order to clarify the scope of this material, it is worth mentioning that the results of quantiQ were reported in the Financial Statements of the report, but are not considered in the social and environmental indicators. Its management was already carried out independently even before the sale of the company. quantiQ was sold on 1/10/2017 (signing), with closing of the transaction on 4/03/2017 (closing). 2016 | Braskem | Annual Report9 In 2015 and 2016, the chemical and petrochemical sector experienced a high spread cycle, which boosted the search for better businesses in key markets such as the United States and Europe, places that showed higher levels of economic performance. Markets and New Fronts G4-8 Petrochemical production focuses The performance of the sector is on transforming oil by-products, associated with the fluctuation usually naphtha and natural gas, of prices of chemical and into materials for industrial use petrochemical commodities or into end products intended for traded in the international society. market. The spreads are formed from the differences between This is a fundamental sector the prices of oil and its by- for the growth of the economy products, defining/ and they and the development of modern define the income results of society for its potential of the industries in the sector. creating new solutions and It is a condition requiring materials from chemistry and companies to constantly search plastic, capable of providing more practicality for people’s for operational efficiency and control of production rigid daily lives and reducing the levels costs to guarantee the balance of environmental impacts in and safety of activities during different market segments, such challenging moments, resulting as construction, agribusiness, from lower spread cycles. automotive, among others. In 2015 and 2016, the chemical Given these characteristics, and petrochemical sector According to data from the Brazilian included - dropped from sixth ranking by France and India, and the petrochemical industry is experienced a high spread constantly evolving technologically. cycle, which boosted the search The market trend follows the line for better businesses in key Chemical Industry Association (ABIQUIM5) , as a result of the country’s political and financial to eighth place in the sector’s followed closely by the United worldwide ranking. Today, the Kingdom. The top three positions industry accumulates net sales in the global ranking are occupied for diversifying raw materials and markets such as the United crisis, the Brazilian chemical of US$ 113 billion, after shrinking by China, the United States, and their sources, seeking to develop States and Europe, places industry - in which Braskem’s nearly 20% in 2015, having been Japan, respectively. renewable inputs. The goal is to that showed higher levels of petrochemical production is also surpassed in the international find innovative solutions that are economic performance. This capable of generating increasingly context helped offset challenges more social and environmental in emerging markets, which was benefits. the case in Brazil. 5 Source: ABIQUIM http://www.abiquim.org.br/comunicacao/noticia/detalhe/2433/industria-quimica-brasileira-perde-posicao-no-ranking- mundial-do-setor (portuguese only) 2016 | Braskem | Annual Report10 Braskem Worldwide G4-4, G4-5, G4-6 UNITED STATES PITTSBURGH MEXICO NETHER LANDS GERMANY INDUSTRIAL UNITS BASIC POLYPROPYLENE (PP) VENEZUELA COLOMBIA BRAZIL SINGAPORE PETROCHEMICALS Brazil Camaçari (BA) Duque de Caxias (RJ) Mauá (SP) Triunfo (RS) Mexico Coatzacoalcos (Veracruz) PVC AND SODA Brazil Maceió (AL) Marechal Deodoro (AL) Camaçari (BA) POLYETHYLENE (PE) Brazil Cubatão (SP) Santo André (SP) Mexico Coatzacoalcos (Veracruz) Brazil Mauá (SP) Paulínia (SP) Germany Schkopau e Wesseling United States Marcus Hook (Pennsylvania) La Porte (Texas) Oyster Creek (Texas) Seadriff (Texas) Neal (West Virginia) PE + PP Brazil Camaçari (BA) Duque de Caxias (RJ) Triunfo (RS) GREEN PE Brazil Triunfo (RS) UTEC United States La Porte (Texas) PERU ADMINISTRATIVES OFFICES TRIUNFO CHILE ARGENTINA Administrative Headquarters Brazil São Paulo (management and administrative offices) Administrative Offices Brazil Salvador (BA) Porto Alegre (RS) United States Rotterdam United States Philadelphia (Pennsylvania) Germany Frankfurt Commercial Offices Germany Argentina Singapore Chile Colombia United States Netherland Mexico Peru Venezuela TECHNOLOGY AND INNOVATION Centers for Technology and Innovation Brazil Triunfo (RS) United States Pittsburgh (EUA) Partnership with companies and external laboratories for research in chemistry and polymers, petrochemical or renewable source. PE polyethylene PP polypropylene PVC polyvinyl chloride Green PE Polyethylene manufactured from sugarcane ethanol, renewable raw material source. LEARN MORE IN www.braskem.com.br > Braskem in the world 2016 | Braskem | Annual ReportBusiness Model With global operations, Braskem seeks to diversify sources of raw materials, production efficiency, and innovation with sustainable returns, in terms of products and production process. All this without losing focus on the Client and market trends. These guidelines are summarized in three conceptual and strategic pillars: to survive, to grow, and to perpetuate. STRATEGY PILLARS Survive • Focus on the Client and the market • Competitive raw materials and energy • Operational productivity and efficiency Grow • Internationalization with expansion focused on the Americas • Serve the global market • Renewable chemicals Perpetuate • Competencies and technology • People and organization • Sustainability and innovation • Governance and Reputation 11 Strategic Planning Braskem’s strategic planning is based on the long-term, but increasingly seeks to act efficiently, in order to adjust the paths of business development to the global market scenarios. In this respect, the Company’s growth is based on: PRODUCTIVITY AND COMPETITIVENESS Guarantee of operational efficiency, productivity, and competitiveness of the units in all regions, especially the stabilization of production at the Braskem Idesa Petrochemical Complex in Mexico, in 2016. GEOGRAPHICAL DIVERSIFICATION Expansion of the global presence and synergies between industrial plants and commercial offices around the world to explore export opportunities, mitigate the volatility of the petrochemical cycle, and reduce dependence on specific markets on the Company’s consolidated results. DIVERSIFICATION OF THE RAW MATERIAL PROFILE Seek alternative sources of raw materials in order to reduce the dependence on naphtha, and adopt renewable sources with lower environmental impact. COMPLIANCE AND GOVERNANCE PRACTICES Rigorous Compliance and Corporate Governance model, as a way of guaranteeing excellence of operations in the various global markets and protecting the business while maintaining financial soundness and cost discipline. 2016 | Braskem | Annual ReportBusiness Model PURPOSE: To improve people's lives by creating sustainable chemical and plastic solutions. RAW MATERIAL SEGMENTS/ PRODUCTS MARKET AND SOCIETY 12 SALES PER SECTOR** 41% 33% Gas 23% 3% Ethanol Naphtha Propylene* Basic Petrochemicals (1st Generation) Polymers*** (2nd Generation) Biopolymers 8% 8% Retail Consumer Goods 4% Automotive 17% Other 22% Food Packaging 13% Industrial 13% Construction 5% 5% 5% Hygiene and Cleaning Agricultural Cosmetics and Pharmaceuticals INNOVATION Total investments in innovation: BRL 275 million Filing of 10 new patent applications Investment in People BRL 19 million invested in training Water Resources 15.4 million m3 of water (reused/recycled) Raw material cost naphtha and gas Naphtha BRL 13.9 billion (include condensate) Gas BRL 6.5 billion (includes ethane, propane, HLR, and propylene) Production 1st Generation Ethylene 3,459,861 t Propylene 1,400,466 t 2nd Generation PE 3,151,646 t PP 3,599,653 t PVC 594,039 t Scope 1: 9,253 ktCO₂e / year Scope 2: 980 ktCO₂e / year Number of Team Members 7,656 and creation of around 40,000 jobs in the value chain Energy consumption: 10.25 GJ/t Wecycle The first polypropylene and polyethylene resins made from fully recycled content were launched. Combined production volumes can reach 50 t/month Economic Performance Social Investments and Community EBITDA of R$11.5 bi up 23% compared to 2015 R$ 27.5 mi in social and environmental, cultural and sports projects, directly benefiting more than 96,400 people in 2016. *Considers 60% propane for US plants, 22% propane for Europe, and 18% acquired from third-parties for the plants in Brazil. **Resin sales in Brazil 2016 | Braskem | Annual Report 13 Recognition Global Compact – Principles 6, 7, 8, 9 and 10 INTERNATIONAL CDP INVESTOR Braskem’s operational soundness category of the O Estado de S. Paulo and sustainability were newspaper Empresas Mais award. acknowledged by important regional Another highlight was receiving and international recognition from the award as best company in the major press and the market the Chemical and Petrochemical In 2016, Braskem became the first representative of the Brazilian industry to join the “A List” of CDP Investor Global, for the transparency and performance of the Climate Change strategy. The list is reserved for public companies with excellence in greenhouse gas management. As for the score, Braskem reached the highest score among all companies in Latin America. throughout 2016. sector from Valor 1000, one of the most prestigious yearbooks in the CDP SUPPLY CHAIN In Brazil, the Company was a Brazilian press. highlight of the sector in the award As Melhores da Dinheiro In addition, Braskem made a publication of magazine IstoÉ important achievements, some Dinheiro, and ranked 3rd in the of them unprecedented among Chemical and Petrochemical Brazilian companies: Braskem won two acknowledgments in 2016 regarding the engagement of its suppliers in climate change. The Company joined, for the first time, the “A List” of the CDP Supply Chain Global. It also entered the list of the 29 companies with best practices in this aspect, a new ranking created by CDP, after evaluating the practices of 3,300 companies worldwide. DOW JONES SUSTAINABILITY INDEX For the fifth consecutive year, Braskem has been selected to be part of the select group of 95 global companies in the Dow Jones Sustainability Emerging Markets Index (DJSI). The emerging market index on the New York Stock Exchange (NYSE) identifies companies that excel by effectively incorporating sustainability into their business strategy. TOP WORK PLACES 2016 For the third consecutive year, Braskem was recognized as a top place to work in the Greater Philadelphia Region in the United States. Braskem was also recognized as a top place to work for the fourth year in Pittsburgh, United States. THE SUSTAINABILITY YEARBOOK Braskem has been included for the third time in The Sustainability Yearbook, a publication prepared by RobecoSAM, an international investment consulting agency specializing in sustainability. The ranking lists the 457 most sustainable companies in the world, with Braskem among the leaders in the global chemical industry and classified in the Bronze category, which recognizes companies with ratings greater than 54 points and whose performance is between the 5% and 10% best evaluated in their sectors. 2016 | Braskem | Annual Report14 REGIONAL - BRAZIL DIVERSITY its sector to be on the list, according to the survey conducted by the site Love Mondays, specializing in evaluating careers. The survey, based on 12,000 interviews, defines a ranking of 200 companies, among which Braskem is listed among the top 10. In the area of diversity, Braskem is among the ten best evaluated by women in the labor market, taking ninth place and being the only one in GREEN POLYETHYLENE Green Plastic became the first product in the Brazilian petrochemical industry to have its carbon footprint certified by the new System of Measurement and Certification of the Carbon Footprint of Products by ABNT (Brazilian Association of Technical Standards). The measurement confirmed that the product has a negative footprint (-2.78kg of CO2eq per kg of product), in other words, it helps to sequester CO2 emissions from the atmosphere. FGV recognized two initiatives: CENTER FOR SUSTAINABILITY STUDIES (GVces) OF FGV-EAESP • The increase in the use of video-conferences to reduce travel was highlighted in the study “Sustainability in the area of Information Technology,” from Insight Case Studies magazine, from the Getúlio Vargas Foundation. A total of BRL 4.1 million was saved through 3,270 video-conferences, which avoided the emission of 1,238 tons of GHG (CO2e). Less Loss, More Water: An initiative by the Brazilian Network of the Global Compact, which has Braskem and SANASA as leaders, • was recognized by GVces Corporate initiatives among the 10 best cases of water resource management in Brazil. ISE BM&FBOVESPA BRAZILIAN GHG PROTOCOL PROGRAM In 2016, Braskem was selected for the 12th time to be a part of the Corporate Sustainability Index (ISE) of the Brazilian Stock Exchange (BM&FBOVESPA). The Company has been part of this index since its inception in 2005, and its permanence reflects its commitment to best practices of Corporate Governance, social responsibility, economic and financial management, and environmental preservation. Braskem’s inventory of greenhouse gas emissions (GHG) received, for the sixth consecutive year, the Gold classification of the Brazilian GHG Protocol Program, due to coverage of emissions 1, 2, and 3 with independent external assurance. The classification was granted in 2016, based on the last inventory, in 2015, calculated by the Company. ECO 2016 AWARD sustainability practices in processes and products or services. Braskem was the winner in the Processes – Large Companies category - with Braskem Labs, an incentive program for entrepreneurs. In its 34th edition, the award had 71 entries, highlighting projects that reduce energy and water consumption The Eco Brasil Award, carried out by Amcham (American Chamber of Commerce), and the newspaper O Estado de S. Paulo, recognizes corporate in the production process, reduce waste emissions, and certify a sustainable chain. GE ECOIMAGINATION AWARD Braskem won the Ecomagination Award, awarded by the GE Company to clients who achieved the positive balance between industrial production and sustainability challenges. The Mobile Reverse Osmosis System, implemented at PP 4 ABC in São Paulo (Brazil), was recognized for its high positive impact, exemption of Health, Safety, and Environment risks (HSE) related to handling hydrochloric acid and sodium hydroxide (caustic soda), economic gains of US$ 950,000 per year and for optimizing the use of 128.115 m³ per year of drinking water, in addition to the guarantee of continuing to use demineralized water in the Company’s production process. The Braskem GHG emissions inventory received, for the sixth consecutive year, the Gold classification of the Brazilian GHG Protocol Program 2016 | Braskem | Annual Report02. SUSTAINABILITY STRATEGY 15 Strategic macro objectives: ratified to the goals for 2020. ASSESSMENT OF IMPACTS REGARDING HUMAN RIGHTS. 280 million SINCE 2002, INVESTMENTS OF AROUND BRL 280 MILLION IN IMPROVEMENTS IN WATER EFFICIENCY AND OVER BRL 100 MILLION TO IMPROVE OPERATIONAL AND ENERGY EFFICIENCY. 86% THE IMPLEMENTATION LEVEL OF THE TEN MACRO OBJECTIVES REACHED 86% IN 2016. 2016 | Braskem | Annual Report16 For Braskem, to evolve is to grow sustainably. This is a principle that and the relation to risks and Active participant in the process and sanitation; Decent work and is materialized by the constant search for innovative solutions, created opportunities associated with with the purpose of creating value to the business and reputation to the a given macro objective. The brand, while minimizing any possible environmental and social impacts sponsors are responsible for for developing these SDGs during Rio+206 and aware of its role in creating a green and economic growth; Responsible consumption and production; Industry, innovation and caused by the Company’s activicties. establishing, maintaining, and increasingly inclusive economy, infrastructure; Sustainable cities The Company seeks to develop the sustainability strategy aligned of the Business strategy and UN commitments as an integral change. with day-to-day business practices. Since 2002, Braskem has invested the corresponding sustainability part of its 10 strategic macro around R$ 280 million in improvements in water efficiency and over R$ objectives. objectives for sustainability. Some of the actions include 100 million to improve the operational and energy efficiency of all its investing in innovation and industrial units in Brazil and abroad, adopting innovative processes and The sponsors’ recommendation Based on a correlation process, technology to create new and strengthening the integration Braskem has inserted all 17 and communities, and Climate technologies. SUSTAINABILITY ALIGNED WITH BRASKEM’S BUSINESS One of Braskem’s ten strategic macro objectives (MOs) is to be among the business benchmarks in Brazil and worldwide for its contribution to Sustainable Development. was validated by Braskem’s the Company defined 79 sustainable products; promoting Business Leader and Vice concrete contributions that can recycling solutions for plastics; Presidents. The evolution of the be put into practice through local development through work was systematically reported its businesses and products. training of people, suppliers to the Company’s Sustainability Among the 17 objectives, and customers; improving Committee, aiming to promote seven were defined as more management practices, targeted decision-making, impacting and with a higher especially those related to focusing on the long term. The degree of contribution. They gender equality, discrimination implementation level of the ten are: No poverty; Clean water and transparency. macro objectives reached the 86% mark. Macro objectives and the Sustainable Development Goals (SDGs) Defined by the United Nations (UN) in 2015, today the Sustainable Development Goals are the new benchmark for governments, civil society and MACRO OBJECTIVES FOR SUSTAINABLE DEVELOPMENT See the infographic on page 17 to understand how the strategic macro objectives for sustainability correlate with the UN Sustainable Development Goals With this vision and focus on growth opportunities for the coming other partners in designing years, Braskem defined its work foundation based on ten strategic business strategies focused on macro objectives for sustainability. Strengthened in 2016 and with eradicating poverty, promoting new goals to be achieved by 2020, this work guides Braskem’s prosperity and well-being actions at all levels and its implementation and results are monitored protecting the environment and by sponsors from several areas, chosen by their area of operation addressing climate change. 6 Held in Rio de Janeiro in 2012, Rio+20 (or United Nations Conference on Natural Development) aimed to discuss the renewal of political commitment to sustainable development. BRL 280 MILLION invested in improvements in water efficiency. 2016 | Braskem | Annual Report2016 | Braskem | Relatório Anual 2 17 Macro obje tiv s To be among the benchmarks in Chemical, Occupational, and Process Safety in the Global Chemical Industry. To be one of the global benchmarks in the sector for its contribution in Sustainable Development. INTERRELATIONS FOR SUSTAINABLE DEVELOPMENT G4-15 All macro objectives defined by Braskem contribute to the 17 UN Sustainable Goals. Development Braskem took part in the the process for defining SDGs between 2012 and 2015 as a Member of the Brazilian Committee of the Global Compact, actively participating in the Sustainable Development Summit. To be recognized as a company that supports its Clients in the development of environmental and social solutions in Chemistry and Plastics, through its products & services. To achieve the "excellent" reputation level in the Citizenship dimension of the RepTrak® Pulse, being recognized by the Community and Society for its contribution to improving human development. Sustainable Development Goals To be among the top three thermoplastic resin producers in the world while maintaining the Investment Grade rating in the three major international agencies. o Goal 2020 Post-consumption o To be one of the five largest traders of polyethylene (PE) and polypropylene (PP) from recycled content in the world and become an important driver of the growth of plastic recycling in Brazil. To be among the leading producers of chemicals and thermoplastic resins from renewable raw materials. And remain the world's largest producer of thermoplastic resins from renewable sources. To be among the benchmarks in the use of water resources in the global chemical industry in terms of water consumption and water reuse rates. To be among the best major chemical industries in the world in intensity of energy consumption and to be a major user of renewable energy sources. To be among the world's best major chemical companies in intensity of Greenhouse Gas (GHG) emissions while maintaining the use of renewable raw materials. 2016 | Braskem | Annual Report Multiplier Effect of Sustainability Strategies G4-18, G4-19, G4-20, G4-21, G4-24, G4-25, G4-26, G4-27 Braskem is aware that achieving Braskem’s Materiality Matrix Matrix show the aspects of the goals is only possible reflects this concern in constantly greatest importance to Braskem’s through clear, open, and reducing possible negative stakeholders and are aligned transparent communication with impacts and increasing the with the ten strategic macro all its stakeholders, including positive impact of its business objectives for sustainability, in a partners in the private sector, and its presence in different prospect up to 2020. governments, and civil society. locations. The results of this MATERIALITY MATRIX High 21 3 23 1 5 2 8 4 28 26 13 27 LEVEL OF IMPACT BRASKEM Medium 22 11 Low 6 18 Irrelevant 16 9 19 7 20 10 25 17 24 29 11b 12 7a 14 15 Irrelevant Low Medium High LEVEL DEGREE TO STAKEHOLDERS 18 TO LEARN MORE ABOUT BRASKEM’S SUSTAINABILITY STRATEGY, VISIT www.braskem.com.br/material- issues-assessement Environmental MATERIALIDADE Critical High Moderate Low BRASKEM’S LEVEL OF CONTROL OR INFLUENCE UPON THE ASPECT Minimum Low Medium Strong MATERIAL ASPECTS (1) Non-renewable resources (2) Water (3) Climate change and energy (4) Air (5) Waste (6) Transportation (7) Biodiversity (7) 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) Property security (17) Safe use of products (18) Grievance mechanisms (19) Suppliers – social management Economy and governance (20) Economic Performance (21) Social investments and community (22) Public assistance (23) Local suppliers (24) Free competition (25) Corruption (26) Public policies (27) Product development - social (28) Labor from Local Communities (29) Transparency and integrity 2016 | Braskem | Annual Report19 MAPPING OF STAKEHOLDERS Category of stakeholders interacting with Braskem Stakeholders Means of engagement Political/strategic Trade unions, regulatory agencies, professional associations, executive branch, legislative branch, public prosecutor’s office, Meetings, Reputation Survey* environmental agencies, public/regional opinion, NGOs, financial market analysts, auditors Industry Influenciators Competitors, trade associations Media Industry trade shows, Participation in sector meetings Coordinators, specialized media, general media, social networks/ Press Releases, Meetings, Interviews, Reputation Survey* virtual environment Academy Research centers, schools, researchers, universities, Meetings, Reputation Survey*, Projects in partnership technical schools Suppliers Meetings, E-Mails, Internet Channel with exclusive access, Raw materials, Petrobras, indirect materials, services, technology Reputation Survey* Financial market Controlling shareholder, minority shareholder, board of directors, financial institutions, debt provider, banks Team Members Team Members, third parties Communities Meetings, Website “Investor Relations”, Reports, Video conference on results E-Mails, Internal Campaigns, Newsletters, Safety Dialogues, Recognition Award, Intranet, Reputation Survey*, Climate Survey (every two years), Communication Survey (every two years) Projects, Direct Relationships with Local Representatives from the Residents, local leadership, partners initiatives Institutional Relations Area, Reputation Survey* Society Abc 18+/ national, families of Team Members Reputation Survey* Facilitators Impacting Beneficiaries Clients Clients of end consumers distributor, Unib, Unipol, Unvin, international Meetings, Visits to Facilities, Technical and Relationship Events, Industry Trade Shows, Sponsorship, Internet channel with exclusive access, Sales support service by account managers, Technical development agenda, Reputation Survey* *The reputation survey has been carried out each year since 2009, with the support of the Reputation Institute. The program relies on an Image and Reputation Management Committee, with participation of representatives of all Company areas, responsible for discussing the main risks and opportunities in the production process and the strengthening of the trust of Braskem’s stakeholders. 2016 | Braskem | Annual Report20 Human Rights G4-18 Commitment to the principles and Organization (P&O), Health, that govern Human Rights Safety, and Environment (HSE), worldwide is embedded in Procurement, Legal, Corporate Braskem’s values, expressed in its Governance, Compliance, and Code of Conduct and in voluntary external partners. Over 100 agreements - such as the Global documents were also provided Compact - aimed at promoting and analyzed in order to sustainable development. map procedures and identify key risks, opportunities, and Braskem carried out an assessment vulnerable groups. focused on the practices of protecting and promoting With this, Braskem has created fundamental guarantees to all a risk matrix of Human Rights human beings, regardless of violations, which is being validated gender, ethnicity, belief, age by the Leaders. In 2017, Braskem group, or any other social status. will provide additional information This assessment was developed on this aspect on its website. based on the UN Guidelines on Business and Human Rights The purpose of this work is to (Ruggie´s Framework), and establish an integrated, strategic included the following phases: and continuous management of Sector Benchmark, Corporate and this aspect. Accordingly, based on Chain Impact Assessment, and the recommendations received, GAP Analysis. Braskem will engage its internal and external stakeholders in order The work encompassed the to motivate them to improve the Company’s operations in current action plans, in addition Brazil, Mexico, the United to reporting the evolution of the States, and Germany, as well results. The Company’s perspective as the activities of external is that, in 2018, the assessment stakeholders. Several Team of impacts on Human Rights will Members were interviewed, be strengthened and integrated among them those responsible into the process of reviewing the for internal areas such as People Braskem´s Materiality Matrix. 2016 | Braskem | Annual ReportBraskem Idesa The Company’s commitment to protecting and promoting human rights goes beyond geographical and cultural boundaries. Braskem Idesa, a joint venture between Braskem and the Mexican group Idesa, were conceived with prerogatives of sustainability and human rights. Therefore, in addition to following Braskem’s global corporate policies, such as the Code of Conduct for Team Members, the unit has a policy focused on Human Rights, which includes procedures that guarantee excellent social and environmental performance: • Health and Safety: Accident frequency rates with and without lost time during the construction phase were less than one accident per million man-hours worked, 21 • New Opportunities Program: • Biodiversity: 400 hectares of An initiative created to support reforested area, 529 specimens professional relocation after of the local wildlife rescued and completion of the construction five-fold increase of 331 plants work on the Braskem Idesa of the rare endangered species Pe t r o c h e m i c a l C o m p l e x , “Ceratozamia Miqueliana.” ensuring the inclusion of 6,500 people in selective processes. • Preservation of Cultural Heritage: The construction • Private Social Investment: works were monitored by After identifying regional a team of specialists from talents, 200 people from the the National Institute of community (93% women) Anthropology and History were trained to be suppliers (INAH) to ensure that any for Braskem Idesa and other archaeological remains companies in the region (legal were properly identified and constitution of 11 cooperatives recovered. Currently, over of cleaning products, uniforms, three thousand pieces have and tilapia and chicken been found and are part of farming, as well as recycling the collection of the INAH- materials made available by Veracruz Center. the Company). • Participatory Environmental to carry out third-party audits M o n i t o r i n g : C o m m u n i t y to ensure compliance with Braskem Idesa will continue winning the DuPont Safety and • Diversity: During the • Human Rights Training: representatives were trained principles governing Human Sustainability Award 2015, as a construction phase, women’s Over 500 people were trained to measure levels of air and Rights, and, together with worldwide highlight in the area of participation was 8%, a highly in different aspects, including water contaminants, as well as Braskem’s other businesses, will Industrial Safety. In 2016, its first representative rate when sexual harassment and dust and noise levels. These intensify the promotion of the year of operation, this rate was compared to the Mexican national mobbing, in which there was a people perform environmental Ethics Line Channel through an 0.67, lower than the average for average of 3.5%. In addition, reduction of 40% of the cases monitoring, guaranteeing the educational process. the Chemical Industry in Mexico workers came from 24 different reported. determined by the National nationalities, but with great use transparency of the results which, so far, have not been Association of the Chemical of local labor, which represented • H u m a n D e v e l o p m e n t : any different than the initial Industry in Mexico (ANIQ). 85% of the workforce. The current 670,000 training hours to environmental parameters. diversity ratio in the workforce is ensure better professional 31% women and 69% men. qualification. 85% OF LOCAL LABOR in addition to workers of 24 different nationalities. 