Embraer S.A.
Annual Report 2016

Plain-text annual report

Table of Contents 04 Presentation 08 Message from the 10 Message from the 12 Institutional President and CEO Board of Directors Profile 24 Customers 30 Shareholders 34 People 38 Partners 40 Society and the 44 Annex Environment |G4-18| Since 1999, Embraer S.A. has shared its annual report, with a state- ment on operational, financial and socio-environmental performance, explained results in their context and presented advances in practic- es of corporate governance, ethics and compliance. |G4-3, G4-7, G4-30| This edition complies with Global Reporting Initiative (GRI) G4 Guide- lines, in accordance – Core option. The content was prepared through interviews with the Board of Executive Officers and based on the com- pany’s Materiality Matrix (see page 6). The data covers the financial year of January 1 through December 31, 2016, and encompasses all sites in Brazil and abroad, except where identified otherwise in explanatory notes. All Embraer sites included in the consolidated fi- nancial statements are within the scope of this report. Eventual re- formulations of information disclosed in previous reports are clarified throughout the content. |G4-17, G4-22, G4-23, G4-28, G4-32| In line with best market practices, references from the Dow Jones Sustainability Index (DJSI), from the BM&FBOVESPA’s Corporate Sustainability Index (ISE, in Portuguese) and from the Global Com- pact of the United Nations (UN), of which Embraer is a signatory, were also considered. The financial data follows International Financial Reporting Standards (IFRS) and was submitted for external verification by KPMG Indepen- dent Auditors. The inventory of greenhouse gas (GHG) emissions was audited by Lloyd’s Register Quality Assurance (LRQA), whereas the oth- er information was verified internally, without external verification of this publication. |G4-33| To learn more, access http://ri.embraer.com.br/Default.aspx?lin- guagem=en# or contact the e-mail address investor.relations@em- braer.com.br. |G4-31| Enjoy! 4 STRATEGIC SUSTAINABILITY DIRECTIVE |G4-18| Building a sustainable future is one of Embraer’s values (see page 15), and as such, it is part of the company’s strat- egy. In order to identify high-priority issues of sustainability, Embraer carries out a specific consultation process with a formal review every three years. Thus, the Materiality Matrix graphically expresses the combined vision of the compa- ny’s management and stakeholders regarding the relevance of a predefined set of sustainability issues. The current matrix is the result of consultations made in 2013. Throughout 2016, a new and amplified survey was conducted, generating the 2017-2019 materiality, which is presented in the Annexes section. Embraer Materiality Matrix (2014-2016)* |G4-27| • Noise • Management of natural resources and waste • Atmospheric emissions • Human and labor rights • Health and safety • Ethics • Attraction, developing and retaining HR • Product safety • Preventing improper use of product • Transparency and communication • Management of • Management of chemical substances • Management of environmental life cycle supply chain • Local socio-economic development • Research, development and innovation • Control of exports • Sustainable new business, products and services • Bio-diversity • Philanthropy and volunteering • Dematerialization • Engagement with public authorities • Crisis management • Privacy and security • Local production chain of information s e i t r a p d e t s e r e t n i r o f e c n a t r o p m I Influence for business strategy GOVERNANCE | ENVIRONMENT | STAFF | VALUE CHAIN | PRODUCTS, SERVICES AND CUSTOMERS The company’s performance in relation to the priority themes of the Materiality Matrix is evaluated by the Master Sustainability Plan, which presents indicators and triennial targets. With a review every three years and annual revaluation, the first cycle of the plan came into force in January 2015, with horizon of December 2017. |G4-2| * The limit of the material aspect outside of Embraer can be found in the GRI indicators. |G4-21| 6 MASTER SUSTAINABILITY PLAN |G4-2| No. Aspect Indicator Dec. 2017 Goal 20151 2016 1 2 2 3 3 4 5 6 7 8 8 8 8 8 8 Ethics Percentage of adherence to compliance policy and procedure.2 Favorability percentage in the climate survey. Attraction, develop- ment and retention of human resources Attraction, develop- ment and retention of human resources 100% 80% Managers: 100%* Non managers: 98.98%* *considering the trainings held on Anti-Corruption - Code of Ethics and Conduct Managers: 96% Non managers: 98% *considering the trainings held on Anti-Corruption – Code of Ethics and Conduct. 89% There was no survey in 2016; the company opted for a bi-annual engagement survey. En- gagement survey will take place in May 2017. Number of staff training hours per year. 500,000 hours per year 557,077 hours Product safety Maintenance of type-approval certificates (CHT, in Portu- guese) for commercial and executive aviation planes. 100% of type certificates valid. Product safety Maintenance of company-approval certificates (CHE, in Portuguese) in all Embraer sites of interest as defined in conjunction with the business units. 100% of all sites of interest certified. 100% 100% 625,416 hours 100% 100% Management of chemical substances Development of the new chemical substance manage- ment system to ensure an adequate level of knowledge of the product’s chemical composition for compliance with current and future environmental legislation. Phase I – definitions and structuring: until February 2015; Phase II – platform availability and data input: until December 2016; Phase III – full operation of the system: until December 2017. Finalized: the first phase of the modification of the registration of hazardous substances in SAP. In progress: training of employees who register substances in the system. Start of data input into the system, aiming to comply with environmental legislation. As of December 2015, all registrations already incorporate the modifications made to the modified system. Finished the structuring and definitions pha- ses. Carried out training for all those involved in the registration of chemical substances in the SAP system. All inputs comply with current legislation. Management of supply chain Percentage of suppliers classified as "high environmental risk" in risk evaluations. 0% Export control Percentage of adherence to export policy and procedure. 100% adherence to the compliance evaluation survey. 0% 77% 0% 97% Sustainable new business, products and services Management of natural resources and waste Management of natural resources and waste Management of natural resources and waste Management of natural resources and waste Number of new business, products and services incorpo- rating principles of Sustainability. Annually launch project that demonstrates the inclusion of sustainability. Non-chrome leather available from tannery for use in aircraft interiors. Partnership with Boeing in the Eco demons- trator program. Technology tests aimed at reducing fuel consumption, CO2 emissions and noise. Consumption of energy (MWh) per equivalent plane. Reduce by 3% consumption by equivalent plane, in relation to the base year 2014 (603.78 MWh/equivalent aircraft). 551.96 MWh/aircraft equivalent (reduction of 9%) 499.79 MWh/equivalent aircraft (reduction of 17%) Consumption of water (m3) per capita. Reduce by 4% per capita consumption of water, in relation to the base year 2014 (44.66 m3/per capita). 41.78 m3/per capita (reduction of 6%) 42.49 m3/per capita (reduction of 5%) Generation of solid waste/net revenue. Generation of dangerous solid waste/net revenue. Reduce by 3% the total generation of waste per million dollars of revenue, in relation to the base year 2013 (2.76 t/million dollars). Reduce by 3% the total generation of dangerous waste per million dollars of revenue, in relation to the base year 2013 (0.5 t/million dollars). 3,21 t/million dollars (increase of 16%) 2,95 t/million dollars (increase of 7%) 0.57 t/million dollars (increase of 14%) 0.5 t/million dollars (maintenance) Management of natural resources and waste Percentage of manufacturing plants and Embraer service centers with ISO 14,001 certification. 100% of manufacturing plants and service centers that existed in 2014 with ISO 14,001 certification. 47.05% (FLM, EGM, ELEB, BOT, GPX, TTE and EVO)3 47.05% (FLM, EGM, ELEB, BOT, GPX, TTE and EVO)3 Management of natural resources and waste Percentage of manufacturing plants and Embraer service centers with relation to environmental liabilities. 100% of manufacturing plants and service centers that existed in 2014 with relation to environmen- tal liabilities (and their respective treatment plans). New acquisitions of buildings, installations or businesses, must be preceded by evaluation of environmental liabilities (environ- mental due diligence), aiming to ensure access to necessary information for the company to make decisions. 76.47% (13 of 17) 76.47% (13 of 17) 9 Atmospheric emissions Emission of greenhouse gases (scope 1+2)/net revenue.4 Reduce by 3% the emission of greenhouse gases (scope 1+2) per million dollars of revenue, in relation to the base year 2013. 5.48 t/million dollars (increase of 8%) 4.09 t/million dollars (reduction of 19%) 9 Atmospheric emissions Emission of VOC/net revenue. Reduce by 3% the emission of VOC per million dollars of revenue, in relation to the base year 2013 (0.0063 t/million dollars). 0.0034 t/million dollars (reduction of 46%) 0.0011 t/million dollars (reduction of 82%) 10 Human and labor rights Percentage of individual suits and labor complaint procedures per employee. Standard of excellence (to be a reference in the market), remain- ing below the national average for companies in the same sector, in accordance with each country’s regulating organizations. 0.391%* *corrected number 0.306% 11 11 12 13 13 13 14 14 14 Employee health and safety Lost Time Injury Rate (LTIR) To reduce the frequency rates of lost time accidents by 30%, in relation to 2014’s accident frequency rate (1.74). 2.25 (increase of 29.31) 1.19 (reduction of 31.6%) Employee health and safety Percentage of manufacturing plants and Embraer service centers with OHSAS 18,001 certification. 100% of manufacturing plants and service centers that existed in 2014 with OHSAS 18,001 certification. 47.05% (FLM, EGM, ELEB, BOT, GPX, TTE and EVO) 47.05% (FLM, EGM, ELEB, BOT, GPX, TTE and EVO)3 Transparency and communication Percentage of indicators responded to in the company's Global Reporting Initiative (GRI) report. Annual GRI Report Coverage Level. 89.65% 89.65% Management of the product’s environmen- tal life cycle Management of the product's environmen- tal life cycle Management of the product's environmen- tal life cycle Environmental requirements for developing products. Incorporate environmental requirements, in addition to those for sound and emissions, for 100% of products launched. Use of the simplified evaluation of the product life cycle ("DfE Matrix"). Use "DfE Matrix" to evaluate 100% of new products launched; for already existing products, evaluate the equivalent for at a minimum of 50% Embraer revenue. Customer orientation regarding the end of the product's life. Define document containing Embraer product strategic guidelines with relation to its end of life. The incorporation of the product’s environmen- tal requirements was implemented in the E2 program. The verification of satisfaction of these environmental requirements, in the E2 program, is in progress. For the next aircraft program to be launched by the company, all environmental requirements will be incorporated, using the DIP (Integrated Development of Products) process. The incorporation of the product’s environ- mental requirements was implemented in the E2 program. The verification of satisfaction of these environmental requirements, in the E2 program, is in progress. For the next aircraft program to be launched by the company, all environmental require- ments will be incorporated, using the DIP (In- tegrated Development of Products) process. New products in 2015: Legacy 450, which was evaluated using the DfE Matrix. Total portfolio: E-jets, Phenoms and Legacy 500/450 already evaluated, responsible for 86% of Embraer revenue. There were no product launches in 2016. Total portfolio: E-jets, Phenoms and Legacy 500/450 already evaluated, responsible for 84.6 % of Embraer revenue. Concluded: the technical guide containing oper- ational guidelines for customers for the proper disposal of products at the end of their life. Concluded: the technical guide containing operational guidelines for customers for the proper disposal of products at the end of their life. Started: the forming of Corporate Policy for Products' End of Life. Local socio-economic development Evaluation average (Balance Score Card) for the results of annually supported projects in the scope of the Social Partnership Program. Local socio-economic development Number of Embraer volunteers engaged in Entrepreneur- ship programs, Social Partnership Program and other social projects recognized by the Embraer Institute. Grade 4, in an evaluation of 0 to 5 points. 2.45 3.44 Increase 20% the number of volunteers. +12% (565 volunteers) +56.72% (793 volunteers) Local socio-economic development Approval of Embraer High School students in entrance exams. Maintain the rate of approval above 80% for Embraer High School students for their entrance exams. Embraer Juarez Wanderley High School: 84% of public university approval Embraer Casimiro Montenegro Filho High School: 83% of public university approval Embraer Juarez Wanderley High School: 86% of public university approval Embraer Casimiro Montenegro Filho High School: 87% of public university approval 15 Research, development and innovation Percentage of annual investment in technological devel- opment applied to projects with environmental gains. Continual increase of the percentage of annual investment in technological development applied to projects with environmen- tal gains, up to the minimum of 50% for the base year 2017 (resource to be applied in 2018). 78% 80% 1. Due to fall of revenue in 2015, some indicators have been significantly altered. 2. Considering the training carried out on Anti-corruption – Code of Ethics and Conduct. 3. This goal has been revisited and to ensure its achievement its deadline has been extended to the next 2018-2020 cycle. 4. Considering Scope 1 emissions related to: fugitive emissions; fuel consumption other than kerosene (jet fuel); and jet fuel consumption from production flights (the current portfolio aircraft). Fuel consumption from development flights, new product certification, as well as the Defence and Security UN aircrafts, are not considered. Revenues for the year were US$6.2 billion, up from US$5.9 billion the previous year. In our order portfolio, we have accounted for US$19.6 billion in firm orders (backlog) and we have achieved an adjusted net prof- it of US$290.5 million, with positive opera- tional margins for our three business units – a result we will seek to intensify in the upcoming years. Our programs have consistently progressed, ensuring proper execution of their sched- ules and budgets. Earlier this year, we cel- ebrated the inaugural flight and the start of the certification campaign for the E190-E2, the first second-generation jet of Commer- cial Aviation’s E-Jets family. Since its launch, the aircraft has received 275 firm orders and 415 letters of intent, options and pur- chasing rights, a total of 690 commitments from airlines and leasing companies. The model’s first units will be delivered in 2018. The KC-390, a multi-mission military air- craft, successfully completed its first in- ternational mission: it has traveled more than 30,000 kilometers in Africa, Europe and the Middle East, in addition to the long transatlantic ferry flights. This is the largest aircraft ever to be manufactured in Brazil, and it sets new standards for the category opening up the opportunity for us to expand the globalization of the Defense & Security business. The program’s current focus is on solely on the certification cam- paign, scheduled to be completed in the second half of 2017, with the first delivery planned for the following year. In Executive Aviation, we have continued to invest in the improvement of the Phenom 100 and Phenom 300 (the world‘s best-sell- ing business jet for the fourth consecutive year) and of the Legacy 450 and Legacy 500 jets, in addition to enhancing the Legacy 650. We also delivered the 1,000th executive jet, a Legacy 500, and we were recognized by U.S. publications Aviation International News (AIN) and Pro Pilot Magazine in the rankings for product support and customer support, respectively. This strengthens our position in customer loyalty, which must be achieved through every relationship opportunity, from prospecting to after-sales. At the end of the year, we announced the creation of a busi- ness unit focused on services and customer support. With the start of operations sched- uled for the first half of 2017, the unit will be responsible for the development of support solutions for products and services, both cur- rent and new, as well as for managing the associated processes and resources. This was also the year of the conclusion of the investigation into misdeeds in four transactions conducted abroad, between 2007 and 2011. We deeply regret these events, but we are certain that we have grown with this experience. We entered into agreements with Brazilian and U.S. authori- ties and we have turned the page, focusing on the continued strengthening of a sustain- able culture that is founded on the pillars of integrity and business ethics. With improved processes and controls, we have advanced in our trajectory of success, which has been recognized throughout our 50 years, with more than 8 thousand aircraft delivered to the market, in 90 countries. We are prepared for the future, with mod- ern products and adjusted operations. We continue to focus on the company’s sustainability and we reaffirm our com- mitment to the United Nations (UN) Glob- al Compact. For the same reason, we are celebrating one more year of listing on the Dow Jones Sustainability Index (DJSI) and on the BM&FBOVESPA’s Corporate Sustain- ability Index (ISE, in Portuguese). We believe that the secret to Embraer’s lon- gevity are the people who are part of the company, to whom we are extremely grate- ful. Together, we remain confident that we will always generate value for customers, shareholders and communities. Paulo Cesar de Souza e Silva President and CEO 9 Message from the President and CEO |G4-1| Prepared for the future We finished 2016 with the certainty that we overcame many chal- lenges, and that we are ready to start a new cycle of achievements in the company. At the beginning of the year, we inaugurated the Embraer Corporate Office (ECO) in São Paulo, with the goal of con- centrating the company’s corporate activities in one central unit, in search of greater synergy and a global vision. This period has been marked by adverse conditions and a deterioration of the compet- itive landscape: emerging markets’ commercial activity continued in deceleration and global political and economic instabilities have affected sector demand. In this context, our company has been dili- gent in adjusting costs and expenses to the current market scenar- io and launched “Challenge 200,” in search of US$200 million in annual savings throughout our operations—these are fundamental adjustments to ensure the growth of our strength and competitive- ness in the coming years. 