Braskem S.A.
Annual Report 2018

Plain-text annual report

ANNUAL REPORT 2018 2 FOREWORD < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER3 GLOBAL AND CONNECTED WITH THE FUTURE We are a company that seeks innovation at all times. As the sixth largest producer of thermoplastic resins in the world1 and a global leader in the production of biopolymers, we believe in the power of transformation through chemistry and plastics, and in their responsible use to improve the lives of people. On the following pages, see the path we pursued in 2018 in order to continue to improve our results, our commitment to sustainable use of plastic, and our capacity to innovate in the search for sustainable products and solutions that are increasingly more efficient. Braskem always seeks to improve its Annual Report to be transparent and provide relevant information to our stakeholders. To do so, we would like to ask for your cooperation on our continuous improvement. At the end of our report, you will find a research about the current content and what, in your opinion, could be improved in the future versions. There are only six multiple choice questions. The research is completely anonymous and does not require any personal or professional information. The answers will only be used internally to improve our report. Thanks in advance for your contribution and enjoy your reading! 1 Considering Polyethylene, Polypropylene, and Polyvinyl Chloride - Source: external consulting < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER4 MESSAGE FROM THE BUSINESS LEADER < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER5 READY FOR NEW CHALLENGES 102-14 Soundness, innovation, and result – these are To this end, we are developing along with the words that defined Braskem in 2018. A year our Members, projects that will help us when, despite all the challenges faced by global think beyond and create a company that is market, we posted a record cash generation, increasingly oriented to the future. Through our reaching R$ 7.1 billion – 187% higher than 2017. squads - groups formed by multidisciplinary Our EBITDA showed a strong consistency, teams with different views on innovation reaching R$ 11.3 billion, with a net income of for the business - we are closely monitoring the controller company of R$ 2.86 billion. topics defined as priority for our company: mobility and digital manufacturing. In addition to keeping our focus on creating value for our shareholders, in 2018 we once While working to improve further the way again placed our bets on innovation. We we operate and drive our vision for the reached higher than simply developing more future, we initiated a digital transformation sustainable products. We encouraged our process in several industrial and corporate Members to follow global disruptive trends, areas, numerous initiatives to create digital sought to better serve our Clients, developed process optimization tools, preventive new ways to manage our business and to maintenance, quality control, and the adoption assumed a leading role in extremely important of technologies such as artificial intelligence, initiatives for the preservation of the planet. machine learning, and advanced analytics. But none of this would be possible without our Members, who continually contribute in the search for new solutions that make Braskem an increasingly better company – and not only in terms of products and services, but also as a great place to work. Therefore, I wish to highlight one of the most important initiatives of our company in 2018 - the BeUx, a new Value Proposition for our Members that offers possibilities for innovation and creation to a diverse and constantly evolving team. SOUNDNESS, INNOVATION, AND RESULT – THESE ARE THE WORDS THAT DEFINED BRASKEM IN 2018< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER6 SUSTAINABLE AND RESPONSIBLE CONTINUOUS IMPROVEMENT CRITERIA 15, 19 AND 20 - COP With a focus on our constant evolution, I would like to highlight our positioning within the Circular Economy. We believe that plastics have a critical role to play in delivering a more sustainable future, but we also recognize the need for better management of post- consumer waste. Thus, through this public positioning, we are increasingly committed to supporting sustainable and innovative technologies and, especially, the expansion of recycling in all places where we operate. Plastic waste in our oceans has attracted worldwide attention. Aware of our role in confronting this global challenge, we joined the Alliance to the End Plastic Waste – an initiative that involves 30 corporations – to help minimize the impact of waste disposed of improperly, and to seek new technologies and business models that favor reuse of this material. Through such initiatives, we are constantly reinforcing our engagement with and contribution to the major global social and environmental agendas. In 2018, we updated our Global Sustainable Development Policy, a document that reinforces our commitments to adhering to the precepts of the Universal Declaration of Human Rights and aligns our goals and aspirations with the agenda of the United Nations’ Sustainable Development Goals. Even in the constant search for the new, at no time have we set aside our strong commitment to continuous strengthening of our governance and compliance processes. In 2018, we continued to implement our Compliance Improvement program. We have already adopted 93% of the total number of actions. We established a process to evaluate the Board and Board members, contributing to its effectiveness and improvement of the company’s governance. Finally, I would like to thank our Shareholders, as well as our Clients, for all the trust placed in Braskem. I also thank all the dedication and competence of our Suppliers, Partners and Members – who are essential in making Braskem even stronger in a scenario of global competition. Fernando Musa WE BELIEVE THAT PLASTICS HAVE A CRITICAL ROLE TO PLAY IN DELIVERING A MORE SUSTAINABLE FUTURE < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER7 BRASKEM < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER8 BRASKEM 102-1, 102-2, 102-4, 102-6, 102-7, 102-12, 102-13, 301-1 We are the sixth largest petrochemical automotive, agribusiness, and company in the world, with 41 industrial units in four countries health and hygiene, among others. (Brazil, the United States, Mexico, and Following our commitment to Germany) and an annual production sustainability and innovation, we capacity of 8.9 million tons of are also the main global producer of thermoplastic resins (Polyethylene, biopolymers, with annual production Polypropylene, and Polyvinyl Chloride) capacity of 200,000 tons of I’m and 10.7 million tons of basic chemicals green™ Green Plastic, a Polyethylene (such as Ethylene, Propylene, produced from sugarcane ethanol, Butadiene, and Benzene, among a source that is 100% renewable. others). We serve Clients in more than In 2018, we launched an Ethylene 100 countries from a wide variety Vinyl Acetate (EVA) copolymer of sectors, such as food packaging, civil construction, industrial, retail, from renewable sources, which is also part of our I’m greenTM brand. WE ARE THE SIXTH LARGEST PETROCHEMICAL COMPANY IN THE WORLD, WITH 41 INDUSTRIAL UNITS AND THE MAIN GLOBAL PRODUCER OF BIOPOLYMERS, WITH ANNUAL PRODUCTION CAPACITY OF 200,000 TONS OF I’M GREEN™ GREEN PLASTIC.< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERMAP OF OPERATIONS 9 OPERATIONS in 4 COUNTRIES Free cash flow generation R$ 7,068 MILLION 8,0082 Members 41 INDUSTRIAL units CLIENTS in over 100 COUNTRIES 16 SALES offices Click here to learn more about our global presence. 2 Members only. Does not include interns. Click here to see the addresses of our offices. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERBUSINESS MODEL 1. Raw Material Extraction 2. Processing Raw Material 3. Logistics 4. Transformation and Processing 5. Use 6. Disposal 7. Recycling Capitals Natural Human Financial 7 5 6 4 3 2 1 10 TO LEARN MORE ABOUT HOW WE WORK, CLICK ON NUMBERS AND ICONS Stakeholders Members Investors / Shareholders Intellectual Manufactured Social It should be noted that Braskem does not produce or market products derived from genetically modified organisms (GMOs) or products containing GMO ingredients, whether in Brazil or abroad. Clients Civil Society < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER11 Click here to watch the video with our strategy for Sustainable Development (Portuguese only) SUSTAINABILITY AS PART OF THE STRATEGY CRITERIA 1, 3, 6, 9, 10, 11, 15, 17, 19 AND 20 - COP We aim to improve people’s lives by creating sustainable solutions in chemicals and plastics—topics that are becoming increasingly strong in our growth strategy. We believe that sustainable development is a way of conducting and developing our business, and considering the needs of all stakeholders, today and tomorrow. We continuously seek to think and act sustainably in all our corporate activities, ranging from operational and management processes to services, investments, relationships, and products. In order to support this work, we have in place a solid Global Sustainable Development Policy, which was revised and approved by the Board of Directors in April 2018, that together with Senior Management, oversees the policy’s commitments performance. Supported by three pillars—increasingly sustainable operations and services, increasingly sustainable product portfolio, and solutions for an increasingly sustainable life (where we work to adapt to climate change while reducing our greenhouse gas emissions and water consumption, among other impacts)—through this policy we aspire to be a civic company and leader in sustainability in the chemical industry, always strengthening our commitment to promoting economic growth, environmental preservation, and social justice. Click here to learn about our Global Sustainable Development Policy. THE SUSTAINABLE DEVELOPMENT IS A WAY OF CONDUCTING AND DEVELOPING OUR BUSINESS< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER12 HUMAN RIGHTS CRITERIA 3 AND 9 - COP We adopt internationally recognized human rights as the base for sustainable development and we respect these rights in developing our business, including direct operations, operations of joint ventures, and of the value chain. Our commitment follows the United Nations Guiding Principles on Business and Human Rights, is guaranteed by Braskem’s Code of Conduct and Code of Conduct for Third Parties and, in 2018, was reinforced with the approval of the Sustainable Development Policy. This policy, in addition to defining responsibilities, is integrated into corporate norms and guidelines related to the topic, with a focus on risk management in three main areas: human rights, community relations, and environmental protection and preservation. Braskem initiated its first audit (due diligence) on human rights in 2016 as set out in its Guiding Principles. In 2017, the assessment of actual IN 2018, WE MET 100% OF SHORT- TERM ACTIONS To learn more about the initiatives in which we participate and about our voluntary commitments, go to www.braskem.com.br/voluntary-commitments and potential impacts of the activities upon human rights was completed, through which we were able to identify all possible risks that involve our operations and those of our value chain, and to approve our first Risk Matrix on the Violation of Human Rights. The matrix defined the prioritization of Braskem’s activities by identifying five potential risks, ensuring the development of action plans to mitigate such risks: dignity and diversity, ethics and transparency, traditional peoples, fair work in the value chain, and post-consumer. To ensure integrated risk management, we included these risks of human rights violations identified in the Corporate Risk Matrix, monitored by the Board of Directors and Senior Management. We made significant advances in 2018. In addition to completing 100% of the short-term actions set out in our action plan, we finalized relevant studies and diagnoses that will allow for even more assertive steps to be taken to mitigate prioritized risks. These advances will be revealed throughout the various sections of this report. Click here to learn more about our commitment to human rights < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERRISKS THAT CAN INVOLVE OUR OPERATIONS AND OUR VALUE CHAIN 13 ETHANOL CHAIN SUPPLIERS BRASKEM LOGISTICS PROCESSOR END USER CONSUMER RECYCLING CHAIN DIGNITY AND DIVERSITY PROPERTY SECURITY PRIVATE PROPERTY PROCESS SAFETY OCCUPATIONAL HEALTH AND SAFETY HEALTHY ENVIRONMENT SAFETY OF SURROUNDING COMMUNITIES TRADITIONAL PEOPLES TRADITIONAL PEOPLES CONSUMER SAFETY CONSUMER SAFETY FAIR WORK IN VALUE CHAIN FAIR WORK IN VALUE CHAIN WORK AND CAREER CONDITIONS ETHICS AND TRANSPARENCY SAFE WORK IN VALUE CHAIN SAFE WORK IN VALUE CHAIN POST-CONSUMER POST-CONSUMER WORK AND CAREER CONDITIONS FAIR WORK IN VALUE CHAIN SAFE WORK IN VALUE CHAIN < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERCARTA DO LÍDER DE NEGÓCIO 14 Macro goals for sustainable development CRITERIA 1, 9, 11, 15, 17, 18, 19 AND 20 - COP In our search for products and solutions that minimize environmental and social impacts, we align our business strategy with 10 macro goals with targets set for 2020, associated with the UN’s 17 Sustainable Development Goals (SDGs) and more specifically to seven SDGs to which we contribute most. The macro goals were developed from the renewed materiality consultation in 2013, based on a structured consultation process with stakeholders. Of the 29 aspects evaluated, 17 were considered material because it were in the critical or highly critical quadrants and were consolidated into 10 macro strategic goals for our contribution to sustainable development. The results of achieving the macro goals are regularly monitored by the company’s Board of Directors. GOAL 2020 SAFETY ECONOMIC AND FINANCIAL RESULTS POST-CONSUMPTION LOCAL DEVELOPMENT WATER EFFICIENCY To be among the benchmarks in chem- ical, occupational, and process safety in the Global Chemical Industry. To be among the top three thermo- plastic resin producers in the world and ensure profitability that sustains busi- ness continuity, while maintaining the Investment Grade rating in the three major international agencies. To be one of the five largest traders of PE and PP with recycled content in the world, among the petrochemical companies producing Polyolefins. And to become an important driver of re- cycling plastic in Brazil, supporting the achievement of the goals in the Pack- aging Sector Agreement. To achieve an “excellent” reputation in the Citizenship Dimension of RepTrak® Pulse, demonstrating recognition from the communities in the vicinity of our facilities and from society at large for the company’s contribution to the im- provement of human development. To be a benchmark in the global chem- ical industry for our usage of water re- sources in terms of water consump- tion and water reuse. % OF ACHIEVED GOALS % OF ACHIEVED GOALS % OF ACHIEVED GOALS % OF ACHIEVED GOALS % OF ACHIEVED GOALS 2016 2017 2018 2020 99% 98% 98% 100% 2016 2017 2018 2020 73% 73% 73% 92% 2016 2017 2018 2020 1% 1% 2% 100% 2016 2017 2018 2020 86% 81% 75% 100% 2016 2017 2018 2020 96% 100% 97% 100% CLIMATE CHANGE DEVELOPMENT OF SOLUTIONS STRENGTHENING PRACTICES RENEWABLE RESOURCES ENERGY EFFICIENCY To be among the world’s largest chem- ical companies in intensity of green- house gas (GHG) emissions while maintaining the use of renewable raw materials. To be recognized as a company that supports its Clients in the development of environmental and social solutions in Chemicals and Plastics, reaching a “strong” reputation level through its products and services. To be among the business benchmarks in Brazil for our contribution to sustain- able development, as well as a global benchmark in the sector for our contri- bution to sustainable development. 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 renew- able sources. To be among one of the best chem- ical industries in the world, in terms of energy consumption intensity and use of renewable energy sources. % OF ACHIEVED GOALS % OF ACHIEVED GOALS % OF ACHIEVED GOALS % OF ACHIEVED GOALS % OF ACHIEVED GOALS 2016 2017 2018 2020 93% 100% 99% 100% 2016 2017 2018 2020 85% 91% 97% 100% 2016 2017 2018 2020 91% 94% 92% 100% 2016 2017 2018 2020 82% 82% 100% 100% 2016 2017 2018 2020 84% 85% 62% 85% Braskem initiatives that have earned recognition as Global Compact LEAD by the UN can be seen here. Click here to see The Sustainability Yearbook 2019. STRENGTHENING PRACTICES < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERNOTHING IS CREATED, NOTHING IS WASTED, EVERYTHING IS TRANSFORMED 103-2, 103-3, 102-12, 102-13 Aware of our role as one of the world’s To move toward a circular economy, we are largest producers of polymers, in 2018 also committed to improving practices at we defined a series of global initiatives to all our industrial units to reduce the loss drive a circular economy in the production of pellets (tiny granules of raw material for chain of processed plastic products. the production of plastic products that can be dispersed in plant and logistics Inspired by nature, a circular economy has a operations, and end up reaching the cycle of positive and continuous development environment) by 2020, and adhering to that preserves and enhances what comes industry commitments to work toward from the planet. We seek to develop eight key making all plastic packaging reusable, initiatives, among which are the partnerships recyclable, or recoverable by 2040. with Clients in the development of new products to expand and facilitate the recycling and reuse Additional initiatives include engaging of plastic packaging. They also include growing consumers in recycling programs investments in new resins from renewable through conscious consumer education sources, such as Green Plastic made from initiatives, using life-cycle assessment sugarcane, and supporting new technologies, tools, and supporting actions to business models, and systems for collection, improve solid waste management to sorting, recycling, and recovery of materials. prevent waste disposal in the seas. OUR GOALS By 2020: 100% from our units will adopt best practices for pellet control. By 2040: 100% of plastic packaging will be reusable, recyclable, or recoverable. A economia circular em uma imagem Para que o desenvolvimento humano seja sustentável, é preciso controlar estoques finitos e equilibrar os recursos renováveis. 15 A economia circular nasce em oposição a economia linear, que funciona baseada em três etapas: extrair, produzir e descartar. Inspirada na natureza, a economia circular propõe um ciclo de desenvolvimento positivo e contínuo que preserva e aprimora aquilo que vem do planeta Terra. Ela otimiza a produção e minimiza riscos sistêmicos. UNDERST A N D H O W T H E P R I N C I P L E O F C I R C U L A R E C O N O M Y W O R K S RAW MATERIALS, CONSCIOUS USE OF NATURAL RESOURCES DESIGN - E N D O F - L I F E T R E A T M R E C Y C L I N G A N D E N T C I R CULAR ECONO M Y WASTE, BUT WITH MINIMAL WASTAGE C O LLECTION R P E R M O A D N U U C F T A I O C T N U A N D R I N G N TIO U DISTRIB N , T I O C O N S U M P E , U S R E U S R E E , P A I R Click here to learn more about the eight fundamental issues we have set to achieve these goals and watch the video with the Circular Economy Manifesto. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER 16 8 million TONS OF PLASTIC WASTE IN SEAS AROUND THE WORLD INVESTMENT OF UP TO R$ 5,5 billion OVER THE NEXT 5 YEARS FOR A MORE EFFICIENT WASTE MANAGEMENT GLOBAL CHALLENGE Plastic waste reaching the oceans has a significant impact Sea), was created by Plastivida and the Oceanography Braskem joined the Alliance to End Plastic Waste to help end on marine life. This plastic is carried to the oceans mainly Institute of the University of São Paulo and aims to work improper disposal of this type of waste in the environment, especially through rivers, which are heavily affected by incorrect with companies and associations in the plastics sector to in the oceans. The goal is to invest up to US$ 1.5 billion over the disposal and poor management of solid waste, and a low coordinate actions to reduce waste in the oceans. And, next five years in projects and in the development of technologies level of recycling. It is a very complex problem that requires since waste management is a broad and complex issue that prevent disposal of plastic waste into the environment. attention from governments, communities, and companies. – with environmental, economic, and social challenges – While working to create sustainable solutions through of Intent, to promote the commitment of this sector. waste management systems in urban areas with low infrastructure, especially chemicals and plastic, we understand the need to be where there are rivers that carry large amounts of waste into the ocean. Plastivida has proposed a mobilization around a Declaration Initial global proposals include partnerships with cities to design integrated part of the solution and we know that much work is We are one of the signatories of the document and still needed to ensure proper management of solid have worked to find solutions through the development The Alliance is a non-profit organization comprised of over 30 global waste. Thus, we have decided to actively take part in of new technologies, increased recycling, and the companies, across the entire plastic production chain. The World the debate and in considering solutions to combat promotion of educational actions. Some initiatives Business Council for Sustainable Development is a strategic partner. the accumulation of plastic waste in the oceans. already align with Braskem’s own objectives and positioning within the circular economy, such as the goal To learn more about this initiative, go to: www.endplasticwaste.org. The initiative, Fórum Setorial dos Plásticos - Por um to adopt best practices in pellet control by 2020, thereby Mar Limpo (Industry Forum of Plastics - For a Clean preventing them from reaching rivers and oceans. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER STRONGER RECYCLING Our sustainable development strategy With the mission to create initiatives and underpins all of the company’s actions. projects aligned to its positioning, we In 2018, we expanded and strengthened launched resins with recycled content the Wecycle platform, which focuses on originated from sacks, post-consumer promoting and developing business and domestic waste, and pails of printing ink. initiatives to value plastic waste through We produced 400 tons in 2018. In addition, partnerships, and bringing reliability and we have been working to promote and quality to the development of products, support globally the engagement of the solutions, and processes involving all plastic value chain in recycling and recovery links in the plastic recycling chain. programs and, through educational programs on conscious consumption, increase the understanding of the value of plastic waste to the economy. With a focus on innovation, we are also investing in the search for both mechanical recycling technologies—to improve the quality of the recycled resin—and chemical recycling, which can allow plastic waste to be processed and transformed again into chemicals that can be used in numerous value chains, with benefits for society. In order to advance the development of chemical recycling, partnerships were established with EngePol - Polymer Engineering Laboratory of COPPE/ UFRJ (Alberto Luiz Coimbra Institute for Graduate Studies and Engineering Research of the Federal University of Rio de Janeiro), SENAI Institute for Innovation in Biosynthetics (SENAI CETIQT), and Cetrel (an environmental services company that started operations in 1978, as part of the Camaçari Petrochemical Complex). 17 COLLECTION AND RECYCLING WITH THE PHILADELPHIA EAGLES In the next eight years, the partnership signed between us and the Philadelphia Eagles football team will make it possible to collect and recycle plastic bottle caps and other plastic materials used at Lincoln Financial Field and at the team’s training center, in Pennsylvania, United States. The initiative also includes an educational project aimed at public schools in the region to promote career opportunities in science, technology, engineering, and mathematics. PLASTIC RECYCLING WITH MURAL ARTS PHILADELPHIA We entered into a partnership with Mural Arts Philadelphia, the largest public arts program in the United States, to recycle plastic used in the process of creating murals. The material is transformed into resins, and then converted into new plastic products such as buckets and benches, which will be used again by the artists. The partnership promotes and introduces the benefits of recycling, and encourages a more sustainable lifestyle among people. REVERSE LOGISTICS PROGRAM FOR POLYPROPYLENE PLASTIC CUPS The program guides and encourages companies to properly dispose of used plastic cups. The initiative is a partnership between us and Dinâmica Ambiental, with supporters such as Copobras, Altacoppo, and Jaguar. The cups are collected and transformed into new products, such as caps for cosmetics and household utensils. Interested companies can support the program or choose the reverse logistics process for their used cups. More than 15 companies participate in the program and, in a five-month period, 3.6 tons of plastic have already been collected, corresponding to nearly 2.2 million cups. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERBRASKEM’S VISION ON SUSTAINABLE FUTURE 18 A digital platform created by us, Bluevision gathers relevant content on solutions for a sustainable future. In line with our commitments, this global channel connects people, shares initiatives and ideas, and materializes our purpose in contributing to improving quality of life by presenting not only innovations, but also the transformative force of those who develop solutions for the intelligent use of natural resources. With a profile on the main social networks, the channel offers inspiring stories, curiosities, and facts, from individuals and organizations, through text, video, and infographics that highlight innovative solutions for a better future, human development, and intelligent use of the planet’s resources. Among the more than 30 videos posted on the platform in 2018, there are two inspiring stories. One is by Mona Soares, an entrepreneur from the state of Bahia who produces artisanal and environmentally friendly cosmetics. The other is by Ernst Götsch, a Swiss farmer and researcher working in Brazil who created a fertilizer-free agricultural technique that relies on ecosystem management. MONITORED REPUTATION Since 2008, the management of our reputation has focused on three major fronts: the monitoring of a panel of rational and emotional indicators, process governance in the areas responsible for relationships with different stakeholders, and incorporation of analyses in decision- making on aspects associated with image and reputation. Annual monitoring uses RepTrak® methodology of the Reputation Institute and is performed in all countries where we operate. This monitoring makes it possible to track the perception of different stakeholders mapped in our relationship chain, assessing emotional aspects (Pulse®), such as level of esteem, admiration, empathy, and trust; and rational indicators reflected in seven dimensions: Products and Services, Innovation, Work Environment, Governance, Citizenship, Leadership, and Performance. In 2018, we made progress in the global Pulse® index, showing a growth in the perception by all stakeholders and maintaining our reputation in the 60-69 points range. In the current survey, 5,939 people were consulted, among Members, Clients, Suppliers, surrounding communities, society, and influencers in the four regions where we operate: Brazil, Mexico, the United States, and Europe (Germany and The Netherlands). Reputation management allows us to create a basis for decision- making in the assessment of image risks and opportunities for improvement in the relationship with stakeholders. Click here to access Bluevision. OUR REPUTATION < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER19 GOVERNANCE AND COMPLIANCE < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER20 COMMITMENT AND GLOBALIZATION 102-16, 102-17, 102-18, 406-1 We believe that the perpetuation of our business is closely linked to ethics and integrity, and therefore we have in place modern governance and compliance initiatives, in line with market requirements. Throughout 2018, we implemented new routines and new controls, and reviewed several policies to enhance compliance processes and make them globally applicable to a multicultural and multi-ethnic team. In this period, we also completed the second year of independent monitoring. The most recent report in September 2018 contained new recommendations that were implemented by January 2019. The third monitoring cycle began in March 2019, and a third report is scheduled to be issued in June 2019. THE PERPETUATION OF OUR BUSINESS IS CLOSELY LINKED TO ETHICS AND INTEGRITY< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER21 • ADHERENCE to the Commitment of the Corporate Movement for Integrity and Transparency • ISSUANCE of the Second Independent Monitoring Report (filed on September 27 at the U.S. Department of Justice) • INVESTIGATION TRAINING for members of the Compliance Committee and Ethics Committee • BEGINNING of the training program for partners concerning the company’s Code of Conduct for Third Parties. • PROGRESS in the evaluation of Ethos Institute’s integrity indicators • COMPLETION of 12 internal audit projects, including compensation, purchase of inputs, sales, and freight 2018 HIGHLIGHTS CRITERIA 13 AND 14 - COP • SOLID TEAM: 37 Members from five different nationalities, 10 more than in 2017 • 8,2753 MEMBERS trained in the topic of compliance by the end of 2018 • TRAINING on anti- • 120 NORMATIVE corruption for members of the Board of Directors and Audit Committee Documents reviewed by the internal controls area Click here to learn more about our structure, principles, and corporate governance model or visit our Investor Relations website. • CREATION of 13 new • With 10 STRUCTURED Normative Documents foreseen in the Compliance Program, including the Policy for Transactions with Stakeholders MEASURES in the Prevention, Detection, and Remediation pillars, the Compliance Program has already reached 95% on actions implemented: 153 out of 161. 3 Interns included. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER22 RISK ASSESSMENT 102-15, CRITERIA 3 - COP Conducted every two years, the risk assessment process determines the main factors that can impact the achievement of the company’s strategic objectives, whether financial, strategic, operational, or regulatory. Of a total of 106 risks assessed, 16 were considered priorities and taken for approval by the Board of Directors, which, together with the company’s leadership, will monitor each of them in greater detail and frequency. For each of these risks, action plans were developed to reduce the likelihood and/or the impact if such event were to occur. It should be noted that risks associated with sustainability are considered strategic and evaluated in this category. Notable among the priority risks are: • Occupational safety: Possibility of failures in occupational safety processes and/or procedures, resulting in accidents with Members, which could lead to lost time injury, permanent damage to health, and/or death. • Tax proceedings: Possibility of unfavorable outcome of tax and social security proceedings in which the company challenges the legal and/or constitutional nature of collections by tax authorities, which may result in financial losses (taxes and fines) and damage to the image. • Post-consumer plastic waste: Possible difficulty in raising post-consumer recycling rates of plastics (chemical, mechanical, and energy), resulting in rejection of our products by society and consequent loss of market. ANTI-CORRUPTION POLICIES AND PROCEDURES 102-16, 103-2, 205-2, CRITERIA 6, 12 AND 13 - COP Our Code of Conduct has a global scope and sets out the values, principles, and practices that guide the company’s conduct. It is worth mentioning that all members of the Board of Directors and 98% of Members received training on Braskem’s Code of Conduct, which has a section dedicated to combating corruption. The company also has in place an Anti- Corruption Policy, and 100% of the Board and 96% of the Members are trained on this topic. Our Code of Conduct is translated into all languages of the countries where Braskem operates, and can be viewed on the company’s intranet and website (https://www.braskem.com/home-en). Click here to learn more about our Anti-Corruption Policy or go to our Investor Relations website. 102-17, CRITERIA 14 - COP Our Code of Conduct is translated into all languages of the countries where Braskem operates, and can be viewed on the company’s intranet and website < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER 23 • Industry cycle: Possible difficulty adapting the business to market volatility or to inadequate assumptions in the development of corporate strategies, resulting in financial losses and/or loss of competitiveness. • Integrity and corruption: Possibility that prevention and detection mechanisms are not sufficient to avoid an event related to corruption, fraud, irregularities, and/or ethical and conduct deviations that could compromise the values and standards advocated by us and the achievement of its objectives, resulting in financial losses (compensations and court settlements) and damages to the image. • Process safety and logistics: Possible failure in the safety of the production process, resulting in • Protection of personal data: Possible non-compliance injury and/or death of Members, environmental with the requirements of the various personal impacts, and/or unavailability of assets. data protection laws, resulting in accusations of obstruction of justice, financial losses (fines and • Macroeconomic and political factors: Possible instability damages), and damages to company image. of macroeconomic and political factors, resulting in difficulty in responding to economic downturn and • Climate change: Possible difficulty in adapting changes in the political scenario, which could lead to to climate change and reducing greenhouse gas loss of market and financial losses for the company. emissions in production processes, resulting in negative impacts on the environment. • Cybersecurity: Possible difficulty in combating cyberattacks, resulting in undue exposure of sensitive • Cost of raw materials: Possible difficulty in establishing data, delays and unscheduled shutdowns, financial contracts that guarantee competitive raw material losses, fraud, and industrial espionage, with potential prices, resulting in exposure to market volatility, reduction to compromise security systems in our plants. of the company’s margin, and financial losses. • Human rights: Possible difficulty in adequately • Environmental issues: Likelihood of problems managing labor relations and relations with communities in management of existing environmental impacted by the company’s operation and that liabilities, resulting in fines and sanctions, in of its chain, resulting in human rights violations, addition to damages to company image. financial losses, and damage to company image. OF A TOTAL OF 106 RISKS ASSESSED, 16 WERE CONSIDERED PRIORITIES< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER24 TRADE CONTROLS The trade control process follows a U.S. government guideline to ensure sanctions against countries and terrorist regimes involved in international drug trafficking or activities related to the proliferation of weapons of mass destruction and other threats to national security, foreign policy, or the U.S. economy. At Braskem, the process mainly involves the areas of procurement, logistics, finance, and technology. DATA PROTECTION As a global company, one of our priorities is to comply with the privacy laws governing the processing of personal data of our Clients, Suppliers, and Members in all countries where we operate. Thus, in 2017 we started a project to adapt to the new GDPR4 requirements in Germany and Holland and, in 2018, we started to implement a Global Privacy Program that covers all regions where we have relevant operations or commercial offices. The expansion of scope was determined when Brazil enacted its General Data Protection Law in 2018, which has made it possible to further streamline our internal structuring to ensure adequate and transparent governance that guarantees the preservation of the rights and freedoms of data owners. This program is already underway and involves mapping personal data used in each area, updating contracts with service providers that process personal data on our behalf (parent company), increasing knowledge and awareness of this law and its implications, and adjusting all necessary processes. Even though this program has been designed as a continuous action, significant improvements have already been implemented, such as the definition for updating international data transfer agreements, as well as the review of contracts and privacy policies for the European region. New initiatives are being implemented for other regions, including Brazil. 4 General Data Protection Regulation (GDPR): a project for data protection and identity of European Union citizens that was approved in 2016 by the European Parliament and Council < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER25 INTERNAL AUDIT Our internal audit is an independent and objective evaluation and consulting activity, designed to add value and improve our operations. In 2018, a total of 12 projects were completed, including: Compensation, Treasury, Procurement of Raw Materials, Sales, Freight, and Transports. These reports generated 126 opportunities for improvement in the internal controls environment of the audited processes and 276 action plans for the respective remediation INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS The Compliance Committee has become a Statutory Committee, consisting of at least three independent members of the Board. Since 2018, the position of Chairman of the Board has been held by an independent member, as provided for in Article 19 of the bylaws. In addition to this enhancement, other improvements are being implemented to ensure the transparency of our actions. In 2018, a process to evaluate the Board and Board members was As demonstration of our commitment to best established, contributing to the effectiveness of the Board and corporate governance practices, in 2018 an obligation improvement of the company’s governance. The first evaluation was included in the company’s bylaws to maintain at cycle is being conducted with the support of a specialized least 20% of independent members in the formation external consulting firm, which has helped identify the strengths of our Board of Directors. Today, our Board consists and points for improvement of the group and its members. of 11 members, six of whom are independent. The succession plan for the CEO and his or her direct reports, as well as for the compliance officer, has become a duty of the Board of Directors, as recommended by the Brazilian Corporate Governance Code, to ensure that company administration has professionals, for hiring or promotion, whose experience and skills contribute to the good performance of the company and preservation of its value. Click here to learn about the structure and the members of our Board and Departments. OUR BOARD CONSISTS OF 11 MEMBERS, SIX OF WHOM ARE INDEPENDENT< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER COMPLIANCE IS FOR EVERYONE CRITERIA 13 - COP In order to understand how our Members view compliance actions, we once again conducted a global survey involving 4,024 people across our operations in Brazil, the United States, Mexico, and Europe. Conducted online between January 15 and February 19, 2018, the purpose of the survey was to understand people’s perception of compliance and how it relates to their day-to-day lives. Overall, the results indicate that our Members changed their perception of the concept of compliance when compared with 2017. People understand the topic as a commitment of ethics, integrity, and transparency and not just as compliance with norms. 26 40.6% 37.9% 44.1% 2018 2017 Ethics, Integrity and Transparency Commitment 18.1% Internal Norms Correct Way of Acting Meanings Procedures Established Pursuant to the Guidelines Technical Standards, Quality and Safety Meet the specifications promised to Client Other Mentions Don’t know Did not answer 14.2% 8.5% 8.8% 16.6% 7.4% 10.7% 4.0% 5.0% 0.9% 2.9% 12.6% 8.30% 1.3% 0.2% 2.6% 0.8% WE ONCE AGAIN CONDUCTED A GLOBAL SURVEY INVOLVING 4,024 PEOPLE ACROSS OUR OPERATIONS< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER27 95.2% 93.3% Furthermore, the dissemination of a culture of ethics, integrity, and transparency ranked first in the perception of priorities of the compliance area, increasing by 10% compared to 2017. The perception that compliance is everyone’s responsibility was already very high in 2017, and this perception was maintained in 2018. Disseminate the culture of ethics, integrity and transparency Objectively evaluate compliance with Policies and Procedures Support in adjusting the company’s internal control environment Support in risk assessment and integrated monitoring Independently report to the Board Other Don’t know/Did not answer 0.3% 2.0% 0.5% 0.1% 85.3% 75.0% 71.2% 77.3% 61.4% 61.3% 44.4% 47.6% 19.6% 20.6% All Members All Leaders Area responsible for Compliance Business Leader (CEO) Board of Directors Other 1.7% 1.6% 14.3% 10.4% 0.8% 8.6% 0.4% 6.5% 0.4% 0.3% 2018 2017 Don’t know 0.1% 2018 2017 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER28 Globally, knowledge of the Compliance Policy has increased from 49% to 82%. Today, 98% of the Members have undergone training in the Code of Conduct and have signed the document. Since the Compliance Policy has been replaced by the Compliance System Policy and by the Code of Conduct, the goal is to have 100% of the Members complete the training. ABOVE-AVERAGE PERFORMANCE After the implementation of several corrective and preventive actions, we reached a score above the market average in the evaluation by the Ethos Institute’s Thematic Guide: Integrity, Prevention and Fight Against Corruption. Based on the 13 integrity indicators selected, which assess how aspects of sustainability and social responsibility have been incorporated into the business, helping to define strategies, policies, and processes, we have reached an overall score of 8.7—where the average of companies is 6.7. We have accomplished significant growth compared with 2015/2016, when indicators first became available for assessment. 2015/2016 2016/2017 2017/2018 6.4 7.9 8.7 IN LINE WITH BEST PRACTICES 103-2, 103-3 The year of 2018 was also significant in the review and Valid and enforced globally, the Dividends and Stakeholder implementation of new documents aligned with the best Transactions policies were approved. The revised market practices and pursuant to recommendations of internal regulations for the Board and its committees, the Brazilian Corporate Governance Code (CBGC), among as well as said policies, are available and accessible to them the internal regulations of the Board of Directors, all Members. In addition, they are available to all our of the Finance and Investments Committee, of the stakeholders on the investor relations website +23% +10% People and Organization Committee, of the Compliance Committee, of the Strategy and Communication Committee, and of the Statutory Executive Board. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERETHICS LINE CHANNEL 102-17, 406-1, CRITERIA 5 AND 13 - COP Since 2017, our Ethics Line Channel has been managed by an independent, outsourced team that receives, evaluates, and directs all reports received in a personalized and impartial manner. Internally, these reports are evaluated by a specialized Investigation team of the compliance area. In addition to the online channel, telephone service is available 24/7, in four languages (Portuguese, English, Spanish, and German). 29 BRASKEM ETHICS LINE CHANNEL Our Ethics Line Channel is available to all Members, Clients, third parties, and external public of the company, and is structured in order to maintain total confidentiality about the content of the reports. The reports may be made any day and time through a toll-free number or via the Internet: BRAZIL: 0800 377 8021 (www.linhadeeticabraskem.com) GERMANY: 0800 183 0763 (www.lineethikbraskem.com) GENERAL NUMBERS DISCRIMINATION HARASSMENT HOLLAND: 0800 022 7714 (www.ethieklinebraskem.com) 340 TOTAL NUMBER OF CALLS THROUGH THE CHANNEL (cases opened and received in 2018) 287 CASES COMPLETED (cases completed in 2018, regardless of date of receipt) 118 CASES STILL ONGOING (cases that remain open, regardless of the date of receipt) IN 2018, 14 CASES RECEIVED IN BRAZIL AND 1 IN THE UNITED STATES IN BRAZIL, 6 CASES WERE COMPLETED BY DECEMBER 31, 2018, AND 8 WERE STILL UNDER REVIEW IN 2018, 55 CASES WERE RECEIVED GLOBALLY 39 CASES WERE COMPLETED BY DECEMBER 31, 2018 AND 16 WERE STILL UNDER REVIEW OF THE 6 CASES COMPLETED, 3 WERE SUBSTANTIATED 5 CASES HAD REMEDIATION ACTIONS IMPLEMENTED 2 REMEDIATION ACTIONS WERE IMPLEMENTED MEXICO: 01 800 681 6940 (www.lineadeeticabraskemidesa.com) UNITED STATES: 1 800 950 9280 (www.ethicslinebraskem.com) ARGENTINA: 0800 222 0394 (www.lineadeeticabraskem.com) COLOMBIA: 01 800 518 4806 (www.lineadeeticabraskem.com) PERU: 0800 76757 (www.lineadeeticabraskem.com) CHILE: + 56-448909744 (www.lineadeeticabraskem.com) SINGAPORE: + 65-31585409 (www.ethicslinebraskem.com) < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER30 BUSINESS PERFORMANCE < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER31 FINANCIAL AND ECONOMIC RESULTS - SOUNDNESS AND CONSISTENCY 102-9, 102-45 103-2, 103-3 We closed the year 2018 with a record free cash flow generation of R$ 7.1 billion, 187% higher than 2017, a result that shows our resilience in a period marked by a challenging external scenario, a reduction in international spreads, and extraordinary events that impacted our operations worldwide. WE CLOSED THE YEAR 2018 WITH A RECORD FREE CASH FLOW GENERATION OF R$ 7.1 BILLION< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERBRAZIL In Brazil, demand for resins, including PE, PP, In this scenario, resin sales totaled 3.4 and PVC, continued to recover and totaled million tons, 2% below 2017, while sales of 5.2 million tons, up 2.4% from 2017 because the main chemicals were 1% higher than of the improvement in the level of economic 2017, totaling 2.9 million tons. In 2018, activity and the demand from the agriculture, exports of resins totaled 1.3 million tons, cosmetics, pharmaceuticals, and food and of the main chemicals, 571,000 tons, packaging sectors. Special notice should be 14% and 31% less than 2017, respectively. given to the PVC market, which, in 2018, grew by 1.4% after four consecutive years of decline. Our Cost of Goods Sold (COGS) reached a total of US$ 9,510 million, 9% higher than in On the other hand, the utilization rate of 2017, an increase that can be explained by the our crackers was 91%, down 3 p.p. from 2017, higher price of feedstocks, partially offset by which is mainly explained by the truckers’ lower sales volume. Despite the increase, for strike in May, the incident at the Chlor-Alkali the year, COGS was positively impacted by the plant Alagoas in January, the blackout that PIS/COFINS tax credit on feedstock purchases affected Brazil’s Northeast plants in March, of US$ 278 million (R$ 1,020 million) and by and lower demand in fourth trimester of 2018. the Reintegra credit in the amount of US$20.5 million (R$ 69 million). 32 56% Naphtha/Condensate 1% Ethane Brazil 2% LRC Propane 1% HLR 3% Electric Energy 3% Natural Gas 7% Propylene 13% Other Variable Costs 3% Salaries and Benefits 2% Services and Materials 5% Deprec/Amort 4% Freight Sales BRAZIL COGS 2018* (*) Includes the accounting COGS and excludes Cetrel and resale of naphtha For the year, the units in Brazil and exports posted EBITDA of US$ 1,905 million (R$ 6,985 million), 61% of the company’s consolidated segments. FINANCIAL OVERVIEW (US$ MILLION) 2018 (A) 2017 (B) VAR. (A) / (B) Net revenue COGS Gross profit Gross margin SG&A Other operating revenue (expenses) EBITDA EBITDA margin Net revenue (R$ million) EBITDA (R$ million) 11,539 (9,510) 2,028 18% (655) 20 1,905 17% 42,258 6,985 11,532 (8,727) 2,805 24% (669) (123) 2,628 23% 36,802 8,380 0% 9% -28% -6 p.p. -2% -117% -27% -6 p.p. 15% -17% THE UNITS IN BRAZIL AND EXPORTS POSTED EBITDA OF US$ 1,905 MILLION (R$ 6,985 MILLION)< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER33 56% Propylene U.S. 22% Propylene Europe 8% Other Variable Costs 3% Salaries and Benefits 3% Services and Materials 2% Deprec/Amort 5% Freight Sales 2% Electric Energy UNITED STATES AND EUROPE In 2018, demand in the U.S. polypropylene market grew by 3.1%, especially in the segments of caps and oriented film, widely used in food packaging. In the European market, on the other hand, demand fell due to the weak economic performance of the region, particularly in countries such as Germany and Italy. The plant utilization rate was 87%, down 10 p.p. from 2017 due to operational problems in the United States, a scheduled shutdown of the unit in Oyster Creek (Texas), and the logistical restriction on receiving propylene at the plants in Europe because of the low level of the Rhine River. As a result, sales were 9% lower, totaling 1.9 million tons. U.S. AND EUROPE COGS 2018* (*) Includes the accounting COGS For the year, the units in Brazil and Europe posted EBITDA of US$ 608 million (R$ 2,208 million), accounting for 19% of the company’s consolidated segments. Our COGS reached a total of US$ 2,496 million, up 7% from 2017 explained by higher propylene prices (which accompanied the FINANCIAL OVERVIEW (US$ MILLION) rise in oil prices) and logistics constraints Net revenue in Europe, which increased the prices of this monomer in the region. COGS Gross profit Gross margin SG&A Other operating revenue (expenses) EBITDA EBITDA margin Net revenue (R$ million) EBITDA (R$ million) 2018 (A) 2017 (B) VAR. (A) / (B) 3,211 (2,496) 715 22% (167) 2 608 19% 11,725 2,208 3,087 (2,324) 763 25% (183) (7) 647 21% 9,854 2,063 4% 7% -6% -3 p.p. -9% - -6% -2 p.p. 19% 7% FOR THE YEAR, THE UNITS IN THE UNITED STATES AND EUROPE POSTED EBITDA OF US$ 608 MILLION (R$ 2,208 MILLION)< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER 34 MEXICO COGS 2018* 23% Ethane 1% Electric Energy 11% Natural Gas 11% Other Variable Costs 0% Salaries and Benefits 7% Services and Other 38% Deprec/Amort 8% Freight (*) Includes the accounting COGS The result for the segment includes revenue of US$ 95 million referring to the delivery-or- pay provision of the ethane supply contract. For the year, the unit in Mexico posted EBITDA of US$ 617 million (R$ 2,251 million), accounting for 20% of the consolidated segments. FINANCIAL OVERVIEW (US$ MILLION) 2018 (A) 2017 (B) VAR. (A) / (B) Net revenue COGS Gross profit Gross margin SG&A Other operating revenue (expenses) EBITDA Operating EBITDA margin* Net revenue (R$ million) EBITDA (R$ million) 1,034 (636) 398 38% (81) 79 617 51% 3,771 2,251 1,128 (657) 472 42% (90) 9 623 53% 3,601 1,987 -8% -3% -16% -4 p.p. -10% - -1% -2 p.p. 5% 13% *Does not consider the delivery-or-pay provision for feedstock contracts. MEXICO Demand for PE in Mexico was 2.1 million The utilization rate of the Polyethylene plants tons compared to 2 million tons in 2017, was 77%, down 11 p.p. from 2017 mainly because a growth of 2.7%. The sectors that most of lower supply of ethane in the period and a influenced this growth were blown and scheduled shutdown in May. As a result, sales films/laminates, widely used in the were 18% lower, totaling 799,000 tons, of which food packaging and hygiene sectors. 