2016 | Braskem | Annual Report 22 Forums and Commitments G4-14, G4-15, G4-16 CDP The participation in working groups and forums, with the specific purpose of multiplying positive practices and experiences, is a strong part of Braskem’s sustainability strategy. In 2016, the Company supported a coalition of organizations called the IEC (Iniciativas Empresariais em Clima - Business Climate Initiatives) in order to adopt a series of recommendations to be submitted to the Government about the best model for Brazil regarding pricing and constituting a carbon market. ICCA (INTERNATIONAL COUNCIL OF CHEMICAL ASSOCIATIONS) Braskem is part of the executive leadership group and acts in energy, climate change, and chemical safety working groups of the International Council of Chemical Industry Associations. The Company also contributes with initiatives such as the Responsible Care Program, which, since 1992, has sought to improve the environmental management of chemical companies and their production chain in Brazil, and the Global Product Strategy (GPS), a program that seeks to promote the recognition and dissemination of possible risks to workers, consumers, and the environment, arising from the production, handling, and sale of chemical products. Support for these initiatives occurs through Abiquim and the American Chemistry Council (ACC), respectively. CARBON PRICING LEADERSHIP COALITION (WORLD BANK) In 2015 Braskem became part of this World Bank initiative that seeks to mitigate climate change by introducing carbon pricing mechanisms. In 2016, Braskem was part of this organization’s Steering Committee. Launched in 2000, the program aims to collect and publish data on greenhouse gas (GHG) emissions from companies in over 60 countries. CDP is an international organization with a global reporting platform that works with investors around the globe in order to increase investment opportunities, contributing to more consistent information for decision-making and risk assessment associated with climate change. CDP operates a standard system for recording and evaluating company strategy and performance, recognizing best business practices in this aspect. GLOBAL COMPACT Braskem has been a member of the Global Compact’s Brazilian Network Committee since 2008 and the Global Compact’s LEAD group since 2013. The Company is also part of UNIDO’s Green Industry Platform initiatives, Caring for Climate of the Global Compact, and Women’s Empowerment Principles of UN Women. BRAZILIAN BUSINESS COUNCIL FOR SUSTAINABLE DEVELOPMENT (CEBDS) One of the founding companies of CEBDS and representative of the World Business Council for Sustainable Development (WBCSD) network. The initiative has nearly 60 national and regional councils in 36 countries and 22 industrial sectors. GETÚLIO VARGAS FOUNDATION - COMPANIES FOR THE CLIMATE Braskem has been participating in the Companies for the Climate initiative since 2012, a business platform created by the Center for Sustainability Studies at the Getúlio Vargas Foundation (FGV). BUSINESS CLIMATE FORUM (ETHOS INSTITUTE) In 2015, the Company extended its voluntary commitments to improving the levels of greenhouse gases reduction by signing the Open Letter to Brazil on Climate Change. 2016 | Braskem | Annual Report23 TO LEARN MORE ABOUT THE FORUMS AND ORGANIZATIONS OF WHICH BRASKEM IS A PART, THEIR AGENDAS, AND HOW BRASKEM IS ENGAGED, VISIT www.braskem.com > voluntary commitments AKATU INSTITUTE Non-governmental, non-profit organization that works to promote conscious consumption. Braskem supports the Institute and sponsors the Edukatu program, an initiative aimed at sustainability education, launched in 2013. TRATA BRASIL INSTITUTE Civil Society Public Interest organization, aiming to coordinate national information and mobilization initiatives, so that Brazil may achieve universal access to basic sanitation. INTERNATIONAL DECLARATION ON CLEANER PRODUCTION Part of the United Nations Environment Program (UNEP), seeks to disseminate environmentally clean production policies and more sustainable production and consumption practices. BUSINESS COMMITMENT FOR RECYCLING (CEMPRE) A non-profit association dedicated to promoting recycling and integrated waste management. PLASTIVIDA Entity that institutionally represents the industry production chain in order to promote the importance of plastic in modern life and promote its environmentally correct use, while prioritizing social responsibility initiatives. FISCAL CITIZENSHIP CENTER (CCIF) Independent think tank whose goal is to contribute to simplifying the Brazilian tax system and improving the country’s fiscal management model. 2016 | Braskem | Annual Report03. Governance and Compliance Global Compact – Principle 10 24 Braskem’s commitment to continuous improvement of its Corporate Governance and Compliance model. CREATION OF THE COMPLIANCE COMMITTEE, TO SUPPORT THE BOARD OF DIRECTORS. HIRING A COMPLIANCE OFFICER TO LEAD THE COMPLIANCE AREA AND REPORT TO THE COMPLIANCE COMMITTEE. ACTING WITH ETHICS, INTEGRITY, AND TRANSPARENCY IN ITS BUSINESS POLICIES. 416 leaders TRAINING IN COMPLIANCE CONDUCTED IN 10 DIFFERENT LOCATIONS, REACHING AN AUDIENCE OF 416 LEADERS. 2016 | Braskem | Annual Report25 Braskem believes that action excellence practices to ensure based on ethics, integrity, and the implementation of a solid transparency is essential to the Compliance Program, such as Survival, Growth, and Perpetuity the creation of a Compliance of its Business. This belief Committee composed of three requires constant evaluation and Board Members, two of which updates of its Business Policies, are independent members who among them those that govern directly report to the Board Compliance. Thus, in 2016, the of Directors. In addition, the Company began a process of Program also promoted: An revising its structure, focusing increase in the number of on improving and strengthening independent members on the compliance in business practices Board of Directors; an increase and processes. in the number of Compliance Members in the areas of Internal This initiative aims to further Controls, Risk Management, improve the concepts and Compliance, and Internal guidelines that drive the Auditing; the approval of the corporate actions of Braskem’s Compliance Policy by the Board Team Members and support of Directors, which includes relationships with Shareholders, the Anti-Corruption, Antitrust, S u p p l i e r s , C o m p e t i t o r s , and Related Party Transactions G o v e r n m e n t s , C o m m u n i t i e s , Policies; the evaluation and other stakeholders, and society improvement of Internal Controls in general, significantly reducing regarding processes that have the possibility that deviations of presented vulnerabilities in the a similar nature occur again. past; outsourcing and improving Search for evolution in these the reporting channel, the “Ethics processes resulted in several Line”, and other initiatives. actions based on market 2016 | Braskem | Annual ReportBRASKEM COMPLIANCE PROGRAM In 2016, Braskem reviewed its and Remediation. Prevention COMPLIANCE SYSTEM MODEL Governance and Compliance is always better and less processes, focusing expanding security on and costly than a cure. Thus, preventive measures are the protecting the Business. In most important ones to be this context, Braskem’s Board implemented and followed, of Directors approved the and should be made a priority creation of the Compliance for the Leaders, investments, Committee directly related to and other uses of Braskem it. In addition, the Company resources. hired a new Compliance Officer and revised the scope and Practicing the Compliance guidelines of the Compliance System is everyone’s area in order to ensure greater responsibility, especially the independence and autonomy Leaders’, and must occur for carrying out its activities. within the dynamics of the The new Braskem Compliance planning Action cycle and commitment, and Program’s System is based on ten its monitoring, evaluation, and measures, structured in three judgment, which permeates pillars: Prevention, Detection, Braskem. 7 8 Detect Leader Prevent 6 5 4 3 2 1 Remedy 9 10 26 1 2 3 4 5 6 7 8 9 Governance and Compliance Policies and Other Guidelines Risks and Controls Assessment Communication and Training Third-Party Compliance Engagement in Collective Actions Management of the Ethics Line Channel Monitoring of Risks and Controls Remediate Risk and Strengthen Controls 10 Disciplinary Measures COMPLIANCE MEASURES CASCADED INTO IN 151 INITIATIVES Since the 01. Governance and Compliance the beginning of 06. Engagement in Collective Actions COMPLIANCE MEASURES BY SUBJECT process review, ten new compliance measures have been established, already cascaded in 151 initiatives focusing on best 02. Policies and Other Guidelines 07. Management of the Ethics Line Channel 03. Risks and Controls Assessment 08. Monitoring of Risks and Controls 04. Communication and Training 09. Remediate Risk and Strengthen Controls governance practices. 05. Third-Party Compliance 10. Disciplinary Measures 15 51 7 25 11 13 5 14 8 2 2016 | Braskem | Annual Report BRASKEM GOVERNANCE MODEL G4-34, G4-39 ) G N I T E E M L A R E N E G ( S R E D L O H E R A H S STRATEGY AND COMMUNICATION COMMITTEE (CEC) PEOPLE AND ORGANIZATION COMMITTEE (CPO) INVESTMENT AND FINANCE COMMITTEE (CFI) Standing Committees to Support the Board of Directors COMPLIANCE COMMITTEE (CC) COMPLIANCE AREA ETHICS COMMITTEE BOARD OF DIRECTORS EXECUTIVE OFFICE FISCAL COMMITTEE (WITH RESP. OF AUDIT COMMITTEE) INDEPENDENT AUDIT DISCLOSURE COMMITTEE 27 C L I E N T S GENERAL SHAREHOLDERS’ MEETING (AG) The General Shareholders’ Meeting is the sovereign body, which has the power to decide all business related to the Company and to make the resolutions it deems appropriate for its defense and development. BOARD OF DIRECTORS (CA) Braskem’s Board of Directors is an autonomous body of a collegiate nature, composed of eleven members and their respective alternates, six of whom are Independent Directors, elected or dismissed at any time by the General Meeting. Its Chairperson is not a Company executive. The term of office of the members of the Board of Directors is two years, and reelection is permitted. STANDING COMMITTEES TO SUPPORT THE BOARD OF DIRECTORS The four Standing Support Committees are part of the Corporate Governance structure and aim to advise the Board of Directors on pre-established matters. The basic roles and responsibilities of the Support Committees to the Board of Directors, as well as the basic guidelines for their constitution, are described in the Board of Directors’ Rules of Procedure. • a Compliance Committee (CC) Created in 2016, the Committee has Support Permanent nature to the Board of Directors continuous regarding its commitment act with to transparency and integrity, in accordance with best Governance practices and applicable laws, standards, and regulations, as well as with Company Policies, monitoring conduct based on principles and ethical values. In this way, the Committee is responsible the monitoring of exposure to risks, internal control systems, and compliance with laws, standards, and regulations, among others. for ensuring • • People and Organization Committee (CPO) Its role is to evaluate, monitor, SUPPORT CORPORATE GOVERNANCE and review Policies and Programs in force, regarding the aspects of People and Organization, such as Remuneration, Health, Safety, and Environment, and the Private Pension Program. In addition, the CPO significant reviews changes in macrostructure and replacement and succession of executives in strategic positions. • • • • the analyzes Finance and Investment Committee (IFC) Evaluates new Policies, monitors and Policies regarding Financial in force Insurance and Management, Risks Financial Guarantees, Management, among others. It is also responsible for the investments subject to approval and investment monitoring. This committee is also responsible for contributing to the Braskem Business Leader Action Program proposal, prior to its presentation the Board of Directors, to the focusing investment financial on strategy, analyzing plan, and leverage goals. as provided by the Sarbanes-Oxley Act of the United States. Corporate Strategy and Communication Committee (CEC) Policies, Evaluates new the monitors and analyzes Policies current Capital Markets, concerning Social and Responsibility, Corporate Sustainability, as well as Institutional Image Programs. the Committee In addition, the general contributes guidelines and assumptions used as the basis for the preparation of the Braskem Business Leader Action Program. to of body FISCAL COMMITTEE (CF) Composed of five members and an equal number of alternates, the Fiscal Committee is an independent Braskem’s corporate administration that supervises the acts of the administrators to ensure compliance with legal and statutory duties, issuing opinions and providing information to the partners, and monitoring the internal audit. The committee has expanded powers, their INDEPENDENT AUDIT Responsible for independently issuing opinions on the Financial Statements in accordance with current legislation. STATUTORY EXECUTIVE OFFICE Officers are responsible for exercising the management of the Company’s business and functional areas, as well as for implementing the General Policies and Guidelines established by the Board of Directors. support in matters the commitment ETHICS COMMITTEE (CET) The Ethics Committee is an advisory and deliberative body whose purpose the Compliance is to involving Committee violations of to act ethically and with integrity and transparency. It is also responsible and for discussing the outcome of investigations of complaints in an exempt manner, and treating documents analyzed with absolute secrecy and confidentiality. information evaluating all 2016 | Braskem | Annual Report Internationalization and Improvement of Compliance The new structure of the Compliance area has also reinforced Braskem’s protection in the face of the Company’s more mature internationalization process, and for this, the team has already been planned with 20 Members who have global ramification. The guidelines are defined in the Brazilian matrix and passed on to representatives of other regions in the world with Braskem production units. In 2016, the Company hired executives responsible for compliance to work in the United States and Mexico, and in 2017 will have a representative in Europe. They also have autonomy regarding their respective executive offices, since they report to the Braskem Compliance area. Compliance Policy and Organization The implementation of the Compliance Policy and a new organizational structure brought improvements to the Company, but did not change its Organizational Culture. Based on the trust, delegation, and integration in relationships between Leaders and their Subordinates, in this new conceptual design, the Office’s main function is to define Braskem’s Compliance Guidelines and ensure its implementation by the respective areas. It is up to the Leader to maintain their autonomy and delegation, managing the risks inherent to the Business and to the processes, executing and monitoring the controls, and fulfilling their responsibilities, accountability, and purposes. 28 TRAINING IN COMPLIANCE The teams in the Compliance area visited the Company’s units to conduct training on Braskem’s Compliance System, the regulatory environment, and the new guidelines. In 2016, the training focused on managers, directors, vice presidents, and advisers, who are responsible for disseminating the practices among the teams and ensuring compliance with standards and processes. In just three months, 16 workshops were held at ten different locations, reaching an audience of 416 participants. In 2017, the center will also expand training to its Suppliers. New e-learning training related to specific issues in the Compliance Policy are being prepared and will be made available to key areas of the Company. 2016 | Braskem | Annual Report29 COMPLIANCE STRUCTURE In order to create value and contribute to Braskem’s competitiveness, productivity, and reputation, the Compliance Department works to help define Guidelines and Policies, disseminate Culture and Integrity, evaluate and manage Corporate risks and improve the Controls and monitoring environment. The Braskem Compliance Department operates in four segments: Internal Controls: responsible for ensuring the adequacy, strengthening, and operation of the Company’s internal control system. Advises Leaders in assessing the internal control structure at the process level for management controls, SOX controls, and compliance controls, and supports them in developing processes and controls to manage transactional risks in a preventive manner, addressing possible vulnerabilities. Risk Management: responsible for helping senior management identify corporate risks that may impact the possibility of attaining strategic objectives, as well as creating and protecting value for Shareholders. Supports Leaders in their responsibilities to identify risks with specialized technical and methodological risk management expertise. In addition, it assists Leaders in defining the action plans necessary to address the risks identified. Compliance: responsible for supporting Leaders in disseminating the Culture of Integrity and adherence to internal laws and regulations. Provides and manages the Ethics Line Channel, enabling the reporting of conduct not in accordance with an ethical, integral, and transparent action by Team Members, Third Parties a n d C l i e n t s . A d d r e s s e s a l l reports with independence and impartiality. The team is also responsible for conducting anti-corruption training for Team Members. Internal Audit: responsible for the independent and objective evaluation of the processes, verifying their effectiveness and compliance, aiming to add value and improve Braskem’s operations. To this end, in 2016, the team dedicated to structuring the area and developing an overall work plan, which was approved by the Compliance Committee in December 2016 and will be implemented beginning January 2017. 2016 | Braskem | Annual Report30 Compliance Policy The strengthening of Braskem’s based on guidelines determined continuous basis, the formalization Braskem defines ten commitments governance also involved the by the Board of Directors and and updating of its policies, assumed in this policy that must creation and approval of the best practices in the market. including those on Governance be implemented in a convincing, Company’s Compliance Policy. and Compliance, as well as their responsible, and unrestricted Braskem understands that effective implementation with manner throughout Braskem, Published in November 2016, operating with ethics, integrity, an educational, preventive, and without exceptions or leniency. the document was constructed and transparency requires, on a awareness-raising approach. THE TEN COMMITMENTS OF THE BRASKEM COMPLIANCE POLICY • Fight and not tolerate corruption in any form, including extortion and bribery. • Firmly and determinedly reject business opportunities that conflict with this commitment. • Adopt ethical, integral, and transparent principles in relationships with public and private agents. • Never cite cultural or normal market conditions as a justification for wrongdoing. • Ensure transparency in information about Braskem, which must be accurate, comprehensive, and accessible, and disclosed on a regular basis. • Be aware that deviations of conduct, whether by action, omission, or complacency, harm society, violate the law, and destroy the image of Braskem as a whole. • Guarantee at Braskem, and throughout its value chain, the practice of the Compliance System, always up to date with the best benchmark references. • Contribute individually and collectively to necessary changes in markets and in the environments where there may be incentive for deviations in conduct. • Incorporate to the Team Members’ Action Programs performance assessments to comply with the Compliance System. • Be confident that this commitment will keep us on the path to Survival, Growth, and Perpetuity. In 2017, all Team Members will receive a badge with the ten commitments for continuous ethical, integral, and transparent action. 2016 | Braskem | Annual ReportCommunication: transparency in Relations with the Market and Internal Audience 31 G4-58 As part of its legal commitments, Braskem regularly sends a set of information to the Brazilian Securities and Exchange Commission (CVM) and the São Paulo Stock Exchange (BM&FBOVESPA), and the New York Stock Exchange (NYSE), such as Standardized Financial Statements, Announcements, Material Facts, and others. In addition, members of the Board of Directors and the Fiscal Committee have an exclusive information channel, which may be accessed on the Braskem portal on the Internet, providing security, transparency, equity, and speed in the process of communicating with Shareholders. For the internal audience, Braskem’s communication channel, View, (intranet), available in Portuguese, English, and Spanish, disseminates Company national and regional news, corporate and business information, products, campaigns, internal processes, and acknowledgments. Braskem Global Agreement G4-SO5 in “Operation In March 2015, as part of Lava-Jato” the investigation, allegations made about defendants criminal proceedings were made public, according to which certain persons no longer linked to Braskem were involved in undue payments to obtain benefits through raw material contracts with Petrobras. In view of these facts, Braskem immediately approved the hiring of law firms with ample and proven experience in similar cases in Brazil and the United States in order to conduct an internal and independent investigation of said allegations, which was performed under the supervision of and in collaboration with public authorities of the Department of Justice and the Securities and Exchange Commission of the United States respectively). (DoJ and SEC, By mid-July 2016, the internal investigation had not obtained evidence proving the existence of illicit facts at Braskem. At the end of July 2016, Braskem received new information about deviations, the revealed collaborations of former Braskem administrators in the context of Odebrecht’s cooperation with the authorities. in commercial Based on this information, the internal investigation confirmed the existence of payments made by the Company between 2006 and 2014 to three companies located abroad, as intermediation services, and it was not possible to prove the effective services provided by such companies. As Braskem’s former administrators explained in collaboration process, these companies only transferred resources to a number of other companies, which the end made illicit payments to Braskem, involving issues such as the naphtha contract signed with Petrobras in 2009 and terminated in 2014, as well as changes in the federal and state tax legislation, to obtain tax incentives and monetization of tax their in credits that were already within the rights of Braskem. After confirming the illicit acts, on October 3, 2016, Braskem began discussions with the DoJ and the SEC to formalize an agreement resolving all the illicit acts identified and to seek a simultaneous agreement with the Brazilian authorities, and later on, with the Swiss authorities. As a result of these negotiations, on December 14, 2016, Braskem entered into a Leniency Agreement with the Federal Public Ministry (MPF). Shortly thereafter, on December 21, 2016, Braskem finalized the formal agreements with the DoJ and the SEC, as well as an agreement to terminate investigations Swiss by Attorney General (in conjunction with the agreement with the MPF, Global Agreement). The Global Agreement includes all the facts ascertained up to the date of its execution involving Braskem under Operation Lava-Jato. the abroad, value Under the terms of the Global Agreement, Braskem will pay the authorities, above-mentioned the in Brazil and approximate of total US$ 957 million, equivalent to nearly BRL 3.1 billion, which is approximately US$ 95 million (nearly BRL 316 million) due to the DoJ, US$ 65 million (nearly BRL 216 million) due to the SEC, close to CHF 95 million (approximately BRL 307 million) to the Swiss Attorney General, and approximately BRL 2.2 billion due to the MPF. to Also according the Global Agreement, Braskem committed to independent monitoring undergo for a term of up to three years by monitors designated by the US and Brazilian authorities, who will verify Company compliance with the obligations assumed in the agreements and evaluate its Compliance Program, with the purpose of reducing the risk of deviations recurring in the Company. 2016 | Braskem | Annual Report32 Code of Conduct: Ethics, Integrity, and Transparency G4-56, G4-57 Acting in accordance with ensure that the Company adheres model that remains in force in applicable laws, regulations, to the best global processes. order to ensure full assimilation policies and best practices is a of content by all Team Members. fundamental principle at Braskem. The content of the Code Effective Compliance represents an of Conduct is disseminated Braskem’s Code of Conduct is intangible asset for the Company to all Team Members of the translated into all the languages to protect and strengthen the Company. The process included of the countries where Braskem Business. Therefore, constant questionnaires on the subject has operations. It may be revision of the Compliance and electronic signature of the accessed on the corporate standards, as well as the Code terms of commitment with the intranet and the Company’s of Conduct, is a best practice to guidelines of the Code. It is a website. BRASKEM’S CODE OF CONDUCT HAS BEEN EXPANDED AND STRENGTHENED, AS PART OF THE COMMITMENT TO ETHICS, INTEGRITY, AND TRANSPARENCY, PRESENT IN THE COMPLIANCE POLICY, WITH A GLOBAL SCOPE AT BRASKEM. IT DEFINES THE VALUES, PRINCIPLES AND PRACTICES THAT GUIDE THE COMPANY’S CORPORATE CONDUCT. Pacts to Fight Corruption Braskem is committed to playing Responsibility. Braskem also an initiative that encourages Participation in collective actions an important role in the fight actively participates in the companies to adopt best through associations with other against corruption, working Integrity Working Group, which governance practices. Braskem companies and entities is a way to promote a more ethical assists in the implementation participates effectively in the of expressing the commitment of and integral business market. of policies that promote Anti-Corruption Working Group, the Braskem Leaders to sharing As part of this objective, the integrity and fight corruption, promoted by the Global Compact experiences, results, and Company is a signatory of the and mobilizes companies and Brazil Network, contributing to actions, to influencing and being Business Pact for Integrity business entities. the development of corporate influenced by best practices, and and against Corruption, an actions that fight corruption in to promoting improvements to initiative of the Ethos Institute The Company is also a signatory all its forms, including extortion the conditions of its markets and of Companies and Social to the UN Global Compact, and bribery. environments. 2016 | Braskem | Annual Report Ethics Line Channel G4-58 Cross-sectionally, Braskem MAIN RESULTS OF THE ETHICS LINE CHANNEL IN 2016 provides the Ethics Line Channel G4-HR3 in which all stakeholders may, in a safe and responsible manner, contribute information in order to maintain a sound, ethical, transparent, and productive corporate environment. This channel is accessible via the Internet on the Company’s website, or through a toll- free number in the languages of the countries in which Braskem operates. All the information received on the Channel is investigated, respecting and confidentiality independence, ensuring blowers and the security of the investigation. In 2017, the Ethics Line Channel will change and evolve. The system will be outsourced and specialized, providing greater impartiality and independence. The service will be customized, will operate 24 hours a day, and will be a reference tool for managing reports. Of the 85 cases opened in 12 founded cases were filed, which resulted in the following remediation 19 unfounded cases were closed. 2015, a total of 31 were measures: brought to 2016 under analysis and had their investigations closed during the year. • • • • • 2 Team Members terminations 2 Team Members warnings or suspensions 2 notifications to Partners 1 Partner removal 3 process improvements Of these, 62 analyses were completed and filed in 2016, of which 36 were founded and 26 were unfounded. Based on 36 founded cases, the following remedial measures were addressed by Compliance: • • • • • • 8 Team Members terminations 11 feedback events/warnings/suspensions to Team Members 5 partner removals 2 cancellations of contracts with partner companies 2 notifications/alignments to partner companies 5 process/control improvements Of these founded cases, three involved discrimination* and the respective remediation measures were: • • • 1 Team Member termination 1 Team Member warning/suspension 1 partner removal. *Discrimination: Includes Mobbing, Sexual Harassment, and Abuse of Power. Of the 44 cases from 2016 that started 2017 in the investigation process, 17 were completed and presented to the Ethics Committee on March 24, 2017, 44 cases opened in 2016 and 12 will be presented to the Ethics Committee scheduled for May 2017. began the year 2017 in the investigation process. Ethics Line cases are archived at the Ethics Committee’s quarterly meetings. The last meeting in 2016 took place on December 12. the anonymity of the whistle 106 cases opened in 2016 33 WEBSITE www.ethicslinebraskem.com TOLL-FREE NUMBERS: • Germany: 0800-183-0763 • Brazil: 0800-377-8021 • United States: 1-800-950-9280 • Holland: 0800-022-1787 • Mexico: 01-800-681-6940 2016 | Braskem | Annual Report34 1.7 million tons HISTORICAL RECORD OF EXPORTS: 1.7 MILLION TONS, 24% EXPANSION COMPARED TO 2015. 04. Financial Performance BRL 11.5 billion RECORD EBITDA IN BRAZILIAN REAIS (BRL 11.5 BILLION) AND IN DOLLARS (US$ 3.3 BILLION) • BRAZIL: BRL 8.5 BILLION • THE US AND EUROPE: BRL 2.5 BILLION • MEXICO: BRL 530 MILLION 4% IN 2016, RESIN PRODUCTION IN BRAZIL WAS 4.9 MILLION TONS, 4% HIGHER THAN 2015. 8.5 million tons BASIC PETROCHEMICALS: PRODUCTION OF 8.5 MILLION TONS IN 2016, 3% HIGHER THAN 2015 AND A HISTORICAL RECORD FOR THE COMPANY. BRL 3 billion VINYLS: NET SALES REVENUE OF BRL 3 BILLION IN 2016, AN INCREASE OF 9% OVER THE PREVIOUS YEAR. Polyolefins: HISTORICAL RECORD OF PRODUCTION OF POLYETHYLENE IN 2016, WITH 3.151 KTON. 2% IN THE UNITED STATES AND EUROPE, BRASKEM’S PRODUCTION AND SALES VOLUME REACHED 2 MILLION TONS IN THE YEAR, A GROWTH OF 2% OVER THE PREVIOUS YEAR. 42% ALSO IN THE RAMP-UP PROCESS, THE UTILIZATION RATE OF POLYETHYLENE (PE) PLANTS IN THE YEAR WAS 42%, WITH A PRODUCTION VOLUME OF 443 KTONS. 2016 | Braskem | Annual Report35 BRASKEM OPERATIONS: SOUNDNESS AND RECORD RESULTS IN 2016 G4-EC1 The maturing of Braskem’s world and prioritized operational in 2016, including exports, was global presence, coupled with efficiency initiatives to increase BRL 8.5 billion, representing greater gains in productivity the average utilization rate of 74% of the consolidated result from the improvement and the domestic petrochemical of the Company’s segments. synergy between operating and plants, whose index reached commercial units, ensured the a record 92% in the year, 3 In the United States and Company’s positive results in p.p. over the previous year. Europe, Braskem’s production 2016. The result was achieved even and sales volume reached 2 after a planned shutdown of million tons in the year, a 2% In 2016, Braskem registered the Bahia power station for growth over the previous year, a record EBITDA in reais (BRL approximately 40 days during reflecting an average operating 11.5 billion) and in dollars (US$ the fourth quarter of the year, rate of 100%, which was 2 p.p. 3.3 billion), which represented as well as the poor performance higher than 2015, both historical growth of 23% and 18%, of national economic activity. records for the units. The result respectively, compared to the was achieved due to the units’ previous year. This improvement Due to good operating good operating performance, is mainly explained by good performance, resin production together with a stronger demand operating performance, a in Brazil was 4.9 million tons for polypropylene in the regions, healthy level of resin spreads in 2016, 4% higher than 2015. especially in the American in the international market, In the year, Braskem’s strategy market, and also due to better a higher volume of Brazilian remained in service of the spreads in these regions. exports, the performance of US Brazilian market, guaranteeing and European operations, and exports of volume not sold The highlight of the year was the beginning of the contribution in the Brazilian market due the scheduled shutdown at the of the Petrochemical Complex in to weaker demand. In this Marcus Hook polypropylene Mexico. scenario, Brazilian exports plant in Pennsylvania, USA, reached a historical record, where improvements were In Brazil, the Company took totaling 1.7 million tons, a 24% made to increase nominal advantage of the synergy with expansion compared to 2015. production capacity by 64 kton its commercial offices around the The EBITDA of Brazilian units per year. 92% all time record in the use of Brazilian petrochemical plants. 