8 and the Securities and Exchange Commis- sion) and U.S. authorities (Department of Justice and the Securities and Exchange Commission) due to certain irregularities identified in four sales contracts, this past decade. The company has greatly strength- ened its Compliance and Internal Controls Program and has implemented an ongoing training program for ethics in relationships with its business partners, both internal and external. Additionally, important struc- tural changes have been made over the last few years, with the Compliance and Internal Audit department now reporting to the Board of Directors through the Au- dit and Risk Committee. The company has learned from these facts and is taking the necessary steps to ensure that similar events never happen again. We look to the future with great optimism, backed by a modern and competitive port- folio of products in all business units, by the satisfaction of our current customers, by the level of governance achieved and by the high quality of our employees. Alexandre Gonçalves Silva President of the Board of Directors Message from the Board of Directors |G4-1| 2016 was a year marked by important events for the company. The continued development of the E2 Programs in Commercial Aviation and of the KC-390 Program in Defense and Security has progressed successfully, and on track with the schedule established for certification and entry into operations in 2018. Significant changes were made to the Board of Executive Officers, with the appointment of a new President and CEO, Paulo Cesar de Souza e Silva, formerly the head of the Commercial Aviation unit, the company’s main business, and the replacement of the General Counsel & Chief Com- pliance Officer, with the hiring of Fabiana Klajner Leschzin- er. Additionally, new leaders were selected for Commercial and Executive Aviation, and the creation of a new business unit was announced with a focus on Service and Support. These changes aim to bring the company closer to final customers and to increase the agility of the company’s decision-making process. After six years of in-depth independent investigations and the company’s unrestricted collaboration, an agreement was reached with Brazilian authorities (Federal Public Prosecutor 10 Israel Vainboim, Josué Christiano Gomes da Silva, Samir Zraick, Alexandre Gonçalves Silva, Sérgio Eraldo de Salles Pinto, Alexandre Magalhães Filho, Cecília Mendes Garcez Siqueira, José Magno Resende de Araújo, João Cox Neto, Pedro Wongtschowski and Hebert Claros da Silva 11 Institutional 12 Embraer is the result of the work of thou- sands of people who, throughout 47 years, have taken on the challenge of establishing a Brazilian company as one of the main forces in the global aerospace market. Founded in 1969, the company started opera- tions in São José dos Campos, Brazil, its head- quarters to this day, with current presence in 10 Brazilian cities and 17 more cities abroad. The company also holds 51% of the shares of Visiona Tecnologia Espacial Telebras, a joint venture with Telebras; and 65% of the Por- tuguese company OGMA, which specializes in aircraft maintenance and manufacturing. Comprising the holding structure are also the companies ELEB, Embraer Aero Seating Tech- nologies (EAST), Atech, Savis and Bradar. |G4-5, G4-6, G4-8, G4-9| With cutting-edge technology and human resources, the company designs, develops, manufactures and sells aircraft, systems and solutions for the Commercial Aviation, Execu- tive Aviation and Defense & Security segment (see page 24), offering customer support and services in over 100 countries. |G4-4| Embraer ended the fiscal year with 18,506 employees throughout the world and deliv- ered 240 aircraft, recording US$6.2 billion in net income and US$19.6 billion in firm orders. |G4-9| EVERY 10 SECONDS, AN EMBRAER AIRCRAFT TAKES OFF SOMEWHERE IN THE WORLD LARGEST BRAZILIAN COMPANY IN THE DEFENSE AND SECURITY SEGMENT GLOBAL LEADER IN COMMERCIAL JETS WITH UP TO 130 SEATS 5th LARGEST MANUFACTURER OF EXECUTIVE JETS IN THE WORLD Every day the world gets more Brazilian. Every day Brazil is more global. |G4-6, G4-8| UNITED STATES DALLAS FORT LAUDERDALE IRWINDALE JACKSONVILLE MELBOURNE NASHVILLE TITUSVILLE WINDSOR LOCKS MESA IRELAND DUBLIN UNITED KINGDOM BURGESS HILL FARNBOROUGH FRANCE LE BOURGET |G4-56| VISION Embraer will further con- solidate its position as one of the leading forces in the global aerospace and defense and security industries. Embraer is a market leader in the seg- ments in which it operates and commands a reputa- tion for excellence. MEXICO CHIHUAHUA SERVICE CENTER MANUFACTURING PLANTS ENGINEERING AND TECHNOLOGY CENTERS LOGISTICS CENTER NETHERLANDS AMSTERDAM PORTUGAL ALVERCA ÉVORA UNITED ARAB EMIRATES DUBAI CHINA BEIJING SINGAPORE SINGAPORE BRAZIL BELO HORIZONTE (MG) BOTUCATU (SP) BRASÍLIA (DF) CAMPINAS (SP) GAVIÃO PEIXOTO (SP) SÃO JOSÉ DOS CAMPOS (SP) SÃO PAULO (SP) SOROCABA (SP) TAUBATÉ (SP) |G4-56| VALUES OUR PEOPLE ARE WHAT MAKE US FLY | Our people are happy, competent, valued, fulfilled, and committed to what they do. People who work as teams and who act with integrity, coherence, trust in each oth- er and respect for diversity. WE ARE HERE TO SERVE OUR CUS- TOMERS | Customer loyalty is earned by ensuring their total satisfaction and by building strong and enduring relationships. Partnerships are established based on real commitment and flexibility. WE STRIVE FOR COMPANY EXCELLENCE | Company actions are aimed at simplicity, agility, flexibility and safety, while constantly striving for improvement and excellence. An entrepreneur- ial attitude is built on integrated planning, re- sponsible delegation and disciplined execution. BOLDNESS AND INNOVATION ARE OUR HALLMARKS | Company on the techno- logical forefront, with a capacity for contin- uous learning; internal transformation and influencing the markets of its businesses. A strategic vision and an ability to overcome challenges with creativity and courage. GLOBAL PRESENCE IS OUR FRONTIER | We demonstrate a global presence and mindset, acting locally to leverage competi- tiveness and using the best of each location, envisioning a world without borders, one that values diversity. WE BUILD A SUSTAINABLE FUTURE | We are constantly striving to build the foun- dation for the company’s longevity, consid- ering stockholders’ profitability, respect for quality of life, environment and society. 15 MANAGEMENT STRUCTURE AND MODEL Embraer has adopted the most strict stan- dards of corporate governance and is asso- ciated with the Brazilian Institute of Corpo- rate Governance (IBGC, in Portuguese), the Brazilian Association of Public Companies (ABRASCA, in Portuguese), Brazilian Institute of Investor Relations (IBRI, in Portuguese) and the National Institute of Investors (INI, in Portuguese). In 2016, the company was listed on the DJSI for the seventh consec- utive year, with three years of continual growth in its overall score. The company also comprises the ISE and the theoretical portfolios of the Brazil Index (IBrX, in Por- tuguese), the Corporate Governance Stock Index (IGC, in Portuguese), the Stock Index with Differentiated Tag Along (ITAG, in Por- tuguese), the Industrial Sector Index (INDX, in Portuguese), the Bovespa Index Value 2nd Line (IVBX 2, in Portuguese) and the Brazil Index 50 (IBrX 50, in Portuguese). The company’s shares are listed in São Paulo on the New Market (BM&FBOVES- PA: EMBR3) and in New York, on the New York Stock Exchange (NYSE: ERJ), through the American Depositary Receipts (ADRs) program, level III. In addition to the New Market requirements, the company’s by- laws impose onerous conditions on any shareholder who might hold shares equal or superior to 35% of the capital, includ- ing submission to Public Tender Offer (OPA, in Portuguese) as well as an authorization from the Brazilian government, holder of a special class share, which grants a veto right in some strategic matters for the com- pany and the Country. |G4-41| General Assembly (GA) • Elects members to and dismisses members from the Board of Directors and the Fiscal Board; sets the global compensation for di- rectors and board members; deliberates on account approvals and proposals for profit and dividend allocation; among the other at- tributions contained in the provisions of the Brazilian Companies Act. • The votes of foreign shareholders are limited to 40% of the votes of Brazilian shareholders. • Information on voting rights and meetings are given in detail in the bylaws, available at https://goo.gl/wFNwsr. |G4-40, G4-42| Corporate governance structure |G4-34, G4-40, G4-41| Shareholders Fiscal Board Board of Directors Strategy Committee Audit and Risk Committee Human Resources Committee Compliance Internal Auditing Risk and Internal Controls Board of Executive Officers 16 Board of Directors (BD) • Composition: 11 members, one elected by the Brazilian government (as holder of the special class share); two are elected by the company’s employees (one appoint- ed by the Embraer Employee Investment Club – CIEMB in Portuguese – and anoth- er nominated by the company’s non-share- holder employees); and eight elected by the other shareholders. • Two-year term, reelection permitted. • Eight independent members. • Eight ordinary meetings per year and extraor- dinary sessions as necessary – 13 meet- ings in 2016. |G4-47| • Defines strategies; elects, supervises and dismisses members of the Board of Exec- utive Officers; monitors risks; and estab- lishes general business policy. |G4-35| • Carries out annual formal performance evaluation – of the Board, the board mem- bers and the Committees – supported by a specialized external consultant. Members evaluate themselves, each other, and also the President and CEO, who, in turn, evalu- ates the execution of the BD activities every fiscal year. |G4-44| • The BD’s Internal Regiment disciplines its operations and the body’s relationship with the committees that advise it. Strategy Committee •Composition: up to five members. •Meets every trimester. • Supports the BD in preparing the Strategic Plan and the Action Plan; evaluates market opportunities; and monitors results. Audit and Risk Committee •Composition: up to five members. •Meets every bimester. • Supports the BD in identifying and managing risks; oversees the quality of financial state- ments; recommends and supervises the external audit firm1; monitors performance and independence of the internal audit. Human Resources Committee •Internally designated as the Committee of People, Compensation, Organization and Governance. •Composition: up to five members. •Meets every trimester. • Guides the BD with regards to the election and dismissal of the members of the Board of Executive Officers, the establishment of compensation and human resources poli- cies, and to the transfer of resources to em- ployee associations as well as entities for assistance, recreation and private pension; guides on matters of governance of the activ- ities of the BD and of its Committees. Fiscal Board • Composition: from three to five members. • Meets every trimester. • Examines the financial statements. • Permanent and independent administration entity. Board of Executive Officers • Composition: from four to 11 members elect- ed by the BD. • Two-year terms, with the possibility of re-election. • Monthly meetings. • Responsible for daily administration, follow- ing the guidelines of company bylaws and the deliberations of the BD and GA. • Formally responsible for the company’s per- formance on economic, environmental and social topics: the Executive Vice President of Finance and Investor Relations and the Vice President of People and Sustainability, respectively. |G4-36| • The Board of Executive Officers is evaluated annually with the 360° methodology, where- as the evaluation of the President and CEO is the responsibility of the BD. All attributes and composition of the BD, the Committees, the Fiscal Board and the Board of Executive Officers are provided in detail at https://goo. gl/nfyTAo. |G4-35, G4-38, G4-39| 1. Function exercised in compliance with American law, especially the Sarbanes-Oxley Act. 17 Board of Executive Officers Michael Amalfitano, José Antonio de Almeida Filippo, John Stephen Slattery, Paulo Cesar de Souza e Silva, Jackson Medeiros de Faria Schneider, Fabiana Klajner Leschziner, Mauro Kern Junior, Mauricio Rodrigues Aveiro, Johann Christian Jean Charles Bordais and Nelson Krahenbuhl Salgado (absent) Compliance |G4-DMA: Fighting corruption, G4- SO3, G4-SO4| The Compliance Program aims to ensure the adoption of the highest standards of integrity and international good practices as well as the adherence to the laws of the countries in which Embraer is present, above all those that govern anti-corruption practices and export control. The initiative is coordinated by the department of Compli- ance and supervised by the Board of Direc- tors, the Audit and Risk Committee, and by the President and CEO. During the fiscal year, the program inten- sified its relationship with the group of more than 200 compliance agents – em- ployees from various departments, in Bra- zil and abroad – who act as multipliers of the culture of ethics and compliance in the company. Workshops were also held to en- sure full comprehension of the company’s policies and how to execute them during daily tasks. The training plan includes lec- tures on ethics and integrity administered by Marjorie Doyle, member of the Society of Corporate Compliance and Ethics (SCCE). 18 ETHICS AND INTEGRITY |G4-DMA: Non-discrimination, G4-DMA: Fighting corruption, G4-56, G4-SO3| The Anti-Corruption Policy and the Code of Ethics and Conduct ensure the company’s integrity in all operations. The former establishes guidelines to prevent conflicts of interest, deal with donations and sponsorships, the offering and receiv- ing of gifts, and outsourcing. It also establishes mechanisms for investi- gations to be carried out prior to the formation of company partnerships. The Code of Ethics and Conduct shares norms for responsible busi- ness management in all operations. The document is guided by internal business values and by the Global Compact of the United Nations, in addition to complying with anti-cor- ruption laws, international trade, and initiatives such as the Interna- tional Forum on Business Ethical Conduct (IFBEC) and the Partnering Against Corruption Initiative of the World Economic Forum (PACI-WEF). In 2016, the Board of Directors approved a revision regarding the prohibition of contributions to politi- cal parties. The Code is available at http://compliance.embraer.com.br/ en/SitePages/Home.aspx and all board members, members of the Board of Executive Officers, employ- ees and third-party collaborators are trained in the document’s guidelines. Lectures were attended by more than 500 employees from several departments and by members of the Board of Directors. Among the advances in the Compliance Program, we highlight the development of the Know Your Customer procedure, which requires a reputational analysis of potential clients based on risk factors, and the adop- tion of a continuous audit system that per- forms monitoring of critical operations, such as supplier payments, travel expenses, do- nations and sponsorships. The intention is to expand the system, which already serves the Internal Audit area, to other processes in the coming years. In 2010, when potential nonconformities in certain overseas business transactions were questioned by U.S. authorities, the company hired external lawyers to conduct independent investigations, proactively ex- panding the initial scope and sharing the findings with the competent authorities. These investigations found that the com- pany was responsible for irregular actions in four transactions involving 16 aircraft between 2007 and 2011 in Saudi Arabia, India, Mozambique and the Dominican Re- public. On October 24, 2016, Embraer an- nounced the terms for closing this case, which had been investigated by U.S. author- ities – the United States Department of Jus- tice (DOJ) and the Securities and Exchange Commission (SEC) – and by Brazilian au- thorities – Federal Public Prosecutor (MPF) and the Securities and Exchange Commis- sion (CVM). As part of the agreements, the company agreed to contract external and independent monitoring for three years to monitor compliance with the terms and will make a payment of US$205.5 million to U.S. and Brazilian authorities. Upon timely fulfilment of the agreements, no charges will be brought against Embraer (see more infor- mation in the GRI Indicators). 19 Risk management |G4-2, G4-14, G4-46| Embraer’s risk management methodology is backed by the Risk Management Policy and is segmented into four categories (see Cat- egorization of Risk). This structure enables the concentration of efforts for more asser- tive monitoring, identification and mitigation, in each situation. Upper management relies on the support of the Risk and Internal Controls department and is also involved, through interviews and meetings, in the periodic revision of trends and adversities that might compromise op- erational performance. The structure is re- inforced by the Audit and Risk Committee, which ensures autonomy to the Internal Audit area as well as to the external audit services. Helpline |G4-DMA: Procedure for complaints and claims related to environmental impacts, G4-DMA: Procedure for complaints and claims related to labor practices, G4-DMA: Procedure for complaints and claims related to human rights, G4-DMA: Procedure for complaints and claims related to impacts in society, G4-57, G4-58| The Helpline is a tool to register allega- tions and concerns related to attitudes that violate the Code of Ethics and Conduct and the law. Contacts are consolidated by an independent company and forwarded to the Compliance department, in order to as- sure the confidentiality2 of the person who files the case, who also receives a protocol number to monitor its progress online. Among the issues raised throughout 2016, nearly 60% were related to conduct devia- tion, of which 45% were pertinent. Refer- rals and solutions to the issues included coaching and conduct monitoring, in ad- dition to disciplinary measures, such as warnings, suspensions and dismissals. |G4- LA16, G4-HR12| In total, 325 reports were filed during the year, a 7% increase over 2015. This rise demonstrates the growing credibility of the channel and of the awareness among employees and third-party collaborators re- garding the conduct expected by the com- pany. In 2017, the Helpline changed its name to Helpline – Whistleblowing Chan- nel, in order to help the public better under- stand its purpose. Employees, partners and suppliers may contact the following telephone numbers: Brazil: 0800-721-5968 Portugal: 800-180-118 United States: 1-877-900-8779 Singapore: 800-130-2122 China: 400-120-4946 France: 0805-080608 Netherlands: 0800-450-0019 or on the site www.embraerhelpline.com 2. Except in countries whose laws do not allow reports to be made anonymously. In this case, Embraer abides by local legislation. 