67% were directed to the Mexican market. Our COGS totaled US$ 636 million, down 3% from 2017 because of lower sales volumes, which offset higher ethane price levels. FOR THE YEAR, THE UNIT IN MEXICO POSTED EBITDA OF US$ 617 MILLION (R$ 2,251 MILLION).< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERRECORD FREE CASH FLOW GENERATION (R$ MILLION) CONSOLIDATED We generated US$ 3.1 billion (R$ 11.3 billion) in EBITDA for the year, representing a 20% decrease compared to 2017, mainly due to lower spreads in the industry and lower utilization rates of our plants. 11,315 1,095 -1,880 -1,917 -938 -826 218 19% Return on Free Cash Flow* +187% 35 EBITDA (R$ MILLION) EBITDA (US$ MILLION) -8% -20% 12,334 11,315 33% 67% 39% 61% 3,872 33% 67% Abroad Brazil EBITIDA 2018 WORKING CAPITAL CAPEX ** INTEREST PAID IR/CSLL COLLECTED STRATEGIC INVESTMENTS OTHER *** 7,068 2,460 FREE CASH FLOW GENERATION 2018 FREE CASH FLOW GENERATION 2017 3,105 39% * Free Cash Flow ÷ Market Cap (considers the share price on 12/31/2018). ** Considers the CAPEX of Braskem Idesa, Cetrel and does not consider associated taxes that are allocated in “working capital.” *** Includes: (i) Premium in the dollar put option; (ii) Funds received in the investments’ capital reduction; (iii) Financial assets held to maturity; and (iv) dividends received. In September 2018, given this strong cash generation and in order to reduce interest expenses on loans, we partially redeemed US$ 200 NET DEBT* US$ 5.1 BILLION million in the 7.375% perpetual bonds at par value. In addition, we NET DEBT / EBITDA* 61% contracted a line of credit of up to US$ 225 million guaranteed by Euler Hermes, which will be used to finance part of the investments in our new PP plant in the United States, and a line of credit of US$ 295 million, with credit coverage by the Italian government 2017 2018 2017 2018 agency SACE, which will be used for corporate purposes. Despite the lower EBITDA, our free cash flow generation reached risk outlook from negative to stable and, for the first time, a record amount of R$ 7.1 billion given the positive variation in our credit risk is three steps above sovereign credit risk operating working capital, the positive impact of the depreciation of by Standard & Poor’s. Thus, we retained our investment the Brazilian real against the U.S. dollar, the reduction in income tax grade by Standard & Poor’s and by Fitch Ratings and above payment in the United States in U.S. dollars, and the lower interest sovereign risk by the three major risk rating agencies. In 2018, Standard & Poor’s and Moody’s shifted our credit paid after the early settlement of debt in Brazilian reais with higher cost including the partial prepayment of the perpetual bond. 2.06X AVERAGE DEBT MATURITY 14 YEARS RAGE OF DEBT MATURITIES 40 MONTHS WEIGHTED AVERAGE COST OF DEBT VARIATION FX + 5.52% *Does not include Braskem Idesa’s project finance debt; considers the Leniency Agreement. Click here to learn more about the results and our business strategy www.braskem-ri.com.br/home-en. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERVALUE ADDED STATEMENT (VAS) 201-1 36 2016 2017 2018 Revenues (R$ thousand) 52,429,423 58,000,752 68,923,212 Personnel (R$ thousand) Sales of goods, products, and services (R$ thousand) 55,930,688 57,958,099 68,255,566 Other (expenses) revenues, net (R$ thousand) (3,437,060) Provisions for credits of doubtful debtors (R$ thousand) (64,205) 1,202 41,451 567,793 99,853 Direct remuneration (R$ thousand) Benefits (R$ thousand) FGTS (government severance fund) (R$ thousand) 2016 1,267,513 986,940 218,110 62,463 2017 2018 1,421,214 1,565,468 1,147,158 212,815 1,239,606 263,294 61,241 62,568 Inputs acquired from third parties (R$ thousand) (39,909,905) (41,147,077) (51,627,620) Costs of products, goods and ser vices sold (R$ thousand) Materials, energy, third-party services, and other (R$ thousand) (37,802,247) (38,845,377) (48,993,132) (2,019,390) (2,237,835) (2,574,232) Loss/recovery of asset values (R$ thousand) (88,268) (63,865) (60,256) Gross value added (R$ thousand) 12,519,518 16,853,675 17,295,592 Depreciation, amortization, and depletion (R$ thousand) (2,683,100) (2,928,855) (2,990,577) Net value added produced by the entity (R$ thousand) Value added received in transfer (R$ thousand) Equity income (R$ thousand) Financial income (R$ thousand) Other (R$ thousand) 9,836,418 13,924,820 14,305,015 720,407 652,527 1,856,981 30,078 690,122 207 48,832 603,630 65 (888) 1,857,793 76 Total value added for distribution (R$ thousand) 10,556,825 14,577,347 16,161,996 Taxes, fees, and contributions (R$ thousand) 3,018,046 4,232,072 4,925,801 Federal (R$ thousand) State (R$ thousand) 1,288,179 2,214,611 2,235,453 1,703,249 1,995,068 2,639,015 Municipal (R$ thousand) 26,618 22,393 51,333 Remuneration of third-party capital (R$ thousand) Financial expenses (includes exchange rate variation) (R$ thousand) 7,000,463 4,790,740 6,763,517 6,755,962 4,545,979 6,495,041 Leases (R$ thousand) 244,501 244,761 268,476 Remuneration of equity capital (R$ thousand) (729,197) Net income (loss) for the year (R$ thousand) (438,331) 4,133,321 3,074,114 2,907,210 2,866,675 Dividends - 1,000,000 - Non-controlling shareholding interest in subsidiaries (R$ thousand) (317,725) 50,331 40,535 Result from discontinued operations 26,859 8,876 - Total value added distributed (R$ thousand) 10,556,825 14,577,347 16,161,996 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER37 BRASKEM’S STRATEGIC OBJECTIVES AMBITION STRATEGY - GLOBALIZATION AND TECHNOLOGY PRODUCTIVITY AND COMPETITIVENESS • Seek continuous improvements in productivity and competitiveness in the current operation, with a focus on operational efficiency and cost leadership Braskem as 1st quartile operator FEEDSTOCK DIVERSIFICATION • Diversify the feedstock profile, increasing gas exposure and maintaining asset flexibility GEOGRAPHIC DIVERSIFICATION • Expand the global footprint outside Brazil with gains in scale in PE and PP, reinforcing our leadership in the Americas PEOPLE, GOVERNANCE AND REPUTATION • Implement solutions to address the challenges of the Circular Economy and include mechanically and chemically recycled resins and chemicals in our product portfolio • Attract and retain talent with the implementation of the new EVP • Strengthen Braskem’s image and reputation before members, society and investors through advances in compliance and innovation Reach balance between liquid base and gas base, creating flexibility of +20% Increase global capacity by 25%, with operations outside Brazil representing more than 50% of EBITDA Recognition of Braskem as a global, sustainable, innovative and people- oriented company In 2018, we continued to implement our strategy through various initiatives. Regarding feedstock diversification, it was our first Regarding productivity and competitiveness, we signed a contract for the year operating the petrochemical complex in Bahia, purchase of wind energy that will enable the expansion of the Folha Larga Brazil, using imported ethane as feedstock. Complex in the State of Bahia, being developed by EDF Renewables. Furthermore, we have established a partnership with Siemens for the development of million planned for the construction of the new Polypropylene a retrofit project of the petrochemical plant of the complex in the ABC region in the plant—the sixth PP industrial unit in the United States, whose State of São Paulo, which will reduce electricity consumption and CO2 emissions in that physical progress is nearly halfway complete. In addition, our unit. [Learn more in the Health, Safety and Environment section - Energy Efficiency]. Board of Directors approved the establishment of a new company We have invested US$ 382 million of a total of up to US$ 675 in India to pursue new growth and sales opportunities. NEW PLANT Construction of the new PP plant in the United States was 48.3% complete at the end of 2018, with a total investment of US$ 382 million already made. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERFAR BEYOND THE PETROCHEMICAL INDUSTRY Far beyond the petrochemical industry In order to evolve in strategic areas of our business and remodel the way we work, in 2018 we started to work on digital transformation. With the participation of dozens of Members worldwide, the initiative has sought the integration of digital technologies in our operations and business processes with the objective of raising us to new levels of performance and competitiveness, evolving the way we work, and creating new ways to serve our Clients. Our culture of agility and entrepreneurship puts us in a solid position to be the company that will lead the digital evolution in our industry. Supported by the newly created Braskem Digital Center, our Members in Brazil, Mexico, the United States, and Germany are looking for new ways to serve Clients, create value, and generate sustainable competitive advantages. Among the actions included in this initiative are: • Using new technologies such as drones, sensors, and machine learning to operate more efficiently and cost effectively. • The intelligent application of a large amount of data gathered by us over the years to support decision-making about factory operations. • The creation of an atmosphere in which Members dedicate their time, talent, and energy to performing higher value activities. A FEW HIGHLIGHTS • The action plan defines more than 50 initiatives covering all business areas, from operations, marketing, and sales, to the supply chain, procurement, and corporate structure. Together, they have the potential not only to increase margin, but also to consolidate our leading position in innovation in the chemical industry. • Examples of the potential gains: The use of digital technologies allows for up to 7% increase in productivity and up to 15% improvement in maintenance costs. 38 BRASKEM 5.0 The backbone of a broad transformation program, we reorganized our Information Technology team around a new strategy that is more connected to the business, and created goals aligned with the company’s strategic objectives. The Braskem 5.0 Program was created to support this transformation. The initiative aims to align the main business challenges with opportunities to adopt new technologies and processes in a sustainable and scalable manner. Some actions of the program are already going in this direction, with projects involving the industrial internet of things (IIoT), virtual reality applied to the industry, robotic process automation (RPA), data-lake analytics, sales force automation, and cloud technologies such as Office 365 and SAP Concur, among others. Planning of the program includes seven pillars: Supply Chain and Logistics, Digital IT, New Business Models, People, Industry 4.0, Enterprise 2.0, and Customer Experience. • In 2018 alone, we received more than 110 initiatives from various areas. • We created the User Experience Squad, focused on providing a new experience in using our current and future technology solutions with a dedicated team and agile methodology. • We held hackathons and Discovery Day, providing the business areas with immersion for one or two days, where, with the involvement of startups and other market companies, we sought alternatives to solve the challenges proposed. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER39 INNOVATION < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERMOVED BY THE NEW We are a company that is always on the lookout for innovation, and for what the future and technology can bring to improve people’s lives in a sustainable and responsible way. But it is not only our model and our strategy that are linked to innovation. Today, innovation is part of each Member who, regardless of their area of activity, is always focused on seeking new solutions and services that strengthen our contribution to sustainable development. 40 INNOVATION IN NUMBERS We live in an era that is in constant transformation. Therefore, investments in people and infrastructure are essential to improving existing initiatives and creating new opportunities for businesses and Clients. 307 MEMBERS 1 PROCESS TECHNOLOGY Development Center, in Mauá (Brazil) 16,000 ANALYSES were conducted for 75 clients in Pittsburgh (United States) 2 TECHNICAL CENTERS focused on polymers, in Wesseling (Germany) and Coatzacoalcos (Mexico) 2 TECHNOLOGY AND INNOVATION CENTERS, in Triunfo (Brazil) and Pittsburgh (United States) 1 RENEWABLE CHEMICALS RESEARCH CENTER, in Campinas (Brazil) 7 PILOT PLANTS 27 NEW RESIN GRADES added to the portfolio in 2018 INVESTMENT OF MORE THAN R$ 14 MILLION in the Technology and Innovation Center in Triunfo (Brazil) and more than R$ 10 million in the Technology and Innovation Center in Pittsburgh (United States). 308 PROJECTS to develop new products and processes 34 NEW PATENT applications and 152 extensions 282 PATENTS granted 420 CLIENTS received support from our Technology and Innovation Center in Triunfo (Brazil), with more than 59,000 analyses conducted < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER41 EXPANDING CAPACITY • LABORATORIES We acquired two new chromatographs for the Process Technology Development Center, in Mauá (Brazil). One focuses on the identification of organic compounds, and the second on sulfur speciation of liquid samples, mainly used in the work of chemicals and specialties platforms. Investments were also made in handling equipment to Throughout 2018, we invested in expansion, construction, enable moisture analysis and powder characterization. and improvements in several of our laboratories and pilot In addition, in order to help grow the solvent business, plants. With this, we expect to have even more versatility new equipments were acquired to sample and measure and capacity for innovation in our products and services. solubility in systems to apply in new solvents applications. In Wesseling (Germany), investments were made in equipment to add capability for assessing basic characterization in polyethylene (PE), such as presses and molds, flow rates, density, impact (IZOD), and moisture, as well as to improve the chromatograph to enable testing of volatile organic emissions. • TECHNOLOGY CENTERS In Pittsburgh (United States), we installed a semi- commercial thermoforming line to help develop new products and applications. In addition, robots were installed to automate operating routines in the laboratory, including compression molding, elasticity, and impact testing. In Triunfo (Brazil), we started the construction of a new 2,800 square meter building for the laboratory expansion. The space will have advanced polymer characterization laboratories, which will be able to perform analyses such as chromatography, polymer fractionation, microscopy, as well as catalysis and petrochemical process technology laboratories. The quality control laboratory will operate in the same building. With an investment of R$ 50 million (including equipment), the challenge for the new building is to encourage innovation even before it is built. The team responsible for the project identified more than 30 applications of plastic in construction, with solutions that take into account the savings, durability, strength, and versatility of materials. WE ARE ALWAYS LOOKING FOR INNOVATION< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERFOCUS ON MEGATRENDS • PILOT PLANT In 2018, we built a fermentation pilot plant at the With a global approach and teams that work in an Renewable Chemicals Research Center (RC), located interconnected manner, we have been directing our in Campinas (Brazil), which will allow us to advance efforts to developments that go beyond plastics, and our renewable chemicals projects and develop new focusing on its positioning in the face of medium – to products and processes. These projects are closely long – term changes, such as new markets and new related to the circular economy proposal, at the beginning of the value chain, seeking to develop products that contribute to CO2 capture. • OPERATION We established a new operation in Boston (United uses for our products. This is how one of the main initiatives of 2018 began: the squads, interdisciplinary working groups that will develop innovative solutions connected to mobility and digital manufacturing. • Mobility: The convergence and maturation of technologies, combined with the need for less polluting States), focusing on research, development, and modes of travel in large cities, are changing the mobility marketing of chemicals and materials from renewable model in the world. Lower consumption of fossil fuels sources. The choice for this location helps us take because of the adoption of electric cars will impact the advantage of the region’s advancement in biotechnology oil market and, consequently, our feedstock. In addition, and advanced materials. Activities include research future vehicles will not be the same as those of today and development in biotechnology and materials and may need products with other characteristics, science, business and market development, and the which generates opportunities. This trend also has search for technologies for strategic partnerships. the potential to change consumption standards and demand a different profile for our products. 42 • Digital manufacturing: The squad’s purpose is to test new business models and develop technologies for 3D printing based on the current product portfolio, but not limited to it. To this end, we are investing in new laboratory capabilities and have partnered with equipment manufacturers, a university in Sheffield, England, and Virginia Tech in the United States, to develop polymers for Filament (FFF) and Selective Laser Sintering (SLS) and explore opportunities in Specialty Chemicals for Stereolithography (SLA). OUR INNOVATIVE THINKINGGO FAR BEYOND PLASTIC< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER43 IINNOVATIONS FOR THE MARKET A plastic that changes color? More flexible and at the same time durable packaging? An EVA for footwear from renewable sources? Every year we invest in research for the development of more efficient products that impact the environment and society less. Among Green EVA: developed in partnership with the North American company Allbirds, the EVA (Ethylene Vinyl hundreds of products, 27 new resin grades were added to our portfolio in 2018. Acetate copolymer) from a renewable source is part of our I’m greenTM brand and will be used in Allbirds’ SweetFoam line of shoes. Among the characteristics Intelligent polymers: Since 2017, we have been working on the development of polymers that change color with an Resistance, flexibility, and transparency: We released three new products to the Brazilian and U.S. markets. In Brazil, there was an expansion external stimulus to communicate relevant of the Polyethylene portfolio for closures, information to the user. Its main applications with the new HDPE resins fully meeting the of the product are lightness, flexibility, and durability. are in food packaging, cosmetics, and technical requirements of carbonated beverage Greenhouse gases are captured during the production pharmaceuticals. Among the benefits are caps, and the new, more durable LLDPE resin process, reducing emissions: While 1 kilo of fossil EVA releases 1.84 kilos of CO2 into the atmosphere, 1 kilo of EVA I’m greenTM captures 2.51 kilos of CO2. increased safety as an indicator of quality, (LL2402N) being used for edible oil bottle caps. reduction in food waste, and the possibility For the flexible packaging market, we introduced of avoiding bad consumer experiences. a new Proxess1509XP metallocene LLDPE, which combines good mechanical properties and gloss for packaging. In the United States, a Polypropylene impact copolymer (Prisma 6810) was launched that combines transparency, stiffness, and impact strength. The product is used for rigid packaging and its market was developed in the United States and Europe. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER44 New applications Thinking and testing products in new ways is also part of our culture of innovation. Thus, in 2018, we started a pilot project at our plant in Camaçari (Brazil) to test the use of plastic for the protection and thermal insulation of pipelines, and to replace metal sheets. The material has presented advantages such as longer lifespan and high capacity for returning to its normal state after being submitted to stress. In addition, the study shows performance gains and cost reductions. The technology is already known in Europe and is being tested in Brazil by our market development area, in partnership with Rochling Plásticos de Engenharia do Brasil and UCA Engineering Plastics. Recycled resin During the Sustainable Brands conference, held in Vancouver (Canada) in July 2018, we presented – through the Wecycle platform – promising results in creating a new recycled resin with superior quality and a high percentage of recycled materials derived from post- consumer thermoformed packaging made from Polyethylene. Its main characteristics include resistance to stress cracking like that of virgin resins and tensile stress mechanical properties that are 70% higher than recycled resins currently on the market. The next step is to identify partners to test the solution in small volume thermoformed packaging. Global resin: The production of a Polypropylene (PP) used in the United PVC: We developed a new grade for the market of rigid profiles for ceilings, Solvents: We launched a new HE- 70S oxygenated solvent, a distinct States for the piping market and used with superior processability and product for our hydrocarbon portfolio. in Brazil for the production of extruded capacity to incorporate mineral fillers. The new solvent is produced with sheets was initiated in Brazil. A new This development was carried out to ethanol, bringing sustainability value PP resin for buckets has also been meet the demand of the processing and lower toxicity to the final product. launched, with better mechanical industry, in line with the new, recently The properties of the new solvent properties and higher melt flow rate, revised ABNT NBR 14285 standard. which improves processability and facilitates production for our clients. allow for its application in formulas for adhesive and cleaning thinners. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERPlaying with Green Plastic As the world’s largest producer of biopolymers, in 2018 we began supplying our Green Polyethylene I’m greenTM for the production of the LEGO Group’s botanical elements, such as trees, bushes, and leaves. The partnership reinforces our successful strategy of investing in sustainable and innovative products. Life cycle assessment CRITERIA 10 - COP In 2018, 13 full studies were completed, four of which were externally reviewed, and 12 additional simplified studies. From 2006 to 2018, a total of 109 studies have been conducted, of which 61 were completed, 13 reviewed and 35 simplified. Among the highlights of the year is the LCA study of the new resin from the renewable portfolio I’m GreenTM EVANCE and a study that compares the best ways to transport Members between their homes and our facilities. The study concluded that management of the occupancy rate and of the technology of the means of transportation are fundamental for reducing the environmental impact related to this operation. In addition, we made a comparison between carton and flexible packaging for frozen foods. The study demonstrated environmental benefits of flexible packaging ranging from 16% to 37% reduction in total impact. Reducing packaging weight and reducing the volume occupied in freezers are key factors in achieving the result. 45 COMPLETE ASSESSMENT In 2018, we completed exten- sive life-cycle inventory work at all of our chemicals and polymer production units in Brazil. This work resulted in the consolida- tion of an inventory with hun- dreds of our products that can be used to diagnose the main points of environmental impact in production, and to disclose the average environmental im- pact of each product family in platforms such as Ecoinvent (the largest repository of LCI datasets in the world) and SICV Brasil (National Repository for Life Cycle Inventories). < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER46 SHARED INFORMATION In January 2018, we started a project to develop a solution that would allow for efficient and comprehensive management and sharing of knowledge at Braskem. In addition to a new organizational structure dedicated to this subject, we created an online platform for knowledge sharing: the Knowledge Hub, which integrates documents available in different systems and knowledge sources currently used in our organization. Through this initiative, people will be able to share and find content and professionals with specific knowledge to guide them when necessary. In addition, the tool promotes great exchange of experiences and generates the possibility to co-create solutions in discussion forums. The platform also benefits internationalization of knowledge and addressing of gaps, increasing individual and collective productivity of Members. The platform was launched in March 2019 and, with it, we hope to be an even more agile, efficient, collaborative, and competitive organization, ensuring collective knowledge in favor of our global competitiveness. More attractive In 2018, we were named one of the most attractive companies for startups, according to a ranking by 100 Open Startups in Bra- zil, a platform for engagement between companies and startups that was created by more than 70 leading organizations world- wide, which evaluate and classify startups around the world to generate business. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER47 INVESTMENT IN THE FUTURE A sustainable entrepreneurship platform already consolidated within the company, Braskem Labs seeks startups with high-impact solutions and entrepreneurs who believe in their potential to transform the world. The initiative is currently divided into three programs with different focuses: Ignition, a program for those who have a good idea that uses plastic and/or chemicals for improved social and environmental impact and want to transform it into a business; Scale, for those who already have a consolidated business and seek to gain scale; and Challenge, which seeks startups to solve challenges posed by our various areas. In 2018, through Scale, 10 startups were accelerated during four months through dozens of mentorships and business connections. Meanwhile, 18 challenges were proposed to the startup ecosystem, and various pilot projects are currently being developed within us to capture efficiency gains or reduce costs in our different areas. SCALE • 158 companies signed up to participate in the program • 10 companies accelerated • 42 Braskem Leaders engaged as mentors, sponsors, or specialists • 40% of the accelerated companies did business with us • 30% are already in contact with potential investors CHALLENGE • More than 270 startups registered • 22 Braskem areas registered • 18 challenges proposed • 19 pilot projects being developed • Approximately R$ 500,000 in investments INVESTMENT R$ 1,779,574.00 R$ 1,996,600.06 R$ 1,435,836.54 2016 2017 2018 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER48 STAKEHOLDERS < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERBEUX - AN OPEN INVITATION TO LIVE NEW EXPERIENCES TOGETHER MEMBERS 103-2, 103-3, 404-2, 405-1 We are a people-oriented organization The twisted semicircle with Braskem’s colors reinforces the concept of constant and, for us, it is essential to create value transformation and the experience that is for all our stakeholders. It couldn’t be any renewed and reinvented at every moment. different with our Members. Promoting the It proposes the ability to renovate complex development of all and creating an environment systems through subtle changes. where people can grow professionally and personally is at the center of the strategy of the People & Organization department. We care about people from before they enter the company until they leave. We want to ensure that the time they spend with the company is a positive experience. Thus, since 2017 we have been reinforcing the implementation of several initiatives to make our work environment more receptive, integrated, creative, and collaborative. Be: As a verb, ‘Be’ is the action element of BeUx. It reinforces the assumption that the career, the achievements and the professional We search for the new at all times. In 2018 path within Braskem depend on the movement we consolidated our Value Proposition with the BeUx, which brings together new possibilities of how people can develop, learn, and experience work. and attitudes of each individual as part of a whole. It also reinforces the assumptions of originality, diversity and respect for People. ‘Be’ also brings forward the power of a group, of self-affirmation and of how members recognize themselves and others and the work that is done from the inside out. 49 The “U”, the leading role of our Members in the construction of the whole gains strength. It emphasizes the invitation to live experiences at Braskem, shows that Members need to be in group and thus make the global and collaborative transformation. The “X”, along with the “U”, creates the expression UX. It represents the movements of the future of work, they come in the form of experimentation. It raises Members to the power of their experience, of sharing, of learning, of what can be experienced together. The words “BE” and “U” have different weights, thus facilitating sound and pronunciation. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERLEADING ROLE AND FLEXIBILITY Society is changing. And so is the way people perceive work. Attentive to how these transformations are rapidly impacting the work environment, with the definition of our Value Proposition we have identified several initiatives to continue evolving in our people management model. Throughout the year, we involved around 300 Members from all countries where we operate to help us identify opportunities for improvement and build new people management practices. After several meetings, nearly 4,800 changes were suggested. Among these initiatives is a working model that brings greater flexibility and self-direction to professionals. We created a more flexible workplace, allowing Members to carry out their activities from places other than the company’s headquarters on certain days of the week. The change offers greater convenience in performing the day’s tasks, strengthening our relationship of trust and professional maturity. 50 A NEW EXPERIENCE In the search for new ways of working and as an invitation to live new experiences, in addition to flexibility, we are also betting on the integration and sharing of spaces. With the physical implementation of this new concept, all our floors at the company’s headquarters in São Paulo (Brazil) underwent a renovation to make the office a more open corporate environment. Workstations are no longer fixed, and people can sit where it is most convenient, either close to their team or close to Members in other areas. The idea is to facilitate closer relations between different areas, opening up opportunities for coexistence and co-creation. Furthermore, in order to increase the spaces for temporary projects, in which multidisciplinary teams are dedicated for long periods of time, specific rooms have been created for this purpose. This initiative is linked to the process to define our Value Proposition, which showed the importance of increasing the opportunities for interaction between people and allowing each Member to play a leading role in carrying out their activities, regardless of where they are. As of 2019, some of these new internal onboarding initiatives will be replicated to other offices and industrial units, observing the specificities of each region and country. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERMORE DIVERSE, INCLUSIVE, AND HUMANE 103-2, 103-3 Our mission to work toward a better society for current and future generations also includes human rights. For this reason, every day we work to become an increasingly inclusive and welcoming company. We give everyone equal opportunities through the Diversity & Inclusion program. In addition to holistic actions, our initiatives are based on five work fronts aimed at the inclusion and empowerment of historically marginalized groups: women, LGBTQIA+ (Lesbian, Gay, Bisexual, Transgender, Queer, Intersex and Assexual), black people, socially vulnerable people, and persons with disabilities. In Brazil, we focused on actions that promote awareness and mobilization on the topic. In 2018, more than 500 Leaders were trained in the topic. We created the affinity network for LGBTQIA+ Members and started hiring transgender people and persons with disabilities. We organized the Braskem Forum on Diversity and Inclusion and approximately 500 Members participated. We also organized the second Diversity and Inclusion Week, with the topic “Empathy,” which featured actions in our units throughout Brazil. In the United States, 2018 was the first year of advancing the local diversity strategy, with the formation of a committee dedicated to the topic and training sessions conducted at all sites. 2016 2017 2018 THE IMPORTANCE OF GOOD COMMUNICATION 22% 22% 23% 23% 25% 27% 23% 23% 23% 10% 9% 10% Women Women in leadership positions Blacks Blacks in leadership positions The way we communicate says a lot about us. Thus, in order to strengthen the work on inclusion and diversity, in 2018 we launched a guide for our Members on how to communicate while respecting gender, sexual orientation, race, ethnicity, origin, physical or mental condition, religion, education, and other characteristics that enrich diversity within Braskem and society. The guide shows, above all, the importance of inclusive communication, and reinforces the awareness that work environments are composed of people with different characteristics and therefore it is important to communicate in a manner that is including, valuing, respecting, and welcoming all diversity inherent to human beings. Note: We don’t have yet have specific indicators for people with disabilities and LGBTQIA+. 51 Guia Comunicação Inclusiva Click here to learn more about our diversity processes. IN 2018, WE WON THE EXCELLENCE OUT AND EQUAL AWARD FOR OUR ACTIONS TO PROMOTE THE INCLUSION OF LGBTQIA+ PEOPLE. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER52 WHO WE ARE 405-1 TOTAL NUMBER OF MEMBERS (WORLDWIDE) 2016 2017 2018 6,005 6,010 6,176 1,651 1,703 1,832 7,656 7,713 8,008 RATIO OF SENIOR MANAGEMENT HIRED WITHIN THE LOCAL COMMUNITY 103-3, 202-2 According to our culture, the exchange of people between business units in Brazil and abroad is a common practice for the development of Members, an initiative that may have a direct impact on this indicator. Brazil United States Germany Mexico International offices Total 2016 2017 2018 53% N/A 67% 26% 0% 49% 56% N/A 67% 29% 0% 51% 58% N/A 75% 28% 10.5% 53% * Members of senior management are Members from grades 3 to 10 who have direct reports (managers, directors, vice presidents, and president). To calculate the number of Leaders from the local community (born in the same state where they work), we used the number of Leaders in senior management positions versus the place of birth, with the exception of the United States, which does not have this information (for legal reasons). This indicator is monitored for all countries where we operate, for those with industrial units and those with commercial offices only. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER 53 RATIO BETWEEN THE LOWEST SALARY COMPARED WITH THE LOCAL MINIMUM WAGE* VOLUNTARY TERMINATION RATE 401-1 202-1 Alagoas Bahia Brazil Rio de Janeiro Rio Grande do Sul São Paulo United States Germany Mexico 2016 2017 2018 2016 2017 2018 1.5 1.6 2.2 1.8 1.8 3.1 2.0 3.5 1.5 1.6 2.1 1.8 1.7 3.1 2.0 3.6 1.5 1.6 2.1 1.8 1.7 3.5 2.1 3.3 1.4% 1.5% 1.8% 3.6% 2.2% 2.6% 1.9% 1.7% 2.0% * The calculation method used considers the lowest salary paid by us using the Hay table (a table of salaries and wages established by us) valid until December using 85% of the range in Brazil and Me- xico (lowest percentage of the range that varies between 85 and 115) and 80% of the range in the United States and Germany (smallest percentage of the range that varies between 80 and 120) of the smallest wage compared with the local minimum wage that is established through local bargaining agreements, for Brazil, and the local minimum wage for non-unionized Members. At all locations, we offer Members salaries above the minimum wage in the region. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER ATTRACT AND DEVELOP PEOPLE5 103-2, 103-3, 402-2, 404-2 Supporting the growth and development of our Members is a priority for the People & Organization department. Thus, throughout 2018 we continued to implement various programs focused on integration, development, and preparation and training of Leaders. We strengthened our connection to student entities in order to bolster our position as a company capable of attracting young professionals. As proof that we are on the right track, in 2018 alone we were recognized by Love Mondays as one of the 50 companies most loved by Members and interns, as one of the Dream Companies for Young People by Cia de Talentos, and as one of the Best Companies to Start a Career by Você S/A. In 2018, our university and technical internship programs had around 35,000 applications, a 32% growth compared to 2017. For the selection process of the university internship program, a pilot project was carried out using artificial intelligence in the application phase and with online dynamics and game phases to ensure a better fit to the profile As part of the Leaders’ training strategy, we offer we were seeking. On another front, our Operator classroom programs and development opportunities Training program hired 40 interns and 89 trainees, through distance education in three environments: the and supported our strategy of renewing the Self-Development Portal, the LMS Platform, and the Industrial team. In Mexico, 41 interns were hired and Technical Development Platform. In Mexico, approximately 10 were employed for positions in industrial and support areas such as analysts and technicians. 5 The Horizontes program was discontinued in 2017, and we do not currently have programs for Members in the post-career transition process 80 individual development plans were conducted for Leaders. Main training topics were crucial conversations between Leader and direct report, international programs, leadership acceleration, strategic planning, and coaching sessions. In all, there were more than 2,600 hours of Leader training. In 2018, in Mexico, the program for developing new 54 leaders was also launched, and looked to prepare Members for their first transition to leadership positions. In the United States, 21 leaders participated in development workshops. Also in 2018, we launched Braskem’s new Career Philosophy, looking to guide Leaders and Members in building their careers in the company, in line with the current scenario and our Value Proposition. For the year, R$ 27.2 million was invested in training 6,825 Members worldwide. For us, career is a sequence of diverse and meaningful experiences that enhance the development of our Members. There are many possible ways to build a career, and each Team Member is encouraged to pursue their own path to achieving a higher level of satisfaction and strengthening their individual purpose while delivering results for the company. MOST LOVED: We are among the 50 largest Brazilian companies most loved by their employees, according to Love Mondays. YOUNG PEOPLE’S DREAM: After a survey conducted with more than 70,000 people, we received the “Dream Career” award in the “Youth” category. BEST COMPANY: We were chosen as one of the Best Companies to Start a Career by Você S/A. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER 55 INDIVIDUAL PERFORMANCE MANAGEMENT 404-3, CRITERIA 8 - COP All of our Members around the world undergo annual goals. Based on the development and growing challenges performance evaluations that consider the Member’s in the PA, the Member is evaluated in the People Planning contribution to the organization in quantitative terms and Succession process that seeks to ensure career (results) and alignment with the culture. This performance planning for strategic positions within the company. and career management is the basis for dialogue in the relationship between Leader and direct report, who plan and agree on the results to be achieved in the year in an Action Program—the PA - as it is known in the company. TRADE UNION RELATIONS 102-41, CRITERIA 6 E 8 - COP We recognize Unions as the legal representatives of our Throughout the period, the evolution of results is Members, and we always seek dialogue and understanding monitored and, if necessary, new directions are defined. as the preferred means of resolving possible labor and The assessment takes place at the beginning of the Union conflicts. In Brazil, almost all of our Members following year and serves as a basis for identifying are represented by Unions. Collective bargaining development opportunities to be included in the PA for agreements are conducted directly by our Brazil’s Labor the following year or in the plan called Education for Work, Relations team or through the Employers’ Unions, also which includes actions to support continuing education with the support and participation of said team. and recommendations for corporate programs. Concerning Members worldwide, only a few at the Neal Finally, in the judgment phase, the Leader decides on the plant in the United States are covered by collective Member’s next steps in a clear, fair, impartial manner, bargaining agreements. In Germany, none of the and in line with the organization’s mission and goals. plants has had this type of coverage since 2014, since The process is carried out in all locations where we operate. for the chemicals and petrochemicals category. In All Members have an individual PA, a requirement to receive Mexico, only unionized Members of the operation their variable pay, which is associated with achievement of are covered by collective bargaining agreements. the country does not have an agreement in place BRAZIL U.S. GERMANY MEXICO INTERNATIONAL OFFICES TOTAL Members covered by collective bargaining agreements 6,098 59 Total number of Members 1 6,173 754 0 188 339 812 0 81 % Members covered by collective bargaining agreements 1 Does not include interns 98.8% 7.8% 0.0% 41.7% 0.0% 6,496 8,008 81.1% The PA cycle consists of four phases: 1. Planning/Pact 2. Monitoring 3. Assessment 4. Judgment < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER COMMUNITIES 103-2, 103-3, 203-1, 301-3, 413-1 A NEW STRATEGY In 2018, we reviewed our Private Social Investment (ISP - Investimento Social Privado) strategy created in 2012. With the support of an external consulting firm specialized in sustainable management, we defined a model that brings greater connection with the business and is in line with our Sustainable 56 MAXIMIZE OUR POSITIVE IMPACT, BUILD LASTING RELATIONSHIPS AND CONTRIBUTE TO THE SUSTAINABLE DEVELOPMENT OF THE COMMUNITIES IN WHICH WE OPERATE AND OF SOCIETY AS A WHOLE SOCIAL AND ENVIRONMENTAL IMPACT Expand the positive social and environmental impact generated by Braskem, contributing to transform the reality of the communities where we operate. REPUTATION Promote Braskem as a company that provides sustainable solutions to local and global RELATIONSHIP Establish relationships of trust and maintain permanent dialogues with our communities and other stakeholders Development Policy. Now, we are guided by three priority causes: challenges and be recognized by communities sustainable consumption and post-consumption; innovation and sustainable entrepreneurship; and local development. as a partner of local development The purpose is to maximize the positive social and environmental impact of Braskem, build lasting relationships, and contribute to the sustainable development of the communities where we operate and of society as a whole. Thus, all our ISPs must fulfill three basic objectives: to increase the positive social and environmental impact, to promote the company as a provider of sustainable solutions, and to establish relationships of trust with communities and other stakeholders. This strategy reinforces our belief that ISP projects can be leveraged through coordination and partnerships, ethics and transparency, internal engagement, and business connection. Private Social Investment (ISP) is the voluntary, planned, monitored, and evaluated use of our private resources to carry out initiatives of public interest, guided by the company’s strategy and by a participatory action of the community, public authorities, and other companies. Lead education practices for sustainable consumption and provide scale and sustainable solutions, considering the life cycle of products, especially plastic, through actions to promote the 4Rs: rethink, reduce, reuse and recycle CAUSES CROSS-CUTTING THEMES N A N D P A ATIO DIN R O O C I N T E R N A L E N G E R S H I PS N T R ETHICS A N D T R A N S P A R E N C Y Innovation and sustainable entrepreneurship Sustainable consumption and post- consumption S S E N SI U N W ITH THE B Local development A G E MENT CO N N E C T I O Empower people to develop businesses that have a positive impact on society and the environment Promote and actively participate in actions aimed at the social and environmental development of the locations impacted by Braskem. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER PORTFOLIO REVIEW OUR IMPACT CRITERIA 16 - COP 57 Based on our new strategy, we map out each project’s strengths and opportunities and consider the demands of the communities themselves. This is an important process that has made it possible to improve projects that have good potential, to maintain those that are efficient, and to verify the possibility of conducting new projects that meet other needs. PROJECTS EVALUATED 4 Alagoas 16 São Paulo 39 TOTAL 9 Bahia Rio de Janeiro 4 Rio Grande do Sul 6 After the analysis, we found that only 34 projects fit our ISP criteria. In order to meet the requirements, the project must be planned, monitored, and evaluated, and have a participatory community action. Projects that do not meet these criteria are considered one-time support or donations. In 2018, we directly helped nearly 200,000 people in different areas where we operate. Our local and global actions have had a positive impact on both the community and the environment. Beneficiaries One-time support or donations Private Social Investment (ISP) projects 2017 2018 Direct 144,000 199,281 Indirect Brazil Mexico Global Total - 26 40 6 1 47 350,910 46 34 7 1 42 Sorted waste (kg) (Ser+) 14,352 25,022 Plastic waste collected and redirected (ton) Plastianguis 7 28 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERGLOBAL PRIVATE SOCIAL INVESTMENT (ISP) BRAZIL GLOBAL MEXICO Investment Number of projects Beneficiaries R$ 8,342,553.97 34 115,867 R$ 954,493.98 R$ 273,430.73 1 7 70,954 3,990 TOTAL R$ 9,570,478.68 42 190,811 GLOBAL INVESTMENT BY COUNTRY (ISP + DONATIONS) 58 GERMANY BRAZIL UNITED STATES* MEXICO GLOBAL Investment Number of projects Beneficiaries R$ 2,160.68 1 - R$ 18,636,399.29 57 120,827 R$ 226,845.92 13 2,010 R$ 964,766.43 16 5,490 R$ 954,493.98 1 70,954 TOTAL R$ 20,784,666.30 88 199,281 *Numbers reported up to third quarter of 2018 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER59 CLICK HERE TO LEARN ABOUT OUR CAUSES GLOBAL INVESTMENT BY CAUSE (ISP + DONATIONS) CAUSE Sustainable consumption and post-consumption INVESTMENT R$ 5,058,198.95 COMPLIANCE: REVIEW OF THE GUIDELINE AND PROCEDURE In order to improve our management practices and continue the process initiated in 2017, we reviewed the Global Guideline for Sponsorships and Donations, the procedures of each country, the documents that guide the selection of proponents, and the monitoring and transparency of the process. This review was done in all regions where we operate: Brazil, Mexico, the United States, and Europe. In partnership with Deloitte, all projects conducted in Brazil in 2017 had their accounts audited to ensure that all investments were being properly allocated and correctly used, pursuant to the provisions set out in the agreements with each proponent. This evaluation may include an on-site audit if the project meets certain review criteria, such as: • If the amount invested is equal to or greater Local development R$ 13,580,460.57 than R$ 500,000 Innovation and sustainable entrepreneurship Total R$ 2,146,006.77 R$ 20,784,666.30 • If the due diligence assessment finds that the proponent has a high level of risk • If it is a donation from the Odebrecht Foundation • If the regular audit disapproves the project, even partially < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER 60 2017 2018 R$ 290,511.63 R$ 954,493.98 36,167 159,018 856 359 497 4,550 47 1,222 18,786 - - 4.7% 70,954 350,910 2,759 1,287 1,488 15,964 64 2,226 32,010 15 4 16% OUR PROJECTS 103-2, 103-3 Braskem Volunteer Program The program was created to promote a positive social and environmental impact in the communities surrounding our operations and to improve people’s quality of life. The program is global and, in addition to Brazil, has the participation of Mexico and the United Investment Direct beneficiaries Indirect beneficiaries Participants States. In 2018, actions were carried out in two ways: Braskem members External guests Hours donated Institutions benefited Actions taken One-time donations Task forces Donation campaigns Engagement rate (percentage of total number of Braskem members) Competition: Members of the company joined forces to work in a social organization in the community for a specific period of time. The collaborative competition took place from May to August and, as recognition, donations were made to entities supported by the teams that achieved the highest score in each country. Task forces: In an unprecedented manner, several individual actions were carried out in a group in each of the locations in which we operate. Donation campaigns and actions were also promoted with people from the community in situations of social vulnerability. One of the main indicators of success of the Volunteer Program is the engagement rate, which grew significantly in 2018, reaching 16% globally and 4,400 hours of volunteer work. IN JUST ONE YEAR, THE VOLUNTEER PROGRAM HAD: 222% increase in participation of volunteers 82% more actions 70% growth in donations 251% more hours dedicated by volunteers < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERSer+ 301-2, 301-3 Ser+ is a project to promote social inclusion and the socioeconomic development of those responsible for sorting recyclable material and of cooperative members by promoting the development of the national recycling chain in Brazil. In 2018, we consolidated the national implementation of the project, covering all regions in which we operate. Through the partnership with Mãos Verdes (Green Hands), we invested and expanded the Sorting Units (UT - Unidades de Triagem) and approved 37 cooperatives based on human rights criteria and, among them, two are qualified to serve our Wecycle program. One of the most important results is the 26% increase in the monthly income of those benefiting from the project, more than double the target set for 2018. It is important to note that given the wide variety of specifications and packaging requirements, most packages that carry the Wecycle seal contain a higher 61 2016 2017 2018 GOAL 2019 percentage of recycled resins, although there is a Investment R$ 1,210,924.68 R$ 1,966,508.50 R$ 1,698,489.70 need to mix with virgin resin in order to meet quality standards. With the advance of the initiative and new partnerships, we plan to expand our volume of recycled resins to 900 tons per month in 2019. Sorting units / Cooperatives served Number of cooperatives eligible to serve Wecycle Sorters benefited Sorters trained Volume of waste sorted (kg) Volume sold/month - T/UT Percentage of sorters with increased income Increase in income/month 45 - 3,444 858 30,824 - - 23% 35 - 1,278 326 14,352 - - 42% 37 2 1,057 472 25,022 72 52% 26% - 40 2 1,000 600 60,000 60 40% 12% WE SEEK TO BE A COMPANYPROVIDEROF SUSTAINABLE SOLUTIONS< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER62 Edukatu Developed in 2013 through a partnership between us and the Akatu Institute, Edukatu takes environmental education and concepts of sustainability and conscious consumption to schools across Brazil. We also entered into partnerships with municipal boards of education of seven cities in the States of São Paulo, Rio de Janeiro, and Bahia, and with the São Paulo State Department of Culture, which significantly increased the reach of the project. Ecobarreira 2016 2017 2018 GOAL 2019 28,441 38,773 42,073 46,210 TOTAL NUMBER OF PARTICIPANTS Ecobarreira (Ecobarrier) is a project carried out in partnership with the Safeweb Institute in Porto Alegre, created to prevent solid waste from reaching Lake Guaíba. Installed in the stream called Arroio Dilúvio in March 2016, Ecobarreira has received our support since 2017 as an environmental education project focused on raising awareness among children and adolescents about conscious consumption and sustainable post-consumption. Since its inauguration, Ecobarreira has already prevented 475 tons of material from being released into the lake, an average of 180 tons per year. After studying the material collected in the stream, it was Pescadores de Mel found that only 8.2% of the material collected is plastic, Through a partnership with Uniprópolis, the project teaches fishermen and of this total, nearly 20% can be recycled. from four regions in the State of Alagoas: Maceió, Barra de São Miguel, 2,591 2,382 2,095 1,000 5,710 7,126 5,388 4,950 TEACHERS INVOLVED STUDENTS INVOLVED Investment 2017 2018 R$ 50,000 R$ 78,000 Marechal Deodoro and Coqueiro Seco (Brazil) the trade of honey production and hydroponic farming. The goal is to promote generation of additional income for fishermen during the annual fishing ban, in addition to social inclusion and technical training. The honey and propolis produced have unique medicinal properties and help strengthen the region’s trade. 