2016 | Braskem | Annual Report36 COMMISSIONING THE UTEC PLANT IN THE UNITED STATES BRASKEM IDESA REACHES AN AVERAGE UTILIZATION RATE OF 73% IN ITS FIRST YEAR OF ACTIVITY In 2016, Braskem commissioned its first Ultra-High The year 2016 was also highlighted by the contribution of the result of the first year of operations Molecular Weight Polyethylene (UHMWPE) plant in the of the Braskem Idesa Petrochemical Complex in Mexico. In line with the estimates planned for the United States in La Porte, Texas. The unit will enable first year of activities, the unit recorded an average operating rate of 42% of the polyethylene better customer service in North America and Europe, plants and EBITDA of US$ 163 million (BRL 530 million), representing 5% of the total consolidated and starts operations supported by improvements at the EBITDA of Company segments. Pittsburgh Innovation and Technology Center in the United States aimed toward increasing research and development In 2016, the focus was mainly on stabilizing the production of the Petrochemical Complex, capacity in UHMWPE. The resin, developed from Braskem’s consolidating the service and relationship with Mexican Clients, and exporting in synergy with own technologies, is eight times lighter than steel and ten Braskem’s operations in other regions. times more durable than high density polyethylene (HDPE). Its diverse applications cover sectors such as automotive It is important to highlight the operational evolution of the Complex over the period. After the and transportation, electronics, fiber and textiles, cracker’s departure in March, the three polyethylene plants began operation in June, which enabled industrial and heavy machinery, material handling, oil and the average plant utilization rate to reach 42% in the second half of 2016, reaching 73% in the gas, pipelines and mining, porous plastics, and recreation. fourth quarter. FLEXIBILITY OF RAW MATERIALS IN BAHIA As part of the strategy to expand the diversification of raw materials for production, Braskem has made progress with the project at the Camaçari plant in Bahia (Brazil) toward making it suitable to receive ethane. With an investment of BRL 380 million and beginning operations scheduled for the second half of 2017, the project includes modernizing the industrial unit and adapting the region’s port infrastructure. By the end of 2016, Braskem had already invested BRL 120 million. In addition, the Company entered into a supply agreement with an affiliated company of Enterprise Products Partners L.P. (NYSE: EPD) for ethane imported from the United States. The term of the agreement is ten years and price based on the international benchmark Mont Belvieu. 2016 | Braskem | Annual Report37 IMPACTS OF THE GLOBAL LENIENCY AGREEMENT RISK RATING AGENCIES In 2016, Braskem maintained diversification of the raw material the investment grade rating by matrix by beginning operation at Under the Global Agreement, Company recorded a consolidated Standard & Poor’s and Fitch the Braskem Idesa Petrochemical Braskem will pay the authorities, net loss of BRL 2.6 billion in 4Q16, Ratings (BBB-) and presented a Complex (Mexico), the cash in Brazil and abroad, the total and BRL 729 million for the year. credit risk above the sovereign position maintained abroad, and approximate amount of US$ Loss attributable to shareholders by the three largest risk rating the availability of a revolving credit and the fact that the Company has operations outside of Brazil. Moody’s: in February, Moody’s downgraded Brazil’s sovereign rating and maintained the 957 million, equivalent to for the year was BRL 411 million. agencies: line available for withdrawal. negative outlook. According to approximately BRL 3.1 billion. Of this total, approximately US$ Except for the amount of the Fitch Ratings: in September Standard & Poor’s: despite 95 million will be paid in cash to Global Agreement mentioned 2016, Fitch reaffirmed Braskem’s the downgrade of Brazil’s the United States Department of above, as well as other non- global scale rating as BBB- sovereign rating by S&P in Justice (DoJ), US$ 65 million to monetary penalties imposed on and changed the outlook from February, Braskem had its global the United States Securities and Braskem under the terms of said negative to stable. This change rating reaffirmed at BBB- with Exchange Commission (SEC), agreement, the Company is not was supported by the Company’s a negative outlook, driven by approximately CHF30 million to the able to predict or measure at this strong cash generation, Braskem’s solid cash position the agency’s scale, the grade fell two steps to Ba2. In this sense, following the drop of the sovereign rating, Moody’s lowered Braskem’s risk rating by one grade to Ba1. Even with the downgrade, Braskem has a risk rating above the sovereign. Attorney General of Switzerland time the extent of the financial and nearly BRL 736 million to the and non-financial impacts, if Federal Public Prosecutor (MPF). any, that the confirmation of The remaining balance will be the allegations, possible actions paid by the Company as of 2018, of other authorities, parallel with approximately BRL 1.5 billion investigations, or the execution to the MPF, divided into six annual of the Global Agreement may payments restated according to the variation of the IPCA8 index, maturing on January 30 of each year, and approximately CHF64 cause for the Company, or the resources that may be necessary to remedy such occurrences. million to the Attorney General The Global Agreement may of Switzerland, divided into four have an adverse material annual payments, due on June 30 effect on Braskem’s business, of each year. reputation, financial condition, and operating results, as well Due to the provision of the fine as on liquidity and the price of referring to the Global Agreement securities issued by Braskem. in the fourth quarter of 2016, the 8 Broad National Consumer Price Index 2016 | Braskem | Annual Report38 RAW MATERIALS AND SOUND PETROCHEMICAL SPREAD LEVELS NET REVENUE 2016 Braskem’s consolidated net decrease in sales volume in the revenue reached US$ 13.7 domestic market, which dropped The average international spread than the previous year, due Also in 2016, the average oil billion, which was 3% lower 1% compared to 2015. of thermoplastic resins produced to a combination of a larger price was US$ 43 per barrel, than in the previous year. The by Braskem in Brazil remained at propylene supply and greater 17% lower than the average decline was explained by the In Brazilian reais, consolidated net a sound level, reaching US$ 677 PP demand in the US market. price in the previous year. 8% drop in the prices of resins revenue was BRL 47.7 billion, which per ton in 2016, down 3% from For the year, the average price This drop was reflected in and basic petrochemicals in was 2% higher than in the previous the previous year’s average spread.9 of propylene in the American the average price of naphtha the international market, due to year due to the depreciation of the Gulf (USG) was 12% lower in the international market in lower oil prices and the new resin Brazilian real from one period to the compared to 2015, reaching 2016, of US$ 385/t, a drop capacities, especially polypropylene, next. Excluding from the analysis Polypropylene (PP) spreads in US$ 759 per ton due to the in line with the drop in oil that began operating in China the resale of naphtha/condensate, the United States were US$ 702/t, which was 24% higher greater availability of the input in the region.10 prices when compared to the during the year. Another factor revenue increased by 1% in dollars previous year. contributing to the decline was the and 6% in Brazilian reais. 9 Difference between the price of petrochemicals and the price of naphtha, ethane, and propane for the raw material mix used in the Brazilian units. 10 Difference between the price of US PP and US propylene. 2016 | Braskem | Annual Report39 Results by Operational Segment in Brazil G4-EC1 The result of Braskem in Brazil is composed of the following segments: Basic Petrochemicals, Polyolefins, Vinyls, and Chemical Distribution. 1. BASIC PETROCHEMICALS Production in 2016 was 8.5 The volume of export sales million tons, 3% higher than was impacted mainly by the 2015 and a Company historical replacement of the exported record, while the average volume of propylene for supply utilization rate in the year was to the Client in the acrylic 92%, an increase of 3 p.p. complex in Bahia and by the compared to 2015, highlighting the petrochemical plants of São higher volume of transfer to the Polyolefins segment for PP Paulo, Rio Grande do Sul, and Rio production. The result was 705 de Janeiro. The Petrochemical kton, 7% less than the volume STRUCTURE OF THE BASIC PETROCHEMICAL SEGMENT The Basic Petrochemicals segment owns and operates four petrochemical complexes in Brazil (Camaçari, Triunfo, São Paulo, and Rio de Janeiro), where olefins, aromatics, and utilities are produced. The total annual ethylene production capacity of these industrial units is 3,952 kton, approximately 78% of which is naphtha-based, 16% is gas based, and the rest is ethanol-based. Of the total ethylene produced by the Basic Petrochemicals units, nearly 80% is transferred for consumption in the Company’s Polyolefins and Vinyls units. The segment’s annual propylene production capacity totals 1,585 kton and approximately 65% is transferred for consumption in the Company’s Polyolefins segment. FINANCIAL OVERVIEW (BRL MILLION) BASIC PETROCHEMICALS 4T16 (A) 3T16 (B) 4T15 (C) VAR. (A)/(B) VAR. (A)/(C) 2016 (D) 2015 (E) VAR. (D)/(E) Plant of Rio de Janeiro also recorded in 2015, which was Net Sales Revenue 6,548 6,409 6,297 2% 4% 25,063 24,270 3% stands out, due to the greater partially compensated by supply of ethane raw material, the increase in benzene and Cost of Goods Sold (5,315) (5,194) (5,247) 2% 1% (20,266) (20,053) 1% BRL 5.6 BILLION is the net revenue from exports, up 13% from 2015. with a record utilization rate. butadiene exports. The segment’s net sales revenue in Net revenue for exports was the Brazilian market reached BRL BRL 5.6 billion, up 13% from 19.5 billion, a 1% growth over the that in 2015, due to the previous year, driven by greater higher average exchange rate sales volume of the main basic between 2016 and 2015, in petrochemicals to third parties, addition to better prices of especially the redirection of sales some basic petrochemicals of gasoline for the domestic in the international market, market, showing a growth of 66% especially butadiene. compared to the previous year. Gross Income 1,233 1,215 1,051 2% 17% 4,796 4,217 14% Gross Margin 19% 19% 17% 0 p.p. 2 p.p. 19% 17% 2 p.p. SG&A (186) (198) (202) (6%) (8%) (698) (659) 6% Other Operating Income (Expenses) (268) (44) (159) 507% 69% (374) (178) 110% EBITDA for the Segment 1,076 1,274 986 (16%) 9% 4,910 4,440 11% EBITDA Margin for the Segment 16% 20% 16% (3 p.p.) 1 p.p. 20% 18% 2 p.p. 2016 | Braskem | Annual Report40 STRUCTURE OF THE POLYOLEFINS SEGMENT The Polyolefins segment consists of 18 polyethylene (PE) and polypropylene (PP) plants in Brazil, including the production of Green Polyethylene made from renewable raw material (sugar cane). The industrial operations include PE and PP plants located in the petrochemical complexes in Triunfo, Camaçari, São Paulo, Paulínia, and Rio de Janeiro, with a total production capacity of 3,055 kton of PE, with 200 kton of Green PE, and 1,850 kton of PP. VAR. (A)/(B) VAR. (A)/(C) 2016 (D) 2015 (E) VAR. (D)/(E) (8%) (1%) 20,307 19,986 2% 4% 2. POLYOLEFINS The production the of PE plants was 89% for the year, Janeiro (both in Brazil), as a Polyolefins segment in 2016 a growth of 2 p.p. compared to result of the improvement in the was 4,301 kton, a record 2015, mainly influenced by the propylene supply from the Basic production of polyethylene. better performance of plants Petrochemical segment. The result was obtained due located in the states of São to the better utilization rate Paulo and Rio de Janeiro. In PP The net sales revenue of the of the polyethylene (PE) and plants, the average utilization Polyolefins segment totaled polypropylene (PP) plants, which rate for the year was 86%, BRL 20.3 billion, a growth of also includes the production of which was 10% higher than in 2% compared to 2015. In the Green Polyethylene made from 2015, influenced by the better Brazilian market, the result was renewable raw material. performance of the plants driven by a greater volume of located in the state of São Paulo exports and better prices in the The average utilization rate of and in the complex in Rio de international market. FINANCIAL OVERVIEW (BRL MILLION) POLYOLEFINS Net Sales Revenue Cost of Goods Sold Gross Income Gross Margin SG&A 4T16 (A) 4,730 3T16 (B) 5,170 4T15 (C) 4,785 (3,731) (4,090) (3,659) (9%) 2% (16,041) (15,461) 999 1,079 1,126 (7%) (11%) 4,266 4,525 (6%) 21% 21% 24% 0 p.p. (2 p.p.) 21% 23% (2 p.p.) Other Operating Income (Expenses) EBITDA for the Segment (64) 694 (22) 849 (63) 829 193% (18%) (16%) 3,291 3,647 (10%) (348) (327) (348) 7% 0% 3% (1,304) (1,225) (120) (131) 6% (8%) EBITDA Margin for the Segment 15% 16% 17% (2 p.p.) (3 p.p.) 16% 18% (2 p.p.) 2016 | Braskem | Annual Report 41 3. VINYLS The Vinyls segment had net 528 kton, maintaining the same sales revenue of BRL 3 billion level recorded in 2015, since, in 2016, a 9% growth over the despite the market recession, the previous year. This increase Company increased sales to the is mainly explained by higher Agribusiness sector (irrigation levels of PVC prices in the tubes), reaching a market share international market and by the of 52%, which was 1 p.p. higher greater export efforts adopted than in 2015. by the Company to compensate for the recession of the domestic In 2016, the average utilization STRUCTURE OF THE VINYLS SEGMENT The Vinyls segment consists of the industrial and commercial operations of the PVC, chlorine, and caustic soda units, as well as other products such as hydrogen and sodium hypochlorite. Industrial operations include three PVC plants and two chlorine-soda plants located in the petrochemical complex in Camaçari and Alagoas. The Company’s annual production capacity for PVC and caustic soda is 710 kton and market. rate of PVC plants was 84%, an increase of 7 p.p. over 539 kton, respectively. In 2016, exports showed a 79% 2015, and production volume increase compared to 2015. In increased by 10% compared to the Brazilian market, sales totaled the previous year. FINANCIAL OVERVIEW (BRL MILLION) VINYLS Net Sales Revenue Cost of Goods Sold Gross Income Gross Margin SG&A Other Operating Income (Expenses) EBITDA for the Segment EBITDA Margin for the Segment 4T16 (A) 794 3T16 (B) 740 (732) (698) 4T15 (C) 724 (568) 156 VAR. (A)/(B) 7% 5% VAR. (A)/(C) 10% 2016 (D) 3,016 2015 (E) 2,780 29% (2,834) (2,416) VAR. (D)/(E) 9% 17% 62 8% (68) (48) 38 5% 43 6% (62) 0 75 45% (60%) 22% 2 p.p. (14 p.p.) (64) (42) 108 9% - 6% 14% (50%) (65%) 183 6% 364 (50%) 13% (7 p.p.) (241) (225) 7% 83% (32%) (27) 355 (49) 241 8% 10% 15% (5 p.p.) (10 p.p.) 13% (5 p.p.) 2016 | Braskem | Annual Report42 4. CHEMICAL DISTRIBUTION (QUANTIQ) Despite a higher sales volume, the results of quantiQ that influenced mainly by the better were reported in the Financial performance of commodities Statements of the report, but such as methanol and caustic are not included in social and soda, the segment’s net revenue environmental indicators. Its ended 2016 with a result 9% management was already lower than the previous year, carried out independently even totaling US$ 239 million. In before the sale of the company. Brazilian reais, net revenue quantiQ was sold on 1/10/2017 was BRL 831 million, down (signing), with closing of the 5% compared to net revenue transaction on 4/03/2017 in 2015. It should be noted (closing). STRUCTURE OF THE CHEMICAL DISTRIBUTION SEGMENT The Chemical Distribution segment has a portfolio of over 1,500 products. Products are classified as commodities, performance chemicals, and specialty chemicals. FINANCIAL OVERVIEW (BRL MILLION) CHEMICAL DISTRIBUTION Net Sales Revenue Cost of Goods Sold Gross Income Gross Margin SG&A Other Operating Income (Expenses) EBITDA for the Segment EBITDA Margin for the Segment 4T16 (A) 190 3T16 (B) 217 4T15 (C) 239 VAR. (A)/(B) VAR. (A)/(C) (12%) (20%) 2016 (D) 831 2015 (E) 875 VAR. (D)/(E) (5%) (153) (174) (195) (12%) (21%) (667) (693) (4%) 37 43 44 (14%) (16%) 164 182 (10%) 19% 20% 18% 0 p.p. 1 p.p. 20% 21% (1 p.p.) (31) (1) 6 3% (35) (1) 8 4% (32) (11%) (3%) (133) (123) 8% (2) 11 (36%) (66%) (18%) (44%) (1) 36 (5) 59 (87%) (40%) 5% 0 p.p. (1 p.p.) 4% 7% (3 p.p.) 2016 | Braskem | Annual Report43 OPERATING RESULTS ABROAD Braskem’s results abroad are composed of the industrial and commercial polypropylene units in the United States and Europe, and the Braskem Idesa Petrochemical Complex in Mexico. UNITED STATES AND EUROPE Due to the increased demand demand, especially in Europe. for polypropylene in the US and The Company’s net revenue European markets during 2016, reached US$ 2.6 billion, which the Company recorded positive was 3% higher than in the results when compared to the previous year, due to the previous year. In the period, increase in the price of PP in sales volume of polypropylene the US market and the increase (PP) increased 2% compared in sales volume. In Brazilian to 2015, due to the better reais, net sales revenue grew operating performance of the 8% due to the exchange rate BRASKEM BUSINESS STRUCTURE IN THE US AND EUROPE Braskem has six industrial plants in the US and two in Europe, with annual production capacity of 2,115 kton, of which 1,570 kton are in the United States and 545 kton in Europe. FINANCIAL OVERVIEW (US$ MILLION) UNITED STATES AND EUROPE 4T16 (A) 3T16 (B) 4T15 (C) VAR. (A)/(B) VAR. (A)/(C) 2016 (D) 2015 (E) VAR. (D)/(E) Company’s units and increased appreciation during the period. Net Sales Revenue 607 636 615 (5%) (1%) 2,548 2,478 3% Cost of Goods Sold (472) (446) (462) 6% 2% (1,750) (2,093) (16%) Gross Income 135 190 153 (29%) (12%) 798 384 108% Gross Margin 22% 30% 25% (7,7 p.p.) (2.7 p.p.) 31% 16% 15.8 p.p. SG&A (48) (46) (37) 5% 31% (162) (134) 21% Other Operating Income (Expenses) (4) 0 (3) - 56% (3) (2) (12%) EBITDA for the Segment 103 161 131 (36%) (22%) 695 317 120% EBITDA Margin for the Segment 17% 25% 21% (8.5 p.p.) (4.5 p.p.) 27% 13% 14.6 p.p. Net Sales Revenue – BRL million 1.997 2.066 2.363 (3%) (15%) 8.896 8.240 8% EBITDA for the Segment - BRL million 336 524 492 (36%) (32%) 2,461 1,110 123% 2016 | Braskem | Annual Report44 MEXICO In the first year of operation, rest was exported to several the average utilization rate of regions, among which are Asia, the polyethylene plants at the Europe, and the United States. Braskem Idesa Petrochemical Complex was 42%, registering In Mexico, the sales price for 443 kton of PE production in 2016. polyethylene (PE) is referenced In the year, 431 kton of PE were in the price of resins traded sold, including resale of resins, in the American Gulf region, to meet the Mexican demand for whose average amount in 2016 grades that are not yet produced was US$ 1,115/t, which was 9% during the ramp-up phase of the plants.11 below 2015. In this scenario, the net revenue recorded in 2016 was BRL 1.6 billion (US$ Of the total sold, 46% were to 474 million). the Mexican market and the BUSINESS STRUCTURE OF BRASKEM IDESA This business segment consists of an ethane-based cracker, two high density polyethylene (HDPE) plants, and one low density polyethylene plant (LDPE) with annual production capacity of 1,050 kton of PE. Since May 2016, the result of Braskem Idesa is no longer registered as a project and became a reportable operating segment. The same occurred with the result of the LDPE plant, but only as of August 2016. FINANCIAL OVERVIEW (BRL MILLION) MEXICO* 4T16 (A) 3T16 (B) 4T15 (C) VAR. (A)/(B) VAR. (A)/(C) 2016 (D) 2015 (E) VAR. (D)/(E) Net Sales Revenue 714 538 Cost of Goods Sold (428) (325) Gross Income 286 214 Gross Margin 40% 40% SG&A (73) (79) Other Operating Income (Expenses) (27) (43) EBITDA for the Segment 336 214 EBITDA Margin for the Segment 47% 40% - - - - - - - - 33% 32% 34% 0.4 p.p. (8%) (37%) 57% 7.3 p.p. - - - - - - - - 1,587 (1,017) 570 36% (246) (125) 530 33% - - - - - - - - - - - - - - - - 11 Ramp-up is a term used in economics and business to define the early stage of industrial production 2016 | Braskem | Annual Report05. Innovation Global Compact - Principles 7, 8 and 9 BRL 275 million in ANNUAL EXPENDITURES ON INNOVATION AND TECHNOLOGY 334 PROJECTS FOR THE DEVELOPMENT OF NEW PRODUCTS AND PROCESSES 12.4% IN THE LAST THREE YEARS, 12.4% OF THE SALES GENERATED BY THE POLYOLEFIN UNIT IN BRAZIL WERE BASED ON PRODUCTS DEVELOPED BY THE INNOVATION AREA 45 Development of a new Master Plan to increase the use of each country’s natural talent for Research and Development 2 INNOVATION & TECHNOLOGY CENTERS: TRIUNFO (BRAZIL) AND PITTSBURGH (UNITED STATES) BRL 1.3 billion FROM 2011 TO 2016, BRASKEM’S DISBURSEMENTS IN INNOVATION AND TECHNOLOGY TOTALED BRL 1.3 BILLION € 5 million INVESTMENT IN A NEW TECHNICAL CENTER IN GERMANY, REFLECTING BRASKEM’S PROGRESS IN ITS INTERNATIONALIZATION PROCESS, FOCUSING ON LOCAL CUSTOMER SERVICE 2016 | Braskem | Annual Report46 Braskem’s strategic vision is to support the development of the industry with investments in innovation and technology. The dynamics of its business activity, influenced directly by the constant oscillation of prices of commodities, requires that the Company keep below the industry average cost curve, something that can only be achieved by developing new solutions that provide greater gains in production efficiency. In addition, as a result of the Company’s global commitment to improving sustainability, innovations are also fundamental to reducing the environmental impacts inherent to large-scale industrial production and to generating new businesses resulting from disruptive creations that can guarantee the exclusivity of supply by protecting the patent right. 2016 | Braskem | Annual Report47 IN DECEMBER 2016, THE PORTFOLIO FOR THE DEVELOPMENT OF NEW PRODUCTS AND PROCESSES HAD TOTALED A POTENTIAL NET PRESENT VALUE OF BRL 8.5 BILLION. Innovation Structure In 2016, Braskem improved its innovation and technology structure, equipping units and reformulating processes and strategies for research and development (R&D). INNOVATION IN FIGURES 302 7 1 334 Team Members Pilot plants Renewable Chemicals Research Projects for the development of Center in Campinas (SP) new products and processes 2 2 1 10 Technical Centers: Wesseling Technology and Innovation Process Technology Development New patent applications (Germany) and Coatzacoalcos Centers: Triunfo (Brazil) and Center in Mauá (SP) and 73 patent extensions (Mexico) Pittsburgh (United States) 2016 | Braskem | Annual Report48 Innovation Processes As part of the area’s efforts, Advisory Group, consisting of five Braskem has consolidated a external members, in five distinct master plan for investments in areas of expertise: Science innovation activities. Based on of matter, macromolecular this new global action dynamic, chemistry, polymer catalysis, Braskem aims to increase the use process and thermodynamics, of each country’s natural talent and renewable chemicals. for research and development of innovation, while stimulating In 2016, meetings were integration among its different held focusing on Braskem’s units. Innovation and Technology programs, in order to The Company makes decisions evaluate efforts undertaken in on innovative projects and innovation based on scientific investment policies in science with the support of the Scientific opinion and in view of global technological trends. 2016 | Braskem | Annual Report49 Investments From 2011 to 2016, Braskem’s carried out jointly with clients INAUGURATION OF THE TECHNICAL CENTER IN EUROPE - WESSELING (GERMANY) With a €5 million investment, the new Wesseling Technical Center is a reflection of Braskem’s progress disbursements in innovation and partners. Contributions to in its internationalization process and reinforces its commitment to Clients and the European market in and technology totaled BRL new structures and purchases of developing new products and applications, which will contribute to expanding the portfolio and the technical 1.3 billion. This is a strategic equipment in 2016 totaled BRL assistance provided. PROCESS TECHNOLOGIES DEVELOPMENT LABORATORY (LDTP) Located at the Mauá petrochemical complex in São Paulo (Brazil), the LDTP received an investment of BRL 4.4 million in 2016 to modernize and acquire equipment, which will make it possible to strengthen the development of resin production process technologies, basic petrochemicals, and specialties. investment, since it also serves 31 million. to support innovation initiatives TECHNOLOGY AND INNOVATION CENTER, TRIUNFO (RS) Among kayaks, and agricultural parts, the most outstanding contributions during the year was mainly geared toward the civil the investment of BRL 2.2 million construction and retail markets. to qualify the Technology and The investment also includes a Innovation Center in Triunfo (RS). micronizer and auxiliary equipment Rotomoulding equipment was acquired, a segment characterized that will be used to support Clients with the new developments. The by the production of large, hollow inauguration event of the new pieces, such as water tanks, laboratory will take place in 2017. cisterns, children’s playgrounds, TECHNOLOGY AND INNOVATION CENTER, PITTSBURGH (UNITED STATES) At the Technology and Innovation tools available in polymer science Center in Pittsburgh, Braskem laboratories. The investment invested US$ 845,400 (BRL 2.3 allows Braskem to access this million) in upgrading the Nuclear state-of-the-art technique and Magnetic Resonance (NMR) seeks to expand and intensify equipment. NMR is one of the the understanding of modified most powerful structural analysis polymer resins and catalysts. 2016 | Braskem | Annual ReportProducts and Solutions Development G4-8, G4-EN27 Braskem’s growth strategy is products developed by the based on developing sustainable Innovation area. and value-added solutions for different production chains that In 2016, the Company supported use plastic as an essential raw 470 Clients, with the aid of material when manufacturing its 20,000 support analyses from end products. the Technology and Innovation Center of Brazil, and another To this end, the Company makes 60 Clients with approximately significant investments in the 16,000 analyses in the United research and development (R&D) States. of new products and services adhering to its Clients’ business Regarding patents, the Company models in the various sectors of submitted 10 new patent the processing industry. In the applications and 73 patent last three years, 12.4% of the extensions. Throughout its sales generated by the Polyolefin history, Braskem has contributed Unit in Brazil were based on 1,030 patent documents. 50 Completing NEW BRASKEM RESINS AT K FAIR For other materials, and excellent time, Braskem the fifth transportation. participated in the 2016 K Fair in thermal and acoustic insulation, in the current portfolio, Braskem Frankfurt (Germany), the main addition to being totally recycled. Flexus Cling is recommended international event in the plastics and rubber industry. The Company With this resin, Braskem intends to establish partnerships for the for composing the outer layer of the film, providing the end exhibited a portfolio of innovative development of new applications product with excellent handling solutions developed throughout in the automotive, industrial, performance and low unwinding the year, among which we highlight packaging, civil construction, and force. the launch of Braskem Amppleo, a home appliances markets. polypropylene resin with High Melt Braskem Rigeo Lumios: New Strength properties. The resin, In addition to Braskem Amppleo, polyethylene resin that provides which was specially developed Braskem presented other high gloss and better finish for for the production of high innovative solutions during the hard blown-moded packages. performance foams, can withstand fair. Among them, the following This launch is in line with the temperatures up to 100°C without stand out: deforming, and enables the market trends and expands the supply of products to the manufacture of products with Braskem Flexus Cling®: packaging markets for cosmetics, widely versatile applications within Specially developed for stretch hygiene and cleaning, and a large density range (from 35 film extrusion, the polyethylene food, resulting in an even more kg to 300 kg per cubic meter), resin primarily serves the market complete portfolio with greater a reduced weight compared to of cargo protection during value added. 