20 Categorization of risk |G4-DMA: Economic performance| STRATEGIES OPERATIONAL FINANCIAL REGULATORY/ LEGAL RISKS THAT COULD RESULTING FROM FAILU- RISKS RELATED TO EX- REFERS TO COMPLIANCE IMPACT THE ECONOMIC RES OR INADEQUACIES POSURE OF FINANCIAL WITH LOCAL LAW WHERE VALUE OF THE BRAND IN INTERNAL PROCESSES OPERATIONS. THE COMPANY EMBRAER OPERATES, AND THE IMAGE OF THAT RESULT IN LOSS OF ADOPTS PROTECTIVE MEA- INCLUDING REGULATIONS EMBRAER, WHICH ARE PRODUCTION, ASSETS, CUS- SURES AIMED AT INCREA- OF THE AERONAUTICAL RELATED TO DECISIONS TOMERS OR REVENUES. SING THE GENERATION OF SECTOR AT EACH STAGE FROM THE BOARD OF ALSO INCLUDES EXTERNAL OPERATING CASH FLOW, THE OF AIRCRAFT MANUFAC- EXECUTIVE OFFICERS. EVENTS, SUCH AS NATURAL POSITIVE RETURNS ON FI- TURING, FROM DESIGN TO CATASTROPHES AND OTHER NANCIAL TRANSACTIONS AS POST-SALES SUPPORT. EVENTS RESULTING FROM WELL AS FUNDRAISING. THE CLIMATE CHANGE. COMPANY’S OPERATIONS FOLLOW GUIDELINES OF THE FINANCIAL MANAGEMENT POLICIES APPROVED BY THE BOARD OF DIRECTORS. With respect to climate change, Embraer car- ries out risk analyses for periods of five years, considering aspects such as environmental laws (Brazilian laws and of countries in which Embraer operates), discussions on carbon taxation and the European Union Emissions Trading Scheme (EU ETS). The most recent analysis, carried out in 2012, did not identify any vulnerabilities of the company to these changes. The main factories are located in Brazil, a country that is not prone to extreme natural phenomena, and the units abroad are also at a low risk. Nevertheless, all operations follow guidelines to minimize adverse effects. In addition to categorizing risks considered to be environmental catastrophes, Embraer mon- itors potential impacts to its operations. Most of the units are ISO 14001 certified and the company maintains its goal of implementation of this certification at 100% of its manufactur- ing plants and service centers. |G4-EC2| Comittment to excellence |G4-DMA: Economic performance| Embraer establishes a corporate procedure for identifying relationship guidelines related to each stakeholder. Based on the Principles of Excellence in Management and on the Model of Management Excellence (MEG, in Portuguese) from the National Quality Foun- dation (FNQ, in Portuguese), Embraer keeps the Embraer Business System (SEE, in Portu- guese), which defines the main guidelines for the company’s business model. By present- ing a systematic vision of Embraer, the SEE makes it possible to understand the main objectives of management by value streams, stimulating continuous improvement with fo- cus on the stakeholders (customers, share- holders, people, partners, society and the en- vironment), ensuring that all activities result in shared values (see more information in the GRI Indicators). |G4-24, G4-25, G4-26| 21 Results Culture Leadership s s e n s u B y c n e c i f f e i i T r a n sformation m a n a g S t a f f e nt m e The application of the lean management phi- losophy is the essence of P3E. Guided by the optimization of processes and the reduction of waste, this philosophy provides reduction in costs as well as gains in productivity and quality. In 2016, P3E has made it possible to improve the efficiency of Commercial Avi- ation, through a project aimed at reducing production cycles. The program also result- ed in the qualification of the sales process for Executive Aviation, which is generating better operating margins. Awards and recognition Brazil’s Most Innovative Company | Award from the Valor Econômico newspaper, in partnership with the consulting firm Strategy&. The compa- ny came in first place in the ranking based on an evaluation of the revenues invested in inno- vation, the creation of new products and the maturity of innovation processes. 2016 Best Companies to Work For in Brazil | Ranking shared by the consulting firm Great Place to Work® and by the magazine Época. This recognition demonstrates the culture of valuing the internal public and its commit- ment to the company’s performance. The Best Companies for Starting your Career | Survey conducted by the magazine Você S/A in partnership with the Fundação Instituto de Administração (FIA) and Companhia de Talen- tos, which evaluates the satisfaction of young people starting their careers. Best Companies for Human Resources | Award given by the newspaper Valor Econômi- co and by the consulting firm Aon to compa- nies that adopt the best practices in human resources management. Transparency in Corporate Reports: Evalu- ating Multinationals in Emerging Markets | Study conducted by the International Trans- parency NGO, which analyzed 100 compa- nies operating in 185 markets and head- quartered in 15 countries. Among the 12 Brazilian companies analyzed, Embraer was the only one to be graded above 5 (5.6) on a scale from zero (least transparent company) to 10 (most transparent company). Empresas Mais | Prize given by the newspa- per O Estado de S. Paulo in partnership with the Fundação Instituto de Administração (FIA). Embraer won first place for the category “Vehicles and Car Parts” and stood out among the ten leaders in Corporate Governance. Aviation International News’ 2016 Product Support Survey | Product support survey con- ducted annually by the U.S. magazine Aviation International News (AIN). In 2016, Embraer’s Executive Aviation reached the top of the rank- ing with the highest average for all aspects of the survey (8.4 points out of a total of 10) for new and used executive jets. Pro Pilot magazine’s Corporate Aircraft Prod- uct Support Survey | Executive Aviation also stood out by taking first place, for the sec- ond consecutive year, in the customer sup- port survey for executive aircraft from the magazine Pro Pilot. Embraer achieved 8.58 points, the highest score among all man- ufacturers in the 26 years that the survey has been conducted. 23 Embraer: value stream Values by stakeholder WIN CUSTOMERS DEVELOP PRODUCTS CUSTOMERS | AVAILABILITY, PERFORMANCE, COMPETITIVE OFFERING/ SOLUTIONS, SAFETY > SHAREHOLDERS | FINANCIAL RETURN/ FINANCIAL HEALTH DELIVER ORDERS PEOPLE | PROFESSIONAL AND PERSONAL FULFILLMENT SERVE CUSTOMERS BUSINESS MANAGEMENT* PARTNERS | INTEGRITY AND CONTINUITY SOCIETY AND THE ENVI- RONMENT | RESPECT FOR SOCIETY AND THE ENVIRON- MENT, WITH GENERATION OF WEALTH AND WELL-BEING * In 2016, the company established the Business management value stream, which joined the previous flows Serving shareholders, Generating value for partners, Respecting society and the environment and Attracting and retaining people. One of the fundamental elements of the com- pany’s management model is the Embraer Enterprise Excellence Program (P3E), through which employees are engaged in re-envision- ing processes for continual improvement of results. Divided into four pillars, the program is considered a key element for the evolution of corporate management. 22 PRODUCTS AND SERVICES |G4-4, G4-8| In 2016, Embraer participated in the Farnbor- ough International Airshow, a global tradition in the airspace sector that is held in London. For the first time, the company had each of its three business units featuring a new product: the latest generation E190-E2 commercial jet (see page 25), the KC-390 multi-mission military freighter (see page 27) and the Leg- acy 500 executive jet (see page 26). These products demonstrate a commitment to cut- ting-edge innovation and technology, as well as continual portfolio modernization. In Commercial Aviation’s Customer Satisfac- tion Survey (CSS), the Index of Spontaneous General Satisfaction (ISGE, in Portuguese) reached 84.9% and the Embraer Absolute Favorability (EAF) index reached 83%, preserv- ing an improvement trend over the last seven years and positioning the company in second place among all sector manufacturers. All sur- vey topics for 2016 showed an increase in the absolute favorability index. These results reflect a commitment to serve customers with excellence. In this regard, starting in 2017, the company will operate a business unit fo- cused on customer support and services (see more information on the customer satisfaction survey results in GRI Indicators). |G4-DMA: Labeling of products and services, G4-PR5| 24 Commercial Aviation Embraer Commercial Aviation is a global leader in the manufacturing of jets with up to 130 seats. In 2016, the company cele- brated the inaugural flight of the first pro- totype of the E190-E2 as well as its first international mission, which marked the beginning of the certification campaign. The delivery of the first aircraft is scheduled for 2018. Also, the campaigns for the E195-E2 and E175-E2 models are on track and their entry into service are scheduled for 2019 and 2021, respectively. The second generation E-Jets have high per- formance engines that – together with new wings, fly-by-wire flight controls and advanc- es in other systems – result in significant re- ductions of fuel consumption, maintenance costs, emissions and external noise. Since its launch, this product has won 275 firm orders and a total of 415 options, purchase rights and letters of intention. |G4-EN7| Despite the schedule of new products in the upcoming years, sales performance for the first generation of E-Jets, mostly the E175 and E190 models, has been on par with previous years. This reflects customers’ preference for these aircraft and validates the decision to offer aircraft with 70 to 130 seats, within one family. The business unit had a significant partici- pation in the United States with the replace- ment cycle of the 50-seat fleet. On the other side of the globe, China is presenting oppor- tunities stemming from new policies issued by the Civil Aviation Administration of China MORE THAN 1,800 COMMERCIAL AIRCRAFT IN SERVICE WITH OVER 100 AIRLINES AROUND THE WORLD THIRD LARGEST MANUFACTURER OF COMMERCIAL JETS IN THE WORLD E195-E2 (120 TO 146 SEATS) E190-E2 (97 TO 114 SEATS) E175-E2 (80 TO 90 SEATS) E195 (106 TO 108 SEATS) E190 (97 TO 114 SEATS) E175 (76 TO 88 SEATS) E170 (70 TO 78 SEATS) FAMILY ERJ 145 (37 TO 50 SEATS) 25 (CAAC). The largest country in East Asia has been strategic for Embraer, accounting for 80% of the region’s market share of the fleet of jets with less than 130 seats. Africa also presents a potential market, not only among the major airlines, but also with smaller op- erators that are migrating to E-Jets. SERVICES AND SUPPORT: - Maintenance and repair of aircraft - Revitalization of aircraft - On-Site stocks (OSS) - Field support - Technical support - Flight operations - Training - eSolutions Learn more at www.embraercommercialaviation.com Comfort and verticalization In 2016, Embraer Aero Seating Technologies (EAST) began operations in Titusville, Florida, where it manufactures commercial and executive aircraft seats, including those for the first class of the E2. This represents an important step for the company’s verticalization strategy. This new unit’s products are characterized by quality, ergonomics, and the use of light materials. Executive Aviation In 2016, shortly after having completed 10 years of operations, Embraer Executive Aviation celebrated the delivery of its 1,000th jet, a Legacy 500. The model was also approved for operations at London City Airport, one of the most restrictive landing sites in the world. This year was also marked by investments in the improvement of the Phenom 100 and Phenom 300 (the world’s best-selling busi- ness aircraft for the fourth consecutive year) and of the Legacy 450, Legacy 500 and Legacy 650E. The company also began the testing campaign for the Phenom 100EV (the new generation of the Phenom 100), which was presented at the main international event for execu- tive aviation, the National Business Aviation Association (NBAA) Con- ference and Exhibition, in Orlando, Florida. The new product version introduces a superior avionics system and more powerful engines, with better performance in high temperatures and elevated altitude airports. The new jet is scheduled to enter the market during the first semester of 2017. Further globalizing the business unit and to be closer to customers, Embraer has transferred part of the final assembly of the Legacy 450 and Legacy 500 jets to Melbourne, Florida, where the Phenom 100 and Phenom 300 models are already being produced. |G4-13| PHENOM 100 (4 TO 7 SEATS) PHENOM 300 (6 TO 10 SEATS) LINEAGE 1000E (13 TO 19 SEATS) 26 EXECUTIVE JETS DELIVERED 1 OUT OF EVERY 5 IN THE WORLD IS FROM EMBRAER Throughout the year, sales channels were also opened with representatives in Mexi- co, Chile, Japan, and in Europe. In addition to enhancing Embraer’s global presence, the initiative aims to develop a global brand that comprehends the culture and the uniqueness of buyers in the countries where relationships are established. Far beyond executive use In 2016, Embraer delivered two Phenom 100E to Etihad Flight College, an integral subsidiary of Etihad Airways, the national airline of the United Arab Emirates. The contract provides for the delivery of two more jets of the same model at the beginning of 2017. The aircraft will be used in the pilot training academy, created to support the rapid growth of the airline’s fleet. The Phenom 100E will also be used to train pilots in the United Kingdom’s armed forces. The contract signed with Affinity Flight Training Services provides for the acquisition of five aircraft for the Military Flight Training System (MFTS) program of the United Kingdom’s Ministry of Defense. The aircraft model is already being used at flight schools in the United States, Finland and Australia. LEGACY 450 (7 TO 9 SEATS) LEGACY 500 (8 TO 12 SEATS) SERVICES AND SUPPORT: - Maintenance and repair of aircraft (Embraer Executive Care – EEC) - Aircraft refurbishment - On-Site Stocks (OSS) - Performance software - Reduced Vertical Separation Minimum (RVSM) - Integrated diagnostic solution (Aircraft Health Analysis and Diagnosis – AHEAD) LEGACY 650E (13 TO 14 SEATS) Learn more at www.embraerexecutivejets.com/en-us MORE THAN 1,000 EXECUTIVE JETS DELIVERED IN MORE THAN 60 COUNTRIES Defense & Security Embraer Defense & Security plays a strategic role in the Brazilian defense system and is the segment leader in Latin America. Additional- ly, it is present in over 60 countries. The A-29 Super Tucano turboprop, for instance, was the business unit’s best-selling model for the year and already serves 13 air forces in tacti- cal support missions, counterinsurgency op- erations, advanced training and surveillance. Participation in the global market will inten- sify in the coming years with the launch of the KC-390, a multi-mission aircraft that sets new standards in the category. In addition to delivering more performance and efficiency (with jet propulsion and reduced operating costs), the new freighter is capable of per- forming various missions such as transport- ing and launching troops and cargo, humani- tarian aid, in-flight refueling, rescue missions and wildfire suppression. In 2016, the air- craft completed major milestones of its flight test campaign and toured eight countries, traveling more than 16,300 nautical miles (nearly 30,200 kilometers), and in 23 days off base, it demonstrated 100% availability. Embraer expects to receive the Initial Op- erational Capability (IOC) declaration by the end of 2017 and the Final Operational Clearance (FOC) in 2018. The first deliveries will also occur in 2018. In recent years, Defense & Security has in- vested continuously in portfolio diversification with air traffic control products and radars operating under the most challenging climat- ic and topographic conditions, in addition to integrated border protection systems. During the year, the process of consolidating the op- erations of Savis Tecnologias e Sistemas S.A. and Bradar Indústria S.A. started. The com- panies are engaged in the development and production of radars, as well as border mon- itoring for remote sensing and protection of DEFENSE AND SECURITY SOLUTIONS IN MORE THAN 60 COUNTRIES 27 strategic structures. Both compose the Tepro Consortium, in charge of implementing the Integrated Border Monitoring System (Sisfron, in Portuguese) in Brazil. Sisfron comprises a border area of 800 km in the state of Mato Grosso do Sul. By 2016, 70% of the project had already been executed. Visiona Tecnologia Espacial is a joint venture formed between Embraer and Telebras with the objective of acting in the integration of the sys- tem of Strategic Defense and Communications Geostationary Satellite (SGDC, in Portuguese) of the Brazilian Government. Scheduled to be launched at French Guiana in the first semester of 2017, the SGDC aims to meet the country’s satellite communications needs, including the National Program (PNBL) and a broad spectrum of strategies. The Gripen Design Development Network (GDDN) in Gavião Peixoto, Brazil, also began operations this year, established for the devel- opment of the Gripen NG in Brazil, in partnership with the Swedish company SAAB. Embraer Defense & Security and SAAB will conduct the full development of the two-seat version of the fighter. Between 2019 and 2024, 36 Gripen NG fighters will be delivered to the Bra- zilian Air Force (FAB, in Portuguese). |G4-13| Gold Medal in Defense & Security In 2016, Rio de Janeiro hosted the Olympic and Paralympic Games, and nearly 2.5 million people passed through Tom Jobim International Airport. Embraer Defense & Security companies – Atech, Visiona Tecnologia Espacial, Savis and Bradar – worked in partnership with the Brazilian Government and contributed to the above-average