2016 2017 2018 Investment R$ 50,000 R$ 50,000 R$ 50,000 People trained in beekeeping 133 91 178 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER63 Plastianguis Held in Mexico, the event encourages recycling and helps educate the community to identify and sort plastic waste, which is exchanged for coins called PlastiPesos. The coins are used to buy cleaning products and food for a price subsidized by us. In 2018, sorting reached 28 tons—304% higher than the previous year. The material was sent to recycling cooperatives in the region. Families benefited Community participants Products delivered (staples basket) Volunteers Hours of volunteer work Plastic collected (tons) Food staples products distributed (tons) 2017 2018 400+ 1,000 6,000 66 600 7 - 800 3,200 19,824 130 1,170 (average of 9 hours per person x 130 people) 28.3 21.7 2017 2018 Investment R$ 250,000 (ICMS) R$ 214,287 (54 BRK, 160 ICMS) Young beneficiaries 258 334 Investment (MXN$) MXN$ 603,889.51 MXN$ 1,192,338.40 Investment (R$) R$ 102,243.37 R$ 227,563.28 PlastiPesos distributed 79,534 Food staples baskets distributed 494 201,967 1,239 SOM + Eu The music education project in Duque de Caxias (Brazil) offers free music workshops and has a permanent calendar of artistic and cultural events. The idea is to promote social inclusion of beneficiary students, who participate in their free time. The project also includes other initiatives, such as Orquestra Tubônica, which combines music with environmental education by producing musical instruments made of plastic, such as PVC. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER64 Inclusion and diversity at The Franklin Institute We have become the official partner for Diversity and Inclusion at The Franklin Institute, in Philadelphia, one of the largest and oldest centers of science, technology, education, and development in the United States. This partnership allowed us to support programs such as Color of Science, Women in Science, and Introduce a Girl to Engineering. The purpose of the initiatives is to drive diversity in STEM (science, technology, engineering, and mathematics) fields, and they offer practical activities, special workshops, and opportunities for direct interaction with academic leaders, industry executives, and influential leaders. We are already a partner of The Franklin Institute in other Respect to local cultures 411-1 projects, collaborating with commitments in sustainability Maintenance of traditional local cultures and livelihoods and state-of-the-art technology that impact more is part of what we monitor in the areas surrounding than 1 million people each year. In 2018, the company our operations. Since 2015, we have supported a was the main sponsor of the Women in Science Day participatory fishing monitoring program that has been event, which included a presentation by Yi So-yeon, a tested and implemented in the communities of Ilha biotechnologist and the first Korean astronaut to go da Maré (Bahia) by Instituto Maré Global. The program to space. The company is also a constant supporter of has annually empowered nearly 100 fishermen and the Philadelphia Science Festival, where we present shellfishers to reproduce their traditional way of life. content about the benefits of plastic to attendees. The work of the Institute, which also involves emancipatory environmental education, has been expanded to the schools in the region through the traveling Environmental Tent. In 2018, 269 children learned about the value of local knowledge and environmental preservation and conservation in the Instituto de Pesca Artesanal) in 2017 and inauguration of communities of Praia Grande, Santana, Botelho, and Martelo. its headquarters in 2018. As a legitimate representative of The innovative tent provides space for debates about the Institute undertook its first initiative: to register IPA at protecting and improving local knowledge about fishing, the Social Security Institute (INSS) to allow it to provide and promotes synergy among the residents who depend services such as issuing of a General Fishing Register (RGP on the quality of artisanal fishing. This synergy resulted - Registro Geral de Pesca), which guarantees fishermen’s in the creation of the Institute of Artisanal Fishing (IPA - rights to disability insurance, retirement, maternity aid, etc. the demands of the communities of Ilha de Maré, this year WE INVEST TO EMPOWER LOCAL WORKERS< >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER65 Open dialogue with the community CRITERIA 5, 7 E 10 - COP We consider the relationship with the local community to be extremely important and, to this end, we established a series of communication channels. Each regional office has specific communication channels for the community. Some of these channels are accessed through Development Committees— this is the case in Triunfo and Bahia, where communication channels were defined through COFIP and COFIC, respectively. In addition, the company has a corporate channel, where questions, complaints, and comments are received by our Corporate Health, Safety, and Environment team and submitted to the corresponding area. In the case of reports on issues related to topics such as harassment and discrimination, we have in place the Ethics Line Channel, as covered in the Compliance and Governance section. OPERATION AT PINHEIRO 413-2 Braskem has been conducting mining activities in Alagoas (Brazil) since 1975, when the company was still known as Salgema. The activities consist of the exploitation of salt that is used in the production of chlorine and soda. Since March 2018, when there were seismic shocks in Maceió, Alagoas, after the heavy rains that occurred at the time, we began to monitor the worsening of the cracks in the buildings in the District of Pinheiro in Maceió, and since then the wells in the area have been deactivated and are not operational. Braskem has signed an agreement to implement emergency measures in the neighborhood and has provided support, information and collaboration with relevant public authorities on the issue. To learn more, visit our website: www.braskem.com.br/esclarecimento-alagoas (Portuguese only) < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER66 SUPPLIERS 103-2, 103-3, 102-9, 308-1, 414-1, CRITERIA 2, 3, 6 AND 9 – COP As an essential part of our successful Parties. The Code was inspired by regulations of the countries where operations, our Suppliers are widely accepted documents that we operate. In addition, in the case managed through a decentralized include, among others, the UN of contracts for industrial areas, all structure, with areas responsible for Universal Declaration of Human Suppliers must also respond to and cost analysis, quality assessment of Rights, the procedures recommended address ours minimum Health, Safety, products and services, and adherence by the International Labor and Environment requirements, to the Code of Conduct for Third Organization (ILO), and the laws and based on our HSE Policy. PROPORTION OF SPENDING ON LOCAL SUPPLIERS BY COUNTRY* 204-1 NATIONAL FOREIGN 2016 2017 2018 BRAZIL 24% 29% 41% 2016 6% 2017 7% 2018 2% GERMANY 76% 71% 59% 94% 93% 98% UNITED STATES 1% 7% 4% 16% 25% 29% MEXICO *For the purpose of calculating this indicator, we consider national suppliers as “local,” and significant places of operations are the countries where we have industrial units. 99% 93% 96% 84% 75% 71% < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERMAIN SUPPLIER CATEGORIES Ethanol: This product has one of the most rigorous management processes at Braskem. To ensure compliance with mandatory requirements, in 2016 we launched the Responsible Ethanol Procurement Program, also intended to improve issues such as slash and burn, biodiversity, and best practices in environmental, human rights, and labor aspects. Fossil raw materials: Among the products in this category are naphtha, condensate, ethane, propane, and LRH in Brazil, ethylene and propene in the United States and Germany, and ethane in Mexico. 67 Management of ethanol Suppliers CRITERIA 6 - COP Our management for this category of In addition, 100% of the committed Suppliers is based on compliance issues supplier mills and a sample of their (mandatory requirements) and excellence sugarcane suppliers are audited by third (points for continuous improvement). In parties every two years. In 2018, Control 2018, 95% of the ethanol purchased by us Union audited 20% of our supplier mills, was produced by Suppliers that conformed which demonstrated their continuous to these two pillars. To this end, we guarantee annual evolution. During this audit, the commitment of 50% of SPOT supplier three nonconformities were found in mills. The other 50% signed, at least, our a new partner, all related to supplier Code of Conduct for Third Parties. management. We will follow up on this issue in 2019 to ensure mitigation of risks related to fair work in the value chain. % COMPLIANCE 97.0% 98.4% 98.7% 2016/17 2017/18 2018/19 7 Suppliers that, although registered at Braskem, do not have supply agreements. Click here to access our Code of Conduct for Third Parties < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER68 PROCUREMENT CRITERIA 2 - COP The year was of great importance for procurement. Another tool is the quarterly Supplier evaluation Responsible for contracting services (industrial process. This evaluation generates the Supplier and corporate), purchasing direct materials Performance Index (IDF - Índice de Desempenho (inputs), indirect materials (MRO), and equipment, de Fornecedores) and is applied to all Suppliers throughout the year we managed to advance our considered critical in the sustainability assessment. global operations, leverage important projects Deviations identified through the assessment for the procurement processes, implement new are dealt with in an action plan involving the technologies, train the team, and obtain significant user areas, Suppliers and procurement. gains to the company through our trading strategies. We are also responsible for ensuring reliability, through transparent purchases and following the formal processes of the organization. To this end, in addition to the information about internal needs, it is important to have detailed knowledge of our Suppliers to predict the financial and managerial impacts of the negotiations. Tools such as Suppliers Radar (which identifies companies with greater exposure to labor and economic risks) and due diligence processes are examples of information that the procurement area uses to better conduct its negotiations within technical, quality, and cost criteria to ensure the good performance of our operations, always with consideration for ethics and responsibility. Percentage of number of Suppliers by type of service With 4,636 Suppliers registered, we continue working to become increasingly digital and global, acting as a driver for sustainable development throughout the supply chain in which we operate. 4.4% 4.7% 14.6% INPUTS LOGISTICS MACHINERY, EQUIPMENT AND INSTALLATIONS ENERGY TECHNICAL AND COMPLEMENTARY SERVICES 42.6% 33.7% < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERMore global and sustainable The globalization process of procurement was started in 2017 and developed in 2018 with the implementation of several new procedures guided by our Global Procurement Policy. Respecting the constraints and needs of each region, in 2018 we strengthened our position by identifying opportunities for development of Suppliers with global presence and development of contractual tools that allow us to leverage synergies. Also in 2018 we put into practice the Sustainable Procurement Tool, which provides a better social and environmental risk assessment during the technical evaluation phase of the bidding process. The platform seeks to support the various purchasing areas by including sustainability issues into their decision- making process and consists of evaluations where Suppliers report information about their management of various aspects related to ours sustainability pillars. This pilot program—carried out with the purchasing categories that are critical in terms of social and environmental impacts, of the industrial services, and inputs areas—allowed the Procurement team to conduct an evaluation with more robust criteria, of all participants of the bidding processes, ensuring better analysis to be included in Coupa, a global platform together with the application of global compliance decision-making. Also in 2018, the teams involved for contracting in procurement and, in 2019, it will be requirements through the Global Procurement Policy. were trained and material was prepared concerning implemented for the purchase categories deemed the criteria and recommendations for the use of the to be of high social and environmental impact. It is also important to highlight the opportunities tool. We are currently in the validation phase of these generated by the synergy among the countries criteria with company Leaders, Compliance, Legal In addition, in 2019 our work should also be guided where we operate and the integration of the Department, and with the Getúlio Vargas Foundation by the introduction of new technologies such as teams with global company Leaders and forums (FGV). After this process, we will seek approval from the Purchasing Process Management Platform and that rely on the contribution of Members from senior management to complete and validate the Warehouse Management Systems, promoting agility, the various regions bringing their perspectives implementation. Meanwhile, the tool is also under simplification, and accuracy in managing warehouses, and allowing the exchange of experiences. 69 COMPANY ENGAGED CRITERIA 2 AND 8 - COP In 2018 we were the Brazilian highlight in the CDP Supply Chain ranking, which evaluates the companies that best engage their supply chains in adopting new approaches to climate change and water management. For the first time we were included on the Supplier Water A list and for the second consecutive year, the Supplier Climate A list. Among our main actions are workshops to train suppliers, follow- up on the implementation of possible improvements identified, and the annual application of a form for the reporting of information related to water and climate management. Joint action between the procurement and sustainable development areas allows us to evolve in the CDP Supply program through a continuous alignment between CDP and purchasing areas, incentive for Suppliers’ participation in the program, and monitoring of response rates. In addition, the procurement area is working to increase the number of CDP member companies in the industrial segment, seeking to further strengthen the program within our supply chain. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER70 TRANSFORMATION IN LOGISTICS As part of the strategy to promote more dynamic logistics and closer proximity to the market and stakeholders, the area of Chemicals and Vinyls—which works primarily with the transportation of liquids and gases—is implementing the Athena project. Scheduled for completion in 2019, the project will allow us to create a new structure focused on solutions, prioritizing processes, communication, and greater proximity to Suppliers through the internationalization of part of the Maritime Contracting team, implementation of monitoring in the transportation fleet, and automation and optimization of systems. LOGISTICS The year 2018 was very challenging for logistics, especially With regard to the new purchasing and compliance guidelines, after the general truck drivers’ strike in Brazil (in May 2018) logistics has been strengthening its actions with service providers. and the consequent establishment of a minimum freight Considering the precarious infrastructure of the Brazilian price by ANTT (National Agency for Land Transport). The highways and the high theft rates, we held periodic meetings immediate impact was a significant increase in the cost of and conducted audits, cargo monitoring, and updating in terms road freight transport of resins, which, as a consequence, of our HSE (Health, Safety, and Environment) procedures, thus mobilized the Logistics team to find alternative forms of obtaining a 40% reduction in the number of cargo thefts and 20% transport and negotiation in order to minimize impacts. in the number of accidents on the roads when compared to 2017. Thus, our logistics area has increased its efforts to use alternative The Log2020 program (which includes operations, management, and more sustainable modes, with coastal shipping gaining planning, and contracting) advanced significantly in relation to even greater importance. In this period alone we, increased by 2017, tripling the recurrent benefits in logistics projects, totaling 80% the volume transported through this mode in relation to R$ 84 million. The benefits include a reduction of 80% in loading what we transported in the previous year—with an expected time in our units in Rio de Janeiro because of the automation of reduction of approximately 80% of greenhouse gas emissions the process, as well as productivity gains—through maximization in the routes where maritime transportation was used instead of storage areas (new layouts and areas, and improvements of road transportation. In addition, we carried out a joint study in stacking), packaging optimization, and improvement in with specialized consultants to create an action plan focused on the logistics network—and the reduction of storage costs. increasing competitiveness of logistics, and developed specific routes that allow us to operate trucks with greater capacity. It is also worth mentioning the continued implementation of transformational projects such as KISS8 (for optimization of networks and inventories), Revolution9 (with improvements to order to cash processes and Client service), as well as the strengthening of global logistics actions for best practices in management. In line with our sustainability strategy, the logistics area is also developing packaging composed of recycled materials and is strongly engaged in the Pellet Zero Program, part of the initiative to reduce marine debris. 8 Keep It Super Simple 9 Process for receiving and processing Client orders < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERSafety and responsibility To ensure safety of all stakeholders involved in logistics processes, we work with the main risk managers in Brazil and freight tracking. We also hold regular meetings with our service providers, ensuring that everyone is up-to-date on our internal Health, Safety, and Environment processes, • Program Na-Mão-Certa: Developed by OSCIP Childhood and have annual audits at carrier headquarters. Brazil, the program promotes the protection of children and In addition, we are part of the following road safety promotion programs: adolescents in the country and ensures that issues related to sexual abuse and exploitation are included in public and private policies. In 2018, we were recognized for the third consecutive year in this program for once again going • Program Olho Vivo na Estrada: This helps prevent unsafe beyond the annual goals established by Childhood Brazil. behavior in the transportation of hazardous products through We raised awareness of 749 truck drivers, 92 logistics third driver awareness. It was instituted by ABIQUIM in partnership parties, and 42 Members, in addition to the involvement with ABICLOR. In 2018, we acted to raise awareness of of 32% of the carriers that serve us. CRITERIA 4 - COP more than 800 people involved in its logistics chain. • Transportadora da Vida: This initiative by the Union of Cargo and Logistics Transport Companies (SETCERGS) certifies cargo transport companies that act with a greater emphasis on safety. 71 WELL-BEING CRITERIA 5 - COP To ensure safety in our logistics processes, it is also important to improve work conditions for truck drivers and the quality of the stop and rest areas, and reduce waiting time. This can limit exposure to prostitution and alcohol consumption. In view of this, in 2018 we proceeded with the approval of gas stations and, with the support of the Buonny risk manager, we approved 13% of the sites inspected in the year. These advances have also provided a better performance of logistics operations, as well as safety and convenience for truck drivers. This year we also supported the Diagnostics of the Child and Adolescent Rights Guarantee System in Camaçari, Dias d’Ávila, and Candeias. We learned how the different public agencies act in prevention, detection, and remediation, and we will be able to develop, in 2019, a project for territorial intervention that guarantees a more efficient and coordinated action among them. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER72 THIRD-PARTY WORK CONDITIONS CRITERIA 5 - COP After improving the work environments made available to third parties, in 2018 we developed a pilot analysis of their work conditions at Braskem. The infrastructure of the workplaces, the reception and inclusion of this group, and the knowledge about the whistleblowing channel (Ethics Line), among other factors, were evaluated. The assessment will help define the next interventions intended to provide good work conditions to third parties. PROCESS SAFETY The logistics area continued with the structured program of risk studies involving 19 new products whose operations are classified as medium and low risk, based on the volume transported and their hazard. Since its inception in 2015, 42 different hazardous products produced and handled by us have already been evaluated. During this process, 25 different carriers and 289 matrix road routes were analyzed, 23 of them with international destinations (Mercosur), in addition to six loading/ unloading bases. Audits were also carried out in 22 bonded warehouses. It is also worth noting the adjustment made to the Logistics HSE procedures for implementation of Intelius. In the maritime transport mode, 37 vessels were inspected by the Vetting team. [Learn more about Intelius in the Health, Safety, and Environment section.] Specific HSE assessments were also carried out in nine different maritime terminals contracted by us and five of our own terminals. Inspections were based on international standards such as the CDI-T (the Chemical Distribution Institute’s terminal inspection program). With this process to identify risks and define preventive control barriers, we focus on the prevention of accidents linked to its logistics operations. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER73 CLIENTS We believe that plastic plays a key role in creating innovation, technology, and responsibility, can a more sustainable future. That’s why we work transform the future. In five years, R$ 190 million with our Clients and our value chains to develop was invested in the export incentive program and products and solutions that are increasingly more than R$ 15 million in actions to promote efficient and with a high potential for recycling and the advantages and benefits of plastic. reuse. For this vision to become a reality, we act in an integrated way to develop new technologies, in the design of new products, and in the generation Wecycle: The initiative focuses on inspiring businesses to value post-consumer plastic of opportunities to innovate through projects waste and the recycling chain, and mitigating and partnerships that strengthen the circular the associated environmental and social risks. economy. Among our main initiatives are: Through partnerships with Clients, recyclers, and cooperatives and companies that own consumer Circular economy: Among the initiatives defined is the development of partnerships with brands, the platform is supported by four main pillars: technical reliability, environmental and Clients in designing new products to expand social responsibility, traceability of origin, and and facilitate recycling and reuse of plastic correct destination of the products throughout the packaging, especially one-way packaging. chain. [Click here to learn more about Wecycle] [Click here to learn more about circular economy] PICPlast: A partnership with the Brazilian Plastics Industry Association (ABIPLAST), the initiative Selo Maxio®: These eco-efficient resins offer benefits such as reduced energy consumption during processing, increased productivity, and promotes the export of processed products, reduced weight of the final product—factors to encourage competitiveness and innovation that minimize the environmental impacts of in the sector. In 2018, more than R$ 40 million the production process of numerous products. was invested in actions such as PlastCoLab, an In 2018, we incorporated into the Maxio family interactive space whose second edition was held the HDPE HD4601U, a resin that enables the in Porto Alegre, directly impacting more than rotomolding process to occur faster than 6,000 people through exhibitions and activities with similar resins, resulting in lower power that showcase how plastic, combined with consumption and higher productivity. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERVERSATILITY, INNOVATION, AND PARTNERSHIPS Throughout 2018, we worked on several projects with our Clients to develop solutions for a more responsible and sustainable use of plastic. Among them is a partnership with Condor, a manufacturer of materials for real estate painting, to create the Special Sustainable Painting Kit, using post- consumer plastic. The product originates from the reuse of plastic packaging of printing inks and road markings. In another partnership, with Pão de Açúcar, one of the leading retailers in Brazil and a pioneer in the collection of post- consumer materials, we and Embalixo will produce new garbage bags using plastic materials discarded by customers at Pão de Açúcar recycling stations and industrial sacks previously used by Braskem to deliver its resins. In addition, along with Leroy Merlin (one of the largest chains of construction material stores in Brazil) and Martiplast, we developed organizers made of 100% recycled plastic under the Ou brand. All of these initiatives are part of the Wecycle platform, which uses innovation in the service of sustainable solutions and the development of business and initiatives that value plastic waste. 74 LIGHTWEIGHT AND PRACTICAL A partnership between Braskem and Cartonale, the largest producer of corrugated plastic solutions in Latin America, supplied Polypropylene (PP) panels to isolate the perimeter of Braskem’s new Technology and Innovation Center at the Triunfo Petrochemical Complex. Lighter and easier to handle, PP panels allow artwork to be printed directly onto the material, requiring no adhesives or paint. More resistant, they can also be used more than once, which makes the product more sustainable. Another advantage is that at the end of the useful life of the plastic panels, they are 100% recyclable. In addition, they will provide a more economical, convenient, and safe disassembly, since they require fewer people to be taken down and transported to other locations. FLOATING PANELS Since 2017 we have supported our client Ciel & Terre Brasil, a joint venture between the French company Ciel & Terre and the Brazilian company Sunlution, in the implementation of its solar energy generation technology using floating panels made with PE supplied by our known as Hydrelio®. The most recent project developed was the creation of a floating solar farm in the reservoir of the Sobradinho Hydroelectric Plant with an approximate area of 5 hectares (equivalent to five soccer fields) and capacity to generate 5MWp of energy. DESIGN CHALLENGE Created to introduce plastic to future architects and designers as a versatile and adaptable material, the Design Challenge has reached its sixth edition and provides students with a market development experience through two months of immersion and training with renowned professionals in the field. The winning team in 2018, from Centro Universitário Belas Artes in São Paulo, created an innovative and multifunctional water cooler from plastic, in partnership with Esmaltec. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER75 GOVERNMENT 103-2, 103-3, 201-4 Responsibility, integrity, and transparency are grant under Complementary Law No. 160/2017, the values that we practice in our daily lives and amount for 2018 was allocated to reserve for tax in relationships with all our stakeholders. Our incentives, pursuant to Art. 195-A of Law 6,404/76. operating model values open dialogue and commitment to ethical management. Since 2015, we have also obtained approval for our requests to reduce by 75% the income tax on earnings We have a tax incentive for ICMS (Value Added Tax on from our industrial units located in the states of Goods and Services) granted by the State of Alagoas Alagoas and Bahia. This incentive is granted by the through the State Integrated Development Program Superintendency of Development of the Northeast (PRODESIN), which assists in the state’s industrial (SUDENE) and has a 10-year term of enjoyment. In development, in consideration for the investment of 2018, we recorded a tax loss in our operations in Brazil, US$ 500 million made by Braskem in the new Alagoas and no deduction is possible in terms of tax incentive. PVC plant implemented in 2012 in the Marechal Deodoro Industrial District. This incentive is treated Considering financial operations, funding was obtained as a reduction of taxes levied upon sales and, in 2018, from a national government agency in 2016, financing the amount calculated was R$ 81.9 million. Since from a national public agency in 2018, and financing PRODESIN was recognized in 2018 as an investment with international public agencies in 2017 and 2018. Total tax incentives / credits* PRODESIN - ICMS (R$ million) SUDENE - income tax (R$ million) Total grants (R$ million) Grant - national agencies (R$ million) Total financing (R$ million) Financing - national government agencies Financing - foreign government agencies - ECAs (R$ million)** 2016 2017 2018 78.8 78.8 - 0.45 0.45 - - - 167.4 95.7 71.7 - - 420 - 420.4 81.9 81.9 - - - 1,732.1 0.45 1,731.7 * Tax incentives/credits: Tax incentives for ICMS, granted by the Government of Alagoas through the Integrated Development Program of the State of Alagoas - PRODESIN, and income tax granted by the Superintendency of Development of the Northeast - SUDENE ** ECAs - Export Credit Agencies: Financing incentivized by NEXI (Japanese ECA) Euler Hermes (German ECA) and SACE (Italian ECA). Financing granted in USD - For conversion purposes the exchange adopted was that on the date of entry of funds into the company’s cash account. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER76 HEALTH, SAFETY, AND ENVIRONMENT BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >77 GAP ASSESSMENT CRITERIA 8 - COP Throughout 2018, all of our units worldwide performed a process called gap assessment—a self-assessment to determine the points that needed to be improved to meet the basic requirements and evolution of performance indicators as defined by Intelius. This process was finalized in December 2018 and, based on this evaluation, each of the plants developed an action plan to be implemented according to their own schedule. The first audit cycles for evaluating the units will take place in 2019. HEALTH, SAFETY, AND ENVIRONMENT 103-2, 403-1, CRITERIA 11 - COP encouraging the collaboration of Members for continuous improvement of processes and company performance. The global nature of Intelius is its greatest highlight. Bringing together the best of each country in a single system, it is possible to eliminate redundancies and inconsistencies and create new mechanisms for Always looking for improvements in the safety, efficiency, sharing best practices among all Members, allowing for and sustainability of our production processes, communication on several subjects. The system also throughout 2018 we strived to implement our new establishes unified panels of indicators, which will be Integrated Management System—Intelius—which made available on an online platform. To increase the involves a set of guidelines and international best knowledge of Members, training was carried out on the practices aligned with our strategy of sustainability, Intelius modules, with 4,401 people being trained in 2018. continuous improvement, and globalization. With Intelius, previous systems no longer exist, but the Implementation started in the second quarter of 2018, implementation did not significantly impact routine and Intelius is now integrating SEMPRE’s EHS, Quality, and plant activities. Intelius acts as a provider of guidelines Industrial Excellence requirements—which since 2013 have on the necessary actions in the industrial areas—without helped us reinforce the culture of risk prevention based on restrictions on the form—thus allowing autonomy and discipline and respect for safety processes and procedures. independence in making operational decisions, providing Through Intelius, we will unify global best practices, greater simplification and integration. Intelius is currently always taking into account local requirements, thus organized into three vertical and two transverse pillars. HES Quality Industrial effectiveness Pillars are the Intelius modules based on current systems Performance Management Continuous Improvement & Good Practice Sharing Cross-cutting topics increase synergy and avoid redundancy between systems BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >78 OCCUPATIONAL HEALTH AND SAFETY 103-2, 103-3, 403-2, 403-9, 403-10, CRITERIA 9 AND 10 - COP Caring for the health and safety of our Members is an essential value for us. As part of our macro goals for sustainable development, we work to be among the Regarding the indicators, in 2018, the frequency were related to falling and stumbling during walking benchmarks in terms of health, operational, product, labor rate of accidents with and without lost time (CAF and climbing ladders. The same applies to the lost- safety and process safety in the global chemical industry, + SAF), considering Members and third parties per time injury frequency rate, considering Members and to annually advance in our goals and performance. million hours worked, presented a small increase of and Partners per million hours worked, with a 56% 4% over the previous year. Many of these events increase and with an 11% increase in severity rate. But, even with constant reinforcement and prevention work, in 2018, there were two occurrences related to occupational disease: an instance of worsening of hearing loss and a new case of illness related to exposure to external leakage. As part of the continuous improvement process, we continue to strengthen its global alignment and standardization for the identification, evaluation, and NUMBER OF ACCIDENTS X 1MM/MHW 2014 2015 2016 2017 2018 GOAL 2019 control of occupational diseases. In this sense, 12 global Accident frequency rate (SAF + CAF) 0.97 0.68 0.8 1.02 1.07 0,75 occupational health and hygiene standards have been developed in Intelius that will reinforce this strategy. It is worth noting that in 2018 we did not register any fatal accidents, either involving Members or contractors. In accident prevention, we continue to implement Accident frequency rate (CAF) Accident frequency rate (CAF) third parties 0.14 0.14 0.26 0.20 0.24 0.29 0.33 0.23 0.53 0.46 0 actions and campaigns related to human reliability, as Severity rate 12.53 47.38 179.03 35.33 183* well as the development of new global standards for occupational safety. We use a methodology called PUMA Number of fatal accidents (Perception, Unfitness, Motivation, Ability) for accident investigation associated with human behavior. Occupational disease frequency rate 0 0 0 0 1 0 0 0 0 0.12 * Increase in value compared to the previous year was due to the evolution of the gravity of a case occurred in 2018 certified after evolution and stabilization of the clinical state. Click here to view our HSE policy (Portuguese only). BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >79 OCCUPATIONAL SAFETY AND RISK MANAGEMENT 103-2, 403-2, 403-3, 403-4, 403-5 At Braskem, the aspects of occupational health and hygiene are part of the same area and same coordination. The objective is integration, since the risks mapped and controlled by one area are monitored by the other, through the health profile of the worker. In relation to the facilities, almost 100% of our units have medical care units in the work environment, facilitating access and surveillance of Members’ health. The exception is remote offices where we have between one and 10 Members. Management of health risks and occupational safety are also part of the management system. This element is composed of four global standards, one of which is specific to risk management. This standard defines the processes, including our risk matrix and actions for their reduction. In addition, other elements, such as process safety management, environment, personal safety, and occupational health and hygiene, address their specific risks. Each of these elements defines specific strategies for such management, such as audits, inspections, and international technical reference tools. The application of these tools is always done by qualified professionals, in the routine activities or otherwise, of Members and contractors. The risk identification process is carried out with the participation of qualified professionals, whether Members or contractors. In addition, it is part of our culture to maintain an open channel between professionals and the Health, Safety, and Environment team, which can be a way to communicate unidentified risks. Our Global HSE Guideline states that “every site or plant must ensure that Team Members are authorized to prevent any act or situation that is considered unsafe”—a requirement that helps protect all Members and contractors from potential occupational hazards. OUR RISK IDENTIFICATION PROCESS IS CARRIED OUT WITH THE PARTICIPATION OF QUALIFIED PROFESSIONALS HUMAN RELIABILITY Evaluating the minor incidents that occurred in 2018, we realized that many of them are associated with distraction and lack of concentration while performing routine activities. Therefore, we began to implement and invest in human reliability actions in all regions where we operate. Among the issues prioritized is mindfulness—the element needed to ensure safety in operations. The action plan for this project was designed throughout 2018, with training already done with Leaders and the creation of a Technical team responsible for work governance in the coming years. In 2019, training will begin in the production units. BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >PROCESS SAFETY 103-2, 103-3, 413-2 Critical to operations, safety in our production processes is the result of strong commitment—and continuous training— of the teams. Our process safety management prioritizes proactive indicators and is always in search of a culture of prevention. To this end, we have in place an ongoing risk analysis program in the industrial processes for improvement through the implementation of specific recommendations. Combat, emergency, and evasion plans are developed for accident scenarios, in line with risk studies. Regarding technical training, there are structured plans for training and retraining of Members on topics regarding process safety. TIER 1 2 3 Incident with loss of containment and release of product above cut-off point Incident with loss of containment, but release of product below cut-off point Incident with small loss of containment or system failure that could potentially lead to a process accident 80 Throughout 2018, five Tier 1 events were recorded (1 less than in the previous year), with a rate of 0.12 per million hours worked (14% less than 2017)—a number compatible with the best process safety benchmarks of companies in the U.S. chemical industry (0.34 is the average rate of U.S. companies in recent years). TIER 1 - No. OF EVENTS 2014 2015 2016 2017 2018 4 11 9 6 5 TIER 1 - FREQUENCY RATE 2014 0.09 2015 0.32 2016 0.22 2017 0.14 2018 GOAL 2019 0.12 0.12 TIER 1 - SEVERITY RATE 2014 0.25 2015 3.41 2016 0.68 2017 0.77 2018 0.30 BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >81 PRODUCT SAFETY 103-2, 103-3, 416-1, 416-2, 417-1, 417-2 Our assessment of impacts of products and services on health and safety is in line with our ongoing evolution with a focus on sustainable development. In this way, we have a constant process for evaluation and international benchmarking, which analyzes For Tier 2, we also see a downward trend, with 26 incidents recorded in 2018 (five less than the previous year). The accident rate per million hours worked fell from 0.74 to 0.60, a reduction of 19%. TIER 2 - NO. OF EVENTS 2014 2015 2016 2017 2018 49 40 37 31 26 TIER 2 - FREQUENCY RATE 2014 2015 1.13 1.17 2016 0.90 2017 0.74 2018 META 2019 our practices and seeks improvements. 0.60 O.60 In 2018, 100% of our products and services were analyzed for their impacts on health and safety. In addition, based on our annual audits at all plants, there were no events In Tier 3, we once again observed an increase in the number of occurrences of non-compliance regarding regulations or voluntary – a result of an improvement in the recording methodology and of the codes related to labeling or communication. We point commitment of the Members to reporting any type of deviation that could out that our labels are reviewed and updated periodically cause a loss of primary containment, in order to reduce minor events. Risk Rating Even though we do not have a target for this indicator, in 2018, we advanced in Risk Rating results. Today all of our plants already meet the international level of “Standard,” and half are at the “Above Standard” level. and comply with global health and safety policies and guidelines, and with the six GHS labeling elements. We also partner with key stakeholders (including ABIQUIM10, ACC11, Plastics Industry Association, and Plastics Europe) to recognize and mitigate risks associated with the In addition, we improved and made available to stakeholders use of products for people and the environment, and all Data Sheets and Material Safety Data Sheets (MSDSs) promote the benefits to our society. In Brazil, we are of our products, in accordance with the applicable contributing to the development of the future Brazilian laws. With increased knowledge of end-use products Chemical Safety Regulation, in addition to advocating and applications, we have been able to meet national for regulatory legislation and its gradual implementation, and international regulatory approvals and enter new which will bring the country a better understanding of markets, ensuring safety to our clients and business. the risks and benefits that encompass chemicals. 10 Associação Brasileira da Indústria Química (ABIQUIM) - Brazilian Chemical Industry Association 11 American Chemistry Council - ACC BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >82 TYPE OF EXPENDITURE (R$ MILLION) 2016 2017 2018 INVESTMENTS AND GAINS IN ENVIRONMENTAL PROTECTION 103-2, 103-3 Our strategy toward the development of increasingly sustainable products and solutions begins with a concern for safety and with our production methods. To this end, we have annual goals and variable investments according to the needs of each plant, region, schedules of maintenance shutdowns, recertification, and business strategy, among others. In 2018 the amounts invested in these initiatives increased by almost 30% compared with 2017, showing our focus on improvements in aspects of HSE, where total spending increased almost 14%. Investments in HSE Expenditure on treatment of effluents and waste Management of emissions Environmental licenses Depreciation Provision for recovery of environmental damages (environmental liabilities) Other environmental management costs Workplace safety Process safety Health Environment Total Treatment of liquid effluents Waste management Total 51.4 25.9 2.8 23.8 103.9 51.1 55.3 106.4 7.9 1.0 46.0 182.6 59.7 7.5 87.6 3.9 13.1 112.1 52.6 57.2 109.8 8.8 1.0 46.0 102.5 48.9 16.5 113.3 5.6 10.2 145.4 60.1 82.0 142.1 6.7 1.1 46.0 89.4 57.9 BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >83 Monitoring of costs avoided through improvement projects is also part of HSE management. In 2018, events internal and external to the company negatively impacted our avoided costs, mainly in our production was below plan. It is worth eco-indicators that, in aggregate, did not noting that our energy consumption reach the goals, generating additional is predominantly of thermal origin, so expenses instead of savings, when projects involving improvements in energy compared to the target established for the efficiency also have a positive impact year. Compared with the historical data on emissions and on avoided costs. from the beginning of Braskem in 2002, we observed an evolution in general. Braskem, in the continuous improvement of its indicators, reformulated its These events include the incident in the methodology to calculate and present electric substation of the Chlor-Alkali avoided costs to establish an economic plant in Alagoas, the truck drivers’ strike valuation parameter based on the in Brazil—which generated problems with improvement of socioenvironmental inflow and outflow of products and inputs indices, considering 2002 as a baseline, the and reduced production—and a blackout year the company started its operations. in Northeast Brazil. Due to these factors, As shown in the following table, the costs avoided since the year we went into operation (2002) until 2018 were US$ 2,768,984,399.00 for all operations in Brazil, Germany, the United States, and Mexico. OUR STRATEGY STARTS AT A CONCERN WITH THE SECURITYBRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >84 WE WORK TO ENSURE A PROCESS FOR IMPROVEMENT TO BE CONTINUED IN OUR INDICATORS COSTS AVOIDED - MANAGEMENT OF HEALTH, SAFETY, AND ENVIRONMENT DIMENSION (R$ MILLION) 2002 TO 2014 2015 2016 2017 2018 2002-2018 Workplace safety 42,570,000 6,150,000 5,030,000 5,850,000 5,640,000 65,240,000 Safety Process safety 2,164,384 - 7,397,260 4,684,932 1,260,274 1,903,968 2,616,297 Waste generation 171,086,342 24,876,883 25,897,298 27,951,463 25,184,154 274,996,142 Water consumption - 11,484,509 1,949,138 4,930,722 4,021,398 - 3,180,674 - 3,763,926 Environment Effluent generation 64,428,893 9,623,867 10,962,052 12,441,199 9,625,041 107,081,052 Energy consumption 979,395,109 179,879,004 228,210,998 198,391,572 127,833,979 1,713,710,661 GHG emissions 285,510,718 79,183,714 58,699,075 116,243,528 69,467,138 609,104,173 TOTAL 1,533,670,936 294,265,345 338,415,078 366,159,433 236,473,607 2,768,984,399 BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >85 WATER EFFICIENCY 103-2, 103-3, 303-1, 303-2, 303-3, 303-4, 303-5, 306-1 Aware of the importance of responsible use of water with strategic areas of the company to obtain accurate and resources and of our role as a benchmark in the global qualified information on extreme climate events related to chemical industry, the company’s water processes water. In tandem with this research, an analysis of the future are integrated into the management of business risks through the Enterprise Risk Management (ERM) platform. Our primary use of water occurs across the projections related to the climate was made, considering the scenarios defined by INPE12 , IPCC13 , and WRI14 until 2040. Based on the survey of historical data and future projections, production process of our 41 industrial plants, mainly all risks and opportunities related to water were prioritized. for cooling systems, steam generation, consumption in processes and products, and disposal of effluents. It is worth mentioning that since 2017 we have developed action plans for all the plants located in high-risk river We draw water from different sources, including surface basins (four Brazilian river basins). These plans consider water, groundwater, and third-party sources (including alternatives such as water reuse and desalination, reuse). Given the nature of our operations, we are legally including evaluations of partnership with local sanitation obliged to monitor our liquid discharges (parameters companies and, depending on the location, a partnership such as pH, temperature, sediments, oils, floating with other businesses. We also monitor 100% of our supply materials, and hydrocarbons, among many others). chain, which is encouraged to report impacts that may indirectly affect us (for example, disruption in production). To identify, assess, and respond to water-related risks in our Where necessary, suppliers receive individual support to direct and value chain stages, the Sustainable Development identify potential opportunities for collaborative actions team worked with focal points of all industrial plants and and to develop action plans to address the risks. 