2016 | Braskem | Annual ReportBraskem Plastic in Space After over a year of operation and a NASA supplier. first piece made from Green research, in 2016, Braskem The technology enables the PE created off the Earth was completed the project to manufacture of tools and spare a pipe connector for irrigating develop a solution in Green parts in space made of resin vegetables. Polyethylene for 3D printing of renewable origin, giving in zero gravity environments. space missions more autonomy. The equipment, which will make The project was conducted Braskem’s Green Plastic is now through a partnership between being used to create parts several types of parts with the I’m greenTM Polyethylene (green plastic), is at the International Braskem’s Technology and in space using the Additive Space Station (ISS) and was Innovation team and Made In Manufacturing Facility (AMF) developed by Made In Space Space, a leading North American printer. Braskem’s UTEC with the support of CASIS company in the development (UHMWPE) was used in the (Center for the Advancement of of 3D printers for zero gravity creation of the printer. The Science In Space). A S A N : t i d e r c o t o h P 51 A S A N : t i d e r c o t o h P 2016 | Braskem | Annual Report 52 WECYCLE Wecycle, Braskem’s Brazilian resins, which, previously, were BRASKEM LABS In 2016, Braskem held the monitored by a Braskem Leader, relevant to the companies were platform for the recovery being discarded. Approximately second edition of Braskem selected according to the made on behalf of Braskem of plastic waste along the 120,000 big bag packages will Labs, an incentive program for similarity between their business Labs. Half the entrepreneurs production chain, achieved be recycled annually, which entrepreneurs that have solutions experiences and the challenges of said that the program generated important advances throughout should generate a potential focused on sustainability and each entrepreneur, having received business for their company, and 2016. volume of 30 tons per month of post-consumer recycled resin innovation, and have social at least four sessions of individual 75% developed improvements impact. The program, developed and collective mentoring on topics in their solution or even made The first polypropylene and (PCR). The novelty may be in partnership with Endeavor - a relevant to their business, as well a new product. Another 67% polyethylene resins made from applied in household utilities, global, non-profit organization as contents online, tailor made by obtained investment in 2016, and fully recycled content were garden products, and lids. fostering entrepreneurship - has Endeavor. Through the program, two entrepreneurs attributed the launched. Combined production broadened its thematic scope entrepreneurs also have access to result directly to their participation volumes can reach 50 tons Possible applications of by accepting applications for a network of strategic players in in the program. The overall per month. Braskem works in polyethylene WCL L004 SCV chemical solutions, as well as their market - including potential evaluation uses the Net Promoter partnership with recyclers in include bags, laminated looking at proposals for social Clients, partners, and investors, Score methodology, which shows São Paulo, which undergo an containers, tarpaulins, flexible and environmental solutions for as well as several Braskem teams, how much the participants would audit process that assesses packaging, and tubes, and it plastic. As a special topic of the such as Innovation, Sustainability, recommend the experience to legal, environmental, and social is produced from used and year, Braskem Labs will also select and Marketing. issues, as well as product discarded bags at Braskem two projects to combat the Aedes another entrepreneur at the same level. The result, of 9.1 out of a quality. Distribution Centers. The total aegypti mosquito. In all, 54 mentors became possible 10, indicates the highest volume of recycled resin can involved with the program, level of satisfaction and confirms The polypropylene WCL H reach 20 tons per month in 2017, In 2016, Braskem Labs received between Braskem Leaders and that respondents will indeed act 1003 BBM is produced from which represents the monthly 190 registrations, an increase of mentors from the Endeavor as promoters of the program. recycling big bags used by the recycling of approximately 19.5% over last year. Of the total, network. The entrepreneurs Company when transporting 200,000 bags. 12 projects sent by young Brazilian participated in three classroom entrepreneurs from the states training events and closed the of São Paulo, Santa Catarina, program with Demo Day, where Rio Grande do Sul, Amazonas, they presented their solutions and Pernambuco, were selected to an audience of 180 Braskem for development. The selected investors, mentors, partners and proposals were chosen considering clients. the innovation of the proposal, the business model, social impact, At the end of this edition, market potential, and entrepreneur Braskem spoke with participating profile of the proponents. entrepreneurs seeking their Participants were individually all, 48 business connections evaluation of the program. In LEARN ABOUT THE PROJECTS SELECTED ON BRASKEM LABS WEBSITE (portuguese only) 2016 | Braskem | Annual ReportODEBRECHT BRASKEM DESIGN CHALLENGE The Odebrecht Braskem Design A total of 24 students participated Challenge is an initiative that in the Challenge (forming eight encourages university students to teams) from four institutions develop innovative applications with traditional Architecture in plastic for urban furniture. In and Design courses: Pontifícia 2016, in its fourth edition, the Universidade Católica do Rio Company expanded the project de Janeiro (PUC Rio), Rio de and took it to Rio de Janeiro with Janeiro State University (UERJ), the goal of using the winning Federal University of Rio de pieces in public areas of Porto Janeiro (UFRJ), and Fluminense Maravilha, the central region of Federal University (UFF). the city that has undergone a revitalization process. With the central theme “Urban furniture for transforming spaces,” Braskem offered challenges to the participating university students divided in two categories: Food and Artistic Presentations; Rest and Work. The winners were, respectively, the Fluminense Federal University (UFF) and the Federal University of Rio de Janeiro (UFRJ). 53 SPONSORING THE BRAZILIAN PARA-ATHLETIC TEAM Overcoming is improving yourself every day. With this motto, Braskem, sponsor of the Brazilian Para- athletic Team since September 2015, reinforced the para athletes’ ability to overcome through the sport. In Brazilian para-athletics, plastic has a practical application, since it is part of the composition of prostheses, making them lighter and better adapted to the athletes’ legs, improving performance and comfort. In 2016, Braskem renewed its partnership with the Association for Assistance to the Disabled Child (AACD) and donated 18,000 tons of polypropylene to produce approximately 24,000 products, such as prosthetics, vests, and orthopedic appliances, among others. 2016 | Braskem | Annual Report54 Life Cycle Assessment Leader in industry initiatives to stages of manufacturing, power strengthen the environmental generation, and transport.) attributes of plastic, Braskem Between 2011 and 2016, a total has been developing several of 41 Life Cycle Assessments and projects based on Life Cycle five Carbon Footprint studies Assessment (LCA) studies, a were completed, identifying the technique used by the Company advantages and priority areas for since 2005 to assess the product improvement. environmental aspects and the potential impacts associated In addition, a methodology with the product (from the was developed to identify the extraction phase of raw materials alignment of the development from nature to final disposal projects of new thermoplastic after use, going through all resin applications with the Sustainable Development Goals (SDG). In 2016, the alignment level of the project pipeline was 84%. This action reinforces the Company’s role as a provider of social and environmental solutions for society and its purpose of improving people’s lives through chemistry and plastic. Throughout the year, Braskem completed a total of ten Life Cycle Assessment studies, among which the following stand out: Recycled Plastic Resins Casa Clic In 2016, Braskem presented who use recycled materials in new seeks to reduce the volume of In 2016, Braskem conducted study, carried out in partnership environmental profiles of packaging. The project, the result disposable packaging in landfills. an LCA study comparing the with GoClic (a participant of the mechanical recycling of of the Wecycle platform launched In LCA studies, these materials are PVC plastic solution applied to Braskem Labs), is aligned with polyethylene and polypropylene, in 2015, aims to stimulate capable of reducing environmental housing construction innovation the Sustainable Development promoting reduced environmental consumption of recycled plastic impacts associated with industrial with a similar traditional Goals of the United Nations impact of those who provide resins, and is in line with the production by 35%. masonry construction. The result (SDG 11), which aims to address material for recycling and those national solid waste policy, which was improved environmental the housing deficit in the world performance by about 16%. The using sustainable solutions. 2016 | Braskem | Annual Report06. Stakeholders Global Compact – Principle 1, 2, 3, 4, 5, 6 and 10 55 1.2% IN BRAZIL, THE VOLUNTARY TERMINATION RATE FOLLOWED THE DOWNWARD TREND OF RECENT YEARS: 1.2%. 77% FAVORABILITY IN THE WORK ENVIRONMENT SURVEY Braskem’s social investment in Brazil totaled approximately BRL 26 million in social and environmental and cultural projects. In the United States and Germany, Braskem invested over BRL 550,000, and in Mexico, BRL 1.3 million. 7,656 TEAM MEMBERS AROUND THE WORLD 90% OF PROFESSIONALS WOULD RECOMMEND BRASKEM TO A FRIEND WHO IS LOOKING FOR A JOB 2016 | Braskem | Annual ReportOne of Braskem’s fundamental principles is the practice of responsible management, based on trust and transparent dialogue with all its stakeholders, among which we highlight the Team Members, Communities close to their business activities, Clients, Suppliers, and Government, in their different spheres. Through coherent initiatives dedicated to each of these stakeholders, the Company seeks to integrate links, aiming to improve the life of society through sustainable solutions using chemistry and plastic. Team Members Global Compact - Principle 6 Braskem has a Management constant concern with training the continuous evolution of its Policy that puts people at the new generations and qualification management model. In 2016, the center of its Business strategy. of people to be an integral part Company achieved the voluntary The organizational culture of the of Braskem’s construction of the participation of 82% of its Team Company is based on principles future. that guide its actions with values Members, and the survey grew by nine percentage points compared such as trust in people, planned Periodically, in partnership with Great to the previous edition, in 2013, delegation, proximity between Place to Work consulting, Braskem reaching a favorability rate of 77%. Leaders and Subordinates, open conducts a Work Environment This result indicates an evolved communication, creation of Survey in all the countries where positive perception of the work a positive work environment, it is present, in order to support environment offered by Braskem. 56 Work Environment Survey DESIRE TO STAY 88% of the respondents intend to work at Braskem for a long time. MOTIVATION 89% of Team Members say they enjoy going to work. PRIDE 90% of professionals would recommend Braskem to a friend who is looking for a job. 2016 | Braskem | Annual Report57 TOTAL NUMBER OF TEAM MEMBERS BY GENDER AND REGION13 G4-10 DIVERSITY G4-10, G4-LA12 Braskem closed the year 2016 operations (Alagoas, Bahia, note that in the administrative One of the key initiatives of the with 7,656 Team Members, Rio de Janeiro, São Paulo, and areas, women represent 52% people strategy is centered on the LGBT14 Rights, standing out as the first large Brazilian company of which 6,005 were men Rio Grande do Sul), 711 in the of the workforce, with 23% in Diversity Program. The program to adopt this commitment and 1,651 were women. Of United States, 752 in Mexico Leadership positions and 52% aims to stimulate an increasingly through the Companies and this total, 5,976 worked in and 174 in Germany, as well as in young professional programs inclusive environment at LGBT Rights Forum. industrial units and offices 43 professionals in commercial (Young Apprentice, Technical Braskem and foster learning located in the five Brazilian offices throughout the rest of Internship, University, and through differences, based In addition, several actions are states where Braskem has the world. It is important to Associate Program). on respect for how each one already in progress and were Brazil United States Germany Mexico International Offices expresses him or herself in reinforced throughout 2016. society. Braskem believes that Focusing on gender equality, Total this initiative not only enriches Braskem held two editions of % 1 2 % 9 7 % 9 1 % 1 8 % 3 3 % 7 6 % 2 2 % 8 7 % 0 4 % 0 6 % 1 2 % 9 7 1,279 4,697 133 578 58 116 164 588 17 26 1,651 6,005 Total 5,976 Total 711 Total 174 Total 752 Total 43 Total 7,656 Braskem closed the year 2016 with 7,656 Team Members. the work environment, but the Braskem Women’s Forum, is also essential for Business promoting lectures on the role Survival, Growth, and Perpetuity. of women in the labor market, in order to engage Team As an evolutionary process Program, of the Diversity the Members and importance of this aspect. The reinforce throughout 2016, Braskem took lectures were attended by Carla two important steps towards Tieppo, addressing the topic equality, through its commitment “Female and Male Brains,” and to the Gender and Race Ana Paula Vitelli, who spoke on Equity Program of the Federal the “Including women in the Government, and to the Charter labor market and promoting of Business Commitments and gender equality in companies.” 13 In order to clarify the scope of this material, it is worth mentioning that the results of quantiQ were reported in the Financial Statements of the report, but are not considered in the social and environmental indicators. Its management was already carried out independently even before the sale of the company. quantiQ was sold on 1/10/2017 (signing), with closing of the transaction on 4/03/2017 (closing). 14 Acronym for Lesbian, Gay, Bisexual, Transvestite, Transsexual 2016 | Braskem | Annual Report58 These initiatives are part of an agenda that integrates the Gender Equality Program, created in 2015 by Braskem and divided into four pillars: PEOPLE DEVELOPMENT Attracting and developing people to support planned growth is another important part of Braskem’s P&O 1. Women’s careers: aims to promote the empowerment of women strategy. Throughout 2016, the Company invested BRL 19 million in various training actions, trained 6,968 in their careers, as well as foster the number of women in leadership Team Members, with an average investment of BRL 2.7 thousand and 32 training hours per Team Member. positions at Braskem. 2. Maternity and paternity: provides support so that women and men may make the most of this phase of life. 3. Health and well-being: supports health and wellness actions for women and men, such as Pink October and Blue November. 4. Procurement and communities: brings Braskem a greater number of women suppliers and encourages the practice of diversity programs in the Company’s sector of activity, and promotes the empowerment of women through social programs in the communities. Respect and Equality The presence of women in environments and occupations that were previously predominantly male has become increasingly common. Aware of this need, especially in the production units, in 2016 Braskem implemented specific breastfeeding support rooms for the withdrawal and storage of breast milk in all its units in Brazil. In addition, the Company adapted 73 bathrooms in Brazilian industrial plants, adapted work uniforms for pregnant women, defined parking spaces for pregnant women at all locations, and extended the period of maternity leave granted to female Team Members to 180 days. The results of these initiatives led Braskem to be nominated, in its first year of implementation of the Program, as a finalist in the WEPs (Women Empowerment Principles) Award of UN Women, receiving honorable mention for its work promoting gender equality. Investment of BRL 19 million in training Average investment of BRL 2.7 thousand per Team Member Training of 6,968 Team Members 32 training hours per Team Member Throughout the year, Braskem development of the existing Leaders new Team Members in the improved the execution of several at the Company. Some of the main culture and values of the programs focused on a better training conducted in 2016 was: Company. work environment, integration, qualification, and training of • Culture and Integration • Global Leadership Team Members, and on preparing Program (Global): 2,660 Development Program: Leadership to deal with the people participated in a Braskem trained 30 Leaders in challenges of the Company’s number of actions in the units the Global Leaders Program, continuous and structured growth. and offices where Braskem which aims to develop Braskem operates based on operates in Brazil, the United professionals aligned with the Leadership Trails, a set of programs States, Mexico, and Germany, Company’s internationalization structured according to the stages of with the purpose of training strategy. 2016 | Braskem | Annual Report• Development Programs for It is important to highlight the Company’s commitment to training local Team Leaders and Area Leaders corporate leaders, in order to ensure the diversity of the management (Brazil): participation of 60 team and strengthen human capital with the participation of members coordinators and 30 managers, of the local community in decision-making processes. In 2016, respectively, with the objective Braskem ended the year with 53% of senior management from local of improving the performance communities in Brazil, 1% higher than the previous year. as Educating Leaders, through reflection, education through work, and sharing experiences. • Leadership Development Program (USA and Mexico): in RATIO OF SENIOR MANAGEMENT HIRED WITHIN THE LOCAL COMMUNITY15 the United States, 70 professionals G4-EC6 from the first two stages of leadership were developed through the Program. In Mexico, 29 leaders participated in 2014 2015 2016 2016. Brazil 52% 52% 53% • Leadership Self-Development Platform (Brazil, Mexico, and United States): an online platform, focused on the development of Team Leaders, Technical Team United States - - - 59 situations, seeking BRASKEM YOUNG PROFESSIONALS The for professional search vulnerable improvement at Braskem also their inclusion in the labor involves young professionals market. In 2016, Braskem used looking to the Company to take social networks to impact this the first steps in their career. Through its own programs, and audience with the opportunities offered, disseminating content others developed in partnership that helps young adults to direct Leaders, and Area Leaders in Germany 36% 63% 67% with entities such as SENAI their career and learn about the Braskem’s Culture competencies through videos, e-learning, and actions scripts. The platform will be launched in Germany in 2017. 15 To calculate this ratio, Team Members of senior management, Team Members of grades 3 to 10 and who have Subordinates are considered. These grades include managers, directors, vice presidents and president. To calculate the number of Leaders from the local community, the number of Senior Management Leaders versus the place of birth is used, with the exception of the United States, which does not have this information for legal reasons. Mexico 62% 21% 26% (National Industrial Learning day-to-day work of the Company, Service), technical education based on statements from various colleges, and universities, Braskem professionals. In total, nearly five works toward the development million young adults were impacted and training of its future Team by the Company’s social networks. International Offices Total - - 38% 0% Members. Young Technician and Young 49% 49% Young Apprentice Program – Partner Brazil Focused on training future With a duration of one year and technicians, engineers, analysts, a half, the program enables the and other professionals in development of the professional Braskem’s operations, the Young skills and competencies of Technician and Young Partner young adults living in socially programs are structured for 2016 | Braskem | Annual Reportpeople taking Technical Education By strengthening its relationship Rio de Janeiro, and Rio Grande Young Operator Program - Development Program (PDCT) and university courses. These with educational institutions, do Sul, to promote Braskem’s Brazil were formed for the Operation programs, which may last one or the Company has continuously brand and make contact with the Aimed toward educating young and Maintenance teams, involving two years, annually offer internship made progress identifying new university audience. adults wishing to build a career in 134 Team Members. 60 opportunities in locations in Brazil professionals and strengthening its where Braskem has industrial position as a Company capable of operations: Mauá (SP), Paulínia attracting young adults willing to (SP), Duque de Caxias (RJ), Triunfo learn and contribute to the growth (RS), Maceió (AL), and Camaçari of their career and the Company. (BA), and at the other administrative offices of the Company. Thus, in 2016, Braskem began a partnership with the Junior In the United States, the 2014 class Business Federations of the states of Associates closed with three of Rio Grande do Sul, Bahia, and associates, two engineers and one Rio de Janeiro, supporting young business associate. In addition, four professionals in their academic trainees participates in the Science Without Borders16 program and 16 participated as summer interns. environment. In addition, the Company participated in a total of six events at universities in São Paulo, ACTION PROGRAM CYCLE G4-LA11 The technical and university internship programs had nearly 32,000 registrations in 2016. The number of university students enrolled increased 22%. the Industrial Operations industry, the Young Operator Program is Also in partnership with carried out in partnership with SENAI SENAI, in the states where the and lasts for 18 months. In 2016, the Company has production units, program enrolled 4,541 young adults the Petrochemicals Technical and qualified 219 operators. Course began to be offered, with program content aligned with Continuing the education and the demands of the industry and development process of Braskem’s with the technical training needed technicians and operators, over to prepare new chemical and 3,900 Team Members participated petrochemical process operators. in specific educational actions, such as seminars, technical forums, and e-learning. In addition, four classes of the Technical Skills Each Team Member has the throughout the year, through identifying opportunities for opportunity to talk with his or dialogue between the Leader improvement to be included in her Leader in order to align their and his or her Subordinate. the Program for the next period, thoughts on the challenges for The Action Program cycle or in the Plan of Education for the work year, the resources consists of four stages: Work, which includes actions to needed to carry them out, and Planning/Pact, Monitoring, support Continuing Education what support will be fundamental Assessment, and Judgment. and recommendations to their success. This is recorded The assessment takes place at corporate programs. for The in the Action Program (PA), the beginning of the following process is carried out at the operates in Brazil, the United States, Mexico, and Germany. All Team Members have an Individual Action Program, which is required in order to receive variable remuneration, which is linked to the level of achievement of the goals and alignment with the Company’s which is monitored and assessed year and serves as a basis for units and offices where Braskem organizational values. 16 The Science Without Borders Program is an initiative of the Brazilian Government, Ministry of Science, Technology and Innovation (MCTI), Ministry of Education (MEC) and of its respective partnership institutions (CNPq and Capes) and MEC’s Departments of Higher Education and Technological Education of MEC to promote the consolidation and internationalization of Brazilian science and technology through international exchange and mobility. SALARIES AND BENEFITS G4-EC5 Braskem has a global competitive remuneration strategy in all locations where it operates. To support this process, periodic salary surveys are carried out to assist in updating internal benchmarks and revisions of the Team Members’ monthly and variable remuneration. Monthly remuneration is based on ranges with the purpose of making team remuneration management flexible, differentiating the skill levels of the Team Members, and applying the concept of meritocracy. Monthly remuneration ranges were determined based on the following: 2016 | Braskem | Annual Report61 • 85% of the market median for the initial amount (Development Range) • Market median at the central benchmark (Target Range) • 115% of the market median for the maximum amount (Advanced Performance Range) Variable remuneration, carried out in the form of Profit Sharing (PLR), is aligned with Braskem’s strategy and culture, making it possible to attract and retain talent. Its main objective is to stimulate achieving the best results and to recognize LOWEST SALARY VERSUS LOCAL MINIMUM WAGE RETIREMENT G4-LA10 SP RJ BA AL RS 2015 2016 1.7 2.2 1.6 1.5 1.8 2.9 2.0 3.6 1.8 2.2 1.6 1.5 1.8 3.1 2.0 3.5 For Team Members who intend to retire from units in Brazil, Braskem offers the Horizons program, which, for a year, prepares and supports professionals and their families for the post-career transition process. The program consists of four modules, totaling 40 hours, and has two fundamental pillars: 1. Reflection of life and career: process of awareness about the new stage of life that is approaching. 2. Knowledge management: ensure the continuity of the Company’s business through a structured process of knowledge transfer acquired by each Team Member throughout his or her career that are important for Braskem’s succession process. Brazil United States Germany Mexico individual performances. The main G4-LA2 individual challenges are included in the Action Program (PA) of each Team Member, and the calculation basis includes indicators such as operating EBITDA, working capital variation, and operational investment (CAPEX). The variation in the ratio of the Company’s lowest salary compared to the local minimum wage remained stable throughout 2016, with a slight increase of 1 and 2 points, respectively, in the state of São Paulo (Brazil), and in the United States. It is worth mentioning that the salaries at Braskem are equal for men and women within their respective positions.17 At Braskem, benefits are offered from the time of hiring and there is no distinction between full-time, part-time or fixed-term Team Members.18. • Health and Dental Plans (Brazil, Mexico, and the United States) • Private Pension – Odeprev (Brazil, United States, and Germany)19 • Life Insurance Life Insurance 16 (Brazil, Mexico, United States, and Germany)20 • Child Care Assistance (Brazil) • Maternity and Paternity Leave (Brazil, Mexico, United States, and Germany)21 • Meal vouchers (Brazil); food stamps (Mexico); discounts at nearby restaurants with Braskem directly paying the restaurant (Germany) • Disease Support (Brazil) • Special Child Assistance (Brazil) 17 The calculation used includes the lowest salary offered by Braskem, using the Hay table (table of positions and salaries established by Braskem), considering 85% of the range (least % of range varying between 85 and 115) from the lowest position at the Company versus the local minimum wage that is established by the collective bargaining agreement, in the case of Brazil, and the local minimum wage for non-union Team Members. 18 Currently, Braskem does not have Team Members in Brazil hired for a fixed term, only Apprentices (16), who are hired according to the country’s own regulations. In Germany, there are three Team Members hired for a fixed-term. 19 Braskem provides private pension plans in Brazil, the United States and Germany, with the purpose of supporting the Team Members in the planning and preparation of their post- career period and their retirement. In Brazil, Braskem offers the supplementary pension plan called ODEPREV - Odebrecht Previdência, put together sustainably, without risks of actuarial imbalance, with a defined contribution format, exclusive to Team Members of the Odebrecht Organization. 20 ODEPREV – Odebrecht Previdência offers participants a social security insurance (PrevSeguro), which extends the financial protection of the Plan Participants and/or their relatives, in case of death (natural or accidental), or total and permanent disability (due to illness or accident), occurring before the age of 65. 21 Braskem tracks the exit and return indicator of maternity leave only in Brazil, and does not monitor this in other countries. In 2016, a total of 33 Team Members utilized the benefit, and 29 was the number of Team Members who returned to work after the maternity leave period. (G4-LA3) 2016 | Braskem | Annual Report62 HIRING AND TERMINATION G4-LA1 In 2016, the Company had the lowest turnover in its history, with rates of 1.9% in global operations and 1.2% in Brazil. This is the best result in the Brazil since 2009. VOLUNTARY TERMINATION RATE22 2015 Women Men Women Men 3.36% 1.50% 5.83% 6.10% 3.77% 1.80% 1.82% 2.20% 3.41% 2.00% Overall 1.90% Overall 6.20% Overall 2.90% Overall 2.30% Overall 2.40% 3.40% 0.80% 6.50% 3.50% 4.90% 0.00% 2.70% 4.20% 3.60% 1.40% 2014 Overall 2.33% Overall 5.12% Overall 3.13% Overall 1.99% Overall 2.54% Men 2.04% 4.95% 2.80% 2.03% 2.29% 2016 Overall 1.20% Overall 3.40% Overall 3.50% Overall 4.90% Overall 1.90% Women 2.80% 3.00% 10.30% 7.40% 3.60% Brazil United States Germany Mexico Overall In addition, Braskem maintained the hiring average when compared to the previous year. The ratio of women hired in the period was higher than that of men for the period, almost the same level as in 2015. Overall hiring rate Men 8.60% 2014 Overall 9.72% Women Men Women Men 2015 13.70% 6.30% Overall 7.00% 9.20% 6.70% 2016 Overall 7.20% Women 9.10% On the other hand, the total number of people terminated was much lower when compared to 2015. In total, 561 Team Members were terminated in 2016, which was 124 fewer people than in 2015. 22 In order to clarify the scope of this material, it is worth mentioning that the results of quantiQ were reported in the Financial Statements of the report, but are not considered in the social and environmental indicators. Its management was already carried out independently even before the sale of the company. quantiQ was sold on 1/10/2017 (signing), with closing of the transaction on 4/03/2017 (closing). 2016 | Braskem | Annual Report63 FORMAL AGREEMENTS WITH TRADE UNIONS G4-LA8 Braskem respects trade union agreements (which includes representation in all locations economic, social, safety, where it operates and focuses environmental, and trade union on local labor legislation as issues), as well as agreements the minimum standard for the concerning working hours, and Company’s obligations to its profit sharing. In addition, in Team Members. It is part of Brazil, representatives from Braskem’s activity to maintain Labor and Trade Union Relations an open channel for dialogue conduct regular training with so that formal agreements are Company Leaders in order to made wherever necessary. keep them updated on this aspect. In 2016, there were 48 In Brazil, collective bargaining meetings in which 470 Team discount of monthly and union Energy, and Gas Workers. Based to review the Profit Sharing agreements are carried out Members were trained. contributions. Commitments on an open and transparent Program. annually, on specific dates the in each Company has operations, and region where for Confirming freedom of association in each respect its regarding the agreements are dialogue, the committee included in the Action Program (PA) of each Team Member, convenes every month to be informed about the metrics and In the United States, the labor includes monthly agreement the possibility of extending region of activity, Braskem and are submitted to a formal projects under development meetings of the Health and rights provided for in local has Team Members who are assessment that is documented to improve awareness toward Safety Committee. The main legislation are discussed. There part of trade union leadership. quarterly. health and safety in the work objectives and metrics are is also collective bargaining It is also important to note environment. between Braskem, the Workers’ that the collective bargaining In line with its global operation, managed and monitored by a Safety Management Process, and Commission, and the Union, to rules that have been signed Braskem respects trade Also regarding Mexico, collective the data is evaluated monthly sign an agreement regarding contain clauses that affirm union representation in all its work norms contain clauses that by the Unit Leaders and by the the Profit Sharing Program. the policy of respect for trade locations. In Mexico, Braskem confirm the policy of respect for Committee which, according to the union activities, which relate Idesa operates according to the union activities and freedom of results, may initiate investigations The representatives of to the access of union leaders processes of SEMPRE (Integrated association. Regarding collective and make recommendations for Braskem maintain regular and to factories; remuneration of Health, Safety, and Environment bargaining agreements, every improvement. Germany does not constant dialogue with union union leaders for the exercise of System) and OSHA’s Health and year, representatives of Braskem have in place formal agreements representatives. The Labor and union leadership; payment for Safety Certification, and is part Idesa participate in the review on health and safety, since Trade Union Relations area is union leaders who are absent in of the Executive Committee of of negotiations and collective there are several government responsible, in each region, for order to participate in external the National Union of Chemical, bargaining agreements. Each regulations and follow-ups on the negotiation of base date events related to union activity; Petrochemical, Carbochemistry, year, a committee is also elected these topics. 