safety compliance indices, as measured by the Ministry of Transportation. Atech – which incorporated the activities of Embraer Systems in 2016 – offered the Integrated Air Traffic Management System (SIGMA, in Portuguese), which provides airspace usage planning, and the Advanced Air Traffic Information Management System and Reports of Operational Interest (SAGITARIO, in Portuguese), which simplifies airspace management, previously planned with SIGMA. Visiona, in partnership with five other companies, carried out a monitoring pilot project by capturing high and very high resolution images, even under adverse climatic conditions. During the football matches held in Brasília, the nation’s capital, with the support of Savis and Bradar, the army relied on a 4G/LTE (700MHz) mobile broadband network with a more reliable connection, without oscillations or interference. In Rio de Janeiro, the company also made available the Airborne Monitoring Sensor Based on Radio-Frequency Emission (SABER M60, in Portuguese), which assisted the Brazilian Aerospace Defense System (SISDABRA, in Portuguese) in protecting the Games’ governmental and sports facilities. Agricultural Aviation Embraer’s Ipanema aircraft is the leader in the Brazilian agricultural aviation market, with 75% market share and more than 1,300 units sold. The product has been manufactured for 50 years, without interruption, focusing on market trends and customer needs. This is the world’s first airplane to be certified to fly with 100% ethanol for fuel. Learn more at www.embraeragricola.com.br KC-390: AIRCRAFT DESIGNED AND MANUFACTURED THE LARGEST IN BRAZIL KC-390 A-29 SUPER TUCANO SPECIAL MISSIONS INTELLIGENCE SURVEILLANCE AND RECONNAISSANCE (ISR) SERVICES AND SUPPORT: - Maintenance and repair of aircraft - Modernization of aircraft - Unmanned aerial vehicles - Training and Operation Support System (TOSS) - Security systems/C4I (command, control, communication, computing and intelligence) - Air traffic control systems - Remote sensing - Aerial surveillance radar - Satellites - Development and integration of complex systems for segments other than aviation and defense Learn more at www.embraerds.com In the coming years, the unit will maintain in- vestments in these projects in order to grow sales volume and customer base, increase financial results, portfolio diversity, and expan- sion of international presence. Research, innovation and development Being at the forefront of technology is a fundamental condition for Embraer, whose strategy is based on continuous learning and the ability to innovate. The manufacturing plants house engineer- ing and product development teams – the largest of which is in São José dos Cam- pos, Brazil, which concentrates more than 4,000 professionals in these activities, 240 of whom are in pre-competitive R&D. In addition, the company maintains three engineering and technology centers: in Belo Horizonte (MG, Brazil), Melbourne (Florida, USA) and in the District of Évora (Portugal). Embraer protects the intellectual property generated by its research and development investments. Throughout the year, consider- ing the portfolios of invention patents and in- dustrial design, the company filed 609 patent applications and had 314 patents granted. The company also allocates resources for in- novation through the Aerospace Participation Investment Fund (FIP, in Portuguese), creat- ed in 2014 with the Brazilian Development Bank (BNDES, in Portuguese), the Funding Authority for Studies and Projects (FINEP, in Portuguese), and the State of São Paulo de- velopment agency Desenvolve SP. In 2016, in- vestments were made in five companies in the space, defense and cyber security segments, for which R$44.27 million were allocated. Incremental innovation, in addition to oc- curring vigorously within P3E (see page 21), is stimulated among employees by the Good Idea and the Innova programs. Good Idea is a program of suggestions for the development of routine activities with more efficiency. Throughout its history, the program has received contributions from 13,000 people and, in 2016, recorded 11,650 implementations of initiatives. The Innova Program stimulates the culture of innovation and provides spaces for the consolidation of ideas. The main initiative today is Green Light, which brings a startup environment into the company by offering financial support and up to 100% paid time off for employees to develop their projects. This year, 28 projects were awarded funding for 76 people. Innova underwent a review and, starting in 2017, the program also assumes the role of catalyzing exponential technolo- gies and identifying disruptive opportunities for the business. With this goal, the company will begin immersion into the innovation hubs of the Silicon Valley and of Boston, USA. In addition to these initiatives, employees also meet annually for the Embraer Seminar on Technology and Innovation (SETI, in Portuguese), a conference that presents the main technological advances being developed, which can be strengthened through integration of the different departments of the company. Regarding product sustainability, the program for the Integrated De- velopment of Environmentally Sustainable Products (DIPAS, in Por- tuguese), coordinated by the Engineering department, leads studies and actions to insert Design for Environment (DfE) strategies into the company. Through this initiative, the use of restricted material is managed with consideration for current and future environmen- tal legislation, technological alternatives to these materials are developed, and studies are conducted with respect to the product life cycle. There is also extensive interaction with the departments responsible for the creation of technologies aimed at reducing fuel consumption, carbon dioxide (CO2) emissions, noise, maintenance costs, and increasing operational efficiency, as well as pilot and passenger comfort. Since the aircraft’s operation is the longest stage in its life cycle, exceeding 15 years of activity, reducing fuel consumption and, consequently, energy, has a direct impact on the product’s environmental performance. Additionally, fuel costs are the main expense in aircraft operation, which is why manufac- turers are always seeking design options that promote efficiency, thereby meeting both environmental and market requirements. |G4-DMA: Products and services, G4-EN7, G4-EN27| United by the common good |G4-EN27| In 2016, Embraer and Boeing conducted tests on an E170 aircraft, which received a series of technologies to reduce environmental impact and increase aircraft efficiency and performance, such as a system for measuring air data; special paint to lessen the accumulation of ice and insects; aerodynamic modifications to reduce noise on takeoff and landing; and a bio-fuel blend, produced in Brazil, with 10% bio-kerosene and 90% fossil kerosene. This initiative is part of the partnership between these companies in the context of the Boeing eco- Demonstrator program, which, without precedent, unites the efforts of two of the world’s leading aircraft manufacturers for the benefit of the environment and of the aerospace industry. Strategic plan guidelines Commercial Aviation | Solidify Embraer’s leader- ship position in its segment, expanding the cus- tomer base, perfecting the E-Jets, and pursuing excellence in the customer support model. Executive Aviation | Consolidate Embraer’s position as one of the world’s most admired brands of executive jets, with recognition of customers for the quality of products and service. Defense & Security | Maintain Embraer’s leading position in the domestic market and expand its international performance through the modernization of products and support services. Business Diversification | Develop new business from the core competencies of the company, accelerating the adoption of new technologies and business models. People, sustainability, organization and processes | Keep advancing as a global organization committed both to delivering customer satisfaction and valuing its people; a company that grows sustainably and serves as reference in the market for innovation and corporate excellence. INTANGIBLE ASSETS Annually, during the review cycle of the stra- tegic plan, Embraer identifies and prioritiz- es its intangible assets in order to guide its performance as a company that values people and is committed to customers and business excellence. Brand | Monitored by material published in the press, presence in the sustainability indi- ces and external acknowledgments referring to the management of people and the quality of service and products (see page 22). Knowledge | Measured through the ma- turity index of processes implemented in the company, as well as by the practices of knowledge management. Intellectual property | Measured by num- ber of patents for inventions and for indus- trial designs. People | Evaluated periodically by compe- tencies (see page 35). Another indicator is external recognition related to personnel management (see page 22). Leadership | 360° evaluations (see page 35). ECONOMIC/FINANCIAL PERFORMANCE |G4-DMA: Economic performance| The year was challenging for Embraer due to reduced sales in the Defense & Security and Executive Aviation, in line with other compa- nies in these segments. The consolidated results, however, were positive in light of the good performance of the Commercial Aviation segment and the reduction of costs and ex- penses, mainly for the qualification of sales and margin improvement in Executive Aviation. In 2016, the company delivered 240 air- craft, the same volume as the previous year. Net revenue was US$6,217.5 million, slight- ly higher than the estimates for the year. Operating income and operating margin Operating income (EBIT) and operating mar- gin closed 2016 at R$717.8 million and 3.3%, respectively, slightly down when com- pared to the previous year (operating income of R$1,103.1 million and operating margin of 5.4%) due to non-recurring items, such as provisions related to the termination of the investigation of non-compliance with U.S. authorities, and also related to the payment of benefits offered in the Voluntary Dismiss- al Program (PDV, in Portuguese). Excluding these factors, adjusted EBIT was R$1,700.5 million and adjusted EBIT margin was 7.9%, in line with the company’s annual guidance. Net income and earnings per share Adjusted net income, excluding deferred income and social contribution taxes re- lated to the impact of exchange variation on non-monetary assets, and also the aforementioned provisions, was R$964.9 million. Adjusted earnings per share were R$1,3179 for the year. Capital indicators In 2016, the company had a negative ad- justed free cash flow of R$1,478.7 million, lower than the positive free cash flow of R$1,391.7 million in 2015, mainly due to lower cash generation from operating activ- ities, and also due to an increase in invest- ments in property, plant and equipment as well as the development of new products. 31 STRATEGIC PLAN |G4-45| Embraer conducts its planning with a 15-year horizon, but attentive to external scenarios, the company promotes annual review cycles with all administrative and operational de- partments. The strategic plan is approved by the Board of Directors, which evaluates it based on risk management, growth expecta- tions and stakeholder demands. The review process carried out in 2016 considered the economic moment faced in the aerospace and defense segments, which resulted in a decrease in the number of sales in the segment, especially in Exec- utive Aviation, in relation to the last eight years. In this scenario, Embraer adjusted costs, expenses and operations – essen- tial adjustments to uphold the commitment to the goals set forth. During the year, the company announced the closure of Harpia Sistemas S.A and Harbin Embraer Aircraft Industry Co. joint venture (HEAI) and, consequently, the ter- mination of the manufacturing of the Lega- cy 650 jets in China. |G4-13| 30 DELIVERY OF AIRCRAFT BY UNIT 2014 2015 2016 92 116 COMMERCIAL AVIATION EXECUTIVE JETS DEFENSE & SECURITY 20 101 120 COMMERCIAL AVIATION EXECUTIVE JETS DEFENSE & SECURITY 15 108 117 NET INCOME BY SEGMENT (%) TOTAL 241 2015 TOTAL 240 2016 50 COMMERCIAL AVIATION 56 COMMERCIAL AVIATION 57 EXECUTIVE AVIATION DEFENSE & SECURITY 29 14 EXECUTIVE AVIATION DEFENSE & SECURITY 28 15 COMMERCIAL AVIATION EXECUTIVE JETS DEFENSE & SECURITY 7 TOTAL 215 2014 25 23 COMMERCIAL AVIATION EXECUTIVE AVIATION DEFENSE & SECURITY OTHERS 1 OTHERS 1 (IN BILLIONS OF R$) TOTAL 14.94 (IN BILLIONS OF R$) TOTAL 20.30 (IN BILLIONS OF R$) TOTAL 21.43 MAIN ECONOMIC-FINANCIAL INDICATORS MILLIONS OF R$* 2016 Variation 2016/2015 2015 2014 Net income Gross margin 21,435.7 19.9% Adjusted operating profit1 (EBIT) 1,700.5 Adjusted operating margin Adjusted EBITDA2 Adjusted EBITDA margin Net profit Net margin Investments3 Debt Net cash (debt) Total assets Net equity Net debt/equity* ROA ROE ROCE4 Inventory Inventory turnover* Asset turnover* Backlog of firm orders (billions in USD) Delivery of aircraft (units) Number of employees EBIT per employee (in thousands of R$) Distributed dividends Profit per share1 (R$) 7.9% 2,844.2 13.3% 585.4 2.7% 12,458.8 12,254.0 (1,873.0) 38,016.7 12,844.9 1.0 1.6% 4.6% 0.2% 8,136.2 2.1 0.6 19.6 240 18,506 91.9 148.6 0.7959 Quantity of shares (thousand)1,5 735,571 6% 20,301.8 14,935.9 1.4 p.p. 14% 0.5 p.p. 16% 1.2 p.p. 142% 1.5 p.p. (7%) (11%) (6,695%) 17% (14%) 11% 1.1 p.p. 3.0 p.p. (6.1 p.p.) (10%) 17% 50% (13%) (4%) 19% 26% 141% 1% 18.5% 1,493.7 7.4% 2,450.6 12.1% 241.6 1.2% 13,409.1 13,785.7 28.4 45,566.9 15,008.7 0.9 0.5% 1.6% 6.3% 9,037.9 1.8 0.4 22.5 241 19,373 77.1 117.8 0.3309 730,205 19.8% 1,303.8 8.7% 1,980.7 13.3% 796.1 5.3% 8,731.2 6,662.0 (102.6) 27,653.6 10,265.4 0.6 2.9% 7.8% 11.6% 6,388.9 1.9 0.5 20.9 215 19,167 68.0 214.4 1.0851 733,677 Verified numbers are in compliance with the IFRS international accounting norm. * Except Debt/Net Equity, Inventory Turnover, Asset Turnover, Profit per Share and Quantity of Shares. 1. The ajusted term is used for amounts calculated excluding provisions relating to non-recurring items that impacted the result of the period. 2. Represents net profit plus net financial revenue (expenses), income tax and social contributions, depreciation and amortization, minority shareholding and equity pickup. 3 Values include investments in Development, CAPEX and Shareholding. 4. ROCE = NOPAT/Shares employed with non-monetary items period average. 5. Weighted average of existing basic shares during the fiscal year, excluding shares acquired by the company and kept in the treasury. 32 Capital market The shares traded on the BM&FBOVESPA (EMBR3) closed 2016 quoted at R$16.00. The American Depositary Receipts (ADRs) traded in New York (NYSE: ERJ) ended the year quoted at US$19.25. Embraer’s mar- ket value was US$3.6 billion at the end of the year (US$5.5 billion in 2015). Value Added Statement (VAS) Added value for the year was R$5,733.2 million, which indicates a small decrease of 2.94% in relation to what was recorded for the previous year. For shareholders, Embraer distributed R$73.6 million in interest on capital and R$75.0 million in dividends, totaling R$148.6 million, with a payout of 25.4% of net consolidated profit, R$585.4 million. Profit per share was R$0.7959. Emphasis should be given to the distribution of R$3,557.1 million in value to employees and R$592.8 million to federal and municipal governments in the form of taxes and contributions. See more information in the financial statements at: http://ri.embraer.com.br/ listresultados.aspx?idCanal=dwxMd7dcHTw/ kwbNAc2ESQ==&linguagem=en#. |G4-EC1| Investment level confirmed In 2016, the credit risk classification agencies Fitch Ratings and Standard & Poor’s (S&P) Ratings Services reiterated the BBB classification for Embraer. The same rating applies to securities issued abroad. Fitch also attributed a national long-term grade of AAA (BRA) and S&P removed the negative company classification in CreditWatch, a sign that credit ratings will be reevaluated. BRAZIL VAS CONSOLIDATED (IN R$ MILLIONS) |G4-EC1| Revenue 2016 2015 2014 23,416.0 22,360.1 16,343.0 Inputs acquired from third-parties (17,157.1) (16,364.1) (11,144.2) Gross added value Depreciation and amortization Net added value produced by the entity Received added value being transferred Distribution of added value Personnel Government (taxes, rates and contributions) Interest and rentals JCP and dividends Retained profit/losses from fiscal year Shares of non-controllers 6,258.9 (1,265.6) 4,993.3 739.9 5,733.2 3,557.1 592.8 991.7 174.0 411.4 6.4 5,996.0 (1,073.4) 4,922.6 605.2 5,527.8 3,342.4 1,251.6 652.2 117.8 123.8 40.0 5,198.8 (676.8) 4,522.0 418.7 4,940.7 2,502.3 1,058.1 553.7 214.3 581.8 30.5 For more information, access the Annual Financial Statement at http://ri.embraer.com.br/Download.aspx?Arquivo=5QjXT9Bt2eaIHjlqenPhYg==. 33 The company ended the fiscal year with 18,506 employees, 16,007 located in Bra- zil and 2,499 located abroad. The turnover rate was 15.03% (see formation of operat- ing team environment and the hiring rates in GRI Indicators). |G4-DMA: Employment, G4-10, G4-LA1| ATTRACTION AND RETENTION With employees from more than 20 coun- tries, respecting differences is an Embraer principle. Embraer also invites the partici- pation of people with special needs through the On the Path to Diversity program, in op- eration since 2012, in partnership with the Center for the Integration of Businesses and Schools (CIEE, in Portuguese). |G4-DMA: Diversity and equility of opportunity, G4-LA12| In 2016, Embraer started its first trainee program. Through next year, those selected will be trained in the classroom and in op- erations, and will cycle through various de- partments in order to become familiarized with challenges inherent to a global com- pany’s daily routine. In Brazil alone, more than 11 thousand young people expressed interest in the first 23 open positions. 