12 Instituto Nacional de Pesquisas Espaciais (Inpe) 13 Painel Intergovernamental sobre Mudanças Climáticas (em inglês, Intergovernmental Panel on Climate Change - IPCC) 14 World Resources Institute GLOBAL HIGHLIGHT CRITERIA 18 - COP We presented our water case at the SDGs in Brazil Global Compact event - The Role of the Private Sector, held in September 2018 in New York, in parallel programming to the UN General Assembly. The selected cases were chosen after the evaluation of 80 registered cases, in a process conducted by a panel of independent jurors, based on criteria created by PwC. Our water case was also selected as a highlight for the global 10-year celebration event of the CDP Supply Chain in Las Vegas in February 2019, and is globally recognized as one of the best initiatives. BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >MANAGEMENT OF CONTAMINATED WATER We have in place a robust management of contaminated areas, with guidelines in our integrated management system that provide for preventive and corrective management of environmental liabilities. With goals and results directly monitored by the company’s senior management, the industrial units work with a focus on prevention of liabilities and, should they occur, investigation and treatment, always seeking the best technical solution. To carry out cross-cutting management of the topic, a group of specialists was created. They convene periodically to discuss specific aspects, such as supplier assessment, new projects, preventive actions to liabilities, legislation, new techniques, internal and external benchmarking to learn about the systems for prevention and remediation, and creation/revision of technical standards on contaminated areas. WATER CONSUMPTION AND EFFLUENT GENERATION We monitor our water consumption and reuse on a monthly basis through specific eco-efficiency indicators, relating consumption to the volume of products produced and marketed, and a reuse indicator that correlates the volume of reclaimed water consumed with the total volume of water consumed by the organization. Thus, in 2018 water consumption was 4.28 m³/t, up 7.5% over the previous year and 5.1% above the target established for the year. In absolute numbers, we consumed 75.7 billion liters (megaliters) of water in its production processes. 86 WATER CONSUMPTION (M3/T) 2002 4.14 ... 2014 2015 2016 2017 2018 GOAL 2019 4.16 4.05 3.93 3.98 4.28 4.09 Some of our units receive or withdraw water and distribute it to other companies (not all owned by us). Therefore, consumption will normally be lower than withdrawal. In 2018, the company’s water withdrawal profile was: SOURCE Volume (megaliters) SURFACE WATER GROUNDWATER SEA WATER PRODUCED WATER ACQUIRED WATER (THIRD PARTY) 20.7 4.2 0 0 54.2 Regarding effluents, all units have pre-defined standards for discharge in accordance with local legislation and formal internal procedures, reporting discharge precautions, and standards for disposal, among others. Some plants have laboratories capable of analyzing the effluents they generate. These laboratories also develop internal standards for environmental quality assessment. Each region where we operate has its own characteristics, as well as substances of interest regarding the composition of the effluents. These substances are listed in specific legislation or in the operating licenses. Our eco-efficiency in generation of liquid effluents was 1.19 m³/t, down 12.3% over 2017 and 6.2% above the target established for 2018. Generation of effluents totaled 21 billion liters (megaliters) in 2018. EFFLUENT GENERATION (M3/T) 2002 1.94 ... 2014 2015 2016 2017 2018 GOAL 2019 1.28 1.15 1.11 1.06 1.19 1.12 BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >In 2018, we or the treatment units that receive our effluent, discharged, after treatment, into the following receiving bodies: SURFACE WATER GROUNDWATER (MEGALITERS/ YEAR) OCEAN (MEGALITERS/ YEAR) THIRD PARTY (FOR USE) (MEGALITERS/ YEAR) OTHER(1) (MEGALITERS/ YEAR) 7.3 0 9.5 0.1 4.1 1Final disposal on the ground in the units of Southern Brazil. The major impacts on these results were, in addition to internal and external events (such as truckers’ strike and blackout in Northeast Brazil), scheduled and unplanned shutdowns, higher temperatures and worsening water quality, increasing consumption of water and purges in cooling towers. Part 1 Part 2 Click here for more information on our water consumption and effluent generation. 87 RESPONSIBLE OPERATION Per CDP, we are again among the 126 companies included on the Climate A list and among the 27 companies on the Water A list. Throughout the world, we are among the 16 companies that have achieved the maximum classification in both categories, of which only two are Brazilian. Three are in the global chemical sector. CDP is a non-profit organization that selects the best publicly traded companies in the world in relation to managing greenhouse gas emissions, water consumption, and use of forests. The responsible use of water and the search for innovative solutions to preserve it are part of our macro goals for sustainable development. Read about some of our main initiatives: Sewage treatment CRITERIA 18 - COP We are one of the supporters of the Mogi+Água project, carried out by the Trata Brasil Institute and the Municipal Department of Agriculture of the Municipality of Mogi das Cruzes, in São Paulo (Brazil). With technology developed by one of the startups of the Braskem Labs program to reduce sewage and generate water to irrigate plants and clean floors, the goal of the project is to install portable sewage treatment plants on rural properties in the municipality. The idea is also to promote the quality of rivers and streams in the region of Mogi. To this end, rural properties in the district of Cocuera will be the first beneficiaries, since it is the entrance of the Tietê River basin in the city. BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< > 88 Less Loss More Water movement CRITERIA 18 - COP An initiative of the Brazil Network of the UN Global Compact, led by us with Sociedade de Abastecimento de Água e Saneamento of Campinas (Sanasa) and Schneider Electric, the Less Loss More Water movement seeks to obtain a commitment from public agents to improve water management and the urban distribution system in the country. Throughout 2018, the movement was present at several important events in Brazil and abroad, such as the 8th World Water Forum, the annual meeting of the UN Global Compact in New York, and Rio Water Week. Less Loss More Water has also released an update on the situation of losses in potable water distribution systems in Brazil. The work, conducted in partnership with the Trata Brasil Institute, was highlighted in the media. The year also marked the creation of bylaws for the movement, the formation of the first council, and the expansion in the number of leading companies. Reuse In 2018, 26.3% of the total water consumed in our operations came from reuse processes, 16.0% of which resulted from process improvement (effort) and 10.3% from the original operation of the plant (born with the project of the plant). In 2018, we avoided consumption of 20.4 billion liters of water from springs as a result of reuse projects. The numbers have remained stable in recent years, but there is growth potential in the future because of water security projects in the Southeast and Northeast of Brazil. TYPE OF REUSE 2014 2015 2016 2017 2018 Process improvements(1) 17.2% 15.6% 16.2% 16.6% 16.0% Inherent reuse(2) 11.0% 9.5% 8.3% 10.4% 10.3% Total 28.2% 25.1% 24.5% 25.8% 26.3% 1 Reuse of process improvements is any reuse originating from modifications in the current units, including or improving processes. 2 Inherent reuse is any use that was born with the industrial unit and is part of the original process of the plant. The number for the previous year is always used given the complexity to generate the number. AQUAPOLO A partnership between Sabesp (São Paulo State Basic Sanitation Company) and BRK Ambiental, the Aquapolo project helps transform treated sewage into reuse water for industrial activities. With capacity to produce 1,000 liters/second of reuse water, it is considered the largest project in the sector in South America and the fifth largest in the world. In all our units in the ABC region, in Greater São Paulo (Brazil), we are already using 97% reuse water in our operations—a project so relevant that it allowed us to maintain our normal activities even during the severe drought that hit the Southeast region of the country in 2015. *Regiões de estresse hídrico BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< > ENERGY EFFICIENCY 103-2, 103-3, 302-1, 302-3, 302-4 We continuously seek solutions that help improve efficiency and reduce energy consumption in our production units—from an environmental and economic standpoint. In 2018, our energy consumption was 10.94 GJ/t, an increase of 3.1% over 2017 and 2.9% above the target established for the year. As in our water efficiency results, events such as the incident in the electric substation of the Chlor-Alkali unit in Alagoas, the truck drivers’ strike in Brazil, the blackout in the Northeast of the country, and planned and unplanned shutdowns had a significant impact on failing to reach the target. 89 ENERGY CONSUMPTION (GJ/T) 2002 11.90 ... 2014 2015 2016 2017 2018 10.74 10.49 10.25 10.56 10.94 GOAL 2019 10.47 INITIATIVES FOR PROCESS IMPROVEMENTS ECONOMIC GAIN (R$ MILLION) REDUCTION IN ENERGY CONSUMPTION (GJ)* Improvements in production processes (except furnaces) and sale of electricity 35,782,578.17 1,340,059 Furnace optimization 34,389,621.81 Reduced steam consumption 24,145,895.37 Improvements in boilers and turbines 6,422,638.60 TOTAL 100,740,733.95 878,698 207,807 192,153 2,618,717 *The calculation methodology considers the total GJ consumed divided by the total tonnage produced. The reduction in energy con- sumption is a result of improvements in the ratio of products per consumption of GJ in the historical series. BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >90 ENERGY MATRIX Among factors influencing our energy matrix, in 2018 we had an increase in consumption of natural gas due to the greater use of ethane as feedstock in Bahia, as well as greater consumption in Mexico. Regarding external fuels, we had an increase in the consumption of coal in the Químicos 2 plant - Rio Grande do Sul. PERCENTAGE OF CONSUMPTION BY TYPE OF ENERGY PER TOTAL CONSUMPTION Electric Natural gas Other external fuels (mainly oil and coal) Residual fuels from the petrochemical process 2014 10.2% 13.0% 5.2% 2015 9.0% 16.0% 5.5% 2016 9.0% 20.0% 6.0% 2017 9.9% 22.4% 4.7% 2018 9.1% 24.0% 6.7% 71.6% 68.8% 65.0% 62.9% 60.2% PERCENTAGE OF CONSUMPTION OF RENEWABLE ELECTRIC ENERGY PER TOTAL ENERGY CONSUMPTION PERCENTAGE OF RENEWABLE ENERGY CONSUMPTION PER TOTAL ENERGY CONSUMPTION 2015 2016 2017 2018 Renewable electric energy (%) 68% 73% Renewable electric energy (self-declared) (%) - - 76% 83% 74% 81%* *Some processes for obtaining self-declarations are still ongoing. 2014 2015 2016 2017 2018 7.17% 8.26% 7.44% 7.60% 7.11% To calculate the percentages of renewable energy, we considered the hydrogen burned from the Chlor-Alkali electrolysis as renewable and considered the percentage of renewable electric energy in the matrix of each country. BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >91 WASTE MANAGEMENT 103-2, 103-3, 301-2, 301-3, 306-2 The correct management of our waste and the increasing investments in renewable raw materials are initiatives already integrated into our operating strategy. Thus, monthly we monitor these numbers through eco-efficiency indicators that relate the volume of waste generated with the quantity of products produced and marketed. Therefore, we work to increase reuse in our industrial units every year by means of return of flows — the equivalent of internal recycling—in addition to investments that in the future will enable us to perform energy and chemical recycling. RENEWABLE AND EFFICIENT Among the initiatives to be an increasingly efficient and modern company in energy generation, in 2018 we kicked off two large renewable generation projects that will start operating between 2019 and 2021. The first was a commitment to enable the expansion of EDF Renewable’s wind farm in Bahia. The new renewable energy park, located in the municipality of Campo Formoso, 350 km northwest of Salvador, will help put Bahia among the leaders in the wind energy sector in the coming years. To enable this expansion, we have committed to purchase wind energy from this park for 20 years, a move that will reduce the amount of CO2 emissions by 325,000 tons over the term of the agreement. . Another project involves our joint investment with Siemens, of approximately R$ 600 million, in the modernization of our plant’s electricity system at the ABC Petrochemical Complex in São Paulo. The project, which will reduce electricity consumption and CO2 emissions, foresees the replacement of steam turbines with high-efficiency electric motors, supported by new cogeneration of energy fueled by residual gas from the petrochemical production process. In order to enable the investment in the new cogeneration plant, we signed a 15-year contract with Siemens in the Build, Own and Operate modality. In addition to providing greater safety and reliability to the processes, with this retrofit, we estimate a reduction in energy consumption equivalent to that of a city with a population of 1 million. The investment started in 2019 and its completion is expected in 2021. BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >We work with strict targets for total waste generation (hazardous and non- hazardous), defined and adjusted annually for a period of five years. In 2018, generation was 2.13 kg/t, 2.5% above the target, but in line with the results of 2017. In 2018, destination by type of waste was carried out as follows: 92 WASTE GENERATION (KG/T) 2002 7.78 ... 2014 2015 2016 2017 2018 GOAL 2019 2.30 2.01 2.16 2.13 2.13 2.29 The waste generated was disposed of as follows: 2014 2015 2016 DISPOSED WASTE (t) Recycling Recovery (including energy) 7,930 5,424 Sanitary and industrial landfills 21,493 On-site storage Incineration Reuse Composting Underground waste injection Other* TOTAL 748 20,408 238 662 7,960 5,000 69,863 4,628 3,975 2,804 1,859 1,713 739 274 0 3,700 19,692 7,371 7,247 9,146 1,303 8,423 482 475 1,931 17,022 2017 6,830 6,370 8,980 455 8,199 505 299 1,756 5,258 1 Other: autoclaving, vacuum thermal desorption of mercury, co-processing of waste in rotary clinker kilns for the production of ce- ment, soil decontamination by thermal desorption 53,400 38,652 DESTINATION1 Hazardous waste (t/year) Non-hazardous waste (t/year) Recycled Reuse (reclaim) Composting Recovery (including energy) Incineration Underground injection Sanitary and industrial landfills Temporary internal storage Other2 2018 6,092 275 259 1,321 865 899 12,341 48 73 2018 1,639 182 134 2,034 7,123 - 3,649 1,212 4,755 ¹ We had adjustments to our waste data reporting methodology to better qualify the information and increase transparency, thus initiating the detailed reporting from 2018. ² Other: autoclaving, vacuum thermal desorption of mercury, co-processing of waste in rotary clinker kilns for the production of cement, soil decontamination by thermal desorption. 2018 7,731 3,355 15,990 1,260 7,988 457 392 899 4,829 42,901 BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >93 FOR THE EIGHTH CONSECUTIVE YEAR, WE OBTAINED THE CLASSIFICATION IN THE GOLD CATEGORY OF THE BRAZILIAN GHG PROTOCOL PROGRAM. 90% 95% 97% 100% 81% 66% 65% 81% 90% 95% 97% 100% s n o i t c a e h t f o t n e m l l i f l u F 100% 80% 60% 40% 20% 0% % Executed Braskem In line with this strategy, since 2008 we have been part of the Global Compact’s Brazilian Network Committee and, since 2013, of the Global Compact’s LEAD group, and are part of the initiatives of UNIDO’s Green Industry Platform and of the Global Compact’s Caring for Climate. In addition, we assumed the coordination of the Technical Group on Energy and Climate of the Brazilian Network of the UN Global Compact in 2017, and we have participated in a business platform created by the Center for Sustainability Studies of the Getúlio Vargas Foundation (FGV): Companies for the Climate. CLIMATE CHANGE 103-2, 103-3, 201-2, CRITERIA 18 - COP Actions for mitigation of and adaptation to climate PLAN TO ADAPT TO CLIMATE CHANGE change have always been part of our strategy, and are a In 2018, the implementation of actions to mitigate climate commitment in our goals for sustainable development. risks occurred according to plan, highlighting the evaluation To be among the world’s best chemical industries in of the effectiveness of 100% of these actions in the terms of greenhouse gas (GHG) emissions intensity, calculation of residual risk, thus ensuring that potential we have made a lot of efforts to develop effective high-risk threats are eliminated. Our plan foresees 2018 2019 2020 2021 2022 2023 actions that bring real solutions, such as the use the implementation of 100% of all actions by 2023. of renewable raw materials, development of new products, and practices such as carbon pricing. WE WERE SELECTED FOR THE SEVENTH CONSECUTIVE TIME TO INTEGRATE THE PORTFOLIO OF THE CARBON EFFICIENT INDEX (ICO2) OF B3 (BRAZIL). BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< > 94 Of the potential climate risk scenarios, we identified 61 potential high-risk threats to the business, 39 in Brazil, 16 in Mexico, and six in the United States. With our management efforts, in 2018 these numbers had already been reduced to 51 potential high-risk scenarios. Our goal is to reach zero by 2023. INDICATOR OF EFFECTIVENESS IN MANAGEMENT OF POTENTIAL RISKS High Risk – Braskem Expected High Risk - Braskem High Risk - Chemical and Vinyls Expected High Risk - Chemical and Vinyls 61 51 15 13 s t a e r h T k s i R - h g H i 32 8 20 5 12 3 7 1 2017 2018 2019 2020 2021 2022 2023 Our goal is to get to zero by 2023! CARBON PRICING Part of our decision strategy for investments since 2016, we have an internal evaluation process (shadow pricing method) that supports our decisions on investment portfolio. A result of a commitment proposed by the World Bank and adopted by us during the UN Climate Summit. The process is being used in 100% of the operations in Brazil: Between 2016 and 2018, 51 projects used the methodology, and of these, 37 impacted the reduction of GHG emissions. Scope 216 emissions are lower than last year, mainly due to a reduction of approximately 20% in the average CO2 emission factor of the Interconnected System in Brazil in 2018 compared to 2017, reaching 802,590 tCO2e. We seek from ours electricity suppliers to obtain self- declarations for the purchase of renewable energy, which in 2018 were audited by an independent third party, to reduce Scope 2 emissions from part of the energy acquired that is obtained by bilateral agreements. GHG EMISSIONS INVENTORY 305-1, 305-2, 305-3, 305-4, 305-5, 305-6 Our corporate emissions inventory considers all Scopes 1, 2, and 3 categories in 100% of the operations. In 2018 there was an increase (0.31%) in our Scope 115 emissions due to an increase in primary energy consumption in our operations, driven by internal technical factors, such as unplanned operational shutdowns, and external factors, such as the truck drivers’ strike in Brazil and power outage events in the Northeast region of Brazil. The total Scope 1 emissions was 10,214,251 tCO2e. GHG EMISSIONS (SCOPES 1 AND 2) - ktCO2e 959 874 1,088 1,077 1,038 1,073 802 2% 10,199 9,743 9,384 9,140 10,727 10,183 10,214 2008 2013 2014 2015 2016 2017 2018 Scope 1 Scope 2 15 Direct GHG emissions 16 Indirect emissions from the purchase of electricity BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< > 95 0.6% 0.6% 0.2% 0.1% The increase in our Scope 1 emissions, coupled with lower production compared to 2017 (approximately 10% reduction) and driven by the above mentioned internal and external events, led to an increase of our Scope 1 and 2 emission intensity indicator in 2018. This increase could have been greater if we had not implemented initiatives to mitigate emissions, among which are projects to switch energy sources for less carbon-intensive alternatives and recovery/energy efficiency in operations. CARBON INTENSITY (SCOPES 1 AND 2) - tCO2e/t 0.721 0.630 0.604 0.641 0.573 0.609 6% GHG EMISSIONS (SCOPE 3) 9.8% 7.4% 26.9% 4.1% 3.9% 1.6% CARBON INTENSITY (SCOPE 1) - tCO2e/t 2008 2014 2015 2016 2017 2018 0.659 0.564 0.540 0.585 0.519 0.565 9% Scope 317 emissions also increased, mainly due to an increase in the scope of reporting products sold under Category 11 - Use of Products Sold and Category 10 - Processing of Products Sold. In 2018, our Scope 3 totaled 24,009,000 tCO2e, with Categories 1, Goods and Services Purchased, 10 and 11 being the most representative: 2008 2014 2015 2016 2017 2018 17Other indirect GHG emissions 41.5% 0.0% Category 1 = 9,968.8 mil tCO2e Category 15 = 142.2 tCO2e Category 10 = 6,459.7 mil tCO2e Category 2 = 134.1 tCO2e Category 11 = 2,364.0 mil tCO2e Category 5 = 59.4 tCO2e Category 12 = 1,773.5 mil tCO2e Category 9 = 1,137.3 mil tCO2e Category 4 = 992.9 mil tCO2e Category 3 = 940.1 mil tCO2e Category 7 = 29.3 tCO2e Category 6 = 7.2 tCO2e Category 8 = 0.7 tCO2e BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >96 CARBON CREDITS IN THE FLEET OF CORPORATE VEHICLES Since 2011 we have carried out an inventory of Scope 3 GHG emissions (indirect emissions), with a significant evolution of the chain’s engagement and identification of initiatives to reduce these emissions. With support from Ticket Log, in 2017 we joined an initiative to generate carbon credits through the replacement of gasoline with ethanol in our fleet of corporate vehicles and became eligible for the monitoring phase in 2018, upon fueling with ethanol at a percentage higher than required (95.46%). In the second half of the same year, we requested the issue of carbon credits, expected to be issued in the first half of 2019. EVOLUTION OF ETHANOL SUPPLY INDICATOR FOR THE FLEET 98% 99% 99% 99% 98.41% 96.12% 96.93% 97.00% 96% 95% 94.88% 93.90% Sep 17 Oct 17 Nov 17 Dec 17 Ethanol Goal ENGAGEMENT OF THE SUPPLY CHAIN In 2018, we proceeded with the process to engage critical Suppliers regarding climate change, achieving results that increase the chain’s resilience to mitigate and adapt: presentation of initiatives to reduce emissions, reporting of targets to reduce emissions, and Suppliers that are already cascading the engagement to their own partners, all of this voluntarily. We have encouraged Suppliers to join the Action Exchange within the CDP Supply Chain, a free consultancy to identify opportunities to reduce costs, emissions, and energy consumption in their processes. In 2018: 61% of engaged Suppliers reported initiatives to reduce emissions 46% of engaged Suppliers reported targets 44% of Suppliers engaged their suppliers 140 Suppliers invited by us answered the climate questionnaire in 2018 (66.5% of the total Suppliers invited) BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >97 OTHER EMISSIONS 305-7 In addition to greenhouse gas emissions, we manage other air emissions, such as ozone-depleting substances and pollutants from fuel combustion, such as NOX and SOX, among others. We have also been replacing depleting substances with other substances not on the Montreal Protocol list. The higher consumption of coal in Southern Brazil explains the increase in emissions of NOX, SOX, and particulate matter. In any case, these emissions are within the legal standards applied to units that consume coal. EVOLUTION OF EMISSIONS OF SOX, NOX, AND OTHER SIGNIFICANT SUBSTANCES (TONS) EMISSIONS 1 2014 (t) 2015 (t) 2016 (t) 2017 (t) 2018 (t) NOX SOX Volatile organic compounds Particulate matter Toxic air pollutants(3) 11,421 11,509 3,881 1,225 97 9,546 4,503 3,808 911 6522 9,651 3,137 6,139 860 531 10,509 3,779 6,811 911 677 10,122 4,870 8,890² 1,289 595 EVOLUTION OF EMISSION OF OZONE-DEPLETING SUBSTANCES (ODS) ODS 2014 (t) 2015 (t) 2016 (t) 2017 (t) 2018 (t) 6,190 Other(4) 14,495 1 The methodologies used are recommended by the local environmental agencies. Where no measurements are taken, estimates (emission factors) based on recognized methods, such as AP-42 from the USEPA, are used. 2 Plants have been increasing their assessments. This explains the increase in these parameters. 3 Includes toxic air pollutants and PAHs. 4 Includes total hydrocarbons and carbon monoxide. 4,746 4,145 7,078 Tons of CFC-11 equivalent 48.6 55.3 3.0 1.7 2.9 Click here and leave your opinion about the content you just read. Answer just six multiple choice questions to help us to continually improve this report. 18 Ozone depletion refers to a decline in the total volume of ozone in the Earth’s stratosphere (the ozone layer). BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER< >98 GRI CONTENT INDEX < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER99 Global Compact Principles 10 10 GRI Standard Disclosure Page and/or answer Global Compact Principles GRI Standard Disclosure Page and/or answer GRI CONTENT INDEX 102-55 GENERAL DISCLOSURES 102-1 - Name of the organization 102-2 - Activities, brands, products, and services 102-3 - Location of headquarters 102-4 - Location of operations 7 7 107 7 102-5 - Ownership and legal form 102-6 - Markets served 102-7 - Scale of the organization 102-8 - Information on employees and other workers 102-9 - Supply chain GRI 102: General Disclosures Braskem was formed in August 2002 by the merger of six Odebrecht Group companies and the Mariani Group. We are a publicly traded corporation with several industrial units in Brazil, the United States, Germany, and Mexico (through a joint venture with Idesa). Go to http://www.braskem-ri.com.br/ ownership-structure for more details. 