2016 | Braskem | Annual Report64 Communities G4-EC7, G4-EC8, G4-SO1 INVESTMENTS In 2016, Braskem and its Team Germany) in philanthropic donations, Members invested BRL 27.5 million benefiting over 60 organizations or Aiming to improve people’s lives the visibility and familiarity 1. Boost human development in social and environmental, cultural, programs focused on the benefits through sustainable solutions in of Company actions. These by stimulating the growth of and sports projects in Brazil, divided of plastic in people’s lives and in chemistry and plastic, Braskem projects, carried out with the the people who make up our into three areas: the fields of science, technology, has defined four strategic Communities surrounding the Communities. • Private Social Investment engineering and mathematics. One objectives for its social and operations and also nationally, 2. Promote social and Projects (ISP): BRL 4.9 of the biggest contributions in the environmental responsibility focus on strategic aspects such as environmental development million. United States was made to United projects: Generate social recycling, incentive to innovation, through chemistry and • Incentivized Sponsorships Way, a 125 year-old organization impact; strengthen reputation; and environmental education. plastic, strengthening the (public interest projects): whose objective is to provide become closer to stakeholders, social and environmental BRL 12.3 million in tax support to local communities. To strengthening relationships The two social causes that guide contributions of our most incentives, plus a BRL 1.8 the amounts invested in the United with Communities; and increase the Company’s actions are: important products. Strategic Objectives Social Impact Visibility, Familiarity Reputation Relationship SOCIAL RESPONSIBILITY STANCE Drive Human Development Promote Social and Environmental Development Through Chemistry and Plastic Stimulating the growth of the people who make up our communities Strengthening the social and environmental contributions of our main products Communities of Interest Neighboring Communities Chemicals and Plastics Chain Plastics and Chemicals as a Solution Culture • Braskem Theater Award • Braskem em Cena Award Sports, Culture, Professional And Human Education • Braskem Sports • Braskem Environmental Stations • Fábrica de Florestas Institute • “Inovar para Construir” (Innovate To Build) • “Lagoa Viva” Consumption, Post-Consumption Innovative Solutions, Great Solutions • Edukatu • “ser+ realizador” • Braskem Labs • “Menos Perda, Mais Água” million consideration of direct States, Team Members’ volunteer funding. hours in the local Communities are • Odebrecht Foundation: added. BRL 7 million donated to the Development and Growth In Mexico, in 2016, there was Program Integrated with a social investment of over BRL Sustainability (PDCIS) and BRL 1.3 million ($2 million MXN) in 1.5 million donated through production projects carried out with the Program called Tributo ao the Communities surrounding the Futuro. industrial operation and focused on generating jobs and income, In addition to direct investments, such as support for Cooperatives projects in Brazil raised BRL 8.7 raising tilapias and making million in 2016 with the participation uniforms. External resources were of several partners, among them also raised, of approximately BRL Ambev, City Halls, SEBRAE (Brazilian 1.6 million ($2.4 million MXN). Support Service for Micro and Small Enterprises), Elektro, ABIHPEC, and Cetrel. The Odebrecht Foundation’s Development and Growth Program In the United States and Germany, Integrated with Sustainability Braskem invested over BRL 550,000 (PDCIS), supported by Braskem, has (approximately US$ 125,000 in the challenge of establishing a social, the United States and €30,000 in economic, and environmentally 2016 | Braskem | Annual Report 65 sustainable development model. In 2016, actions were carried out involving 390 Communities, directly PROJECTS Braskem’s Private Social Investment projects directly benefited over 96,400 A major focus of the program these actions, a change in scenario since 2015 has been to is expected, with a significantly support the development and larger volume of waste being benefiting over 20,000 people, and people in 2016. Among them, the following stand out: implementation of strategies for sent to cooperatives, generating indirectly, another 285,000. Among them, the following stand out: SER+ REALIZADOR • Education: jointly with Rural G4-EN28 managing post-consumer waste in substantial increases in income. the municipalities where Braskem operates. Deliveries to date were The program includes the in Porto Alegre, Salvador, and participation of several partners Family Houses, that benefited Present in all states where Braskem cooperatives supported, 47 received ABC Paulista, and the latter two from the public and private sectors over 320 students from the operates, this initiative seeks to increase technical advice and guaranteed the were given support to prepare such as Ambev, SEBRAE, and the Agriculture, Forestry, Agribusiness courses and and the percentage of post-consumer waste shipment of over 30,000 tons of waste the Consultation Letter to BNDES City Halls of Porto Alegre and recycling in the country, promoting for recycling. Over 8% of this volume to obtain funds to develop their Salvador, which invested over BRL the Aquaculture Qualification the social and economic inclusion of refers to plastics produced by Braskem: waste management plans. With 5.8 million in the year. course in the municipalities waste collectors and the efficiency PE, PP, and PVC. Presidente Tancredo Neves, of the recycling chain. By investing in Nilo Peçanha, and Igrapiúna in equipment and infrastructure of the Due to the economic crisis, only the the State of Bahia. sorting units, training and personalized target for sorted mass was met, with 2016 HIGHLIGHTS technical consulting, recyclable material increase in income prevented by the Todos Somos Porto Alegre 1. Productive inclusion of • Environment: through collectors have been able to increase reduced value of recyclable materials. (We are all Porto Alegre) those pulling carts or the Earth Conservation their productivity and income. There was also an intention to expand In 2016, the program We are carts pulled by animals Organization, which reached the program, which was not confirmed All Porto Alegre came to a close. The waste collectors were the end of 2016 with 9,000 In 2016, the project benefited over in the year. hectares of conserved area, 3,400 waste collectors, and among the Supported by Braskem, this mapped and registered municipal waste management through an active search program in Porto Alegre (Rio Grande carried out by the do Sul, Brazil) was created to meet municipality, and, adhering the requirements of Municipal Law to the program, were able SER+ REALIZADOR’S RESULTS 2014 2015 2016 2016 Goal No. 10,531, which prohibited the to choose to migrate to circulation of human and animal the formal labor market or Waste collectors benefited 2,132 3,538 3,444 4,000 traction vehicles in the city. continue in the recycling business. In total, 2,059 Waste collectors trained 710 1,103 858 1,100 Waste collectors with an increase in income 402 960 787 1,300 Sorted mass (t) 8,492 25,703 30,824 30,800 Sorted plastic (t) 1,928 4,863 5,480 Sorted PP, PE, and PVC (t) 1,133 3,128 2,601 - - In order to socially include those people were registered in who had their carts taken off the the first phase, of which road, efforts were made by public 581 were allocated to other authorities, civil society, and the occupations with income, private sector. The program was and 225 are in transition to officially launched in December new activities. 2012 and included three phases: 201,000 trees planted, 150 families served, more than 2,300 tons of carbon neutralized, and 105 springs conserved/recovered. • Citizenship (Social): jointly with the Law and Citizenship Institute, which reached the end of 2016 with 305,000 visits to the Communities and raised about BRL 11.2 million, with the Food Acquisition Program (PAA). 2016 | Braskem | Annual Report66 2. Restructuring of 3. Environmental education Program cooperatives receive support the sorting system The last stage focused on for renovations and improvements The sorting units formalized mobilizing the population in equipment and infrastructure adherence to the program the with environmental and specialized technical advisory immediate needs and demands education actions. One services. The advisors also help the for investment were identified. of them was the project cooperatives obtain partnerships Over the course of four years, Caminhos da Reciclagem for waste collection, which is what they received the assistance of (Recycling Paths), in which occurred in 2016 with Banco do technical advisors to guide the about 400 teachers were Brasil in Rio de Janeiro and with the sorting process. The leaders brought to sorting units to Post Office in São Paulo. In Alagoas, of the units received training learn about the waste sorting cooperatives were selected in a public aimed toward managing and process, impacting over notice for selective waste collection developing the entrepreneur. 28,000 people. after receiving support from Braskem With these improvements, Given the success of the Rio the capacity of the selective Grande do Sul initiative, Braskem collection system was fully began to encourage the structured EDUKATU Edukatu is the first online Brazilian for the application. achieved, with production per management of solid waste in learning network about conscious the Ministry of the Environment for an action planned with the person of approximately 2.4 other Communities of interest. consumption and sustainability and the Ministry of Education. SESI network was transferred to tons per month during 2016 - In 2016, in the ABC Paulista involving over 28,000 teachers In 2016, it reached 28,000 2017. In addition to the number an increase of 43% compared region, the Consultation Letter and elementary and middle school participants, about 2,400 being in of participants, other indicators to the first quarter of 2015. The for the Inter-municipal Selective students in Brazil. Created in 2013 cities in which Braskem operates. confirm the success of the initiative. average per capita revenue Collection Plan was presented to by Braskem and the Akatu Institute, Over 10,000 students were directly In 2016 alone, the external funding recorded a 42% increase in the Inter municipal Consortium the project has already received involved in intervention projects in for the project from partners was the fourth quarter of 2016, of ABC, composed of the seven support from partners such as HP, their school communities, raising approximately BRL 1.3 million. The compared to the same period municipalities in the region, which Cargill Foundation, Sabesp, Elektro, awareness with 63,000 people website surpassed the two million in the previous year, surpassing will seek funding from BNDES Unilever, KPMG, and Mais Unidos, about conscious consumption. The mark of total views and has already the amount of BRL 1,000. through the document. and gained institutional support from targets for 2016 were not met, motivated over 600 media stories. EDUKATU’S RESULTS Accumulated number of participants Accumulated number of teachers engaged Accumulated number of students engaged 2014 7,429 272 2,495 2015 11,850 377 3,915 2016 7,646 415 3,353 Accumulated 28,441 1,084 9,911 Goals 39,350 1,200 10,450 2016 | Braskem | Annual Report 67 2016 HIGHLIGHTS Turma que Recicla and The game Reciclaki, an app The best results in the application In 2016, actions were also Reciclaki App available for computers and of the “Recycling Class” were launched about the water crisis, Edukatu launched Turma que mobile devices, simulates the achieved by the team of teacher conscious energy consumption, Recicla (Recycling Class) in 2016 work of collectors at a sorting Luciene Soares, from Pref. José and hygiene. Edukatu promotes with the goal of reflecting on the unit: Various types of waste Custódio da Silva School, in the on-site actions to mobilize topic of waste. With the help pass over a conveyor belt, and municipality of Coite do Nóia teachers, training them to use the of online games, videos, and the player must direct it to the (AL), which mobilized 230 people, platform and carry out practical infographics, students create correct trash bin for each type of reduced the school’s waste projects for engaging students actions to reduce the amount of material. Launched in July 2016, generation by 20%, and created and the school community. The waste generated in school and in the game has already achieved stronger ties with the region’s activity took place in schools in the Community. over 9,500 views. waste collectors. the city of São Paulo and in nine municipalities in the same state, as well as actions in the states of Bahia, Mato Grosso do Sul, and Pará, all in Brazil. With an expressive amount of educational content produced in recent years, in 2017 Edukatu intends to focus on gains in scale through on-site mobilization, dissemination, and teacher training for the use of the platform. FÁBRICA DE FLORESTAS INSTITUTE Present in the Brazilian states of integrated environmental education. who are trained in seed collection, to the Nursery Garden Schools. Bahia, São Paulo, and Rio de Janeiro, The organization is maintained native seedling production and In 2016, over 1,000 people were the Fábrica de Florestas Institute by Braskem, Cetrel - Odebrecht planting, and maintaining the trained in planting techniques and the construction contributes of socially and environmentally to Ambiental, and Comitê de Fomento Industrial of Camaçari (COFIC), planted areas. The project also Environmental develops the 27,000 received sensitivity training. The result of the year was 88,000 responsible communities through in Bahia (Brazil). The work of the Education Program (PEA), which seedlings produced and, of these, the expansion, recovery, and Fábrica de Florestas Institute is offers guided visits to students 46,000 planted and monitored. All maintenance of green areas, with developed with the Communities, from public and private networks targets for 2016 were exceeded. FÁBRICA DE FLORESTAS’ RESULTS 2014 2015 2016 Metas Seedlings produced Seedlings planted 165.669 116.572 88.407 85.000 83.413 39.206 46.628 41.786 People trained in planting 883 1.064 1.036 740 People received sensitivity training 17.565 16.739 27.506 13.500 2016 | Braskem | Annual Report2016 HIGHLIGHTS New Nursery Garden School Also, the 1st Virada Sustentável Summer Eco Parque Sauípe and Virada Sustentável Salvador took place, a festival Salvador (Bahia) that, through art, culture, and In of 2016, another edition the Summer Eco Parque In 2016, this project was marked by games, offered reflections on Sauípe Project was held in the the inauguration of a new nursery several aspects of sustainability, municipality of Mata de São João, garden school in Bom Jesus da with cultural activities and training which promoted adventurous Lapa, Bahia. A new model for the in parks and public spaces around activities such as a climbing wall, program was developed, with the the city. The Itinerant Nursery a zipline, and kayak tours. There creation of the Itinerant Nursery Garden School attended the event were over 1,700 visitors during Garden School, which was displayed and provided sensitivity training the two months of the project. Eco throughout the year in places such for about 3,300 people, donated Parque Sauípe protects an area as malls and squares, also in Bahia, 450 seedlings of species native to of 66 hectares in the transition at opportune moments such as the Atlantic Rainforest, and 500 region between two ecosystems in Environment Week and Forest Day, children participated in seedling the Atlantic Rainforest: the forest in June and September. production workshops. and the restinga. 68 BRASKEM’S REGIONAL INITIATIVES IN BRAZIL Braskem Theater Award (Bahia) and Braskem em Cena Award (Rio Grande do Sul) em Cena,” focused on attracting audiences and presenting street shows in communities farthest away from Porto Alegre’s cultural centers. Salvador hosted the 24th edition of the Braskem Theater Award, which Inovar para Construir received 2,400 people at its awards (Rio de Janeiro) ceremony. Other initiatives within the project include the Braskem Held in partnership with the Theater Award Circuit, a theater FIRJAN System, the Inovar para festival in the state of Bahia, and Construir (Innovate to Build) the Braskem Theater Award Show, project is an initiative that which warms up the local scene seeks to disseminate solutions and brings the shows closer to the for plastic for civil construction. audience, which was about 3,000 These solutions are published people at the presentations in 2016. on a virtual platform (www. The Rio Grande do Sul initiative takes firjan.com.br/visaotecnologica), to dedicated promoting place during Porto Alegre em Cena, innovative solutions for all one of the largest performing arts sectors of the industry. In 2016, festivals in Latin America, awarding a total of 15 people were trained professionals and plays in six in the professional initiation categories. In 2016, a total of 4,500 course in assembly techniques spectators went to see the plays for modular construction sites nominated for the award. There are in plastic, and 120 people were also projects Sábado em Cena and qualified in the improvement in Braskem “Descentralização Braskem plastic solutions course. 2016 | Braskem | Annual Report69 IMPACT OF THE OPERATIONS ON COMMUNITIES Green Belts and environmental projects, and In all, 30 of Braskem’s 40 units in 2016, the space received over have a green belt - a green area 5,000 visitors and trained over 124 around the industrial plants that producers. The area stands out for provides another level of protection the preservation of local wildlife and reduces exposure to risks. and flora, and was recognized by The green belt also protects local UNESCO as an Advanced Outpost flora and wildlife species and helps of the Atlantic Forest Biosphere. improve the quality of the air in the environment. Safety and Communication with Communities Preparedness and Response to Local entities to the plants, offers a courses offered for the training With 68 hectares of area, the Braskem has communication Emergencies (APELL), implemented Toxicology and Medical Conduct of waterways professionals, for Braskem Environmental Station, channels open to all Communities in Brazil in the units located in course for health professionals, example, included 45 people from which surrounds the Triunfo where it operates. In some units, the states of Alagoas and Rio de simulation, and implements actions the local community, preparing Petrochemical Complex (Rio Grande in addition to the toll-free number Janeiro over twenty years ago. The against the Aedes aegypti mosquito. them for the labor market. do Sul), has been continuously (0800) and the Ombudsman’s project conducts and coordinates Braskem plays a leading role in monitoring the wildlife and flora carried out by the Zoobotânica office available on the Company’s the Community may website, emergency simulation and keeps the Community informed about the the community, by engaging its neighbors and providing essential In addition to practical actions that ease and prevent risks to the Foundation since 1989. Currently, dialogue with the Company risks and measures that control and insight into the potential impacts of health and safety of Communities, the space welcomes students through periodic meetings, factory minimize possible impacts arising the products it manufactures and environmental education activities for guided tours that promote visitation programs, training, and from industrial operations. The local ways to minimize them. are developed so that the environmental education through interface with the government - coordinators of the program also games and workshops in the middle initiatives usually promoted by the plan and execute training activities Maré Boa population understands the risks and impacts of the operation of of the native forest. In 2016, there Community Consultative Councils and guarantee the reliability of Maré Boa is a communication and the Private Use Terminal in the were over 2,800 visitors. (CCC’s) of each location. In the equipment and tools such as alarm social responsibility program that region. One of the actions carried ABC region, in São Paulo (Brazil), systems, substance detectors, and seeks to positively impact the out in July 2016 was sponsoring Another Braskem green belt is a the CCC returned in December respiratory protection equipment Communities within the area of the Civic-Social Action (ACISO) preservation area located in the 2016, with the COFIP ABC action. that is used by public agencies. influence of the Port of Aratu in carried out by the Brazilian Navy, district of Pontal da Barra, next to Braskem’s Chlorine-Soda unit APELL In 2016, there were three groups actions toward strengthening to five thousand residents of these Bahia (Brazil). The program includes which provided support services in Maceió (Alagoas). Created in One of the highlights of Braskem’s of the program Formando Laços and sustaining fishing activity communities, among them medical 1987, it is now a space for studies, relationship with its surrounding (Building Bonds). The initiative and generating jobs and income, care, issuing documents, and visits, and development of social community is the Community brings communities and local such as training courses. The dental procedures. 2016 | Braskem | Annual Report70 Suppliers G4-12 Global Compact - Principle 10 PERCENTAGE OF PURCHASES BY SUPPLIERS BY COUNTRY G4-EC9 With over 8,000 Suppliers spread processes, cost analysis, quality throughout its operations worldwide, assessment of products and Braskem seeks to closely monitor services, compliance with the the behavior of its partners, seeking Supplier Code of Conduct, legal attitudes in line with the Company’s regulations, and Health, Safety, and ethical, social, and safety principles. Environment (HSE) requirements. In the period covered by this report, Braskem in Brazil reduced expenses on contracting foreign Suppliers, falling from 36% in 2015 to 24% in 2016. In its first year of operation, Mexico allocated 16% of its spending budget to hiring foreign Suppliers. This percentage was maintained in the United States and grew in Germany from 4% (2015) to 6% (2016). Therefore, only companies meeting PERCENTAGE OF PURCHASES BY SUPPLIERS BY COUNTRY tax and regulatory obligations, It is worth mentioning that with technical and administrative qualification, and a healthy all to Suppliers have access the Braskem Ethics Line economic situation, are considered Channel and are encouraged for hiring. to contribute information that helps to strengthen transparency Brazil Based on the magnitude of its and trust. All complaints are operations, Braskem has structured, investigated and have reparation decentralized Supplier management in areas responsible for purchasing measures to ensure the correct outcome of any problems. Germany TO LEARN MORE ABOUT THE ETHICS LINE CHANNEL, VISIT braskem.com.br > Ethics Line The Code of Conduct for Suppliers is available for download at braskem.com.br > Suppliers United States Mexico Suppliers 2015 2016 Domestic Foreign Domestic Foreign Domestic Foreign Domestic Foreign 64% 36% 96% 4% 99% 1% - - 76% 24% 94% 6% 99% 1% 84% 16% 2016 | Braskem | Annual ReportMAIN SUPPLIERS CATEGORIES Fossil fuel raw materials: Braskem works with a team REVISED CODE OF CONDUCT FOR ETHANOL SUPPLIERS Following a process of continuous codes, other standards, and 71 periodically analyzed to ensure strategic to maintaining dedicated to these partners improvement, in 2016 Braskem protocols applied to the ethanol that it keeps up with market Braskem’s operations, fossil fuel to ensure compliance with promoted a review of its Code industry. The work was carried developments, incorporating the raw materials are among the all processes and alignment of Conduct for Ethanol Suppliers, out by Proforest, an international lessons learned from audits and largest portion of the Company’s with the Company’s safety ensuring its alignment with the organization that works with the changes in legislation, treaties, expenses with Suppliers. Among standards. When signing a code applicable to all of Company’s management and sustainable and agreements related to the these products are naphtha, supply contract with Braskem, Suppliers, according to the aspects purchase of natural resources. sector. The new structure has an condensate, ethane, propane, all of these partners sign the monitored by the Company: area for mandatory requirements and HLR in Brazil, ethylene and Code of Conduct for Ethanol slash and burn, biodiversity, In addition, Braskem reinforced that must be followed by the propylene in the United States Suppliers, developed in 2010 best environmental practices, its relationship model and Suppliers and also a section about and Germany, and ethane in by Braskem with the support and human and labor rights. purchase procedures with continuous improvement that Mexico. To ensure cost control of Proforest. In 2016, this This revision also sought greater Suppliers. The Braskem will allow Braskem to influence and supply continuity, Braskem code went through a review synergy with the Company’s Responsible Management its Suppliers through an agreed has contracts with specific that reinforced the relationship Compliance Program and the Structure of Ethanol will be upon action plan. suppliers in all countries where model and the procedures its operations are located. regarding the purchase of Ethanol: Braskem’s product Ethanol. In 2016, a total of 99.1% of ethanol came from in the highest social and plants that signed the Code of environmental risk category, Conduct for Ethanol Suppliers, ethanol has a more rigorous a number above the established management process than goal of 90%. The remainder the other inputs used by the was purchased in commodities Company - and the same is exchanges in order to meet true for its Suppliers. Thus, specific demands. Responsible Ethanol Management Structure Braskem Code of Conduct for Braskem Suppliers Responsible Ethanol Management Structure Braskem In 2016, a total of 99.1% of ethanol came from plants that signed the Code of Conduct for Ethanol Suppliers, a number above the established goal of 90%. Compliance Excellence Audit Program + Robust Management 2016 | Braskem | Annual Report2016 | Braskem | Relatório Anual 72 PROCUREMENT BRAZIL In one more year of economic Health, Safety, and Environment challenges and high inflation (HSE) assessments, as well in the Brazilian market, as compliance with regulatory the Procurement area was and legal obligations. responsible for ensuring the Company’s competitiveness and In Brazil, the area is responsible the availability of essential goods for contracting Industrial and services for the business, Services (for operations by optimizing existing contracts maintenance), Corporate and searching for new partners. Services, purchase of inputs It is important to point out that and packaging required for Braskem Suppliers are selected production, and purchase of by the Procurement team in equipment and materials for conjunction with the user areas, maintenance and operation. and undergo quality analysis, In addition, it also manages with pre-established parameters Braskem’s indirect materials and in each situation, standardized inputs warehouses in Brazil. PERCENTAGE OF SUPPLIERS BY TYPE OF SERVICE G4-EC9 2016 37.19% 56.55% 7.26% Machinery, equipment, and facilities Technical and supplementary services Other (inputs and packaging) SUPPLIERS RADAR SUPPLIER PERFORMANCE INDEX (IDF) A tool that was strengthened in The Supplier evaluation process also underwent minor 2016 was the Suppliers Radar, reformulations and, in 2016, the analyses began to be which identifies in advance carried out by the user areas and respective buyers. companies with greater exposure This evaluation generates the Supplier Performance to labor and economic risks, Index (IDF) and is applied to all partners considered enabling the implementation of critical in Quality, QM (deviation history), Punctuality, a work plan to minimize possible HSE, Financial, and Compliance dimensions. Deviations impacts on these aspects for identified through this study are handled by an action Braskem. plan involving the user, Supplier, and Procurement areas. 73 SUSTAINABLE PROCUREMENT SUSTAINABLE PURCHASES Based on a strategy connected to The first action of this strategy is the relevance to the business, Braskem’s Sustainability macro was mapping the Supplier chain, through internal and other objectives, the Procurement area in which the supply categories indicators drawn from the ISO works to make the purchasing were classified by a specific 9000, and the second aspect process increasingly more criticality matrix. This matrix evaluates the potential social sustainable and responsible. includes two aspects: The first and environmental impact. Sustainability Matrix Classification Percentage of suppliers in the Procurement area identified in the categories (Base 2016) s s e n i s u b e h t r o f y r o g e t a c e h t f o e c n a v e l e R Relevant High Low Medium s s e n i s u b e h t r o f y r o g e t a c e h t f o e c n a v e l e R 20.3% 54.4% 16.3% 9.0% Social and environmental impact of the category Social and environmental impact of the category Throughout the year, the actions CEBDS (Brazilian Business Council support the Suppliers selection originating from this mapping were for Sustainable Development). The process. In 2016, a pilot planned. Among them is structuring questionnaires will be included project was carried out in one self-assessment questionnaires in the new bidding processes to of the purchasing categories, based on the Sustainable show the overall performance showing its effectiveness in the Procurement Manual tool of in Sustainability aspects, and to evaluation process. DEVELOPING SUPPLIERS WITH SEBRAE Another action initiated and de Janeiro. Several companies aligned to the Sustainable were invited and participated in Development planning of the a business diagnosis conducted area was the implementation of a by SEBRAE-RJ, and in structured Supplier development project in partnership with SEBRAE, in Rio training opportunities mapped. according to the CDP SUPPLY CHAIN In 2016, the area continued to support the CDP Supply Chain program, which requests that Suppliers submit a report on their greenhouse gas emissions, associated risks and opportunities, and their strategy to ensure improvements in the management of the aspect. This year’s focus was to identify the most significant risks and opportunities reported in the CDP program and the evaluation of possible action plans. In addition, for Suppliers located in regions of potential water stress, the water management questionnaire was requested. 