34 In order to provide direct contact with uni- versity students, the company is also es- tablishing partnerships with educational institutions, such as the Engineering Spe- cialization Program (PEE, in Portuguese), conducted by the Technological Institute of Aeronautics (ITA, in Portuguese). Students complete a professional Master’s curricu- lum for Aeronautical Engineering and, upon completion of the course, they may be hired by Embraer. Another initiative is the Embraer Designer Program (PPE, in Portuguese), in which participants are technically trained at the São Paulo College of Technology (FATEC, in Portuguese), and work as interns within the company. This year, US$1,278,805.96 and US$626,077.18 were invested in these programs, respectively. Retaining committed talent requires the de- velopment of a work environment that stim- ulates the upper mobility of positions. With this in mind, Embraer promotes the Internal Employment Program (API, in Portuguese), in which available positions are exclusively disclosed to employees before being an- nounced to the market. This makes vertical mobility (promotion) and horizontal mobility (changing departments) available for career planning. In 2016, 36% of positions open were filled by employees. DEVELOPMENT AND TRAINING |G4-DMA: Training and education, G4-DMA: Investments| Developing talents and preparing them to take on positions of leadership are fundamental conditions to ensure the longevity of the busi- ness. For this purpose, Embraer uses training programs that cover technical as well as be- havioral abilities. Throughout the year, more than 300 courses were offered, mostly online, with the support of videos, tutorials, games and infographics. Training for leaders and future leaders is planned based on PSE guidelines (see page 21), with emphasis on the Embraer Leader- ship Development Program, which offers con- tinued education, improvement for upward mo- bility in careers and other measures focused on the Leadership, Business and Results, and Market axes. The initiative, developed in part- nership with Dom Cabral Foundation, gradu- ated two classes in 2015 and four in 2016, which represents 183 managers trained in Brazil and abroad. Employee performance is analyzed periodical- ly through a skill evaluation. This process was carried out between April and June. Results guide the Personal Development Program (PDI, in Portuguese) and make it possible for leaders to recommend the most appropriate courses to each of their employees. Another performance indicator is the automatic salary progression, geared to production employees 35 at the beginning of their careers, which pro- vides for adjusting the compensation of those who receive positive evaluations. Leaders are evaluated based on 360° assessments, the Performance Map and the Calibration Com- mittee (see performance analysis and career development in GRI Indicators). |G4-LA11| Through year end, the company invested R$14,298,941.00 in 625,416 total hours of training, which represents 34 hours per em- ployee (see average number of training hours per year per employee, as well as the total num- ber of employee training hours for human rights policies in GRI Indicators). |G4-LA9, G4-HR2| INTERNAL COURSES AND PLANNING FOR PRE-RETIREMENT |G4-LA10| Employees Value invested (R$) Grants awarded 2016 90 2015 90 2014 116 115,305.08* 80,000* 190,820 90 90 116 * The 2015 program ended in 2016. The 90 participants of the 2015 program are the same in 2016. accordance with the current legislation in each country. |G4-EC3, G4-LA2| HEALTH AND SAFETY |G4-DMA: Workplace health and safety| Concern with employee health and safety is the focus of the Environmental, Health and Safety Policy (MASS, in Portuguese), which aims to ensure a work environment that complies with labor and environmental law, in addition to complying with health, safety and ergonomic requirements. The initiatives are developed based on periodic medical exams (for all employees) in order trace each department’s epidemiological profile. With this information the company developed the Behavioral Program, Tensional Reeducation Training Program (PERTO, in Portuguese) and the Prevention through Design program. the to COMPENSATION AND BENEFITS |G4-DMA: Economic performance, G4-DMA: Market pres- ence, G4-DMA: Employment| Employees receive fixed compensation, established in accordance with the com- plexity of their functions aligned with sala- ries practiced on the market, and variable compensation, based on company results and individual performance (see variation of the proportion of the lowest salaries, gender discrimination, compared to local minimum wage in GRI Indicators). |G4-EC5| Brazilian employees have a benefits pack- age and may participate in the Embraer Prev complementary pension plan. Membership is voluntary, without restrictions, and time of service is considered for withdrawal. Con- tributors define a monthly value of up to 8% of their salary and the sponsor matches that amount. Abroad, benefits packages vary in 36 and the quest for efficiency (see page 30), which included a Voluntary Dismissal Pro- gram (PDV, in Portuguese). All applications were evaluated by the company, and the 1,463 people who were awarded received, in addition to their severance pay, com- pensation of 40% of the nominal monthly salary proportional to their time of service in the company, six months of health and dental plan coverage, and support through lectures and career qualification and/or transition workshops. |G4-LA10| A satisfaction survey was conducted with these employees, revealing that 85% of the respondents expressed their gratitude for the time they worked at Embraer. This data shows the respect with which the PDV was conducted and reaffirms the high satisfac- tion rates recorded in surveys over the last seven years. Every year between 2007 and 2015, Em- braer conducted an Internal Organizational Climate Survey, seeking to evaluate the de- gree of employee satisfaction. Because it is often above the market average, the compa- ny opted to improve practices in 2016, with a biannual engagement survey, which will take place in 2017, for the first time. Furthermore, emphasis is given to the Well- Being program, which aims to encourage the practice of healthy habits among employees. The Internal Accident Prevention Com- mittee (CIPA, in Portuguese) exists since 1971, and it is made up of representatives elected annually by employees, and an equal proportion of members are named by the company (87.26% representation), with the objective of ensuring safety in the operating environment. |G4-LA5| The company is also in dialogue with unions regarding terms related to employee health and safety. Clauses negotiated in collective conventions cover 100% of Brazilian employ- ees and include: offering Personal Protective Equipment (PPE); training and education re- garding this issue; complaint recording sys- tem; and accident audits and periodic visits with the participation of employees’ repre- sentatives. |G4-11, G4-LA8| Internationally recognized certificates, such as the OHSAS 18001 (since 2001), accred- it Embraer operations with regard to adopt- ed practices. Incident reduction and work condition improvement goals defined in the Master Sustainability Plan (see page 7) are supplemented annually. In addition, safety indicators are also monitored and analyzed monthly by the Board of Executive Officers and by the Board of Directors. For the year, the total number of accidents with lost time was 82, and the occupational sickness rate was 0.22% (see more infor- mation in GRI Indicators). |G4-LA6| MANAGEMENT OF ORGANIZATIONAL CLIMATE In 2016, various sector companies an- nounced cost and expense adjustments, including those related to the operating environment. In this context, Embraer ap- proved a plan for operational adjustments in continuity with the reviews of processes 37 MANAGEMENT OF SUPPLY CHAIN |G4-DMA: Environmental evaluation of suppliers, G4-DMA: Evaluation of suppliers in labor practices, G4-DMA: Freedom of association and collective bargaining, G4-DMA: Child labor, G4-DMA: Forced or slave labor, G4-DMA: Evaluation of suppliers in human rights, G4-DMA: Evaluation of suppliers in societal impacts, G4-12| Embraer’s supply chain is divided into 1,200 direct suppliers, with which resources are traded for the manufacturing of products, and 3,000 indirect suppliers, who support technical and administrative activities. The relationship with this public is guided by the Code of Ethics and Conduct (see page 18) and goals are established in the Master Sustainability Plan (see page 7). Business partners are subject to risk as- sessments that include monthly monitor- ing of performance indicators, face-to-face audits at contractor companies’ plants and the periodic assessment of environmental impact surveys. In addition, all contracts contain clauses regarding human rights and labor as well as environmental laws. This year, no significant negative impacts were identified with regard to labor practic- es in the supply chain. |G4-EN32, G4-EN33, G4-LA14, G4-LA15, G4-HR1, G4-HR4, G4-HR5, G4-HR6, G4-HR10, G4-SO9| 38 EVOLUTION OF PDCA IN 2016 Increase of 12% for delivery volume and increase of 12.4% for billing. Part numbers number 2014 2016 +10.1% High risk suppliers 2014 2016 -83% Direct employment 2014 2016 -2% On-time deliveries 2014 2016 +7.7% (97.2% of deliveries made on-time) AERONAUTICS CHAIN DEVELOPMENT PROGRAM (PDCA, IN PORTUGUESE) In partnership with the Brazilian Industrial Development Agency (ABDI, in Portuguese), the PDCA seeks to improve all companies involved in the direct supply of industrial processes. The initiative was based on the Excellence Management Model (MEG, in Portuguese) of the National Quality Foun- dation (FNQ, in Portuguese) and promoted significant improvements related to service, costs, quality and waste reduction. EXCELLENCE IN MANAGEMENT PROGRAM (PEG, IN PORTUGUESE) An initiative that aims to enable indirect suppliers to continuously pursue excel- lence, contributing to increased productivity and technical improvement. Companies – selected from risk mapping and cost reduction opportunities – participate in courses on lean management philosophy and receive guidance for kaizen practices (continuous performance improvement). EVOLUTION OF PEG IN 2016 3 classes trained 17 projects completed 14 goals defined 231 measures identified 32 hours of training More than 640 hours of kaizens Reduction of 169 days and 9 hours of processes Savings of R$12 million 1 IDENTIFICATION OF SUPPLIERS 2 THEORETICAL TRAINING 3 KAIZENS 4 PRESENTATION OF RESULTS 39 the Environment SOCIO-ENVIRONMENTAL RESPONSIBILITY |G4-DMA: Energy, G4-DMA: Water, G4-DMA: Emissions, G4-DMA: Effluent and waste| The MASS Policy also guides Embraer’s En- vironmental actions, having among its princi- ples respect for the environment, the pursuit of eco-efficiency and the management of the company’s products’ life cycle. GREENHOUSE GASES (GHG) Since 2012, Embraer has been a signatory party of the aerospace industry’s sustain- ability commitment that establishes two of the industry’s key goals: carbon neutral growth by 2020 and a 50% reduction in net aviation CO2 emissions by 2050, consider- ing 2005 levels. Each year, Embraer disclos- es an inventory of GHG emissions certified by ISO 14064 and audited by Lloyd’s Reg- ister Quality Assurance (LRQA) (see emis- sion inventory results in GRI Indicators). |G4-EN15, G4-EN16, G4-EN17, G4-EN18, G4-EN19, G4-EN20, G4-EN21| Energy and water In 2016, energy consumption totaled 176,889 MWh, a higher value than in 2015, mainly due to the increase of installations and work forces in units of the United States and Portugal. A savings of 2,498 MWh/year was also recorded due to initiatives, such as the modernization of hangar lighting sys- tems, installation of photovoltaic panels, and replacement of tubular fluorescent bulbs with LED lights. This year, the company also hired a consultancy in order to identify improvement opportunities related to the reduction of en- ergy consumption at the Faria Lima, Eugênio de Melo, Taubaté and ELEB units (see more about energy consumption and its reductions in GRI Indicators). |G4-EN3, G4-EN6| During the fiscal year the company consumed 1,127,226 m³ of water, reusing 5%. |G4-EN8, G4-EN10| Effluent and Waste The company’s units discard their effluents in the public network, with the exception of Tau- baté and Gavião Peixoto, Brazil, which discard effluents in the Boçoroca and Mulada streams, respectively. This is possible because they have their own Sewage Treatment Plants (ETE, in Portuguese), and the Gavião Peixoto ETE stands out for its removal of nitrogen-based material (ammonium, nitrite, nitrate) and the reuse of water. The volume discarded is less than the supporting capacity of the water bod- ies and both are outside the Environmental Protected Areas (APA, in Portuguese) (see water disposal broken down by treatment and destination in GRI Indicators). |G4-EN22| Embraer waste management is carried out by third-party companies, specialized in process- ing and decontaminating materials for reuse or responsible disposal (see total weight of generated waste and their destinations in GRI Indicators). |G4-EN23| Sector partnerships |G4-15, G4-16| Embraer establishes dialogs with associa- tions, entities, multilateral organizations and voluntary initiatives in order to contribute to the formulation of public policies concerning the aerospace sector. These relationships are regulated by guidelines stated in the Code of Ethics and Conduct and monitored by the Compliance Program (see page 18). This year, a topic that involved the sector concerned Brazilian Law No. 258/2016, which instituted the modernization of the Brazilian Aero- nautics Code. The current document is from 1986, prior to the current Brazilian Constitution, the Consumer Defense Code, the new Civil Code and the National Civil Aviation Agency. This is an important debate tak- ing place in Brazil’s Senate. The Brazilian Aerospace Industries Associ- ation (AIAB, in Portuguese), in which the company participates on the Board of Executive Officers, was a member of the expert committee that analyzed this reform. Embraer has also been attentive to discussions about easing sanc- tions on Iran, allowing the sale of commercial aircraft under license from the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department, and on the change of European law to allow the transfer of data between Brazil and the U.S. The company also favored setting limits for state support in the de- velopment and maintenance of aeronautical projects. During the year, Brazil appealed to the World Trade Organization (WTO) against subsi- dies granted by the province of Quebec (Canada) for the development of the Canadian C Series commercial aircraft model, a direct rival of the E-Jets, which aggravated the price dispute in commercial aviation. This is a sensitive issue to maintain a level playing field. After six years of negotiations between governments, environmental groups and members of the aviation industry, including Embraer, the International Civil Aviation Organization (ICAO) introduced the first stan- dard for certification of CO2 emissions in aviation. The standard seeks to promote the reduction of CO2 emissions from aircraft, encouraging the integration of fuel-efficient technologies in the design and devel- opment of aircraft. The CO2 standard will be applied to all new aircraft models launched after 2020 and also, progressively, to all aircraft in use starting in 2023, even if designed and launched before 2020. During the ICAO October meeting, the 191 member countries also agreed to implement a Carbon Offset and Reduction Scheme for Inter- national Aviation (CORSIA). The agreement will add to other industry ef- forts to address climate change (see Embraer’s participation in nation- al and international associations and organizations in GRI Indicators). LETTERS, PRINCIPLES AND OTHER EXTERNALLY DEVELOPED INITIATIVES |G4-15| Name Date of adoption UN Global Compact Initiative Towards sustAinable Kerosene for Aviation (ITAKA) Friends of Rio+20 Commitment to reducing GHG emissions in aviation (ICAO/ATAG) Call to Action Bio-fuel research center EcoDemonstrator 2008 2012 2012 2012 2014 2015 2016 Scope Global Global Global Global Stakeholders involved Suppliers, manufacturers, transportation com- panies and organizations from different sectors Suppliers, manufacturers, transportation com- panies and aerospace sector organizations Organizations from various sectors Suppliers, manufacturers, transportation compa- nies and organizations from the aerospace sector Global Suppliers, manufacturers, transportation com- panies and organizations from different sectors Brazil (with world impact potential) Technology test for improving environmental performance of product Partnership with Boeing Partnership with Boeing EMBRAER INSTITUTE |G4-DMA: Indirect economic impacts, G4-DMA: Local communities, G4-EC7, G4-EC8, G4-SO1| The Embraer Institute for Education and Research, which celebrated 15 years of operations in 2016, was created in order to manage Embraer’s social private investment in programs focused on education. The initiatives are based on three fronts of action: education, engagement with society and preserving the memory of the Brazilian aeronautical industry. During the fiscal year, in order to encourage good practices, Embraer – through the Embraer institute – embraced four Sustainable Development Goals, established by the United Nations (UN). Learn more at www.institutoembraer.org.br. 15 YEARS OF SOCIAL TRANSFORMATION R$20 MILLION INVESTED DURING THE FISCAL YEAR ENGAGEMENT WITH SOCIETY Social Partnership | The Social Partnership Program sup- ports educational projects structured by civil organizations. In building its thematic agenda, the Embraer Institute pro- motes public consultations based on the Sustainable Devel- opment Objectives (SDGs) agenda. Volunteering | The Embraer Institute coordinates initiatives focused on disseminating a volunteering culture among em- ployees of the company, and establishes partnerships with public and private entities aiming to intensify volunteerism in activities that comply with Embraer values. MORE THAN 150 PROJECTS SUPPORTED SINCE 2004 793 EMPLOYEES ENGAGED 2016 IN PRESERVING MEMORY Embraer Historical Center | Created in 2006 and incorporated into the Institute in 2014, it is responsible for rescuing, preserving and disclosing the memory of the Brazilian aeronautical industry in four exhibition spaces – São José dos Campos (SP), Gavião Peixoto (SP), Villepinte (France) and Fort Lauderdale (EUA) – and on the website http://institutoembraer.org.br/ centrohistoricoembraer. In 2016, the virtual exhibition Women in Aviation was held, in line with the fifth UN Sustainable Development Objective (Gender Equality). See https://goo.gl/EQWdyL. Guided tours | Launched in 2015 as an experiment, the initiative opens the São José dos Campos unit’s doors to the community. In addition to bringing the unit closer to the community, the program rescues the company’s history and involves employees who work as guides during the visits. A Flight for Embraer | At the end of 2015 and at the beginning of 2016, the Catavento Cultural Museum, in São Paulo, held a thematic exhibition on Aviation Technology, which had an Embraer Institute collection, including a life size passenger cabin. 