7 7 52 30, 66 102-23 - Chair of the highest governance body 6 GRI 102: General Disclosures 102-14 - Statement from senior decision-maker 102-15 - Key impacts, risks, and opportunities 102-16 - Values, principles, standards, and norms of behavior 102-17 - Mechanisms for advice and concerns about ethics 102-18 - Governance structure 4 22 19, 22 19, 22, 29 19 The Chairman of the Board of Directors of Braskem is not the executive director of Braskem. Pursuant to Article 19, Sole Paragraph of the company’s bylaws, “The position of Chief Executive Officer and Chairman of the Board of Directors may not be cumulatively held by the same person, unless otherwise provided for in the Regulation.” Regulation = B3 Level 1 Listing Regulation. Members (including company Leaders), Financing Institutions, Clients, Suppliers, Academia, Local Audiences (NGO, Community, Trade Entities), Opinion Formers (Government, Press), and General Public. Go to www.braskem.com.br/ material-issues-assessement for more details. 102-40 - List of stakeholder groups 102-41 - Collective bargaining agréments 55 3 102-42 - Identifying and selecting stakeholders The identification and selection of our stakeholders for engagement was based on the groups that play the role of influencers, enablers, impactors, and beneficiaries in the relationship with the company. Go to http://www.braskem.com. br/material-issues-assessement for more details. 102-10 - Significant changes to the organization and its supply chain There was no significant change in the reporting period. 102-11 - Precautionary Principle or approach As a principle and in accordance with the Health, Safety, Environment, Quality and Productivity Policy, Braskem does not produce, handle, use, market, transport, or dispose of any product if it cannot do so safely with a minimum impact of the product on the environment. It should be noted that Braskem does not produce or market products derived from genetically modified organisms (GMOs) or products containing GMO ingredients, whether in Brazil or abroad. 102-12 - External initiatives 102-13 - Membership of associations 7, 15 7, 15 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER100 Global Compact Principles 7 6 6 GRI Standard Disclosure Page and/or answer Global Compact Principles GRI Standard Disclosure Page and/or answer 102-43 - Approach to stakeholder engagement 102-44 - Key topics and concerns raised 102-45 - Entities included in the consolidated financial statements 102-46 - Defining report content and topic Boundaries 102-47 - List of material topics 102-48 - Restatements of information GRI 102: General Disclosures 102-49 - Changes in reporting www.braskem.com.br/ material-issues-assessement www.braskem.com.br/ material-issues-assessement 30 www.braskem.com.br/ material-issues-assessement www.braskem.com.br/ material-issues-assessement There was no significant change in the reporting period. There was no significant change in the reporting period. 102-50 - Reporting period January 1 to December 31, 2018. 102-51 - Date of most recent report 102-52 - Reporting cycle 102-53 - Contact point for questions regarding the report 2018 Annual 107 102-54 - Claims of reporting in accordance with the GRI Standards This report was prepared in accordance with the GRI Standards: Core option 102-55 - GRI content index 99 102-56 - External assurance MATERIAL TOPIC ECONOMIC PERFORMANCE Macro objectives: Economic-financial results GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach The external assurance, carried out 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. www.braskem.com.br/ material-issues-assessement 31 31 201-1 - Direct economic value generated and distributed GRI 201: Economic Performance 201-2 - Financial implications and other risks and opportunities due to climate change 201-4 - Financial assistance received from government MARKET PRESENCE Macro objetive: Local Development GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components GRI 202: Market Presence 103-3 - Evaluation of the management approach 202-1 - Ratios of standard entry level wage by gender compared to local minimum wage 202-2 - Proportion of senior management hired from the local communityl INDIRECT ECONOMIC IMPACTS Macro objetive: Local Development GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 203: Indirect Economic Impacts 203-1 - Infrastructure investments and services supported PROCUREMENT PRACTICES Macro objetive: Local Development GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach 36 93 75 www.braskem.com.br/ material-issues-assessement 49 52 53 52 www.braskem.com.br/ material-issues-assessement 56 56 56 www.braskem.com.br/ material-issues-assessement 66 66 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERGRI Standard Disclosure Page and/or answer Global Compact Principles GRI Standard Disclosure Page and/or answer 66 Macro objective: Energy efficiency ENERGY GRI 204: Procurement Practices 204-1 - Proportion of spending on local suppliers ANTI-CORRUPTION Macro objetive: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components www.braskem.com.br/ material-issues-assessement 22, 28 28 22 103-3 - Evaluation of the management approach 205-2 - Communication and training about anti-corruption policies and procedures GRI 205: Anti-corruption 205-3 - Confirmed incidents of corruption and actions taken There were no confirmed cases of corruption in the period. ANTI-COMPETITIVE BEHAVIOR Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach www.braskem.com.br/ material-issues-assessement 22, 28 28 GRI 206: Anti- competitive Behavior MATERIALS 206-1 - Legal actions for anti-competitive behavior, anti-trust, and monopoly practices Nothing to report. Braskem does not have any process of this nature. Macro objective: Renewable Resources GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components GRI 301: Materials 103-3 - Evaluation of the management approach 301-1 - Materials used by weight or volume 301-2 - Recycled input materials used 301-3 - Reclaimed products and their packaging materials 28 91 91 7, 10 61, 91 61, 91 GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 302: Energy 302-1 - Energy consumption within the organization 302-3 - Energy intensity 302-4 - Reduction of energy consumption WATER Macro objective: Water efficiency GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 303: Water 303-1 - Interactions with water as a shared resource 303-2 - Management of water discharge-related impacts 303-3 - Water withdrawal 303-4 - Water discharge 303-5 - Water consumption BIODIVERSITY Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach www.braskem.com.br/ material-issues-assessement 89 89 89 89 89 www.braskem.com.br/ material-issues-assessement 85 85 85 85 85 85 85 www.braskem.com.br/ material-issues-assessement 76, 82 82 10 10 7, 8 8 8 101 Global Compact Principles 7, 8 8 8, 9 7, 8 8 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERGRI Standard Disclosure Page and/or answer Global Compact Principles GRI Standard Disclosure Page and/or answer 304-2 - Significant impacts of activities, products, and services on biodiversity In 2018, there were no significant impacts on biodiversity (valid for Mexico, where the topic is material). GRI 304: Biodiversity 304-4 - IUCN Red List species and national conservation list species with habitats in areas affected by operations Two species (Ceratozamia miqueliana and Zamia loddigesii). It should be noted that these species were rescued by the company during the construction of the complex in 2012 to 2016, and are now in a conservation area. EMISSIONS Macro objective: Energy Efficiency GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach 305-1 - Direct (Scope 1) GHG emissions 305-2 - Energy indirect (Scope 2) GHG emissions 305-3 - Other indirect (Scope 3) GHG emissions GRI 305: Emissions 305-4 - GHG emissions intensity 305-5 - Reduction of GHG emissions 305-6 - Emissions of ozone-depleting substances (ODS) 305-7 - Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions EFFLUENTS AND WASTE Macro objective: Security GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach www.braskem.com.br/ material-issues-assessement 93 93 94 94 94 94 94 94 97 www.braskem.com.br/ material-issues-assessement 85, 91 85, 91 8 8 7, 8 7, 8 7, 8 8 8, 9 7, 8 7, 8 GRI 306: Effluents and Waste 306-1 - Water discharge by quality and destination 306-2 - Waste by type and disposal method 85 91 ENVIRONMENTAL COMPLIANCE Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach www.braskem.com.br/ material-issues-assessement 82 82 GRI 307: Environmental Compliance 307-1 Non-compliance with environmental laws and regulations In June 2018, a civil lawsuit was filed by the State Public Prosecutor’s Office in São Paulo against Braskem and 11 other companies located in the Capuava Petrochemical Complex. The lawsuit asks for compensation of R$ 100 million for moral and environmental damage due to high rates of people in the region suffering from Hashimoto’s thyroiditis. At the close of this report, there was no evidence that industrial activities were responsible for triggering Hashimoto’s thyroiditis in that location (this information also applies to indicator 413-2). SUPPLIER ENVIRONMENTAL ASSESSMENT Macro objective: Strengthening practices 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components GRI 103: Management Approach 103-3 - Evaluation of the management approach GRI 308: Supplier Environmental Assessment 308-1 - New suppliers that were screened using environmental criteria www.braskem.com.br/ material-issues-assessement 66 66 66 102 Global Compact Principles 8 8 8 8 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERGRI Standard Disclosure Page and/or answer EMPLOYMENT Macro objective: Economic-financial results GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach 401-1 - New employee hires and employee turnover www.braskem.com.br/ material-issues-assessement 49 49 53 401-2 - Benefits provided to full-time employees that are not provided to temporary or part-time employees GRI 401: Employment 401-3 - Parental leave OCCUPATIONAL HEALTH AND SAFETY Macro objective: Secutity GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach 403-1 - Occupational health and safety management system GRI 403: Occupational Health and Safety 403-2 - Hazard identification, risk assessment, and incident investigation 403-3 - Occupational health services 403-4 - Worker participation, consultation, and communication on occupational health and safety Life insurance, health insurance, disability allowance, maternity/paternity leave, private pension fund, and stock purchase plan, among others. There is no distinction of benefits offered to full-time, temporary and part-time employees. Benefits are offered upon hiring. In Brazil, we monitor the number of maternity leaves and the percentage of terminations up to one year after the return from the leave. Number referring to Members in Brazil who returned from maternity leave from January to December 2018: 92 returns and 7 post-return terminations. www.braskem.com.br/ material-issues-assessement 76, 78 to 80 78, 80 76 78, 79 79 79 103 Global Compact Principles Global Compact Principles GRI Standard Disclosure Page and/or answer 403-5 - Worker training on occupational health and safety 79 403-6 - Promotion of worker health GRI 403: Occupational Health and Safety 6 6 403-7 - Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 403-8 - Workers covered by an occupational health and safety management system 403-9 - Work-related injuries 403-10 - Work-related ill health TRAINING AND EDUCATION Macro objective: Strengthening practices To support the promotion of non-occupational health to employees, Braskem offers health insurance, which covers general and dental services. For contractors, Braskem requires, through a service agreement, the provision of health insurance. In addition to health insurance, Braskem promotes other health support actions, such as: vaccination campaigns, quality of life tests, occupational medical follow-up, and nutritional monitoring, gym membership, among others. To support the promotion of non-occupational health to employees, Braskem offers health insurance, which covers general and dental services. For contractors, Braskem requires, through a service contract, the provision of health insurance. Braskem has approximately 21,000 workers, 40% of whom are Members and 60% are contractors covered by the occupational health and safety management system. 78 78 103-1 - Explanation of the material topic and its Boundary www.braskem.com.br/ material-issues-assessement GRI 103: Management Approach 103-2 - The management approach and its components GRI 404: Training and Education 103-3 - Evaluation of the management approach 404-2 - Programs for upgrading employee skills and transition assistance programs 404-3 - Percentage of employees receiving regular performance and career development reviews 49 49 49, 54 55 6 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERGRI Standard Disclosure Page and/or answer Global Compact Principles GRI Standard Disclosure Page and/or answer www.braskem.com.br/ material-issues-assessement 103-1 - Explanation of the material topic and its Boundary www.braskem.com.br/ material-issues-assessement LOCAL COMMUNITIES Macro objectives: Local Development DIVERSITY AND EQUAL OPPORTUNITY Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 405: Diversity and Equal Opportunity 405-1 - Diversity of governance bodies and employees NON-DISCRIMINATION Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 406: Non- discrimination 406-1 - Incidents of discrimination and corrective actions taken RIGHTS OF INDIGENOUS PEOPLES Macro objective: Local Development GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 51 51 49, 52 www.braskem.com.br/ material-issues-assessement 21 to 22 21 to 22 21 to 22 www.braskem.com.br/ material-issues-assessement 55 to 59, 71 to 74, 76 to 77 103-3 - Evaluation of the management approach 55 to 59, 71 to 74, 76 to 77 GRI 411: Rights of Indigenous Peoples 411-1 - Incidents of violations involving rights of indigenous peoples 64 No incidents were identified in the reporting period. Considering that traditional populations (fishermen and quilombolas) live in communities close to Braskem’s operations in the Port of Aratu, some initiatives have been taken to prevent damage, promote sustainability, and establish a relationship of dialogue and trust with these communities. 6 6 GRI 103: Management Approach 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 413: Local Communities 413-1 - Operations with local community engagement, impact assessments, and development programs 413-2 - Operations with significant actual and potential negative impacts on local communities SUPPLIER SOCIAL ASSESSMENT Macro objective: Strengthening practices 56 56 56 65, 80 103-1 - Explanation of the material topic and its Boundary www.braskem.com.br/ material-issues-assessement GRI 103: Management Approach 103-2 - The management approach and its components 103-3 - Evaluation of the management approach 414-1 - New suppliers that were screened using social criteria GRI 414: Supplier Social Assessment PUBLIC POLICY Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 415: Public Policy 415-1 - Political contributions 66 66 66 www.braskem.com.br/ material-issues-assessement 75 75 Zero 104 Global Compact Principles 1 1 2 10 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADERGRI Standard Disclosure Page and/or answer Global Compact Principles GRI Standard Disclosure Page and/or answer 105 Global Compact Principles CUSTOMER HEALTH AND SAFETY Macro objective: Security GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach 416-1 - Assessment of the health and safety impacts of product and service categories GRI 416: Customer Health and Safety www.braskem.com.br/ material-issues-assessement 81 81 81 100% (SDS provides impacts and controls of HES, they are reviewed periodically, SDS platform (3 years) - RIS (according to with each legislation reported). 416-2 - Incidents of non-compliance concerning the health and safety impacts of products and services 81 MARKETING AND LABELING Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach www.braskem.com.br/ material-issues-assessement 81 81 81 417-1 - Requirements for product and service information and labeling The labeling information corresponds to SDS information (GHS format) and is handled by each site. The internal procedure used is ANX 6020- 00840 - Information on chemical hazards. GRI 417: Marketing and Labeling 2016 417-2 - Incidents of non-compliance concerning product and service information and labeling 81 417-3 - Incidents of non-compliance concerning marketing communications Zero. The company declares non-existence of non-compliance with regulations and voluntary codes relating to marketing communications, including advertising, promotion and sponsorship, broken down by type of results. SOCIOECONOMIC COMPLIANCE Macro objective: Strengthening practices GRI 103: Management Approach 103-1 - Explanation of the material topic and its Boundary 103-2 - The management approach and its components 103-3 - Evaluation of the management approach GRI 419: Socioeconomic Compliance 419-1 - Non-compliance with laws and regulations in the social and economic area www.braskem.com.br/ material-issues-assessement 28 28 Braskem has lawsuits in the aforementioned period, whether environmental or regulatory; however, the company does not have definitive ruling on fines or non-monetary sanctions during the period in question. The same criteria used in the “Reference Form” established by the “Brazilian Securities Commission” (“CVM”) was adopted for this report, in accordance with IN CVM 480/209 - R$ 50 million. For environmental matters, it considered the amount of R$ 10 million. SDG Page number COP Criteria* Page 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 12 71, 78, 80 62, 63, 64 49, 64, 71 85 89 12, 47, 49, 61, 67, 72, 78, 80, 85, 93 31, 40, 64, 93 12, 49, 60, 61, 63, 72 15 12, 17, 61, 62, 63, 64, 66, 73, 91 93 16, 62, 63, 64 12, 20, 24, 71 12, 47, 60, 61, 62, 63, 64, 71, 73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 11, 14 66, 68, 69 11, 12, 22, 66 71 29, 65, 71, 72 11, 22, 55, 66, 67 65 55, 69, 77 11, 12, 14, 66, 78 11, 45, 65, 78 11, 14, 77 22 22, 26, 29 22 6, 11, 14 57 11, 14 14, 85, 87, 88, 93 6, 11, 14 6, 11, 14 * COP (Communication on Progress): commitments made by UN Global Compact participants with the implementation of the 10 Global Com- pact Principles in their business strategies and daily operations. < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER 106 LIMITED ASSURANCE REPORT ISSUED BY INDEPENDENT AUDITORS To the Board of Directors, Shareholders and Stakeholders Braskem S.A. São Paulo - SP Introduction environmental information disclosed in sustainability reports - KPMG Sustainability Assurance Manual - KSAM, applicable to historical non-financial information. These standards require compliance with ethical requirements, including independence ones, and the engagement is also conducted to provide limited assurance that the information disclosed We have been engaged by Braskem S.A. (“Braskem” or in the Braskem’s Annual Report 2018, taken as a “Company”) to apply limited assurance procedures on whole, is free from material misstatement. the sustainability information disclosed in 2018’s Annual Report, related to the year ended December 31st, 2018. Responsibilities of Braskem’s Management The Management of Braskem is responsible for adequately preparing and presenting the sustainability information in the Annual Report 2018 in accordance with the Standards for Sustainability Report of the Global Reporting Initiative – GRI (GRI-Standards), as well as the internal controls determined necessary to ensure this information is free A limited assurance engagement conducted in accordance with the Standards for Sustainability Report of the Global Reporting Initiative - GRI (GRI-Standards) and the KPMG Sustainability Assurance Manual - KSAM consists mainly of questions and interviews with the Management team Braskem and other professionals of the Company involved in the preparation of the information disclosed in the Annual Report 2018 and use of analytical procedures to obtain evidence that enables us to reach a limited assurance conclusion from material misstatement, resulting from fraud or error. about the sustainability information taken as a whole. A Independent auditors’ responsibility limited assurance engagement also requires additional procedures when the independent auditor acknowledges issues which may lead them to believe that the Our responsibility is to express a conclusion about the information disclosed in the Annual Report 2018 taken information in the Annual Report 2018 based on a limited as a whole could present material misstatement. assurance engagement conducted in accordance with the Standards for Sustainability Report of the Global Reporting Initiative - GRI (GRI-Standards) and the methodology developed globally by KPMG for assurance of social and The selected procedures were based on our understanding of the issues related to the compilation, materiality and presentation of the information disclosed in the Annual KPMG Financial Risk & Actuarial Services Ltda. Rua Arquiteto Olavo Redig de Campos, 105, 6º andar - Torre A 04711-904 - São Paulo/SP - Brasil P.O. BOX 79518 - Zip Code 04707-970 - São Paulo/SP - Brasil Phone +55 (11) 3940-1500, Fax +55 (11) 3940-1501 www.kpmg.com.br < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER107 Report 2018, on other engagement circumstances • application of analytical procedures regarding data and assurance engagement, we may have identified and also on our considerations regarding areas and interviews for qualitative information and their correlation other issues and possible misstatements within the processes associated with material sustainability with indicators disclosed in the Annual Report 2018; information presented in the Annual Report 2018. information disclosed where relevant misstatement could exist. The procedures consisted of: • analysis of evidence supporting the disclosed information; Nonfinancial data is subject to more inherent limitations (a) engagement planning: considering the material • visits to three Braskem’s operations and to the corporate the methods used to determine, calculate or estimate aspects for Braskem’s activities, the relevance office application of these procedures, and items (b) and (c); these data. Qualitative interpretation of the data’s of the information disclosed, the amount of materiality, relevance and accuracy are subject to quantitative and qualitative information and the (e) analysis of whether the performance indicators individual assumptions and judgments. Additionally, operational systems and internal controls that omission and justification are reasonable to be we have not examined data related to prior periods, served as a basis for preparation of the information accepted associated to aspects and topics defined as to evaluate the adequacy of policies, practices and in the Braskem’s Annual Report 2018. This analysis material in the materiality analisys of the Company; sustainability performance, nor future projections. than financial data, due to the nature and diversity of defined the indicators to be checked in details; (f) comparison of financial indicators with the financial Conclusion (b) understanding and analysis of disclosed information statements and/or accounting records. related to material aspects management; Based on the procedures carried out, described We believe that the information, evidence and results earlier in this report, we have not identified any (c) analysis of preparation processes of the Annual we have obtained are sufficient and appropriate to relevant information that leads us to believe that Report 2018 and its structure and content, based provide a basis for our limited assurance conclusion. the information in the 2018 Annual Report of on the Principles of Content and Quality of the Standards for Sustainability Report of the Global Reporting Initiative - GRI (GRI-Standards); Scope and limitations Braskem is not fairly stated in all material aspects in accordance with the Standards for Sustainability Report of the Global Reporting Initiative - GRI (GRI- The procedures applied to a limited assurance engagement Standards), as well as its source records and files. (d) evaluation of non financial indicators selected: are substantially less extensive than those applied • understanding of the calculation methodology we cannot provide reasonable assurance that we are and procedures for the compilation of aware of all the issues that would have been identified KPMG Financial Risk & Actuarial Services Ltda. indicators through interviews with management in a reasonable assurance engagement, which aims responsible for data preparation; to issue an opinion. If we had conducted a reasonable Ricardo Algis Zibas to a reasonable assurance engagement. Therefore, São Paulo, May 10th, 2019 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER108 CORPORATE CREDITS Vice President of People, Business Communication, Marketing and Sustainable Development Marcelo Arantes Director of Corporate Communication André Vieira Director of Sustainable Development Jorge Soto Supervision of Corporate Communication Rodrigo Uchoa Vitor Garcia Supervision of Sustainable Development Mario Pino André Villaça Beatriz Muniz Analysis of Indicators, Project Development and Content Production Keyassociados Graphic Design and Layout Magenta•Lab Assurance KPMG Photographs Braskem collection Translation Gotcha! Idiomas For more information about this report, please contact imprensa@braskem.com 102-53 Headquarters - Office Rua Lemos Monteiro, 120 Butantã - São Paulo (SP) ZIP Code: 05501-050 102-3 < >BRASKEMBUSINESS PERFORMANCEHEALTH, SAFETY, AND ENVIRONMENTGRI CONTENT INDEXINNOVATIONGOVERNANCE AND COMPLIANCESTAKEHOLDERSCORPORATE CREDITSMESSAGE FROM THE BUSINESS LEADER

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