2016 | Braskem | Annual Report 74 LOGISTICS Braskem Logistics (Basic Team Members of the area In 2016, Braskem continued to providers to keep them up-to- is also part of the Company’s SAFETY PROCEDURES Petrochemicals and Polyolefins) work with their own evaluation reinforce Processes Safety in date on best practices in Health, strategy, which hires most works with Health, Safety, and methods, based on Braskem’s Logistics through a structured Safety, and Environment, and, of its non-hazardous road Environment (HSE) professionals performance analysis system program of risk studies from this, adopts assessment freight (resins) with electronic to ensure compliance with and Abiquim’s Safety, involving seven new products tools and safety controls. The trackers. For hazardous all social and environmental Health, Environment, and with operations classified as Company also conducts annual products (chlorine soda) and requirements critical to the Quality Assessment System average risk, based on the audits at the headquarters of petrochemicals, transportation Company’s operations. (SASSMAQ). volume transported and its the transportation companies, companies are required to degree of hazard. with evaluations and planning have 100% of the freight of corrective actions for tracked, freight must be For the logistics operations Supplier cases that resulted handled exclusively by the involved in these seven below the expected in the supplier’s own fleet, and must products, 144 routes, 17 Supplier Performance Index carry out the Priority Product transportation companies, six (IDF). To this end, tools such Logistics Risk Study (e.g. loading and unloading areas, as the Service Level Agreement Benzene and Pygas). Finally, the configurations of road (SLA) and the Accident/ for propylene, in addition to equipment, and ten ships were Incident Prevention (IP) Index tracking the entire freight, evaluated. Specific inspections are used. All this caution is telemetry is required on board based on international reverted in detailed monitoring the vehicles. standards were also carried of the events and indicators out at six maritime terminals of freight transportation: The Company also has a contracted by Braskem with Transport Accident Frequency contract with Suatrans, the purpose of identifying risks Rate (by number of trips and the leader in chemical and and defining preventive control per kilometer driven) and environmental emergency barriers. Accident Severity Rate. road response in Brazil, and conducts audits at the service Braskem also holds periodic Maintaining partnerships with bases and simulations on the meetings with its service Brazil’s leading risk managers main transportation routes. 2016 | Braskem | Annual Report75 EMISSION CONTROL On another front, Braskem Logistics adopts different to to actions focused on identify opportunities In addition to initiating reduce emissions. emissions monitoring, the area has sought creative ways to sustainability. In this regard, As a result, also in 2016, reduce this indicator, such as the Polyolefins Logistics Braskem’s Polyolefins Logistics the use of closed circuits to participated in events in four began measuring its emissions transport resins, sharing of Brazilian states (São Paulo, from all modes for sales to dedicated vehicles with other Rio de Janeiro, Bahia, and Clients in Brazil, reaching a transportation companies, and Rio Grande do Sul) and in result of 0.027 kgCO2e/t.km, fostering more sustainable Mexico, to foster partner with emissions of 67.9 million modes of transport. engagement in voluntary kgCO2e (3.2 million tons of monitoring of greenhouse resins and 108.8 million km gas emissions (GHG), seeking traveled). ROAD SAFETY PROGRAMS AND PARTNERSHIPS The areas responsible for managing Braskem’s logistics activities are in line with programs relevant to promoting road safety, among which the following stand out: • Program Olho Vivo na Estrada: established by Abiquim in partnership with Abiclor, aims to prevent unsafe behavior when transporting hazardous products through driver awareness. The “Olho Vivo na Estrada” is part of a risk management system, and its goal is to reduce the number of road accidents with chemicals to zero. • Program Transportadora da Vida: a program of the Trade Union of Freight and Logistics Transport Companies (SETCERGS), which certifies cargo transport companies that carry out actions with a greater emphasis on safety. • Program Na mão certa: developed by the NGO Childhood, is dedicated to eliminating the sexual exploitation of children and adolescents on Brazilian highways. In 2016, Braskem was recognized by the NGO for having trained multipliers and conducted sensitivity training with over 300 truck drivers, in addition to the partnership with the risk manager for support and communication of the cause to the majority of truck drivers who ship Braskem products. 2016 | Braskem | Annual Report76 Clients G4-8 With Clients in diverse segments of throughout the year, such as production of fan blades and This initiative reinforces and business events such as the industry, Braskem is constantly new formulations of grades and body. The input provided reduced Braskem’s commitment to the Agrishow 2016, one of the largest seeking to maintain and expand products, technical follow-ups, emission of carbon dioxide by 4.2 plastic chain in Brazil, innovation, agricultural technology fairs in a collaborative relationship with audits, and training. The tool used tons per million pieces produced, and sustainability, providing an the world, held in Ribeirão Preto, its partners. To this end, the by Braskem as the basis for project as well as a 30% reduction in increasingly better life for people. in the state São Paulo. Company integrates investments management is CRM (Customer the annual energy consumption Read more about the initiative. in innovation for developing Relationship Management). required to produce fans, an solutions in partnerships with 8% drop in production time of PICPlast During the year there was also an advance in the agenda to train Clients, creating new solutions Maxio® Seal the part, and a 9% increase in The Plastic Chain Incentive businesses and businessmen that can contribute to improving Created to recommend the eco- industrial productivity. Program (PICPlast) is a Braskem with the launch of a Production the life of society and ensuring the efficient resins of the Company’s initiative in partnership with Chain Program for eight Brazilian preservation of the environment. portfolio, the Maxio® Seal serves Wecycle the Brazilian Association of the states, with a total of 71 one of Braskem’s main growth The Wecycle platform was created Plastic Industry (ABIPLAST). companies. Held in partnership Visio Program pillars: Innovation. Through it, with the objective of developing The objective is to encourage with SEBRAE, the project is part Visio is a platform that integrates resins are identified that bring business and initiatives for the development of the plastic of an agenda to expand the sharing knowledge and environmental gains, since they appreciation of plastic waste production chain through three capacity of plastic processing experiences between Braskem and provide to Clients less energy through partnerships, bringing areas: promoting the export of companies. Clients. The goal is to strengthen consumption, greater productivity reliability and quality to developing processed polyethylene (PE) and relationships to create common in the production process, and a products, solutions, and processes polypropylene (PP), encouraging In promoting the advantages of values capable of increasing lighter end product. that involve all links on the plastic competitiveness and innovation plastic, the sector fund set up for competitiveness and business recycling chain. in the sector, and promoting the financing the program received productivity. In this way, the eco-efficiency of advantages of plastic. 31 new participants in 2016, the Maxio® line allows progressive In this way, Wecycle can offer which totaled 486 companies In 2016, a total of 909 Clients were reduction of production costs companies committed to In 2016, the amount invested in registered since December served by Braskem’s Polyolefins and environmental impacts, sustainable development a recycled sales fostered for exports totaled 2014. The total volume of funds unit in Brazil (Polyethylene, contributing to improving plastic raw material with quality, BRL 139 million, which was 3% collected a total of BRL 6.9 Polypropylene, and Renewable people’s lives and preserving the traceability, process regularity, higher than the previous year. million from December 2014 Chemicals). According to Visio environment. Among the highlights and socially and environmentally Throughout the year, PICPlast to January 2017, of which over records, 89 Clients were involved of 2016 is the experiment applying responsible actions throughout the promoted the participation of BRL 3 million were invested in 126 initiatives implemented Maxio® H 202HC resin to the recycling cycle. sectorial companies in fairs over the period. 2016 | Braskem | Annual Report77 2014 125.7 60.0 65.7 1.6 1.6 - - 2015 173.9 71.6 102.3 - - - - 2016 87.5 78.8 8.7 1.6 1.6 - - Government G4-EC4 Open and transparent dialogue competitiveness through PIS- with all stakeholders and Cofins exemption for the purchase proposing solutions that develop of raw material for first and second not only the Company, but also generation petrochemicals. Thousand BRL Total tax incentives /credit1 - PRODESIN - ICMS - REINTEGRA Grants for investments, research and development, and other relevant types of concessions2 other sectors of industry and the FINEP country’s economy, is something Reintegra, a government program that is a part of Braskem. that aims to return a percentage of the taxes on the production chain Always motivated to offer solutions to certain segments of exporters, to the sector’s challenges, in is still working at a lower rate than 2016, the Company continued expected by the sector since it several actions to defend the underwent a revaluation in 2015. competitiveness of its production chain, as well as the search for Created in 2011 as a temporary solutions to challenges in the mechanism and established as areas of logistics, infrastructure, permanent in 2014, Reintegra energy, and topics related to provides mobile rates that may FINEP Award ECAs (financial aid from export credit agencies)3 1. Tax incentives/credits: Restitution of federal taxes by the Reintegra program and tax incentives of ICMS, granted by the Government of Alagoas, through the Integrated Development Program of the State of Alagoas - Prodesin. 2. Grants for investments, research, and development: FINEP awards and financing for innovation projects. 3. Financial assistance from ECAs (credit and exporting agencies): Risk insurance operation with NipponExport and Investment Insurance (NEXI – Japanese agency) for investment in maintenance and in the butadiene project. OPEN DIALOGUE Among several other associations that discuss new paths • Brazilian Business Council for Sustainable Devel- for the Brazil’s macroeconomic policies, Braskem actively opment (CEBDS) industrial policy still affecting vary between 0.1% and 5% participates in discussions forums in petrochemical entities, Brazil’s growth. on the income of companies industry representatives, and other sectors of the economy: • Federation of Industries of São Paulo (FIESP): pri- One of the topics that remained from exports. In 2015, the on the discussion agenda was 1% rate was set to 0.1%, a preserving the Special Regime percentage that is valid until of the Chemical Industry 2016. Reintegra is expected to (Reiq). Approved by the Federal reach 2% in 2017, returning Government of Brazil in 2013, this to 3% in 2018, according to demand remains one of the pillars the decree established by the for the recovery of the sector’s Federal government. vate law entity focused on guaranteeing Brazilian compet- • Brazilian Chemical Industry Association itiveness, with demands for lower production costs and (ABIQUIM): a private law entity structured to carry out the containing deindustrialization, guaranteeing the country’s statistical monitoring of the sector, promotes specific stud- economic and social development. ies on the activities and products of the chemical industry, follows changes in legislation and advises associated com- • Federation of Industries of the State of Bahia panies on economic, technical and foreign trade issues. (FIEB): private law entity focused on the growth, mod- ernization, and improvement of the competitiveness of • Brazilian Association of the Plastic Industry (Abi- the industry in the State of Bahia, and sustainable devel- plast): focuses on the processing industry. opment of the State • National Industry Confederation (CNI): the highest • Applied Tax Studies Group (GETAP): a nonprofit enti- body of the industrial trade union system, focused on de- ty dedicated to assisting the improvement of Brazilian tax fending and representing the industry by promoting an legislation, through suggestions regarding its simplifica- environment conducive to business, competitiveness, and tion and rationalization. sustainable development in Brazil. 2016 | Braskem | Annual Report78 07. Health, Safety, and the Environment Global Compact - Principles 1, 2, 6, 7, 8 and 9 RECORD OF ONE ACCIDENT WITH DEATH. SEMPRE THREE FACILITIES REACH THE MAXIMUM IMPLEMENTATION STAGE. BRL 103.9 million INVESTMENTS OF BRL 103.9 MILLION IN HEALTH, SAFETY, AND ENVIRONMENT PROJECTS. Environment BEST HISTORICAL RESULTS IN THE RATES OF EFFLUENT GENERATION AND ENERGY CONSUMPTION. Braskem is the first Brazilian industry to be part of CDP’s “A List” - global ranking for strategies and results associated with climate change. 15 plants PROCESS SAFETY (RISK RATING, AS PER INSURER): 15 PLANTS WITH THE INTERNATIONAL STANDARD ABOVE STANDARD. FIRST INVENTORY OF GHG EMISSIONS FROM OPERATIONS IN MEXICO. FOR THE 6º CONSECUTIVE YEAR BRASKEM HAS QUALIFIED IN THE GOLD CATEGORY IN THE BRAZILIAN GHG PROTOCOL PROGRAM. 2016 | Braskem | Annual Report79 For Braskem, maintaining health dedicated to the rigor of a set of Health, Safety, and Environment and safety, and preserving the internal controls (extended along System), which takes into environment are key elements its production chain) to ensure account the unit’s profile, as for the growth of the business water and energy efficiency, well as its respective risks, and the search for innovative constant reduction of generated when setting annual progression opportunities in the market. waste, control and mitigation of goals. To ensure that all plants Always thinking about the future its carbon emissions, and safety are standardized, annual audits - not only of the Company, but of assurance in all its units. work with the following points: all its stakeholders - the Company Strategic Elements, SEMPRE works on its sustainability In 2016, the Company continued Guidelines and Procedures in strategy objectively, focusing on its path of evolution in alignment with Quality and on developing increasingly Health, Safety, and Environment Productivity, and Verification of sustainable processes. In this (HSE) management, aligned the Barriers for process safety way, the Company is constantly with SEMPRE (Integrated risk scenarios. Diagnosis Stage 1 - Construction of HSE bases Stage 2 - Prevention of personal losses Stage 3 - Prevention of big losses Stage 4 - Performance assured in HSE Stage 5 - High performance in HSE SEMPRE PATH OF EVOLUTION 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% n o l i t u o v e f o e g a t s r i e h t o t e u d s t n a l p f o e g a t n e c r e P 2013 2014 2015 2016 2017 2018 2019 (cid:1)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:3)(cid:7)(cid:8)(cid:9)(cid:2)(cid:10)(cid:11)(cid:12)(cid:13)(cid:2) In 2016, 100% of SEMPRE audits were carried out, certifying 90% of the units. In addition, 50% showed an improvement over 2015: today 6.7% of units are in stage 5, while 4% are in stage 4, and 46.7% are in stage 3, and 6.7% are in stages 1 and 2. It should be noted that the audits for Braskem’s terminals in Brazil were carried out separately from the industrial units and focused on logistics operations. Technology labs are included in the scope, and the Pittsburgh Innovation and Technology Center, in the United States, is certified in stage 5, and the Campinas Center for Research in Renewable Chemicals, in Brazil, is certified in Stage 1 of SEMPRE. 2016 | Braskem | Annual Report 80 Investments and Gains in Environmental Protection G4-EN31 Braskem applies resources to increasing the levels of environmental protection related to risks of process or product accidents. In 2016, the Company improved significantly in provisions for environmental damages (Environmental Liabilities), which increased from BRL 65.8 million in 2015 to BRL 182.6 million. This increase is not associated with a greater number of environmental liabilities, and is a result of improved man- agement that allowed the Company to expand the forecast of expenditures from two to five years. Other expenses were divided as follows23: INVESTMENTS AND GAINS IN ENVIRONMENTAL PROTECTION Type of spending (BRL million) Work safety Process safety Investments in HSE Health Environment Total Liquid effluents treatment Waste management Total Spending on treating effluents and waste Emissions management Environmental licenses Depreciation Provision for environmental damages recovery (environmental liabilities) Other environmental management costs *In 2014, spending on effluents and waste treatment were not evaluated separately 2014 117.9 4.9 15.1 27.0 164.9 105,1* 59.1 0.5 46.0 50.4 48.8 2015 2016 65.6 13.0 4.7 31.1 114.4 50.5 42.7 93.2 8.1 1.1 46.0 65.8 66.6 51.4 25.9 2.8 23.8 103.9 51.1 55.3 106.3 7.9 1.0 46.0 182.6 59.7 23 The depreciation amount is an estimate based on previous years. The amount reported in provision for environmental damage recovery refers to what has been planned for use over the forecast of needs for the coming years. Other environmental management costs include groundwater management, environmental noise monitoring programs, quality of surface water resources (lakes, rivers, sea) and pipelines, environmental risk management, and energy and water management. 2016 | Braskem | Annual Report81 Health, Safety, and Environment management also include monitoring savings and avoided costs through improvement projects developed by the area. In 2016, this work resulted in gains of approximately BRL 252.4 million in operations in Brazil, the United States, Germany, and now Mexico. COSTS AVOIDED - HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT DIMENSION (IN BRL MILLIONS) 2014 2015 2016 Occupational Health and Safety In March 2016, Braskem frequency rate of accidents reported the death of a Team with and without lost time Member at the PE 8 plant in (CAF + SAF), considering Team Cubatão, Brazil. The accident Members and Third Parties occurred while finishing per million hours worked, has unloading propylene when shown a downward trend in the operator performing the the last four years, with its maneuver was hit by the lowest value in 2015. In 2016, sudden movement of the hose this rate increased by 17.6% (hook) caused by remaining compared to 2015 but is still pressure in the equipment. below the historical rate. Safety Work safety Process safety 0.6 7.9 0.6 -3.4 Despite all medical efforts, the -27.0 17.1 due to the aggravation of his Rate, considering Team Team Member died days later The Lost Time Injury Frequency Health Occupational health 37.1 19.0 23.3 Waste generation 53.7 13.5 Water consumption Environment Effluents generation 1.9 7.2 6.2 6.7 4.6 2.1 Energy consumption 307.6 116.8 134.9 GHG emissions 4.5 Common impact 14.0 Management 4.1 0.0 0.0 0.5 67.0 0.0 0.1 HSE TOTAL - 431.4 136.8 252.4 state of health. Members and Partners per million hours worked, was 0.24. For over five years, Braskem The variation of the Severity had not recorded any accidents Rate of Accidents with Lost of this nature in its operations, Time went from 43.32 in 2015 and will now further reinforce to 164.17 in 2016, due to the its focus on discipline in its fatality that occurred at the PE8 operational activities. The described above. G4-LA6 In 2016, the frequency rate of accidents with and without lost time increased by 17.6% compared to 2015, but is still below the historical rate. 2016 | Braskem | Annual Report2012 2013 2014 2015 2016 Process Safety 82 INJURY FREQUENCY RATE X 1MM/HHT Accident Frequency Rate (SAF+CAF) Accident Frequency Rate (CAF) 1,04 1,04 0,97 0,68 0,80 0,35 0,39 0,14 0,26 0,24 SEVERITY RATE 30,79 64,70 12,53 43,32 164,17 NUMBER OF To reinforce everyone’s strengthened by the leaders, well as audits of barries and awareness of the importance of who work rigorously on risk technical actions to reduce safety procedures, and ensure management in processes, risk in scenarios of greater that processes are effective, operations, and logistics. To significance. The Process Braskem conducts preliminary this end, several management Safety pyramid is used to assessments in order to manage methods are used, such as classify unwanted events and mitigate potential risks. change management, accident according to their magnitude ACCIDENTS WITH 0 0 0 0 1 The process is continuously and incident investigations, as of damage. FATALITIES G4-LA6 NEW CASES OR AGGRAVATED OCCUPATIONAL DISEASE TIER In 2016, after three years without any cases, Braskem identified a case of work-related disease (depression) in the São Paulo (Brazil) office. The investigation was completed in July and included the opinion of external and independent specialists on the case and its history. During the evolution of the analysis, the Team Member received medical assistance, including follow-up with external G4-SO2 psychologists and psychiatrists. 1 2 3 Incident with loss of containment and release of product above cut- off point. Incident with loss of containment and release of product below cut- off point. Incident with small loss of containment or system failure that could potentially lead to a process accident. 2012 2013 2014 2015 2016 5 0 0 0 1 One of the highlights of the year process safety. It is also In 2016, Braskem recorded was intensifying the analysis worth highlighting the focus nine Tier 1 events, down from of the smaller process safety on strengthening human 11 events in the previous year. occurrences, usually considered trustworthiness at Braskem, The accident rate was 0.22, “near-misses,” allowing for the continuity of the barriers consistent with the best process increased preventive learning audits, and the implementation safety benchmarks of companies in the units, as well as further of technical risk mitigation in the US chemical industry (0.41 revision of the corporate actions for the most significant was the average benchmark for standards associated with scenarios. US companies in 2015). 2016 | Braskem | Annual Report83 TIER 1 TIER 2 TIER 3 NUMBER OF ACCIDENTS (TIER 1) 29 22 11 9 4 2012 2013 2014 2015 2016 ACCIDENTS RATE (TIER 1) nº of accidents x MM/HHT 0.51 0.70 0.32 0.22 0.09 2012 2013 2014 2015 2016 SEVERITY RATE (TIER 1) 3.24 3.41 2.62 0.25 0.68 For Tier 224 events, the reduction trend of previous years was confirmed. In 2016, Regarding the smaller cases, 3,133 Tier 3 events, at the base of the pyramid, were recorded. This result ensures a preventive focus on the smaller events Braskem recorded 37 events, three fewer and a stronger process safety culture, and demonstrates the commitment of than the previous year. The accident rate the Team Members to reducing the number of small events to minimize the was 0.90. occurrence of more severe events. NUMBER OF ACCIDENTS (TIER 2) 91 49 40 37 2013 2014 2015 2016 ACCIDENTS RATE (TIER 2) nº of accidents X 1MM/HHT 2.20 1.13 1.17 0.90 2013 2014 2015 2016 RISK RATING Braskem has been continuously advancing in efforts to improve the Risk Rating of its plants by implementing several improvements in its facilities and searching for increasingly safe production processes. In 2016, the Company advanced in having almost all units audited by insurers and reinsurers, and now owns 13 plants with the international standard “Standard” and 15 plants “Above Standard.” It should be noted that Braskem does not have a target for this indicator. S T N A L P F O R E B M U N L A T O T 18 10 16 12 13 15 2014 2015 2016 Standard Above Standard 2012 2013 2014 2015 2016 24 In 2012, Braskem did not evaluate the Tier2 indicator. This indicator only came to be measured in 2013, so it does not yet have a five year history. 2016 | Braskem | Annual Report 84 Product Safety G4-PR1, G4-PR3 In 2016, Braskem updated characteristics of its products, and made available all of Braskem constantly carries its Emergency accordance with Sheets25 the in out internal audits to ensure new the safety and reliability of Brazilian legislation, improving its processes. In 2016, audits them with the Chemical involved units producing Substances Information (FISPQ) hazardous and non-hazardous of the products produced and products. marketed by the Company. In addition, in partnership About Process Security with ABIQUIM (Brazilian (SEPRO), in 2016 this aspect Chemical Industry Association), continued to be strengthened the Company acts with the in all of the Company’s International Council of Chemical leadership committees. In Associations (ICCA) to promote addition to rigorous analysis the recognition and disclosure of the risks and benefits, to and management of process and risks industrial for people and the environment, of logistics operations, there the use of chemicals. All FISPQs was a focus on recording of the products manufactured and analyzing near-misses, and marketed may be found on seeking preventive learning, Braskem’s website. continuous improvement of management of barriers, and Aware of the degree of hazard, the implementation of technical toxicity, corrosivity, flammability, actions to mitigate risks for the and environmental impact most significant scenarios. 25 In the United States, the Company uses the Material Safety Data Sheet (MSDS) and in Europe, the Safety Data Sheet (SDS), required by the Occupational Safety and Health Administration (OSHA) and the EU relevant directive (REACH). 2016 | Braskem | Annual Report85 Water Efficiency G4-EN8, G4-EN10 The drought and reduced From 2002 to 2016, Braskem treated domestic sewage) volume in the reservoirs invested approximately BRL improved by 27%, and - in responsible for water supply 280 million in projects toward 2016 alone - 15.4 million continue to show warning improving water efficiency m³ were reused. signs in Brazil. Considering at its plants in Brazil, with • this scenario, and all those accumulated savings of with a potential impact on the over BRL 175 million in cost From 2014 to 2016, the reuse of 25 million m3 of water was calculated Company’s global operations, reduction with the treatment of through the Aquapolo, Braskem has been investing liquid effluents and operating the largest project for the heavily in the assessment and costs with water consumption. production of industrial management risk of water The following results stand out: reclaimed water in Latin scarcity in its production units • The total volume of water America, releasing throughout the country. As a result of this initiative, in 2016 the Company completed consumed was 72.4 million m3/year. The consumption index reached 3.93m3/t, totaling an accumulated a to volume equivalent 10,000 Olympic swimming pools for drinking water consumption in the ABC the assessment of the regions improvement of about 5% region, in São Paulo, Brazil. where it operates crackers to since 2002. help guide investments where • The liquid effluent Braskem also uses specific 25 MILLION m3 Volume of water reused through the Aquapolo Project. there is a need to reduce water consumption or abstraction. For 2017, action plans will generation index reached 1.11m3/t, historical result since best the be developed focusing on 2002, representing an reducing water risk, in addition accumulated improvement indicators to measure its water efficiency, such as water consumption (m3/t of product)26 and generation of effluents (m3/t of product). The 2016 result WATER CONSUMPTION – m3/t -5% to extending the study of water of about 41%, and savings was 6.0% better than the agreed scarcity risk for the other of BRL 115 million with regions in Brazil and abroad effluent treatment. for the water stress scenario • From 2011 to 2016, the according to the climate risk water reuse percentage upon target for the year (4.18 m3/t), and 3.0% better than the 2015 performance (4.05 m3/t). The achievement of the target study already carried out by (rainwater, treated represented a savings for the 4.14 ... 4.23 4.30 4.16 4.05 3.93 the Company. industrial effluents, and Company of nearly BRL 12 million. 2002 2012 2013 2014 2015 2016 26 Cubic meters per ton of product. Note: Braskem Idesa’s consumption in Mexico was not recorded in 2016, since the Complex was at the beginning of its operation and in the stabilization phase. Beginning 2017, the unit’s consumption will be part of this indicator. 2016 | Braskem | Annual Report86 The good performance regarding in these industrial units, thus The industrial units located the year’s water efficiency is improving the rates for specific mainly due to internal initiatives consumption and loss reduction. by the industrial teams toward in ABC in São Paulo (Brazil), which used 7,957,425 m3, and where almost all of the water improving the cycle of the cooling In 2016, Braskem utilized consumed is reclaimed water towers, which represent important figures in water consumption an absolute total volume of 15,395,138 m3 of reclaimed water. (Aquapolo), are noteworthy. G4-EN10 RECLAIMED WATER 18.5% 6.4% 12.1% 23.8% 29.5% 28.1% 18.5% 17.2% 6.4% 17.4% 25.1% 23.4% 15.6% 15.1% 11.0% 11.0% 9.5% 8.3% 2011 2012 2013 2014 2015 2016 Process Improvement Inherent Reuse (1) Reuse in Process Improvements is any reuse that comes from modifications in the current units, including or improving processes. (2) Inherent reuse is that which was always part of the industrial unit as part of the plant’s original process. The effluent generation to the previous year’s result for the indicator, and indicator in 2016 presented a performance. Despite having the achievement of the target 4.3% lower result compared to the annual target (1.16 m3/t), lower compared and 3.5% suffered negative impacts due represented a savings for the to operational problems, it Company of BRL 1.7 million. was Braskem’s best historical GENERATION OF LIQUID EFFLUENTS – m3/t 1.94 ... -43% 1.28 1.17 1.22 1.15 1.11 2002 2012 2013 2014 2015 2016 Note: Braskem Idesa’s generation in Mexico was not recorded in 2016, since the Complex was at the beginning of its operation and in the stabilization phase. Beginning 2017, the unit’s generations will be part of this indicator. 