119,000 VISITED THE A FLIGHT FOR EMBRAER EXHIBITION AT THE CATAVENTO CULTURAL MUSEUM 42 EDUCATION Embraer High Schools | Embraer’s Juarez Wanderley and Casimiro Montenegro Filho High Schools, located in São José dos Campos and Botucatu, respectively, offer three years of education (a full high school term) at no cost, for students from the public school sys- tem. In addition to the full scholarship, Embraer High Schools also provide uniforms, teaching materials, food and transportation. Their applied educational method focuses on academic excellence and professional ori- entation, through socio-environmental and cultural ed- ucation, and is a key factor in achieving high approval rates in public and private university entrance exams. For 2016, the two high schools were listed among the best schools in Brazil, based on the results of the National Secondary Education Exam (ENEM, in Portu- guese). Juarez Wanderley College also won the first four positions in the Intelligence Olympics, organized by the Multiple Intelligences Assessment (AMI, in Portuguese) and by the Commercial and Industrial Association (ACI, in Portuguese) in São José dos Campos. Scholarship Fund | Program for alumni of the Embraer High Schools who had excellent academic perfor- mance, financial limitations and who have been ac- cepted into public or private universities with full tuition waiver. The fund is made up of donations from individ- uals, among them employees, as well as companies and organizations. Supporting the sustainability of the program, former students also become donors, once they find a place in the job market, and a grace period comes to an end. In 2016, the initiative benefited 271 university students. Entrepreneurship | The Embraer Institute carries out initiatives in order to stimulate the entrepreneurial spirit in students of the public system in the areas where the company is present. Noteworthy, among the highlights of 2016, are the various awards re- ceived by the MiniCompany Program, coordinated in partnership with the Junior Achievement organization of the State of São Paulo, including the Best Mini- Company award in the Social Responsibility category. i e d ade e m e n t c o o V o d g a sformatio n ção social ento co m a s unity e n g m m m aja o C g n E a n m a r r o t f l s a n c a o i r S T P r e M Parceria Social Partnership Social a m G uid e d Pro gra Visita s to urs G uia d a s s e e m r v o a r r e o a r t r n b e m C E l o a c c i i r r ó o t t s s i i H H r e r e a t r n b e m C E ç ã y preservation o da memór i a l a u i r n a t t e n e u r i l n o g V High Schools Embraer Colégios Embraer E E d d u u c c Scholarship Fundos de Bolsas fund i t a a ç ã o o n E E m n p t r r e e e p r n e d n e e d u o ri ri s s m m o G G e n e e r a r a ç ã tio o de valor n of value 271 UNIVERSITY STUDENTS BENEFITTED IN THE YEAR 2,840 STUDENTS GRADUATED SINCE THE CREATION OF THE INSTITUTE MORE THAN 80% GRADUATING STUDENTS APPROVED IN PUBLIC AND PRIVATE UNIVERSITIES 43 GRI INDICATORS Location of the organization’s headquarters |G4-5| Avenida Brigadeiro Faria Lima, 2,170 – Putim, São José dos Campos – SP. Employee profile |G4-10| BY FUNCTIONAL LEVEL Board of Executive Officers1 Manager Supervisor Pilot Engineer Professional Technical Administrative Operational 20163 Women 9 45 82 0 547 1,036 332 319 540 Men 82 269 638 93 3,603 1,487 2,912 435 6,077 20153 Women 9 40 75 0 586 965 300 377 599 Men 73 235 678 102 3,783 1,300 3,168 480 6,603 20142 Women 8 43 81 0 576 961 277 386 589 Men 79 234 726 106 3,708 1,271 3,013 490 6,619 Total by gender 15,596 2,910 16,422 2,951 16,246 2,921 Total BY TYPE OF CONTRACT Determined time Undetermined time Total by gender Total BY WORK DAY Full work day Half period Total by gender Total BY COUNTRY Brazil China USA France Netherlands Ireland Portugal Singapore 18,506 20163 18,506 20163 18,506 20163 Men 306 15,290 15,596 Men 15,580 16 15,596 Men 13,540 46 1,479 93 75 0 324 39 Women 70 2,840 2,910 Women 2,905 5 2,910 Women 2,467 21 284 19 19 0 83 17 19,373 20153 19,373 20153 19,373 20153 Men 217 16,205 16,422 Men 16,403 19 16,422 Men 14,488 48 1,406 89 56 0 294 41 Women 89 2,862 2,951 Women 2,945 6 2,951 Women 2,519 26 262 19 10 1 97 17 19,167 20142 19,167 20142 19,167 20142 Men 226 16,020 16,246 Men 16,219 27 16,246 Men 14,571 43 1,189 187 4 2 209 41 Women 67 2,854 2,921 Women 2,916 5 2,921 Women 2,523 27 221 75 1 1 57 16 Total by gender 15,596 2,910 16,422 2,951 16,246 2,921 Total 18,506 19,373 19,167 44 BY WORKFORCE Direct employees Third-parties4 Total 20163 20153 2014 Men 13,108 Women 2,328 Men 14,488 Women 2,519 Men 16,246 Women 2,921 4,355 19,791 3,935 20,942 0 19,167 1. Includes director-president, vice-presidents and executive officers. 2. In previous years, the count for Brazil was notated by region in the country. Starting in 2015, the counts came to be notated by country. 3. Numbers referring to sites in Brazil. 4. The system used for handling third-parties does not allow for a breakdown by gender. Participation in national or international associations and organizations1 |G4-16| NATIONAL AGENDA Seat on the Board of Governance Participation in projects/ commissions Strategic participation Is there resource allocation beyond the registration/ association fee? Brazilian Association of Public Companies (Abrasca, in Portuguese) Brazilian Association of Industries for Defense and Security Materials (ABIMDE, in Portuguese) Brazilian Association of General Aviation (ABAG, in Portuguese) Brazilian Association of Mechanical Sciences (ABCM, in Portuguese) Aerospace Industries Association of Brazil (AIAB, in Portuguese) Foreign Trade Association of Brazil (AEB, in Portuguese) Technology Park of São José dos Campos Association National Association for Research and Development of Innovative Companies (ANPEI, in Portuguese) Center for Competitiveness and Innovation of the Eastern Region of the State of São Paulo (CECOMPI, in Portuguese) National Confederation of Industry (CNI, in Portuguese)2 Federation of Industries of the State of São Paulo (Fiesp, in Portuguese) Brazilian Institute of Corporate Governance (IBGC, in Portuguese) Industrial Enterprise Development Institute (IEDI, in Portuguese) Brazilian National Confederation of Industry (MEI, in Portuguese) INTERNATIONAL AGENDA Aerospace Industries Association (AIA) Air Transport Action Group (ATAG) Aviation Working Group (AWG) Yes Yes Yes No Yes Yes No Yes Yes No Yes No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No No No No No No No No No No No Seat on the Board of Governance Participation in projects/com- missions Strategic partici- pation Is there resource allocation beyond the registration/ association fee? No Yes Yes Yes Yes Yes Yes Yes Yes No No No Brazil Industries Coalition (BIC) American Chamber of Commerce (Amcham) Portuguese Chamber of Commerce in Brazil (CPCB, in Portuguese) Brazilian Center for International Relations (CEBRI, in Portuguese) Brazil-China Corporate Council (CEBC, in Portuguese) Brazil-United States Corporate Council (CEBEU, in Portuguese) European Policy Center (EPC) Global Compact Foundation Foreign Trade Study Center Foundation (Funcex, in Portuguese) General Aviation Manufacturers Association (Gama) International Aerospace Environmental Group (Iaeg) National Aeronautic Association (NAA) United States Chamber of Commerce (US Chamber) World Economic Forum (WEF) Yes Yes Yes Yes Yes Yes No No Yes No No Yes No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No No No No No No No No No No No 1. The list does not present the totality of associations in which Embraer participates. However, the most strategic ones were listed. 2. Associative participation through the Fiesp system. Limit of material aspect inside and outside of the organization Material matters Material aspects |G4-19| Indicators Economic performance Market presence Indirect economic impacts Energy Water G4-EC1 G4-EC2 G4-EC3 G4-EC5 G4-EC7 G4-EC8 G4-EN3 G4-EN5 G4-EN6 G4-EN7 G4-EN8 G4-EN9 G4-EN10 Export control Attraction, development and retention of human resources Attraction, development and retention of human resources Local socio-economic development Management of natural resources and waste Sustainable new business, products and services Research, development and innovation Management of natural resources and waste 46 Aspect limit in the organization |G4-20, G4-21| Inside Outside X X X X X X X X |G4-19| |G4-20, G4-21| Atmospheric emissions Emissions Management of natural resources and waste Management of chemical substances Management of chemical substances Effluent and waste Management of the product’s environmental life cycle Products and services Management of supply chain Transparency and communication Attraction, development and retention of human resources Human and labor rights Environmental evaluation of suppliers System for complaints and claims relating to environmental impacts Employment Employee health and safety Work health and safety Attraction, development and retention of human resources Management of supply chain Transparency and communication Training and education Diversity and equality of opportunity Evaluation of suppliers for labor practices System for complaints and claims relating to labor practices Investments Human and labor rights No discrimination Freedom of association and collective bargaining Child labor Management of supply chain Forced or slave labor Evaluation of suppliers for human rights Transparency and communication System for complaints Local socio-economic development Local communities G4-EN15 G4-EN16 G4-EN17 G4-EN18 G4-EN19 G4-EN20 G4-EN21 G4-EN22 G4-EN23 G4-EN24 G4-EN27 G4-EN32 G4-EN33 G4-EN34 G4-LA1 G4-LA2 G4-LA5 G4-LA6 G4-LA7 G4-LA8 G4-LA9 G4-LA10 G4-LA11 G4-LA12 G4-LA14 G4-LA15 G4-LA16 G4-HR1 G4-HR2 G4-HR3 G4-HR4 G4-HR5 G4-HR6 G4-HR10 G4-HR12 G4-SO1 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 47 |G4-19| |G4-20, G4-21| |G4-26, G4-37| Ethics Fighting corruption Management of supply chain Transparency and communication Evaluation of suppliers for societal impacts System for complaints and claims relating to societal impacts Product safety Labeling products and services G4-SO3 G4-SO4 G4-SO5 G4-SO9 G4-SO11 G4-PR5 X X X X X X X X Date of the most recent report |G4-29| The previous version of this annual report was published in April 2016, referring to the fiscal year of 2015. Approach and frequency of stakeholder engagement and consultation processes between stakeholders and the highest governance body in relation to economic, environmental and social topics |G4-26, G4-37| Stakeholders Approach Responsible parties Frequency Embraer Operators Conference – EOC and Embraer Executive Operators Conference – EEOC for discussion of matters rela- ting to aircraft (maintenance, operation and field items). Customer Support Annual Customers Kaizens to improve Embraer’s interaction with customers. Customer Support Continuous/Depending on demands Studies to develop or improve products. Market Intelligence, Customer Support and Engineering Continuous/Depending on demands Customer satisfaction surveys. Customer Support Annual Aeronautical fairs for presen- ting and selling products. Embraer Suppliers Conference (ESC) for strategic alignment and awarding the year’s best suppliers. Supply Chain Alignment (SCA) and Supply Chain Quality Alig- nment (SQA) for strategic and operational alignment. Executive Meeting for following action plan indicators. Customer Support Meeting (CSM) dedicated to post-sales for discussing technical and commercial matters. Program Review Meeting (PRM) for technical/operational surveillance of development activities for series and post sales programs. Sales In accordance with global calendar Executive-Administration Annual Program managers and directors and department of Supplier Quality Annual Executive-Administration Quarterly Executive-Administration Quarterly Program directors and managers Biannual Suppliers 48 Shareholder assembly. Legal Vice-President In accordance with the rules for calling a meeting detailed in the Bylaws Shareholders Investor Relations Site. Administration of Investor Relations Embraer Day for presenting re- sults and relevant information. Administration of Investor Relations Meetings with the Ministry of Labor. Management of Workplace Safety, Occupational Health and Environment Meetings with CETESB, Sani- tary Surveillance, Federal/Sta- te Police, Ministry of Defense, mayors, municipal secretaries of education, class entities and Brazilian business associations. Participation in international forums and organizations (WEF, ATAG, IATA, ICAO, UNDP, Global Compact, OMC, AWG, among others). Management of Corporate Sustainability and Management of Workplace Safety, Occupational Health and Environment Administration of External Relations and Managing Corporate Sustainability Society Meetings with federal and state governments, mayors' administra- tions and governmental agencies. Administration of External Relations and Managing Corporate Sustainability Continuous Biannual Bimonthly Continuous Continuous Continuous Blog of the Director-President. Presidency Continuous Cycle of Values – events bet- ween leaders and employees for sharing Embraer Values. Administration of Brand Management and Internal Communications Bimonthly Leaders and employees At least each trimester Meetings to follow up on PA/ PMS and alignment each semester. Climate survey and meetings between leaders and employees. Leaders Helpline. Compliance Board Message to managers. Administration of Brand Manage- ment and Internal Communications Continuous Continuous Continuous Measurements taken to develop and improve awareness of the highest governing body regarding economic, environmental and social topics |G4-43| Measurements Body Economic Environmental Social Lecture on shareholder activism Board of Directors Presentation on environmental matters at company sites Board of Directors Presentation from the Embraer Institute of Education and Research (IEEP, in Portuguese) Annual compliance training Presentation from the Committee of Financial Management Presentation of work from the Committee of Control and Environmental Risks (CCRA, in Portuguese) Presentation of work from Committee of Sustainability Presentation from the Committee of Ethics Anti-trust training Board of Directors Board of Directors Board of Executive Officers Board of Executive Officers Board of Executive Officers Board of Executive Officers Board of Executive Officers X X X X X X X X X X Highest level body or position that formally analyzes and approves the sustainability report for the organization and ensures that all material matters are covered |G4-48| President-Director. Process adopted to communicate critical concerns to the highest level governing body |G4-49| The company’s Board of Executive Officers and Board of Directors’ Advisory Committees communicate critical company concerns where BD ordinary meetings take place or, if necessary, they request Extraordinary meetings. Variation of the proportion of the lowest wage, separated by gender, compared to the local minimum wage at important operational sites |G4-EC5| Country Gender Reference Ratio (%) Brazil (BRL)1 United States (USD)2 Portugal (EUR)3 France (EUR)4 2014 2015 2016 Men 1,337.60 1,339.80 1,502.80 Women 1,337.60 1,470.55 1,470.55 Men 1,733.33 1,733.33 2,142.40 Women 2,080.00 2,080.00 2,102.53 Men 700.00 700.00 Women 700.00 700.00 700.00 700.00 Men 1,891.99 1,891.99 1,851.39 Women 1,891.99 1,513.59 1,556.80 880.00 1,395.33 530.00 1,466.62 171 167 154 151 132 132 126 106 1. Minimum wage in Brazil. The salary floor follows of the union category. 2. Minimum wage in the state of Florida. 3. Minimum wage in Portugal. 4. Minimum wage in France. Important operational sites are those in which Embraer is present have that have a significant quantity of staff. The following countries’ offices were not considered: Singapore, China and Netherlands. Consumption of electrical energy by unit (MWh) |G4-EN3| 2014 64,210 17,444 Unavailable 14,710 14,210 Unavailable 10,775 Unavailable 4,830 Unavailable Unavailable Unavailable 2015 65,864 17,291 14,218 13,707 13,443 12,929 10,959 8,147 4,031 3,626 2,180 900 2016 62,472 15,683 16,021 15,320 15,601 13,326 10,987 13,299 4,264 4,853 3,232 925 Faria Lima Botucatu Évora Eugênio de Melo Gavião Peixoto OGMA ELEB Melbourne Taubaté Nashville Fort Lauderdale Sorocaba 50 Harbin* Belo Horizonte Beijing São Paulo Total Unavailable Unavailable Unavailable Unavailable 126,179 830 636 179 Unavailable 168,940 0 612 183 111 176,889 * In 2016, electrical energy consumed at the São Paulo office was included and the Harbin unit, in China, was excluded, due to closing of operations. Consumption of energy within the organization |G4-EN3| Type of fuel (non renewable) Total consumption (MWh) Diesel Gasoline Liquefied Petroleum Gas (LPG) Natural gas Aviation kerosene Total 736 319 12,087 31,805 102,113 147,060 Consumed non-renewable fuel values include the consumption in sites certified in ISO 14064 – Part 1 referring to Scope 1 (SKJ, EGM, TTE, ELEB, BOT, GPX, BHZ, SOD and SPO). Therefore, consumption referring to Embraer sites abroad were not considered. Type of fuel (renewable) Total consumption (MWh) Hydrous ethanol Total 83 83 Consumed renewable fuel values include the consumption in sites certified in ISO 14064 – Part 1 referring to Scope 1 (SKJ, EGM, TTE, ELEB, BOT, GPX, BHZ, SOD and SPO). Therefore, consumption referring to Embraer sites abroad were not considered. Quantities of acquired heating, refrigeration and steam not significant. Energetic intensity |G4-EN5| The indicator of energetic intensity covers electrical energy consumed during the year for the manufacturing of aircraft. Due to the various models of plane manufactured by Embraer, the term equivalent aircraft was created, a number calculated from the plane model and the work hours required for its manufacture. In 2016, 249 equivalent aircraft were produced. Considering the consumption of electrical energy in manufacturing plants in Brazil in 2016, the energetic intensity indicator was 500 MWh for each equivalent aircraft produced, a value 10% lower when com- pared to that in 2015. With relation to the performance of all sites reported for this indicator, the energetic intensity of Embraer S.A. sites was 711 MWh per equivalent aircraft, a value 4% lower than that reached in 2015. 