2016 | Braskem | Annual Report87 DISTRIBUTION OF EFFLUENT DISPOSAL BY LOCATION G4-EN22 Countries Location Effluent Destination Volume of effluents discharged (m3/year) Treatment method COD (kg/year) Rio de Janeiro Canal de Coelho Bahia Odebrecht Ambiental Treatment Station 587,244 6,157,184 Biological Pre-treatment with water-oil separator and biological treatment at Odebrecht Ambiental 69,939 3,492,411 Alagoas Ocean disposal 3,375,706 Neutralization/Aerobic process (activated sludge) 320 Brazil Rio Grande do Sul External Effluent Treatment Station (ETE) Ponte Funda Stream São Paulo Perequê River 4,155,331 85,153 271,386 Tamanduateí River 1,949,353 La Porte Houston navigation channel Marcus Hook Delaware River via POTW United States Germany Neal Seadrift Big Sandy River Victoria Barge Canal Oyster Creek Oyster Creek Schkopau Wesseling Saale River Rio Rhine 443,044 695,995 241,157 303,324 86,417 83,382 149,904 Mexico Mexico Huazuntlán River 1,271,951 Pre-treatment with water-oil separator and primary, secondary (biological) and tertiary treatments 1,261,223 Sent for external treatment 290,466 Water-oil separator and primary treatment through decantation and filtration Conventional primary and physical, physicochemical, and biological Primary treatment and chlorination Primary, biological, and chlorination treatment Primary treatment and chlorination External treatment External treatment External treatment Primary and biological treatment Internal treatment with partial reuse and sending to the Huazuntlán River NA 333,868 2,658 6,960 1,471 NA NA NA 1,799 - Among the main impacts on effluent generation in 2016 are the quality of the abstracted water, the influence of the summer temperature in some regions, operational problems, and shutdowns for maintenance. On the other hand, positive actions were implemented, such as increasing the concentration cycle in cooling towers, optimizing operating procedures with consequent reuse of water currents and reduced losses. 2016 | Braskem | Annual Report88 Energy Efficiency G4-EN3, G4-EN5, G4-EN6 Braskem units always seek to was Braskem’s best historical minimize their environmental result for the indicator and a impact. To this end, they work to total reduction of 14% since the find alternatives that help reduce beginning of measurement in energy consumption, improving 2002. Among the actions that efficiency, and searching for the contributed to this result are the best available energy matrix. energy optimization initiatives for furnaces, boilers, turbines, The result for the year was pumps, and compressors, better in line with the agreed upon energy utilization in the plants, target for 2016 (10.25 GJ/t), greater efficiency in steam and 2.3% below the 2015 generation, and the development performance (10.49 GJ/t). It of control systems. ENERGY CONSUMPTION - GJ/t 11.90 -14% 10.67 10.74 10.55 10.49 PERCENTAGE OF CONSUMPTION PER TYPE OF ENERGY IN RELATION TO TOTAL CONSUMPTION Electricity Natural gas 2012 2013 2014 2015 2016 10.3% 9.9% 10.2% 9.0% 9.0% 12.0% 8.9% 13.0% 16.0% 20.0% External fuels (mainly oil and coal) 4.8% 4.8% 5.2% 5.5% 6.0% Residual internal fuels from the petrochemical process 72.9% 76.3% 71.6% 68.8% 65.0% PERCENTAGE OF RENEWABLE ENERGY CONSUMPTION COMPARED TO TOTAL ENERGY CONSUMPTION 2012 2013 2014 2015 2016* 8.95% 9.39% 7.17% 8.26% 7.44% * The 2016 data does not include Braskem Idesa unit in Mexico Among the main initiatives in emissions of 3.4 kg/t MVC/day. drop in natural gas consumption Brazil toward reducing energy In addition, the plant managed (savings of BRL 1.2 million per consumption in the units, the to reduce consumption by 1.2 year). 10.25 following stand out: ... ALAGOAS - PVC2 AL Savings of BRL 1.7 million per t/h of steam in the P3201A/B and P3206 heat exchangers, reducing CO2 emissions (savings of BRL 657,000 per year) and SÃO PAULO - PP3 ABC Savings of BRL 900,000 avoiding the burning of 320,000 kg of 2002 2012 2013 2014 2015 2016 Note: Braskem Idesa’s consumption in Mexico was not recorded in 2016, since the Complex was at the beginning of its operation and in the stabilization phase. Beginning in 2017, the unit’s consumption will be part of the indicator. year through reduced vapor steam consumption through hydrocarbons by the Flare. consumption in the MVC T energy optimization, with a The result was a reduction in 1302 and T1502 purification column, with a reduction in CO2 1.13 million m³ drop in water consumption and 1.11 million m³ greenhouse gases emissions equivalent to 1,100 t of CO2. 2016 | Braskem | Annual ReportIn 2016, Braskem’s production that presented the most gains units recorded a gain of BRL 134.9 was the one implemented at UNIB million through initiatives toward 2 RS (Rio Grande do Sul), which, improvements in processes, by optimizing the furnaces, had energy sales, furnace optimization, a gain of BRL 38.4 million. By reduced steam consumption, and reducing the technical coefficient improved boilers and turbines. of steam from evaporation to These initiatives reduced energy 2.55, the CS 1 AL (Alagoas) unit consumption by 5,471,141 GJ in reduced its energy consumption the year. In Brazil, the initiative by 1,261,711 GJ. G4-EN6 INITIATIVES TOWARDS IMPROVEMENTS IN PROCESSES ECONOMIC GAIN (BRL MILLION) Improvements in production processes (except furnaces) and sale of electricity Furnace optimization Reduced steam consumption Boiler and turbine improvements TOTAL 56.9 60.5 6.3 11.1 134.8 89 Improvements in energy efficiency in Triunfo: the use of coal with environmental control guarantee In recent years, the Brazilian to increase the capacity and system, called Miecon, began electricity sector has been quality of coal, optimize operations in August 2016 and experiencing periods instability. Based on of a the use of natural gas, and made it possible to increase increase the efficiency of and optimize the use of coal, predominantly hydroelectric cogeneration. matrix, droughts that affected and increase the retention of ash generated by burning - a large part of the country As part of these strategic without additional costs. In influenced tariffs, and even initiatives, Braskem in this process to improve energy with recovered reservoir Triunfo, Rio Grande do Sul efficiency, the Company sought levels, the scenario is still challenging. (Brazil) took advantage of the shutdown cycle (from June coal with higher energy value rates, lower emission and In the search for alternatives coal-fired boilers in order to stringent emission control that guarantee a supply of promote improvements in the standards of particulate to September) of the two while complying with the most clean energy with prices efficiency of the electrostatic matter. compatible with the needs precipitator system, of the business, Braskem responsible for retaining ash The changes integrate the has been working hard to from combustion gases. strategic plan to obtain analyze trends and, through increased energy efficiency internal efforts, to implement The Company invested BRL while guaranteeing innovative strategies energy generation in for its 2.7 million in a new control environmental control, one of system that will generate the Company’s main focuses production units. These daily savings of approximately of attention. initiatives include projects 10 MW of energy. The 2016 | Braskem | Annual Report90 Waste Management G4-EN23 For Braskem, the correct During the year, 37,334,108 When evaluated according to Regarding waste disposal, the values have remained at the same level over management of all generated kg of waste considered Braskem’s specific eco-efficiency the years, with some changes related to the storage of this waste for later waste in its production process hazardous and 18,057,602 indicators, which considers the disposal, as well as seasonal generation associated with expected events is essential, and such action is kg of non-hazardous waste generation of waste per ton and not specifically related to production. part of the Safety macro objective were generated, both with an produced, this value has been of the Company’s Sustainable increase compared to 2015, steadily declining over the last 15 Development Strategy. With this mainly due to the specific years, reaching a total reduction focus in mind, among the actions characteristics of the production of 63% since 2002. carried out by the Company in process and the impacts of 2016, the following stand out: seasonal and non-seasonal Thus, based on this data, in 2016 initiatives toward reductions at events, such as unscheduled the index was in line with the the source and optimizing internal shutdowns (which may occur established target (2.16 kg/t), but procedures, creating economic due to a power outage, for 7.5% higher than the previous value by transforming waste into example), and scheduled year’s performance (2.01 kg/t). by-products, reverse logistics, shutdowns for maintenance Reaching the target represented and actions toward reuse and and improvements in plant savings for the Company of composting, among others. efficiency. nearly BRL 600,000. 28 These results do not include the Braskem Idesa unit in Mexico, since the Complex was still starting operations and in the stabilization phase. Beginning in 2017, the unit’s generations will be part of the indicator. Destination of generated waste (%) Potential for reuse 2012 2013 2014 2015 2016 55.3% 57.1% 60.6% 61.8% 56,2% Reuse 29.6% 21.7% 26.8% 29.7% 27,3% Discarded 15.1% 21.1% 12.6% 8.5% 16,5% Allocated waste (thousand kg) Recycling Recovery (including energy) Landfill/ Industrial landfill 2012 2013 2014 2015 2016 7,737 19,858 7,930 4,628 7,371 4,165 3,169 5,424 3,975 7,247 14,112 11,152 21,493 2,804 9,146 WASTE GENERATION - kg/t 5.78 2.28 2.20 2.30 ... 2.01 2.16 2002 2012 2013 2014 2015 2016 Note: In 2016 Braskem Idesa’s (Mexico) generations were not recorded, since the Complex was still starting operations and in the stabilization phase. Beginning in 2017, the unit’s generations will be part of the indicator. -63% On-site storage 474 187 748 Incineration 11,552 17,263 20,408 245 534 290 306 238 662 1,859 1,713 739 274 1,303 8,423 482 475 Reuse Composting Underground waste injection Other* TOTAL 1,933 8,568 7,960 0 1,931 4,040 9,650 5,000 3,700 17,022 53,936 70,443 64,868 19,692 53,400 * Other: autoclave; thermal vacuum treatment to remove mercury, co-processing of waste in rotary clinker kilns for the production of cement, soil decontamination through thermal desorption. 2016 | Braskem | Annual ReportClimate Change G4-2, G4-EC2, G4-EN15, G4-EN16, G4-EN17, G4-EN18, G4-EN19 In 2016, Braskem took forums, as well as government global initiatives regarding important steps in the process initiatives, seeking to support climate change, including of evolving the climate change discussions on options that strategy, with emphasis on align the competitiveness of the of International Council Chemical Associations strengthening adaptation the Brazilian industry with a (ICCA) and the Carbon Pricing and effective actions toward low carbon scenario. Leadership Coalition (World reducing its greenhouse gas Bank), Braskem has been (GHG) emissions. Today, the Braskem’s participation in acting as one of the leaders in Company plays an important national and international developing plans and initiatives role in international debates forums has been increasingly toward carbon pricing and that define policies aligned with strategic, shedding light on the creating the proper tools to the industry’s commitments Company’s constant efforts to encourage companies and to reducing GHG emissions. reduce and mitigate social and governments to take action In Brazil, the Company environmental impacts. With toward a low carbon economy. participates in several business active participation in the major CLICK HERE TO LEARN MORE ABOUT BRASKEM’S PARTICIPATION IN NATIONAL AND INTERNATIONAL WORKING GROUPS AND FORUMS. 91 Important Steps • In 2016, Braskem’s latest GHG emissions inventory was awarded, for the 6th consecutive year, the Gold category classification in the Brazilian GHG Protocol Program. • For the fifth consecutive time, Braskem has been selected to be part of the Carbon Efficient Index (ICO2) portfolio of BM&FBOVESPA (Brazil). • For the first time, Braskem is part of CDP’s “A List”: the maximum score of the global ranking of companies regarding its strategies and results associated with climate change. Also, Braskem is the first Brazilian industry to achieve this result. • Braskem participated in the UN Conference on Climate Change (COP-22) held in Morocco, contributing to the discussions on carbon pricing instruments and disseminating its practices and progress in the management and adaptation to climate change. • The Company conducted workshops with Suppliers on training and technical support to identify opportunities to reduce emissions and costs. Almost 44% of the emissions outside the direct control of Braskem (Scope 3) are now reported to the Company. 2016 | Braskem | Annual ReportGREENHOUSE GASES EMISSIONS (GHG) Braskem’s corporate GHG emissions inventory considers all categories of Scopes 1, 2, and 3 in 100% of its operations. GHG EMISSIONS (SCOPE 1 E 2) - ktCO2e 8% 12.000 959 10.000 10,199 771 9,565 874 9,743 1,088 1,077 980 9,384 9,140 9,253 8.000 6.000 4.000 2.000 0 92 Considering only Scope 1 emissions directly managed by Braskem, in 2016 the actions and initiatives implemented totaled a cumulative reduction of nearly 19% compared to base year 2008. Carbon Intensity (scope 1) - tCO2e/t 0.659 19% 0.581 0.578 0.564 0.540 0.532 Scope 1 Scope 2 ... 2008 2012 2013 2014 2015 2016 Note: Braskem Idesa’s emissions in Mexico were not included in 2016, since the Complex was at the beginning of its operation and in the stabilization phase. Beginning in 2017, the Complex’s emissions will be part of this indicator. CARBON INTENSITY (SCOPE 1 AND 2) 0,721 18% ... 2008 2012 2013 2014 2015 2016 Note: Braskem Idesa’s emissions in Mexico were not included in 2016, since the Complex was at the beginning of its operation and in the stabilization phase. Beginning in 2017, the Complex’s emissions will be part of this chart. 0,628 0,630 0,630 0,604 0,589 ... 2008 2012 2013 2014 2015 2016 Note: Braskem Idesa’s emissions in Mexico were not included in 2016, since the Complex was at the beginning of its operation and in the stabilization phase. Beginning in 2017, the Complex’s emissions will be part of this indicator. 2016 | Braskem | Annual ReportAmong the main initiatives to reduce emissions are: In southern Brazil, replaced part of the fossil fuel consumption with the additional purchase of electricity, implying reduced absolute emissions. Actions to optimize operational and energy efficiency. Energy reduction and/or recovery initiatives. FIRST INVENTORY OF GHG EMISSIONS FROM OPERATIONS IN MEXICO Braskem Idesa’s operations the Company’s efficiency carry significant weight in indexes after it is stabilized. 93 BRASKEM IDESA GHG EMISSIONS - tCO2e/year (SCOPE 1) 58,641 1,474,227 BRASKEM IDESA CARBON INTENSITY - tCO2e/t 1,527 1,588 Scope 1 Scope 2 Scope 1 Scope 1 + 2 MANAGING INDIRECT EMISSIONS Since 2011, Braskem has carried (UNPOL), working together with distance; and emissions by the Company’s results, with out a GHG emissions inventory the Sustainable Development volume per distance traveled direct emissions (Scope 1) On the other hand, it is worth of Scope 3 (indirect emissions) area, created a tool enabling - “Comprehensive GHGE”), representing 14% of Braskem’s mentioning that the team and has significantly evolved practical and rapid measurement which calculate the relationship total. Given the pre-start and qualified itself, and carried in actions to engage its supply of Greenhouse Gas Emissions between the transported start of operations, results out the emissions inventory chain and to identify initiatives to in the logistics transport of volumes and traveled distances. for 2016 were lower than including all categories of reduce these emissions, while also finished products in any mode expected, since on some direct and indirect emissions, strengthening involvement in areas of transport. With this, it was The chart on the next page shows occasions the unit operated which will enable management such as Procurement, Logistics, easier to visualize the emissions the emissions by volume per without its operational and monitoring beginning at Services to People, Information of cargo transport by business, traveled distance (Comprehensive efficiency at full load. Because the plant’s start-up phase. Due Technology, acquisition of raw by type of transport, and even GHGE) indicator, month by month. it started operating in 2016 to the technology used in this material, and others. by Client. To make comparisons From now on, actions will be and to its more modern new unit, the Company expects possible, three KPIs were created taken toward critically analyzing technology, the unit in Mexico that its result in the coming In 2016, the Logistics area of (emissions by transported the results and identifying actions is expected to improve years will be one of its best. the Polyolefins Business Unit volume; emissions by traveled to reduce emissions. 2016 | Braskem | Annual Report94 EGHG EMISSION MANAGEMENT IN LOGISTICS ABSOLUTE EMISSIONS (tCO2e) (kgCO2/t.km) 0.0262 0.0261 0.0265 0.0263 0.0262 0.0278 15,803,961 Expansion of the measurement scope for 2016: 3,118,478 14,756,583 0.0257 0.0259 0.0265 0.0264 0.0277 0.0267 11,999,834 11,533,672 11,351,439 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec In the area of Services to People, Braskem joined an initiative with the transport supplier to purchase carbon credit through the use of fuels from renewable sources in its fleet of vehicles. The initiative has been implemented and is in the process of monitoring and raising user awareness, in order to achieve maximum adherence and consequently obtaining carbon credits. 2012 2013 2014 2015 2016 Note: Braskem Idesa’s emissions in Mexico were not included in 2016, since the Complex was at the beginning of its operation and in the stabilization phase. Beginning in 2017, the Complex’s emissions will be part of this chart. The increase in Braskem Scope 3 absolute emissions was mainly due to the following factors: Increased production in absolute figures, with the consequent increase in consumption of inputs and raw materials, among others. Emissions from Braskem terminals, previously not yet included. In the category referring to the use of the products sold by the Company, the beginning of reporting emissions associated with the gasoline produced and sold by the crackers, which was not previously included. In the category referring to the end-of-life treatment of products sold, the report was expanded to approximately 80% of the products. 2016 | Braskem | Annual ReportOTHER EMISSIONS G4-EN20, G4-EN21 In addition to greenhouse gas emissions, Braskem manages other air emissions within its responsibility, such as ozone-depleting27 substances and pollutants from fuel combustion, such as NOX, SOX, and others. EVOLUTION OF EMISSION OF OZONE LAYER- DEPLETING SUBSTANCES (SDCO) SDCO Tons of CFC-11 Equivalent *Not reported in the period. 2012 (t)* 2013 (t) 2014 (t) 2015 (t) 2016 (t) - 180.5 48.6 55.3 3.0 Braskem has also been replacing ozone-depleting substances with other substances outside the Montreal Protocol lists. EVOLUTION OF EMISSIONS OF SOX, NOX AND OTHER SIGNIFICANT SUBSTANCES Emission(1) NOX SOX Volatile Organic Compounds 2012 (t) 2013 (t) 2014 (t) 2015 (t) 2016 (t) 8,756 12,157 11,421 9,546 5,880 6,582 11,509 4,503 9,651 3,137 1,756 2,707 3,881 3,808 6,139(2) 860 531 Particulate Matter 1,088 1,547 1,225 911 Toxic Air Pollutants(3) Other(4) 142 549 97 652(2) 7,121 6,108 6,190 14,495(2) 4,145 (1)The methodologies used are recommended by state environmental agencies. Where there is no measurement, estimates (emission factors) based on recognized methods, such as AP-42 from USEPA, are used. (2) The plants have been expanding their assessments, which explains the increase in these parameters. (3) Includes Toxic Air Pollutants and HAP (4) Includes total hydrocarbons and carbon monoxide. 27 Ozone depletion refers to the decline in the total volume of ozone in the Earth’s stratosphere (the ozone layer) 95 ENGAGEMENT OF SUPPLIERS IN EMISSIONS REDUCTION Braskem does not have mandatory requirements the preparation and reporting of an emissions for its Suppliers, but has been developing voluntary inventory, and identify risks and opportunities are engagement initiatives for the past five years as a carried out annually with support from CDP Supply means of more efficiently managing GHG emissions Chain. As a result, there has been significant and the risks and opportunities in the chain evolution regarding the representativeness of upstream. Actions to raise awareness, encourage Scope 3 emissions. SUPPLIER ENGAGEMENT - CLIMATE CHANGE 200 150 100 50 0 No. of Suppliers invited No. of engaged Suppliers % of Suppliers’ adherence % of Scope 3 coverage 60% 182 57% 177 42% 46% 31 0% 13 39 1% 18 2012 2013 42 25 9% 2014 54% 44% 96 104 11% 2015 2016 Braskem has expanded Supplier engagement toward Water Resources, focusing on those located in regions with potential water stress, and is training its buyers to broaden the management of the reported aspects. SUPPLIERS’ ENGAGEMENT WATER RISK MANAGEMENT 53 21 Total number of suppliers invited Suppliers engaged 2016 | Braskem | Annual Report96 CARBON PRICING After creating a work platform to assist impact regulation, identifying positive and in making investment decisions, Braskem negative contributions to projects. Thus, concentrated its actions in 2016 on: the positive or negative economic values • Validating the carbon price with impact caused by emissions are calculated senior management. for those projects that reduce or generate corresponding to the environmental • Adapting its standards and emissions. procedures. • Aligning and training leaders and This process is now entering the monitoring key stakeholders. phase, in which will be evaluated the • Using this criteria to support effectiveness of the price defined compared decisions for the 2017 investment to the change in project eligibility in the portfolio. decision-making process. All actions were concentrated in Brazil, and in 2017 the The tool calculates the virtual cost of Company will define and implement a carbon as a preliminary path for future strategy for its international units. To understand impact To calculate carbon footprint To reduce emissions To create platform To determine internal price To apply price To monitor performance It is worth mentioning that Braskem also actively participates in the Emissions Trading Simulation (SCE) and the Companies for Climate Platform, a constructive carbon market experience for debate and knowledge generation, expanding the contribution of companies to government proposals. 2016 | Braskem | Annual ReportRISKS AND OPPORTUNITIES - ADAPTATION TO CLIMATE CHANGE In information; interpreting ensure order its to in 97 Brazil, United States, competitiveness while information; and expansion and Germany until 2040, contributing to the transition to of risk management by with external support from a new development model based incorporating climate variables the National Institute of on the low carbon economy, in the Company’s strategic Space Research (INPE) and Braskem has been working on planning. a comprehensive adaptation specialized consulting, the Company complemented these plan that works on five After identifying and prioritizing studies by identifying the main fronts: internal engagement; potential opportunities and potential impacts for Braskem external coordination; securing climate risks in all plants Idesa’s operations in Mexico. POTENTIAL CLIMATE RISK SCENARIOS 2015 Scenario 2040 Scenario k s i r l a i t n e t o p h g h i h t i w s t i n u l a i r t s u d n i f o r e b m u N 14 4 12 3 11 3 2 1 1 1 1 1 1 Intense Rain and Electrical Discharges Water Shortage Hurricanes and Tropical Cyclones Energy Generation Flooding Epidemics Heat Waves Rising Sea Levels In Brazil, the Company validated, that will be monitored by the with its leaders, the potential sponsor of the Company’s Climate climate risks and the respective Change macro objective. actions for the most relevant risks, which will be managed periodically After validating the actions for through a framework based on a potential risk scenarios, Braskem methodology approved with the will focus on validating scenarios Getúlio Vargas Foundation (FGV), and actions for international in São Paulo, and with indicators operations. 2016 | Braskem | Annual Report 98 OVERVIEW OF THE CLIMATE CHANGE ADAPTATION PLAN PLANTS OF BRAZIL NUMBER OF ACTIONS - “TOTAL” AND “(IN PROGRESS)” Region/Location Intense Rain and Electrical Discharges Water Shortage Hurricanes and Tropical Cyclones Energy Generation Flooding Rising Sea levels BRAZIL NORTHEAST SOUTHEAST SOUTH AL BA RJ SP RS - - - 1(1) 1(1) 3(2) 5(2) 4(1) 3(1) - - - - - 4(1) 1(0) 2(1) 1(1) 1(0) - 1(1) 1(0) - - 3(1) 2(0) - - - - Total 6(3) 7(3) 5(2) 8(3) 7(2) BRASKEM TOTAL 2(2) 15(6) 4(1) 5(2) 6(2) 1(0) 33(13) (-)= not applicable Example: 4(1) = total of 4 actions and 1 in progress 2016 | Braskem | Annual Report99 GRI G4 Content Index INDICATOR DISCLOSURE GENERAL STANDARD CONTENT Strategy and Analyses G4-1 G4-2 Organizational Profile G4-3 G4-4 G4-5 G4-6 G4-7 G4-8 G4-9 G4-10 G4-11 G4-12 SP Office - Headquarters Rua Lemos Monteiro, 120, Edifício Odebrecht Butantã ZIP CODE: 05501-050 Phone: +55 11 3576-9000 98.9% of Team Members in Brazil are covered by collective bargaining agreements, 42.2% in Mexico, and 8.9% in the USA. PAGE 03 03 08 08, 10 10 07, 10 08 09, 50, 76 07, 08 57 07, 70, 72 2016 | Braskem | Annual Report100 INDICATOR DISCLOSURE Braskem Idesa Complex beginning of operation In principle, and in accordance with the Health, Safety, Environment, Quality and Productivity, Braskem does not produce, handle, use, commercializes, transports or discard any product if it does not can do it safely, with minimal impact to the environment. G4-13 G4-14 G4-15 G4-16 Identified Material Aspects and Boundaries G4-17 G4-18 G4-19 G4-20 G4-21 G4-22 G4-23 The following comment concerns indicators G4-22 and G4-23: it should be noted that the results of quantiQ were reported in the Financial Statements of the report, but are not included in social and environmental indicators. Its management was already carried out independently even before the sale of the company. quantiQ was sold on 1/10/2017 (signing), with the closing of the transaction on 4/03/2017 (closing). Stakeholder Engagement G4-24 G4-25 G4-26 G4-27 Report Profile PAGE - 22 17, 22 22 08 18, 20 18 18 18 18 18 18 18 2016 | Braskem | Annual ReportINDICATOR DISCLOSURE PAGE 101 G4-28 G4-29 G4-30 G4-31 G4-32 G4-33 Annual, covering the fiscal year from January 1 to December 31, 2016 2015 Annual G4 Core The external assurance, performed by KPMG, occurs at the request of the Leaders and is part of the set of annual goals of those responsible for preparing the report. Governance G4-34 G4-39 Ethics and Integrity G4-56 G4-57 G4-58 ETHICS AND INTEGRITY SPECIFIC STANDARD CONTENT Material Aspects: All Macro Objectives: All Material Aspects: Economic Performance 120 27 27 32 32 31, 33 2016 | Braskem | Annual Report102 PAGE 35, 39 91 77 60 59 64 64 70 INDICATOR DISCLOSURE G4-EC1 G4-EC2 G4-EC4 Aspects: Market Presence Macro Objectives: Local Development G4-EC5 G4-EC6 Aspects: Indirect Economic Impacts Macro Objectives: Local Development G4-EC7 G4-EC8 Aspectos: práticas de compra Macro Objetivos: desenvolvimento local G4-EC9 Aspects: Materials Macro Objectives: Renewable Resources G4-EN1 Among the main non-renewable direct materials used by Braskem are naphtha, condensate, ethane, propane, HLR, and sodium chloride. The Company also uses ethanol manufactured from sugar cane to produce ethylene from a renewable source, thereby reducing its demand for non-renewable resources. Braskem understands materials as those present in the end product. Non-renewable materials are resources that are not renewed at the same rate at which they are consumed, such as minerals, metals, oil, coal, and gas. The values used are not disclosed because it is commercially sensitive information. 2016 | Braskem | Annual Report103 INDICATOR G4-EN2 Aspects: Energy DISCLOSURE PAGE Braskem continuously invests in renewable raw materials. In industrial plants, reuse is maximized through the return of currents within the production process, which would be equivalent to internal recycling. Investments in energy and chemical recycling are being made for the future. Macro Objectives: Energy Efficiency G4-EN3 G4-EN5 G4-EN6 Aspects: Water Macro Objectives: Water Efficiency G4-EN8 G4-EN10 Aspects: Biodiversity Macro Objectives: n/a (only material for Mexico) G4-EN12 was no activity industry, such as in Mexico, where Braskem Idesa Complex finalized the construction of its The main impact of Braskem in biodiversity occurs when new units are built in areas where before there petrochemical plant. These impacts are reversible in the medium term (approximately 10 years). G4-EN14 miqueliana(flora, critical status) in Mexico. Moving the plants found to the environmental protection area By 2016, only one endangered species was at risk of being affected by Braskem’s operation: the Ceratozamia created by the Company significantly increased the number of plants. Aspects: Emissions Macro Objectives: Climate Change 88 88 88, 89 85 85, 86 2016 | Braskem | Annual ReportINDICATOR DISCLOSURE PAGE 104 G4-EN15 G4-EN16 G4-EN17 G4-EN18 G4-EN19 Macro Objectives: Climate Change G4-EN20 Macro Objectives: Energy G4-EN21 Macro Objectives: Safety G4-EN23 Aspects: Products and Services Macro Objectives: Application Development G4-EN27 In the agribusiness segment, the use of polypropylene to produce raffia sacks prevented the emission of 190,600 tons of CO2e. In the automobile segment, the use of PP to replace several materials avoided the emission of 4.5 million tons of CO2e. In the segment of real estate paints, the use of PP in buckets, replacing the tin can, avoided the equivalent of 19,500 tons of CO2e. In total, for the PP segment, the emission of 4.7 million CO2e. was avoided. Macro Objectives: Post-Consumption G4-EN28 Material Aspects: Compliance 91 91 91 91 91 95 95 90 50 65 2016 | Braskem | Annual Report105 INDICATOR DISCLOSURE PAGE Macro Objective: Strengthening of Practices Braskem was not definitively ordered to pay fines or to comply with non-monetary sanctions in the period. G4-EN29 For the purpose of this report, the same materiality criteria used on the Reference Form established by the Brazilian Securities and Exchange Commission (CVM) was adopted, under Normative Instruction CVM 480/2009 - BRL 60 million. For environmental issues, the amount of BRL 10 million was considered. Aspects: Overall Macro Objectives: Climate Change, Energy, Water G4-EN31 Aspects: Employment Macro Objectives: Economic and Financial Results G4-LA1 G4-LA2 G4-LA3 Material Aspects: Diversity and Equal Opportunities Macro Objectives: None, because the related aspects are not material G4-LA6 G4-LA8 The health and safety data recording system does not break down data by gender or third parties. The monitoring methodology for absenteeism, which was expected to be adapted by the second half of 2016, is still being reviewed. Material aspects: Training and Career Macro objectives: Strengthening of Practices G4-LA10 G4-LA11 80 62 61 61 81 63 61 60 2016 | Braskem | Annual ReportINDICATOR DISCLOSURE PAGE Material Aspects: Diversity and Equal Opportunities Macro Objectives: None, because the related aspects are not material 106 57 64 82 03, 31 G4-LA12 Material Aspects: Local Communities Macro Objectives: Local Development G4-SO1 G4-SO2 Material Aspects: Anti-Corruption Macro Objectives: Strengthening of Practices G4-SO5 Material Aspects: Anti-Corruption Macro Objectives: Strengthening of Practices G4-SO6 Zero. In Brazil, in 2016 Braskem made no donations to political parties. Material Aspects: Unfair Competition Macro Objectives: Strengthening of Practices G4-SO7 Indicator is restricted to the Brazilian territory. In 2016, no actions were recorded regarding the indicator G4-SO8 Regarding this indicator, the following should be considered: (i) The Leniency Agreement, referred to above as the "Braskem Global Agreement"; (ii) in addition, Braskem was not definitively ordered to pay fines or to comply with non-monetary sanctions in the period in question. For the purpose of this report, the same materiality criteria used on the Reference Form established by the Brazilian Securities and Exchange Commission (CVM) was adopted, pursuant to Normative Instruction CVM 480/2009 - BRL 60 million. For environmental issues, the amount of BRL 10 million was considered. 