51 Reduction of energy consumption |G4-EN6| Total of water removed by source |G4-EN8| Project title Economy in the year (kWh) Water sources Unit Gavião Peixoto Faria Lima Eugênio de Melo Botucatu Total Modernization of the hangar illumination system – G-1340 Modernization of the hangar illumination system – G-1560 Modernization of the hangar illumination system – G-1350 Modernization of the hangar illumination system – G-1360 Modernization of the hangar illumination system – G-1362 Modernization of the hangar illumination system – G-1550 Installation of photovoltaic panels Patio F 51/57 Patio F 231 LED lighting – F-30/2 Hangar F30/1 LED lighting – F-51/57 LED lighting – external (layout) LED lighting – F-101 LED lighting – F-113 LED lighting – F-77 LED lighting – F-50 LED lighting – F-66 LED lighting – E-501 LED lighting – external areas – layout Replacement of tubular fluorescent lights with LED lights – B01 and B12 Installation of photovoltaic lighting posts Project of compressed gas economy 173,184.00 69,264.00 221,400.00 173,952.00 112,788.00 304,920.00 3,352.00 5,280.00 35,868.00 75,200.00 41,040.00 15,010.00 136,800.00 26,400.00 116,160.00 80,256.00 60,192.00 170,544.00 394,896.00 31,200.00 9,348.00 6,480.00 235,247 2,498,780.61 For lighting projects, the avoided consumption was estimated using the old and new lighting powers and the operational time in each hangar where the exchange took place. For the photovoltaic energy generation project the avoided energy was estimated based on the power of installed photovoltaic panels and the solar incidence in the region. For the compressed gas economy project in Botucatu, gas economy was estimated based on energy used before and after implementation thereof, in which habit changes were encouraged, such as turning off compressors in the early morning and on weekends. 52 Quantity (m³) 2014 2015 2016 647,616 616,545 563,845 - - 60,315 Underground water Effluent from other organizations Municipal supply of water or other water supplying companies 115,737 344,268 503,066 Total volume of removed water 763,353 960,813 1,127,226 The SJK, EGM and GPX sites are supplied with underground water captured in the area of the company. The ELEB, Taubaté, Botucatu, Belo Horizonte and Sorocaba sites in Brazil and the Évora, OGMA, Fort Lauderdale, Nashville, Melbourne and Beijing sites abroad use municipally supplied water or other water supplying companies. As of 2016, we began to report the volume of effluent treated for reuse from the water company of the municipality of Melbourne. The Harbin unit ceased operations at the start of 2016 and information referring to this unit is not included in the report. Values reported were obtained using direct measurements. Water sources significantly effected by removal of water |G4-EN9| We add that there are no sources significantly effected by our operations. Total percentage and volume of recycled and reused water |G4-EN10| Site SJK EGM TTE ELEB GPX BOT EVO FLL BNA MLB BJS BHZ OGMA SOD Embraer Brasil Embraer S.A. Total of used water (m³) Total of recycled and reused water (m³) Percentage of recycled water 2016 362,813 143,113 26,464 56,106 69,000 89,316 82,617 29,560 1,980 71,283 2,213 4,760 239,078 2,050 753,622 1,180,353 5,280 0 7,454 29,952 5,801 0 1,800 0 0 0 0 0 2,840 0 48,487 53,127 1 0 28 53 8 0 2 0 0 0 0 0 1 0 6 5 53 The values of recycled and reused water were estimated according to the consumption of the equipment that uses recycled and reused water, as well as according to the volume of the reservoir in which it is stored. Biogenic Emissions (tCO2e) Scope 1 The total amount of used water is the sum of water consumed (G4-EN8) and recycled and reused water. G4-DMA: Emissions Embraer uses the approach of operational control, including operational unit emissions and activities which the company controls in the inventory. The reported greenhouse gas emissions cover the SJK, EGM, TTE, ELEB, GPX, BOT, BHZ, SOD and SPO sites. The emission factors used in the calculations are attached. Referenced used were: • IPCC 2006, 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Prepared by the National Gre- enhouse Gas Inventories Programme, Eggleston H.S., Buendia L., Miwa K., Ngara T. and Tanabe K. (eds). Published: IGES, Japan. www.ipcc-nggip.iges.or.jp/public/2006gl. • National Energetic Balance 2015: Base year 2014/Energy Research Company – Rio de Janeiro: EPE, 2015. https://ben.epe.gov.br/downloads/Relatorio_Final_BEN_2015.pdf. • GHG Protocol Brazilian Program. Calculation Tool, 2016 Cycle. www.ghgprotocolbrasil.com.br/ferramenta-de-calculo. • Ministry of Science, Technology and Innovation (MCTI, in Portuguese). Factors of the CO2 emissions from electrical energy generation from Brazil’s National Interconnected System. Accessed on: Jan. 30, 2016. http://www.mctic.gov.br/mctic/opencms/textogeral/emissao_corporativos.html. Direct emission of greenhouse gases (GHG) (Scope 1) |G4-EN15| Scope 1 Emissions GHG CO2 (tCO2e) CH4 (tCO2e) N2O (tCO2e) HFC (tCO2e) PFC (tCO2e) SF6 (tCO2e) Total 2014 27,396.26 399.19 166.86 2,217.17 0 0 2015 28,164.26 11.68 171.43 3,053.97 0 0 2016 35,704.63 10.79 239.76 2,105.83 0 0 30,179.48 31,401.34 38,061.01 54 2014 84.8 2015 64.81 2016 48.11 Indirect emission of greenhouse gases (GHG) resulting from the acquisition of energy (Scope 2) |G4-EN16| Scope 2 Emissions GHG CO2 (tCO2e) CH4 (tCO2e) N2O (tCO2e) HFC (tCO2e) PFC (tCO2e) SF6 (tCO2e) Total Biogenic Emissions Scope 2 2014 0 2014 16,905.26 2015 15,699.16 2016 10,217.33 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16,905.26 15,699.16 10,217.33 2015 0 2016 0 Other indirect emissions of greenhouse gases (GHG) (Scope 3) |G4-EN17| Scope 3 Emissions GHG CO2 (tCO2e) CH4 (tCO2e) N2O (tCO2e) HFC (tCO2e) PFC (tCO2e) SF6 (tCO2e) Total 2014 29,847.30 1,776.41 250.08 0 0 0 2015 31,979.47 1,862.90 278.61 0 0 0 2016 26,185.27 1,250.07 381.18 0 0 0 31,873.78 34,120.98 27,816.52 Biogenic Emissions Scope 3 (tCO2e) 2014 1,156.98 2015 1,086.24 2016 1,348.55 55 Intensity of emissions of greenhouse gases (GHG) |G4-EN18| Embraer calculates its greenhouse gas intensity indicator by adding the emissions from Scopes 1 and 2 accor- ding to the company’s net revenue. The company’s reduction goal is 3% during 2017, using 2013 as a reference. Considered in this indicator: Scope 1 emissions referring to: fugitive emissions; burning of different aeronauti- cal kerosene fuels (QAV, in Portuguese); and burning of QAV in production flights (current portfolio aircraft). Not considered: development flight emissions and certification of new products, as well as the Defense and Security Business Unit’s aircraft. In this way, the 2016 indicator showed 19% reduction with relation to the year of 2013. Reduction of emissions of greenhouse gas (GHG) |G4-EN19| Reduction of emissions of greenhouse gas (GHG) Weight (tCO2e) Redesigning processes – Scope 1 Conversion and modernization of equipment – Scope 2 Conversion and modernization of equipment – Scope 1 Changes in the behavior of employees Total emissions avoided 2014 2015 2016 77 47 120 22 266 98 239 0 0 337 0 185 0 19 204 Persistent Organic Pollutants (POP) Volatile Organic Compounds (VOC) Particulate Matter (PM) 0 27 36 0 20 26 0 7 19 Reported values refer to manufacturing plants SJK, EGM, Eleb, GPX and BOT. To calculate emissions, the te- chnical norms from the Environmental Company of the State of São Paulo (CETESB, in Portuguese) and the Environmental Protection Agency (EPA) were used. Installations carry out surveillance of atmospheric emissions resulting from stationary sources annually or at the demand of a local environmental agency, as per company procedure doc.emb 2314 and the Plan of Surveillance for Atmospheric Emissions (PMEA, in Portuguese). PMEAs identify all installed stationary sources, analyzed parameters and systems for controlling employed pollutants. Emissions monitored are: Particulated Matter, Volatile Organic Compounds, Nitrogen Oxide, Sulphuric Oxide and Carbon Monoxide. Emissions, measured in mg/Nm3, are converted to tonnes/year in order to verify if they ex- ceeded the limits set by law. Results are recorded at the local environmental agency and do not exceed the set limits, a compensation project not being necessary. Emissions from volatile organic compounds were significantly reduced in the last few years due to the installation of robots in the main painting cabins, which lessened the quantity of paint used for planes, consequently redu- cing VOC emissions. Also added are the improvements made for control procedures for calculating emissions. Total discard of water, separated by quality and destination |G4-EN22| Emissions of substances that destroy the ozone layer (SDOs, in Portuguese) |G4-EN20| Emissions shown in tonnes of equivalent CFC-11, calculated using the Ozone Depleting Potential (ODP) adopted by Montreal Protocol. Values taken from the Environmental Protection Agency (EPA), available at www.epa.gov/ ozone/science/ods/index.html. Total volume of water discard (m³) 2014 2015 2016 Treatment Destination Emissions of substances that destroy the ozone layer (SDOs, in Portuguese) Precursor HCFC-22 HCFC-141b Total ODP (tCFC-11E/t gas) 2014 (tonnes) 2015 (tonnes) 2016 (tonnes) 0.055 0.110 0.165 0.08 0.03 0.11 0.08 0.03 0.11 0.04 0.02 0.06 Domestic 318,443 373,229 291,422 SJK EGM GPX TTE 213,196 164,318 153,752 Primary treatment – railing 46,867 56,970 48,270 Primary treatment – railing Public sewage collection network Public sewage collection network 38,009 20,371 34,465 13,311 34,319 12,440 Anaerobic treatment Local stream Aerobic treatment Local stream Emissions of NOx, SOx and other significant atmospheric emissions |G4-EN21| Industrial 71,108 116,126 108,047 OGMA N/C 104,165 42,641 Biological treatment Categories NOx SOx 2014 2015 2016 Volume of emissions in tonnes Volume of emissions in tonnes Volume of emissions in tonnes 103 2 97 2 91 2 SJK BOT EGM GPX ELEB 23,708 25,690 24,619 37,702 37,670 28,918 4,160 4,200 3,540 615 827 577 4,923 4,714 3,699 Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment 56 Public sewage collection network Public sewage collection network Public sewage collection network Public sewage collection network Local stream Public sewage collection network 57 OGMA EVO N/C N/C 19,562 19,530 23,466 27,164 Physical-chemical treatment Physical-chemical treatment Public sewage collection network Public sewage collection network OBS.: The value of industrial effluent generated at the Harbin unit (1,763 m³) in 2015 was removed from the table since Harbin closed its operations in 2016. Only effluents treated within Embraer sites were considered. In this way, the volume of the Botucatu’s efluents, which are sent directly to the municipality concessionaire, was not accounted for in this indicator. Total weight of waste (in tonnes), separated by type and disposal method* |G4-EN23| Disposal method Not dan- gerous Danger- ous Total Not dan- gerous Danger- ous Total Not dan- gerous Danger- ous 2014 2015 2016 Landfill (non-dangerous) 1,190 0 2 0 1,190 1,408 2 374 1,295 1,008 0 12 0 386 1,008 1,408 2,009 1,067 1,071 0 0 0 0 9 0 0 1,091 1,100 0 0 0 0 394 867 12 0 0 0 1,295 4 0 0 Total 2,009 422 867 989 1 1 0 28 0 977 1 1 10,368 103 10,471 12,284 113 12,397 12,454 97 12,551 853 557 0 0 1,997 2,850 2,490 2,217 4,707 0 0 0 557 695 0 0 29 0 758 128 30 1,453 157 30 846 679 23 0 2,080 2,926 1,479 2,158 118 27 141 27 Incineration Compost Co-processing Decontamination Sterilization Recycling Recovery Sewage treatment Physical-chemical treatment Industrial landfill (dangerous) * The waste data from Évora unit, not included in the table, totaled 3,152 tonnes for non-hazardous waste, in which 61 tonnes were subject to disposal processes and 3,091 were subject to a recovery process. Considering hazardous wastes, 262 tonnes were disposed of and 61 tonnes were recovered. The variation in results between 2015 and 2016 is due to the inclusion of three sites from United States (Mel- bourne, Nashville and Fort Lauderdale) and the exclusion of the Harbin unit, whose activities ended in 2016. Total number and volume of significant leakage |G4-EN24| In 2016, the company did not record leakage of significant volumes. Number of complaints and claims related to recorded environmental impacts, processed and solved through formal processes |G4-EN34| We have not received any report on the Helpline with respect to complaints and claims related to environmental impacts. 58 Total number and rate of employee turnover by age range, gender and region in 2016 |G4-LA1| Country Age range Men Women General total Brazil China France Portugal Netherlands Singapore United States Under 30 years Between 30 and 50 years More than 50 years Total 264 760 807 Total 1,831 Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total 0 4 2 6 5 50 14 69 15 30 1 46 0 0 1 1 0 3 0 3 Under 30 years 55 Between 30 and 50 years 135 More than 50 years Total 39 229 % 1.43 4.11 4.36 9.89 0.00 0.02 0.01 0.03 0.03 0.27 0.08 0.37 0.08 0.16 0.01 0.25 0.00 0.00 0.01 0.01 0.00 0.02 0.00 0.02 0.30 0.73 0.21 1.24 Total 123 216 55 394 0 12 0 12 6 35 7 48 1 5 0 6 0 2 0 2 0 0 0 0 7 28 11 46 General total 2,185 11.81 508 % 0.66 1.17 0.30 2.13 0.00 0.06 0.00 0.06 0.03 0.19 0.04 0.26 0.01 0.03 0.00 0.03 0.00 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.04 0.15 0.06 0.25 2.75 Total 387 976 862 % 2.09 5.27 4.66 2,225 12.02 0 16 2 18 11 85 21 117 16 35 1 52 0 2 1 3 0 3 0 3 62 163 50 275 0.00 0.09 0.01 0.10 0.06 0.46 0.11 0.63 0.09 0.19 0.01 0.28 0.00 0.01 0.01 0.02 0.00 0.02 0.00 0.02 0.34 0.88 0.27 1.49 2,693 14.55 59 Total number and new employee rate by age range, gender and region in 2016 |G4-LA1| Accidents with leave for all workers (direct employees) |G4-LA6| Country Age range Men Women General total Brazil China France Portugal Netherlands Singapore United States Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total Total 361 130 4 495 0 4 1 5 Under 30 years 79 Between 30 and 50 years 163 More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total Under 30 years Between 30 and 50 years More than 50 years Total 49 291 1 17 0 18 1 20 1 22 22 24 0 46 0 3 0 3 General total 880 % 1.95 0.70 0.02 2.67 0.00 0.02 0.01 0.03 0.43 0.88 0.26 1.57 0.01 0.09 0.00 0.10 0.01 0.11 0.01 0.12 0.12 0.13 0.00 0.25 0.00 0.02 0.00 0.02 4.76 Total 157 57 0 214 1 6 0 7 22 39 9 70 3 5 0 8 1 7 0 8 7 5 0 12 0 0 0 0 319 % 0.85 0.31 0.00 1.16 0.01 0.03 0.00 0.04 0.12 0.21 0.05 0.38 0.02 0.03 0.00 0.04 0.01 0.04 0.00 0.04 0.04 0.03 0.00 0.06 0.00 0.00 0.00 0.00 1.72 Total 518 187 4 709 1 10 1 12 101 202 58 361 4 22 0 26 2 27 1 30 29 29 0 58 0 3 0 3 1,199 % 2.80 1.01 0.02 3.83 0.01 0.05 0.01 0.06 0.55 1.09 0.31 1.95 0.02 0.12 0.00 0.14 0.01 0.15 0.01 0.16 0.16 0.16 0.00 0.31 0.00 0.02 0.00 0.02 6.48 60 Region South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 2014 2015 2016 47 11 6 0 64 38 20 24 0 82 28 13 2 0 43 Accidents with leave for all workers (third-party employees) |G4-LA6| Region South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 2014 2015 2016 22 0 12 0 34 Accidents rate with leave for all workers (direct employees) |G4-LA6| Region South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 2014 1.45 4.29 6.96 0 1.77 Accidents rate with leave for all workers (third-party employees) |G4-LA6| Region South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 2014 2.37 0 29.10 0 3.51 17 0 1 0 18 2015 1.17 7.63 22.23 0 2.25 2015 1.49 0 4.95 0 1.54 35 0 0 0 35 2016 0.88 3.65 2.68 0 1.19 2016 2.78 0 0 0 2.60 61 Occupational illness for all workers (direct employees) |G4-LA6| Region South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 2014 2015 2016 15 0 0 0 15 8 0 0 0 8 6 0 0 0 6 Occupational illness rates for all workers (direct employees) |G4-LA6| Region 2014 2015 2016 Number of occupational illnesses Rate of occupational illnesses South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 15 0 0 0 15 0.25 0.19 0 0 0 0 0 0 0.22 0.17 Days lost (accidents + illnesses) for all workers (company employees) |G4-LA6| Region South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 2014 993 203 110 0 1,306 2015 6,945* 423 438 0 7,806 2016 885 17 25 0 927 * Considering a fatal accident which took place in 2015, for which 6,000 lost days were counted, as per NBR 14280. Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender |G4-LA6| Days lost (accidents + illnesses) for all workers (third-party employees) |G4-LA6| Region 2015 2014 223 0 0 0 223 210 0 17 0 227 South America (Brazil) North America (United States) Europe, Middle East and Africa Asia Total 62 2016 609 0 0 0 609 Rate of days lost (accidents + illness) for all workers (third-party employees) |G4-LA6| 2015 Region 2014 South America (Brazil) North America (United States of America) Europe, Middle East and Africa Asia Total 24.04 0 0 0 23.00 1.49 0 4.95 0 1.54 2016 48.43 0 0 0 45.27 Absentee rate separated by women |G4-LA6| Scheduled hours Hours of absence 3,918,774.14 Absentee rate separated by men Scheduled hours 22,151,700.83 Total Scheduled hours 26,070,474.97 265,285.47 Hours of absence 854,162.27 Hours of absence 1,119,447.74 Percentage 6.77 Percentage 3.86 Percentage 4.29 Total number and rate of occupational illness for third-party employees is zero (0). There were not deaths for the report’s period. Rate of days lost (accidents + illnesses) for all workers (company employees) |G4-LA6| Region South America (Brazil) North America (United States of America) Europe, Middle East and Africa Asia Total 2014 30.55 79.23 127.65 0 36.08 2015 213.70 161.47 405.64 0 214.04 2016 27.92 4.77 33.44 0 25.65 Employees with high incidence or high risk of illness related to their occupation |G4-LA7| None. 63 Average number of training hours per year per employee, separated by gender and functional category* |G4-LA9| Functional category 2014 2015 2016 Men Women Men Women Men Women Board of Executive Officers Number of men who were regu- larly evaluated Percentage of men who were regularly evaluated Total women Number of women who were regularly evaluated Percentage of women who were regularly evaluated Analysis of career performance and development in 2016* |G4-LA11| Hour load 1,101 297 5,383 Board of Executive Officers Employees in the category Hours per employee Hour load 79 14 8 37 73 74 967 9 107 3,832 396 72 53 9 44 4,512 1,692 16,544 3,312 19,280 2,820 Manager Employees in the category Hours per employee 234 19 43 39 235 70 40 83 223 86 34 83 Hour load 31,266 3,901 35,363 4,015 24,152 2,696 Supervisor Employees in the category Hours per employee Hour load Pilot Employees in the category Hours per employee 726 43 1,332 106 13 81 48 0 0 0 678 52 1,285 102 13 75 54 0 0 0 625 39 2,694 93 29 69 39 0 0 0 Hour load 133,344 23,180 105,260 18,843 116,927 20,091 Engineer Employees in the category Hours per employee 3,708 36 576 40 3,783 28 586 32 3,550 33 544 37 Hour load 31,691 21,669 29,652 21,756 33,698 27,243 Professional Employees in the category Hours per employee 1,271 25 961 23 1,300 23 965 23 1,236 27 942 29 Hour load 98,781 14,151 95,219 8,807 128,310 18,772 Technical Employees in the category Hours per employee 3,013 33 277 51 3,168 30 300 29 2,879 45 329 57 Hour load 16,108 13,558 11,382 8,679 9,880 6,397 Administrative Employees in the category Hours per employee 490 33 386 35 480 24 377 23 420 24 309 21 Total men 72 223 625 93 3,550 1,236 2,879 420 6,066 79 235 657 91 3,465 1,173 2,639 390 4,727 15,164 13,456 Manager Supervisor Pilot Engineer Professional Technical Administrative Operational Total 110 105 105 98 98 95 92 93 78 89 9 34 69 0 544 942 329 309 535 11 32 78 0 538 886 259 298 375 2,771 2,477 122 94 113 0 99 94 79 96 70 89 * Due to the Voluntary Dismissal Program, the number of employees is less than the number of evaluated in some categories. Composition of groups responsible for governing and separating employees by functional category, in accordance with gender, age range, minority status and other diversity indicators |G4-LA12| Functional category Board of Executive Officers Manager Supervisor Pilot Engineer Professional Technical Administrative Operational Total Total 91 314 720 93 4,150 2,523 3,244 754 6,617 18,506 Woman (%) Man (%) 10 14 11 0 13 41 10 42 8 16 90 86 89 100 87 59 90 58 92 84 Functional category Total Under 30 years (%) From 30 to 50 years (%) More than 50 years (%) Hour load 197,431 14,677 179,383 11,229 194,844 13,384 Board of Executive Officers Operational Employees in the category Hours per employee 6,619 30 589 25 6,603 27 599 19 6,066 32 535 25 Hour load 515,565 93,126 479,470 77,607 533,617 91,799 Total Employees in the category 16,246 2,921 16,422 2,951 15,164 2,771 Hours per employee 32 32 39 26 35 33 * There was an alteration of data related to prior years since, in 2014, the Embraer standard for functional categorization was used. In consolidating training hours per capita, for what was considered the total number of training participants, there was an alteration so that the number of company employees would be considered. Data for 2013, 2014 and 2015 is global. In 2015 there was an increase in training hours for Leadership, due to the implementation of the Leader School. Manager Supervisor Pilot Engineer Professional Technical Administrative Operational Total 91 314 720 93 4,150 2,523 3,244 754 6,617 18,506 0 1 2 0 18 17 23 32 20 19 48 65 80 45 72 72 64 56 76 71 52 34 18 55 10 11 13 11 5 10 64 65 Employees by minority status Number of black employees who work for the company Percentage of leadership positions occupied by black employees Number of people with disabilities 20141 829 2.67 709 20151 889 2.60 755 20162 1,480 2.30 617 1. Data strictly refers to Brazil. 2. Data referring to 2016 includes integral subsidiaries – Atech and Savis-Bradar. Composition of groups responsible for governing and separating employees by functional category, in accordance with gender, age range, minority status and other diversity indicators |G4-LA12| Governance body Board of Directors Board of Executive Officers Total 11 10 Woman (%) Man (%) 9 10 91 90 Governance body Total Under 30 years (%) Board of Directors Board of Executive Officers 11 10 0 0 From 30 to 50 years (%) More than 50 years (%) 9 30 91 70 Number of complaints and claims related to recorded labor practices, processed and solved through formal processes |G4-LA16| All reported problems, concerns, complaints or violations addressed to the Embraer Helpline are treated confidentially. The complaint will receive a protocol in order to follow the report status online. The verification process is covered by a policy and a procedure, following a calculation methodology. Embraer does not tolerate retaliation with anyone who reports a concern in good faith. Reports made on the complaint channel Outside the scope Inside the scope Applied measures Warnings and suspensions Exemptions Coaching, surveillance, orientation, awareness campaign and improvement of processes and policies 2016 (Helpline) 325 23 302 100 31 6 63 66 Total number of employee training hours regarding human rights or procedures related to human rights matters relevant to the Organization’s operations, including the percentage of trained employees |G4-HR2| Number of hours dedicated to training employees Total number of hours dedicated to training for policies or procedures related to human rights matters Percentage of hours dedicated to training for policies or procedures related to human rights matters Brazil China United States France Netherlands Portugal Singapore Total Brazil China United States France Netherlands Portugal Singapore Total 548,296 1,526 61,868 452 1,391 10,489 1,394 625,416 1,303 16 500 14 46 199 3 2,081 0.2 1.0 0.8 3.0 3.3 1.9 0.2 0.3 Number of employees* Number of employees trained in policies or procedures related to human rights matters Percentage of employees trained in policies or procedures related to human rights matters 15,436 67 1,763 112 94 407 56 17,935 1,168 13 445 13 40 167 2 1,848 7.6 19.4 25.2 11.6 42.6 41.0 3.6 10.3 * Data does not include subsidiaries. Total number of cases of discrimination and corrective measures taken |G4-HR3| There was no internal or external case of discrimination due to ethnicity, color, sex, religion, ideology, nationality or social origin reported on the official company channel (Helpline) which had been verified and considered as having happened in 2016. Percentage of operations with implemented programs of local community engagement, impact evaluation and local development |G4-SO1| Percentage of operations with programs of local community engagement is 49.98%. 67 Total number and percentage of operations submitted to risk evaluation related to corruption and significant identified risks |G4-SO3| Communication and training in policies and procedures for fighting corruption |G4-SO4| Operations Due diligence of suppliers Due diligence of sponsors Due diligence of donations Due diligence of class entities Total number of operations submitted to risk evaluations related to corruption Percentage of operations submitted to risk evaluations related to corruption 5,164 146 34 96 100 100 100 100 Risks related to corruption Type of risk evaluation Action to mitigate risks Conflicts of interest (improper or incorrect payments in order to obtain favors) Qualitative Improper accounting (incorrect records and/or provisioning) Qualitative Inclusion of the subject of conflicts of interest in training that is related to anti-corruption and to the Code of Ethics, analysis of suppliers through the due diligence process, in addition to responses to periodic consultations held with the Compliance team. Additionally, continuous surveillance was im- plemented for payments considered critical and specific tests were included for the departments analyzed by the Internal Audit. Control tests were also performed for SOx certification, by the Internal Controls department. Continuous surveillance was implemented for payments considered critical and specific tests were included for the departments analyzed by the Internal Audit. Additionally, control tests were also performed for SOx certification, by the Internal Controls department. Qualitative Inclusion of specific tests in the departments analyzed by the Internal Audit. The Compliance team's carrying out of the due diligence analyses, in addi- tion to carrying out training on anti-corruption matters. Additionally, specific tests for verifying due diligence in Mergers and Acquisitions (M&A) processes were included in the Internal Audit's work plan. Inclusion of the subject of conflicts of interest in training that is related to anti-corruption and to the Code of Ethics, analysis of suppliers through the due diligence process, in addition to responses to periodic consultations held with the Compliance team. Additionally, continuous surveillance was im- plemented for payments considered critical and specific tests were included for the departments analyzed by the Internal Audit. Control tests were also performed for SOx certification, by the Internal Controls department. Continuous surveillance was implemented for payments considered critical and specific tests were included for the departments analyzed by the Internal Audit. Additionally, control tests are made for SOx certification, executed by Internal Controls and training actions and responses to periodic consulta- tions made to the Compliance team. Improper commercial discounts (absence of approval or alteration of prices) Failure to observe proper anti- corruption procedures in the M&A process Qualitative Improper or duplicated payment (to public authorities and certifying entities) Qualitative Bribery or improper benefits (improp- erly receiving or paying suppliers, commercial representatives, custom- ers, public authorities and external entities) Qualitative 68 Region* Governance bodies established in the organization Number of individuals and/or employees that compose each governance body Southeast Total Board of Directors Fiscal Counsil Board of Executive Officers 3 13 10 9 32 Region* Number of individuals and/or employees that compose each governance body in each region Number of members of the governance body to which anti- corruption policies and procedures have been communicated Percentage of members of the governance body to which anti- corruption policies and procedures have been communicated Southeast 32 * Considered only the Southeast region of Brazil 32 100 Functional categories Leaders Non-leaders Number of employees in each functional category 1,177 16,133 Types of trading partners Suppliers Third parties (commercial representatives, law firms and logistics agents) Number of each type of trading partner 5,064 100 Functional category Board of Executive Officers Manager Supervisor Pilot Engineer Professional Technical Administrative Operational Total Number of employees who were notified of the anti-corruption procedures and policies Percentage of employees who were notified of the anti-corruption procedures and policies 87 382 629 77 3,680 0 3,223 8,027 1,205 17,310 98 97 99 99 100 0 95 94 99 97 69 Confirmed incidents of corruption and actions taken |G4-SO5| None. Number of complaints and claims related to recorded societal impacts, processed and solved through formal processes |G4-SO11| None. Results from customer satisfaction surveys |G4-PR5| Satisfaction indicators obtained from the annual satisfaction survey of Commercial Aviation customers (%) Embraer Absolute Favorability (EAF) Relative-to-benchmark Favorability (RBF) Embraer Absolute Unfavorability (EAU) Spontaneous General Satisfaction Index (ISGE) 2014 67.20 0.85 8.00 87.40 2015 77.30 0.85 3.60 85.90 2016 83.20 0.91 3.70 84.90 70 GRI G4 CONTENT INDEX |G4-32| Materiality Disclosures Embraer SA 7 1 0 2 l u J e c i v r e S General standard content STRATEGY AND ANALYSIS G4-1 G4-2 ORGANIZATIONAL PROFILE G4-3 G4-4 G4-5 G4-6 G4-7 G4-8 G4-9 G4-10 G4-11 G4-12 G4-13 G4-14 G4-15 G4-16 MATERIAL ASPECTS IDENTIFIED AND LIMITS G4-17 G4-18 G4-19 G4-20 G4-21 G4-22 G4-23 INVOLVEMENT OF STAKEHOLDERS G4-24 G4-25 G4-26 G4-27 Page Global compact 6 3 8 to 9 and 10 to 11 6; 7 and 20 to 21 4 13 and 24 to 29 13 and 44 13 and 14 to 15 4 13; 14 to 15 and 24 to 29 13 34 and 44 to 45 37 38 26; 28 and 30 20 to 21 41 41 and 45 to 46 4 4 and 6 46 to 48 46 to 48 6 and 46 to 48 4 4 21 21 21 and 48 to 49 6 71 General standard content REPORT PROFILE Page Global compact G4-28 G4-29 G4-30 G4-31 G4-32 G4-33 GOVERNANCE G4-34 G4-35 G4-36 G4-37 G4-38 G4-39 G4-40 G4-41 G4-42 G4-43 G4-44 G4-45 G4-46 G4-47 G4-48 G4-49 ETHICS AND INTEGRITY G4-56 G4-57 G4-58 4 48 4 4 4 and 71 to 74 4 16 to 17 17 17 48 to 49 17 17 16 to 17 16 to 17 16 49 17 30 20 to 21 17 50 50 15 and 19 20 20 10 10 10 SPECIFIC STANDARD CONTENT Information about management approach and indicators Material aspects CATEGORY: ECONOMIC Economic perfor- mance Market presence Indirect economic impacts G4-DMA G4-EC1 G4-EC2 G4-EC3 G4-DMA G4-EC5 G4-DMA G4-EC7 G4-EC8 CATEGORY: ENVIRONMENTAL G4-DMA G4-EN3 G4-EN5 G4-EN6 G4-EN7 G4-DMA G4-EN8 G4-EN9 G4-EN10 G4-DMA G4-EN15 G4-EN16 G4-EN17 G4-EN18 G4-EN19 G4-EN20 G4-EN21 G4-DMA G4-EN22 G4-EN23 G4-EN24 G4-DMA G4-EN27 G4-DMA G4-EN32 G4-EN33 G4-DMA G4-EN34 Energy Water Emissions Effluent and waste Products and services Environmental assessment of suppliers Procedures for complaints and claims related to environmental impacts 21; 31 to 33 and 36 33 21 36 36 36 and 50 42 to 43 42 to 43 42 to 43 40 to 41 40 and 50 to 51 51 40 and 52 25 and 29 40 to 41 41 and 53 53 41 and 53 to 54 40 to 41 and 54 40 and 54 to 55 40 and 55 40 and 55 40 and 56 40 and 56 40 and 56 40 and 56 to 57 40 to 41 41 and 57 to 58 41 and 58 58 29 29 38 to 39 38 38 20 58 Page Omissions Global compact Currently unavailable. There is no information on the energy reductions of products sold during the period covered by the report. 7 6 7 | 8 8 8 | 9 8 | 9 7 | 8 8 8 7 | 8 7 | 8 7 | 8 8 8 | 9 7 | 8 7 | 8 8 8 8 Currently unavailable. As of the date of publication of this report, the numerical results of the tests performed were not disclosed. Howe- ver, it can be stated that the flights were satisfactory and occurred within normal performance conditions. 7 | 8 | 9 Currently unavailable. There is no monitoring of negative environmental impacts in the supply chain. 8 8 8 6 72 CATEGORY: SOCIAL SUB-CATEGORY: Labor practices and decent work Employment G4-DMA G4-LA1 G4-LA2 G4-DMA G4-LA5 Health and safety at work G4-LA6 G4-LA7 G4-LA8 34 and 36 34 and 59 to 60 36 36 to 37 37 37 and 61 to 63 63 37 Currently unavailable. Discriminated rates by gender will only be possible by 2018. Information for absenteeism rate is available, but there is no breakdown by region of this figures. SPECIFIC STANDARD CONTENT Information about management approach and indicators Material aspects G4-DMA G4-LA9 G4-LA10 G4-LA11 G4-DMA Training and education Diversity and equality of opportunities Page 35 to 36 36 and 64 36 and 37 35 to 36 and 65 34 G4-LA12 34 and 65 to 66 At Embraer we value diversity and we are committed to providing equal employment opportunities, without regard to ethnicity, age, gender, religion, national origin, physical or mental disability, sexual orientation or medical condition. Omissions Global compact Currently unavailable. There is no monitoring of negative impacts on labor practices in the supply chain. Evaluation of suppliers’ labor practices Procedures for complaints and claims related to labor practices G4-DMA G4-LA14 G4-LA15 G4-DMA G4-LA16 SUB-CATEGORY: Human rights Investments Non-discrimina- tion Freedom of association and collective bargaining Child labor Forced work or analogous with slavery Supplier evalua- tion as to human rights Procedures for complaints and claims related to human rights G4-DMA G4-HR1 G4-HR2 G4-DMA G4-HR3 G4-DMA G4-HR4 G4-DMA G4-HR5 G4-DMA G4-HR6 G4-DMA G4-HR10 G4-DMA G4-HR12 SUB-CATEGORY: Society Local commu- nities Fight against corruption Supplier evalua- tion as to impacts on society Procedures for complaints and claims related to impacts on society G4-DMA G4-SO1 G4-DMA G4-SO3 G4-SO4 G4-SO5 G4-DMA G4-SO9 G4-DMA G4-SO11 SUB-CATEGORY: Product liability Labeling of products and services G4-DMA G4-PR5 38 to 39 38 38 20 20 and 66 35 to 36 38 36 and 67 19 67 38 to 39 38 38 to 39 38 38 to 39 38 38 to 39 38 20 20 42 to 43 42 to 43 and 67 18 and 19 18 to 19 and 68 18 to 19 and 69 70 38 to 39 38 20 70 24 24 and 70 6 6 6 2 1 6 3 5 4 2 1 1 10 10 10 MATERIALITY 2017-2019 The review of the first Materiality Matrix (2014-2016), conducted during 2016, followed the guidelines of the Global Reporting Ini- tiative (GRI) guidelines from version G4. The definition of the set of themes to be analyzed considered the topics identified in the first matrix, the recently launched Sustainable Development Goals (SDGs) and the topics routinely addressed in the sustainability indices of the New York and São Paulo stock exchanges. Thus, 21 themes were initially defined for the consultation pro- cess: biofuels; biodiversity; local community development; person- al development; socioeconomic development in the local supply chain; dematerialization; human and labor rights; availability of raw materials; diversity and inclusion; atmospheric emissions; ethics, transparency and compliance; product lifecycle management; nat- ural resources and waste; risk and crisis management; chemical substances management; research, development and innovation; noise; health, safety and well-being; product safety; information security; economic and financial sustainability. The Embraer Business System (SEE, in Portuguese) was used as a reference to define the stakeholders to be consulted in the process. The SEE determines the key stakeholders (clients, cus- tomers, partners, shareholders and society) of the company and defines the business management model, the organization model and the main roles and responsibilities for the management of Embraer. The process also involved sectoral and regulatory organi- zations, aviation experts and civil society organizations. The process was attended by 46 representatives of Embraer’s main stakeholders, of which: 6 shareholders; 11 clients of the Business, Executive and Defense and Security Aviation business units; 6 suppliers; 11 representa- tives of society (including NGOs, sectoral or- ganizations and experts in the sustainability field) and 12 employees from different ar- eas of the company. In order to ensure the identification of the most significant topics for the company’s business, the vice presi- dents and the CEO were also consulted. The matrix was later validated by the Sus- tainability Committee, the Board of Executive Officers and by Embraer’s CEO. The materi- al issues identified will be the basis for the new Sustainability Plan (2018-2020), which will be developed during 2017 and will pres- ent specific indicators and targets for each issue. The Plan will continue to be disclosed annually, which will allow monitoring of the company’s results and progress in relation to the achievement of the goals established. The following materiality presents the eight themes identified in the process considering the combined vision (significance of the en- vironmental, social and economic impacts related to the Embraer activities versus the influence of the theme for the company’s stakeholders) of the evaluations carried out. Natural resources and waste Ethics, transparency and compliance Health, safety and well-being Atmospheric emissions MATE RI ALI TY MATERIALITY Economic and financial sustainability Product safety Other issues covered: Biofuel Biodiversity Local community development Socioeconomic development in the local supply chain Dematerialization Human and labor rights Diversity and inclusion Availability of raw materials Product lifecycle management Risk and crisis management Chemical substances management Noise Information security Research, development and innovation Personal development Credits OVERALL COORDINATION VICE PRESIDENCY OF PEOPLE AND SUSTAINABILITY CORPORATE SUSTAINABILITY MANAGEMENT CONSULTANCY FOR INDICATORS, EDITORIAL COORDINATION, LAYOUT, REVIEW AND CONTENT THEMEDIAGROUP TEXT KMZ CONTEÚDO (COORDINATION: THEMEDIAGROUP) ENGLISH TRANSLATION CENTRAL DE TRADUÇÕES & GLOBAL LANGUAGES PHOTOGRAPHY EMBRAER’S COLLECTION 76 

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