2016 | Braskem | Annual Report107 INDICATOR DISCLOSURE PAGE Material Aspects: Client Health and Safety Macro Objectives: Safety G4-PR1 G4-PR2 Material Aspects: Product and Service Labeling Macro Objectives: Safety G4-PR3 G4-PR4 Aspects: Marketing Communications Macro Objectives: Strengthening of Practices No record of complaints. No record of complaints. G4-PR7 There have been no instances of non-compliance with regulations and voluntary codes regarding marketing communication, including advertising, promotion, and sponsorship. Material Aspects: Compliance Macro Objectives: Strengthening of Practices Braskem was not definitively ordered to pay fines or to comply with non-monetary sanctions in the period. G4-PR9 For the purpose of this report, the same materiality criteria used on the Reference Form established by the Brazilian Securities and Exchange Commission (CVM) was adopted, under Normative Instruction CVM 480/2009 - BRL 60 million. For environmental issues, the amount of BRL 10 million was considered. Aspects: Non-discrimination Macro Objectives: Strengthening of Practices G4-HR3 84 84 33 2016 | Braskem | Annual Report108 KPMG KPMG Financial Risk & Actuarial Services Ltda. Rua Arquiteto Olavo Redig de Campos, 105, 6º andar - Torre A 04711-904 - São Paulo/SP - Brasil Caixa Postal 79518 - CEP 04707-970 - São Paulo/SP - Brasil Telefone +55 (11) 3940-1500, Fax +55 (11) 3940-1501 www.kpmg.com.br Limited assurance report issued by independent auditors Independent auditors’ responsibility Our responsibility is to express a conclusion about the information in the 2016 Annual Report based on the limited assurance engagement 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 Accounting 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 independence ones and also that the engagement is conducted to provide limited assurance that the information in the 2016 Annual Report, taken as a whole, is free from material To the Directors and Officers of misstatement. Braskem S/A São Paulo - SP Introduction A limited assurance engagement conducted in accordance with NBC TO 3000 (ISAE 3000) consists mainly of questioning the management of Braskem and other professionals of the Company involved in the preparation of the information disclosed in the We have been engaged by Braskem S/A (“Braskem”) to apply limited 2016 Annual Report and applying analytical procedures to obtain assurance procedures on the sustainability information disclosed in evidence that allows us to make a limited assurance conclusion Braskem’s 2016 Annual Report, related to the year ended December 31st, 2016. Responsibilities of Braskem’s Management about the sustainability information taken as a whole. A limited assurance engagement also requires additional procedures when the independent auditor learns of issues which lead them to believe that the information disclosed in the 2016 Annual Report taken as The management of Braskem is responsible for preparing and a whole could present material misstatement. adequately presenting the information in the 2016 Annual Report in accordance with the Global Reporting Initiative (GRI) Sustainability 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. 2016 | Braskem | Annual Report109 The selected procedures were based on our understanding of the Scope and limitations issues related to the compilation, materiality and presentation of the The procedures applied in a limited assurance engagement are information disclosed in the 2016 Annual Report, other engagement substantially less extensive than those applied in a reasonable circumstances and considerations regarding areas and procedures assurance engagement. Therefore, we cannot ensure we are aware associated with the material sustainability information disclosed in of all the issues that would have been identified in a reasonable the 2016 Annual Report where material misstatement could exist. assurance engagement, which aims to issue an opinion. If we had The procedures consisted of: conducted a reasonable assurance engagement, we may have identified other issues and possible misstatements within the (a) planning: consideration of the materiality of aspects to information presented in the 2016 Annual Report. Braskem’s activities, relevance of the information disclosed, amount of quantitative and qualitative information and operational systems Nonfinancial data is subject to more inherent limitations than and internal controls that served as a basis for preparation of the financial data, due to the nature and diversity of the methods information in the 2016 Annual Report. This analysis defined the used to determine, calculate or estimate this data. Qualitative indicators to be tested in detail; interpretations of the data’s materiality and accuracy are subject (b) understanding and analysis of the information disclosed related to individual presumptions and judgments. Additionally, we did to the management of material aspects; not examine data regarding prior periods to assess the adequacy (c) analysis of processes for the preparation of the 2016 Annual of policies, practices and sustainability performance, nor future Report and its structure and content, based on the Principles projections data. for Defining Report Content and Quality of the Global Reporting Initiative - GRI (GRI-G4); Conclusion (d) evaluation of indicators and other non-financial information: Based on our review, nothing has come to our attention to • understanding the calculation methodology and procedures for indicate that Braskem’s 2016 Annual Report is not presented, in all the compilation of indicators through interviews with managers material aspects, in accordance with the Global Reporting Initiative responsible for preparing the information; Sustainability Reporting Guidelines (GRI-G4), and with its source • application of analytical procedures on the quantitative information records and files. and questions about qualitative information and their correlation with indicators disclosed in the 2016 Annual Report; São Paulo, July 17th, 2017 • • analysis of evidence supporting the information disclosed; visits to four of Braskem’s operational units and its head office for application of these procedures, as well as of items (b) and (c); KPMG Assessores Ltda. KPMG Financial Risk & Actuarial (e) plausibility analysis of the reasons for omissions of performance CRC 2SP034262/O-4 F-SP Services Ltda. indicators associated with topics and aspects identified as material through the Company’s materiality assessment; and We believe the information, evidence and results we have obtained are sufficient and appropriate to provide a basis for our limited Eduardo V. Cipullo Ricardo Algis Zibas conclusion. Accountant CRC 1SP135597/O-6 2016 | Braskem | Annual Report110 MACRO OBJECTIVES Safety To be among the benchmarks in Chemical, Occupational, and Process Safety in the Global Chemical Industry. SEMPRE: 99% of industrial plants in stage 5 implementation Accident rate with and without lost time - 0.75 accidents/MM Mhw; Event rate Tier 1: 0.20 events/ MM Mhw In 2016, this macro objective reached a level of progress of about 86% of the goal for 2020. Occupational Safety • In the period from 2002 to 2016, the injury frequency rate w/o Lost Time (Saf) + w/ Lost Time (Caf), • • • • and severity rate improved respectively 92.3%, 92.2%, and 36%. A fatal accident occurred at the PE8 CUB-SP plant. Fifteen industrial plants without record of lost time accidents (considering Members and Contractors) for more than three years, ten of these for more than five years. The percentage of plants in SEMPRE stages 4 and 5 increased from 13% to 46.7%. Percentage of behavioral dialogues without deviation improved from 66% in 2015 to 80% in 2016. This denotes a stronger culture of prevention through compliance with procedures. Process Safety • Risk Rating: The number of industrial plants with above standard rating based on audits by insurance companies has evolved from 12 to 15. • Nine TIER1 process accidents were recorded, 18% less than in 2015. The total cost avoided was BRL 17.1 million. Chemical Safety • Updated the multi-year action plans to replace asbestos, HCFC22 (Hydrochlorofluorocarbon), and CCl4 (carbon tetrachloride); Occupational Health • Recorded a new case of occupational illness due to depression. Liquid, Paste, and Solid Waste • In the period from 2002 to 2016, the waste generation rate improved by 63%, representing a result 57% better than the national chemical industry average (Abiquim database, 2015). 2016 | Braskem | Annual Report 111 MACRO OBJECTIVE 2020 GOAL ACTIONS IN 2016 Economic Production capacity: capacity Production Capacity and financial results of the 3rd largest 11,000 kt/yr. • The petrochemical complex in Mexico began operation in April and provided an increase in the capacity To be among the top three (2020) - LyondellBasell. of Low Density Polyethylene (LDPE) of 1.05 million tons/year. In 2016, this macro objective reached a level of progress of 73% of the goal for 2020. thermoplastic resin producers in the world and ensure Investment Grade: maintain EBITDA profitability that sustains the Investment Grade rating • Record EBITDA of BRL 11.5 billion in 2016. business continuity while of Moody’s, Fitch Rating, and maintaining the Investment Standard & Poor’s. Investment Grade Grade rating in the three major international agencies. • Maintained the investment grade assigned by two global risk rating agencies: Fitch Rating and Standard & Poor’s. Downgraded by Moody’s in February 2016. Post-consumer To be one of the five largest traders of PE and PP from recycled content in the world, among the petrochemical companies producing Polyolefins. To become an important driver of the growth of plastic recycling in Brazil, helping achieve the goals in the Sector Agreement on Packaging. In 2016, this macro objective reached a level of progress of 73% of the goal for 2020. Wecycle Platform • Launched the first polypropylene and polyethylene resins made from fully recycled content. Combined production volumes may reach 50 tons per month. The resins were developed within the Wecycle platform, an initiative that seeks to recover plastic waste throughout the production chain. Mechanical recycling rate: 28% in Brazil • Polypropylene resin WCL H 1003 BBM is produced from recycling big bags used in resin transport that were discarded in the past. Nearly 120,000 big bags will be recycled annually, which should generate a potential volume of 30 tons/month of post-consumer recycled resin. The new product may be applied to household utilities, garden products, and lids. Tramontina is already testing and evaluating in which applications of its gardening line the resin may be used. • Possible applications of WCL L004 SCV polyethylene resin are bags, laminated packaging, tarps, flexible packaging, and tubes. It is produced from used and discarded bags at Braskem’s Distribution Centers. The total volume of recycled resin may reach 20 tons/month in 2017, representing the monthly recycling of approximately 200,000 bags. 2016 | Braskem | Annual Report 112 MACRO OBJECTIVE 2020 GOAL ACTIONS IN 2016 Renewable resources To be among the leading producers of thermoplastic chemicals and resins from renewable raw materials. Remain the world’s largest producer of thermoplastic Production capacity of thermoplastic chemicals and resins from renewable raw materials: 230Kt/yr. In 2016, this macro objective reached a level of progress of 78% of the goal for 2020. Green PE • • The production of Green PE has been modernized to further mitigate impact on the environment. With investments of BRL 7.1 million from 2013 to 2015 to reduce CO2 emissions by 30%, new equipment was installed to reduce losses, reducing fuel consumption by the generator; as well as a new effluent reuse system, which will reuse effluents. After modernizing its production process, the updated Green PE Life Cycle Assessment (LCA) was launched, which identified the capture of 2.78 tons of CO2e per ton of product produced from sustainable resin, against 2.15 tCO2e/t identified in the previous study. Green PE is the first product from the Brazilian petrochemical industry to receive carbon footprint certification, an initiative that was born in the Technical Committee of the Industry Plan (CTPIn) and the Ministry of Industry and Commerce (MDIC), which defines and guides actions for implementing resins from renewable sources. the National Policy on Climate Change in priority sectors. According to the measurement, made by Carbon Trust and the Brazilian Association of Technical Standards (ABNT), the polyethylene from renewable origin has a negative emissions footprint, that is, it helps to sequester polluting gas from the atmosphere. The company voluntarily participated in the certification in order to provide transparency to information to its client relations, and to promote the adoption of this practice. In 2016, this macro-objective reached a level of progress of 96% of the goal for 2020. Water Consumption Water consumption rate (m³/t): • In the period from 2002 to 2016, the water consumption rate improved by 4.8%, the water reuse average water consumption of percentage improved by 38%, and the net effluent generation rate improved by 43%. the global chemical industry Water Efficiency 26.5 m³/t (2014) • Reduction in water consumption rate for the fourth consecutive year, reaching 3.93 m³/t. This is about To be among the benchmarks 6.5 times better than the average for the global chemical industry (ICCA 2013 - 25.64m³/t). in the use of water resources Percentage of water reuse: in the global chemical industry 2020: 25% • The net effluent generation rate reached 1.11m³/t, the best result since 2002. in terms of water consumption 2025: 30% and water reuse rates. 2030: 50% • Three process improvement initiatives were implemented in the UNIB1 BA, UNIB 2 RS, and UNIB 3 ABC crackers for water recovery and reuse, totaling an annual savings of nearly BRL 2.5 million; • Completed study of four watersheds of a total of eight that will be studied. Results presented at Abiquim’s 16th Congress of the Program called Atuação Responsável (Responsible Performance). 2016 | Braskem | Annual Report 113 MACRO OBJECTIVE 2020 GOAL ACTIONS IN 2016 Climate Change To be among the world’s best major chemical companies in intensity of greenhouse gas (GHG) emissions, and to be a major sequester of GHG emissions due to the use of renewable raw materials. CO2 Emissions Intensity (tCO2e/t): remain at 600Kg/t In 2016, this macro-objective reached a level of progress of 93% of the target for 2020. Greenhouse gas inventory: • Considering only Scope 1 emissions, directly managed by the Company, the total aggregate reduction was about 9% compared to baseline year 2008 (without Mexico). Scopes 1 + 2 totaled a reduction of 18% (without Mexico). CDP Investor • Braskem became the first Brazilian industry to join the A List of the CDP carbon program. CDP Supply Chain • Braskem joined the A List of the CDP Supply Chain Program. Climate Risk Management • The climate risk studies in Mexico were completed and the Braskem’s Adaptation Plan was designed in Brazil, consolidating plans for the Northeast, Southeast, and South regions. In 2016, this macro-objective reached a level of progress of 94% of the goal for 2020. Energy Efficiency To be among the best major chemical industries in the world in intensity of energy consumption and to be a major user of renewable energy sources. Energy consumption rate (GJ/t): 10.82 GJ/t Energy Consumption • In 2016, a total of 10.25 GJ of energy was consumed per ton produced, the best result since 2002, representing an aggregate improvement of 14%. % of renewable energy use: • Five initiatives were implemented to improve the energy efficiency of the process, totaling an annual 11% savings of BRL 4.6 million. • Since 2002, approximately BRL 100 million has been invested to improve the efficiency of the electrical system of crackers in the UNIB1 BA and UNIB2 RS against power outages (caused, for example, by lightning striking Braskem’s external and/or internal electrical system). 2016 | Braskem | Annual Report 114 MACRO OBJECTIVE 2020 GOAL ACTIONS IN 2016 Reputation Index (%): “excellent” level in RepTrakTM Pulse citizenship dimension (> 80%) Leverage of private social investments: 200% based on annual budget Local development To achieve the “excellent” reputation level in the citizenship dimension of RepTrak® Pulse, demonstrating that it is recognized by the community surrounding the facility and by society at large for its contribution to the improvement of human development. In 2016, this macro-objective reached a level of progress of 88% of the goal for 2020. In 2016, a total of BRL 27.5 million were invested in social and environmental projects, with emphasis on private social investment projects: • Ser + Realizador: 3,444 waste collectors benefited and 813 recorded an increase in income. • Fábrica de Florestas Institute: produced 88,407 seedlings, planted 46,628, and 27,506 people received sensitivity training. • Edukatu: the numbers have evolved significantly. The number of participants reached 28,441 people, the number of teachers engaged increased to 1,084, and the number of students engaged “Strong” reputation level with Clients in the products & services dimension of Deep In 2016, this macro-objective reached a level of progress of 85% of the goal for 2020. LCA studies • From 2011 to 2016, a total of 41 ACV and five Carbon Footprint studies were completed, identifying the advantages and priority areas for product improvement. Developing solutions Dive: 70.0% To be recognized as a company that supports its clients in the Rate of new projects development of environmental showing positive social and and social solutions using environmental impact: 233.2 Chemistry and Plastics, kt/yr. reaching a “strong” reputation level through its products & Number of LCA studies services. completed: 14 • In 2016, the level of alignment of the project pipeline was 84%. Throughout the year, Braskem completed a total of ten LCA studies, among which the Recycled Plastic Resins and Casa Clic stand out. Braskem Labs • In its second edition, the program received 190 applications and selected 12 innovative proposals in the areas of chemistry and plastic, and also to combat the Aedes aegypti mosquito. • The Eco Brasil Award, sponsored by the American Chamber of Commerce (AmCham) and the newspaper O Estado de S.Paulo, recognized the Braskem Labs program as a winner in the Processes – Large Companies category. 2016 | Braskem | Annual Report 115 MACRO OBJECTIVE 2020 GOAL ACTIONS IN 2016 In 2016, this macro-objective reached a level of progress of 91% of the goal for 2020. Diversity • Braskem was chosen among 200 companies in Brazil as one of the 10 best for women to work according ISE Bovespa score: remain to a survey conducted by Love Mondays (based on 12,000 interviews). Braskem’s diversity program listed with a score equivalent was reported to the People and Organization Committee (CPO), a support committee to the Board of to the average between the Directors (CA), demonstrating the strategic importance given to the topic. Strengthening practices portfolio benchmark and ISE BM&FBovespa To be among the business the portfolio average DJSI • For the 12th consecutive time, Braskem was included in the ISE portfolio (Corporate Sustainability benchmarks in Brazil for its Emerging Markets Score. Index), the sustainability index of BM&FBOVESPA of São Paulo. contribution to Sustainable DJSI Emerging Markets Development. To be one of Maintain a score equal to the • Braskem was listed for the fifth consecutive year in the Dow Jones Sustainability Emerging Markets the global benchmarks in the average of the world Chemical Index (DJSI), the sustainability index for companies in emerging markets on the New York Stock sector for its contribution in Industry benchmark and the Exchange (NYSE). Sustainable Development. first in the global industry The Sustainability Yearbook index. • For the third time, Braskem was included in The Sustainability Yearbook, a publication prepared by RobecoSAM, an international investment consulting firm specializing in sustainability. The ranking lists the 457 most sustainable companies in the world, with Braskem listed among the 19 leading companies in the global chemical sector and among the 12 leading Brazilian companies (considering the 59 sectors covered by the study). Additionally, in 2016, Braskem received the “Bronze” classification. 2016 | Braskem | Annual Report Glossary Biopolymer Flare all quotas does not exceed the Raffia Thermoplastic resin produced Static mechanical safety maximum fixed limit for the Fibers used to manufacture from renewable raw materials equipment that is powered to system. The cap is set to ensure bags for transporting fruit or Cap Emission limit burn chemical compounds that that total system emissions are small loads the industrial plant will not reduced from one period to the be able to process. Burning next. Trade is the trading of Ramp-up keeps hazardous compounds permissions between participants Term in economy and business Cracker from being released into the - those who can reduce their defining the initial stage of Industrial plant where naphtha atmosphere. emissions further can sell their industrial production is processed into derivatives, surplus permissions to those such as ethylene, propylene, Rotary clinker kilns for whom reducing emissions Risk rating (of processes) and other co-products Kilns to produce cement is more expensive than buying Process safety index permissions from others. That is, established by insurance Cracking (naphtha) Grade (Resin) the trade mechanism allows the companies Breaking molecules for Type, Specification reduction sought by the group ethylene production to be achieved at the lowest Second generation (in the Eco-efficiency The ratio between the use Investment grade Investment grade possible cost. petrochemical industry) Second generation units, Offsets producers of intermediates and of resources required to Reverse logistics Emission credits that may be thermoplastic resins (PE, PP, manufacture a given product A set of actions, procedures, traded in a cap&trade market. and PVC) and its production volume. and means enabling the They are generated by the Expresses productivity from an collection and restitution of reduction of avoided emissions Spread environmental standpoint solid waste in the business or emissions in accredited Margin (of profitability) sector, for reuse in its cycle or locations outside of market Eco-indicators in other production cycles, or coverage (e.g. reforestation). Tagalong Environmental performance for other destinations These securities may be Mechanism that gives minority indicators used as compensation by shareholders the same rights Cap&trad market participants in a cap&trade as controlling shareholders in Grid factor Cap & trade. A system composed market who have exceeded the event of sale or transfer Average rate of GHG emissions of several parts in which their emission limit of control. Under Brazilian law resulting from generating electricity emission quotas (permissions) (Brazilian Corporate Law). are established for each p.p. participant, so that the sum of Percentage point 116 ACRONYMS ABS: acrylonitrile-butadiene styrene GJ: Gigajoules GPS: Global Product Strategy KWh/t: kilowatt-hour per ton kg/t: kg per ton PE: Polyethylene HDPE: High Density Polyethylene LDPE: Low Density Polyethylene LLDPE: Linear Low Density Polyethylene PP: Polypropylene PVC: Polyvinylchloride REACH: Registration, Evaluation, Authorization and Restriction of Chemicals SAN: Styrene acrylonitrile UNIB: Basic Petrochemicals and Vinyls Unit UNPOL: Polyolefins, Renewables and Europe Unit UTEC: ultra-high molecular weight - Braskem’s brand 2016 | Braskem | Annual ReportCorporate Information BRAZIL SOUTHEAST UNIB 3 CK ABC Avenida Presidente Costa e Silva, 1178, Pq. Capuava – Santo André ZIP CODE: 09270-901 Phone: +55 11 4478-1515 UNIB 3 IN ABC Rua da União, 765, Jardim Sonia Maria Mauá ZIP CODE: 09380-900 Phone: +55 11 4977-2020 UN PE 7 ABC Avenida Presidente Costa e Silva, 400, Pq. Capuava – Santo André ZIP CODE: 09270-000 Phone: +55 11 4478-4000 UN PP 4 ABC Avenida Ayrton Senna da Silva, 2700, Jardim Oratório – Mauá ZIP CODE: 09380-901 Phone: +55 11 3583-2200 UN PE 8 CUB Rodovia Cônego Domenico Rangoni,55, s/n Km 266 – Pista Oeste Cubatão ZIP CODE: 11573-903 Phone: +55 13 3362-9001 UNIB 4 e PE 9 DCX Rua Marumbi, 1001, Campos Elíseos Duque de Caxias ZIP CODE: 25221-000 Phone: +55 21 2187-8883 UN PP 5 DCX Rua Marumbi, 1400, Campos Elíseos Duque de Caxias ZIP CODE: 25221-000 Phone: +55 21 2173-4100 UN PP 3 PLN Avenida Wagner Samara, 1280, Bairro Cascata, Paulínia ZIP CODE: 13147-082 Phone: +55 19 3344-6700 SP Office - Headquarters Rua Lemos Monteiro, 120, Edifício Odebrecht, Butantã ZIP CODE: 05501-050 Phone: +55 11 3576-9000 SP Office – Villa Lobos Avenida das Nações Unidas, 4.777, 11º andar, Edifício Villa Lobos Pinheiros ZIP CODE: 05477-000 Phone: +55 11 3576-9000 117 SOUTH UNIB 2 RS BR 386, Rod. Tabaí / Canoas, km 419, Via de Contorno, 850 Triunfo ZIP CODE: 95853-000 Phone: +55 51 3457-6310 PP 1 RS BR 386 KM 419 – III Polo Petroquímico, Via Oeste – Lote 5 Triunfo ZIP CODE: 95853-000 Phone: +55 51 3721-8161 PP 2 / PE 5 RS BR 386 KM 419 Lote 4 Polo Petroquímico do Sul Triunfo ZIP CODE: 95853-000 Phone: +55 51-3457-5511 PE 4 RS BR 386 – Rodovia Tabaí/Canoas – Km 419, Via de Contorno, 1216 Polo Petroquímico, Triunfo ZIP CODE: 95853-000 Phone: +55 51-3721-8661 2016 | Braskem | Annual ReportPE 6 RS PE 1 BA Av. Av. Antônio Carlos Magalhães, 3244, BR 386 – Rodovia Tabaí-Canoas – Rua Eteno, 1582, Copec - Polo de Camaçari Thomé de Souza, 20º andar 118 Km 419, Via de Contorno 1178 Polo Petroquímico, Camaçari ZIP CODE:42810-000 Phone: +55 71 3413 3711 Salvador ZIP CODE: 41820-000 Phone: +55 71 3504-7932 Lote 29, Passo Raso, Triunfo ZIP CODE: 95853-000 Phone: +55 51-3457-2351 RS Office Av. Soledade, 550, 2º andar, Petrópolis, Porto Alegre ZIP CODE: 90470-340 Phone: +55 51 3216-2626 ALAGOAS CS 1 AL Avenida Assis Chateaubriand, 5260 Bairro Pontal da Barra, Maceió ZIP CODE: 57010-900 Phone: +55 82 3177-5151 PVC 2 AL Rodovia Divaldo Suruagy – Km 12 – Via II Polo Industrial José Aprígio Vilela, Marechal Deodoro ZIP CODE: 57160-000 Phone: +55 82-3177-5412 Mining Av . Major Cícero Góes Monteiro, 2889, Mutange, Maceió ZIP CODE: 57017-515 BAHIA UNIB 1 BA Rua Eteno, 1561, Copec-Polo de Camaçari Camaçari ZIP CODE: 42810-000 Phone: +55 71 3413-2200 PE 2 BA Rua Hidrogênio, nº 3520, COPEC, Polo de Camaçari UNITED STATES Camaçari ZIP CODE: 42810-280 Phone: +55 71 3413 3860 PVC 1 BA Rua Hidrogênio, 3342, COPEC–Polo de Camaçari Camaçari ZIP CODE: 42810-280 Phone: +55 71 3413-2800 PE 3 BA Rua Benzeno, 2391, COPEC - Polo de Camaçari Camaçari ZIP CODE:42810-020 Phone: +55 71 3413 4100 PP6-BA Rua Hidrogênio, 1404 - Polo Industrial de Camaçari Camaçari ZIP Code: 42810-010 Phone: +55 71 3797 3865 Fax: +55 71 3632 2206 CS 2 BA Rua Oxigênio, 765, COPEC - Polo de Camaçari Camaçari ZIP CODE:42810-270 Phone: +55 71 3413 3344 BA Office Headquarters 1735 Market Street, 28th floor PA 19103 Philadelphia 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 Marcus Hook Plant 750 West 10th Street Marcus Hook, PA 19061 Neal Plant 200 Big Sandy Road Kenova, WV 25530 Phone: +1 304 453-1371 Fax: +1 304 453-5916 Seadrift Plant P.O. Box 105 Port Lavaca, TX 77979 Phone: +1 361 487-1100 Oyster Creek Plant P.O. Box 2168 2016 | Braskem | Annual Report119 COLOMBIA (office) Braskem S.A. Sucursal Colombiana Calle 93 - 11A - 28 - Oficina 302 Edificio Capital Park 93 Bogotá - Columbia Phone +57 (1) 589-7074 CHILE (office) Braskem Petroquímica Chile Ltda. Nueva de Lyon Nº 145 - Oficina 1204 Edifício Costanera Lyon Providencia - Santiago - Chile Phone +56 (2) 2482-7000 NETHERLANDS (office) Weena 200, 9Th floor Tower C 3012 NJ Rotterdam The Netherlands Phone +31 (10) 7985002 SINGAPORE (office) 8 Eu Tong Sen Street #22-89 The Central, 059818 Singapore Phone: +65 6671 0431 Freeport, TX 77542 Phone: +1 979 705-2650 MEXICO Technology and Innovation Center 550 Technology Drive Pittsburgh, PA15219 Phone: +1 412 208-8100 Fax: +1 412 20-88205 Houston Office 5100 Westheimer Rd – Suite 495, Houston, TX 77056 Phone: +1 713 255-4747 / Fax: +1 713 255-4740 Pasadena Office 4949 Fairmont Parkway, Suite 101 Pasadena, TX 77505 Phone: +1 979 705-2650 GERMANY An der Welle 3 60322 Frankfurt am Main Phone: +49 69 427 299 200 PP 11 Wesseling Werk Wesseling Rodenkirchner Strasse 400 50389 Wesseling Phone: 49 2232 705 356 PP 12 Schkopau Werk Schkopau PF 1163 06201 Merseburg Phone: +49 3461 54 740 200 Braskem Idesa SAPI Boulevard Manuel Avila Camacho 36, Piso 24 Col. Lomas de Chapultepec CP 11000 México D.F Coatzacoalcos Plant Camino Petrolero El Chapo s/n, Km. 1.3 Col. Zona Industrial de Coatzacoalcos Veracruz, Mexico OTHER COUNTRIES ARGENTINA (office) Braskem Argentina S.A. Carlos Pellegrini, 1149 - Piso 7º C1009ABW Ciudad Autónoma de Buenos Aires Buenos Aires - Argentina Phone +54 (11) 5275-6600 VENEZUELA (office) Av. Río Caura – Torre Humboldt, Piso 19, Oficina 1901, Urb. Prados del Este, 1080 Caracas Phone: +58 (212) 976-5025 PERU (office) Braskem S.A. Sucursal Perú Av. Victor Andrés Belaunde, 280 - Oficina 603 San Isidro, Lima 27, Peru Phone +57 (1) 442-4241 2016 | Braskem | Annual Report120 G4-31 FOR MORE INFORMATION ON THIS REPORT, PLEASE CONTACT IMPRENSA@BRASKEM.COM.BR Credits Vice President of People, Business Communication, Marketing, and Sustainable Development Marcelo Arantes Corporate Communication Director André Vieira Sustainable Development Director Jorge Soto External Communication Supervision Carlos Eduardo dos Santos Mariana Fernandes Cardoso Sustainable Development Supervision Mario Pino Luiz Carlos Xavier Vinício Salotti Analysis of Indicators, Project Development, and Content Production Keyassociados Graphic Design and Layout Kite Estratégias Digitais Assurance KPMG Photos Braskem Collection Translation Gotcha! Idiomas 2016 | Braskem | Annual Reportwww.braskem.com 

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