Embraer S.A.
Annual Report 2017

Plain-text annual report

Contents Introduction Message from President and CEO 03 05 07 Message from the President of the Board of Directors 08 20 About Embraer Sustainability management 23 Economic performance 26 Social performance 29 Environmental performance Attachment GRI GRI content index 31 62 70 Credits Contents INTRODUCTION Contents Embraer S.A. is committed to disclosing the re- sults of its operations and progress made in the relationship with its stakeholders on an annual basis, including customers, shareholders, peo- ple, partners and civil society. |102-1, 102-5, 102-40| In line with such principle, this report has been prepared in accordance with the GRI Standards: Core option. |102-54| This is the first stage of the transition to the new format, which replaces the G4 version. This publication is also a publicly available source of information, as requested by the Dow Jones Sustainability Index (DJSI); and evidence of the commitments made under the Global Compact, of which the company is a signato- ry, and the Sustainable Development Goals (SDGs) set by the United Nations (UN). Its content reflects the current Materiality Matrix, and covers the activities of the admin- istrative parent company and its subsidiaries in Brazil and abroad from January 1 to December 31, 2017 – except as otherwise indicated in the explanatory notes. |102-45 | 102-46 | 102-48 | 102-49 | 102-50| The financial data and the inventory of green- house gases (GHG) emitted were respectively au- dited by KPMG Auditores Independentes and by Lloyd’s Register Quality Assurance (LRQA). The remaining data was reviewed internally. |102-56| THANK YOU FOR YOUR INTEREST. For more information, go to: http://ri.embraer.com.br or send an email to investor.relations@embraer.com.br |102-53| Contents !"##$%"& '()!& & MESSAGE FROM THE PRESIDENT AND CEO |102-14| PASSION FOR EXCELLENCE In 2017, we strengthened the pillars that will support our growth in the coming years – ethics, innovation and efficiency – and we made progress towards reaching the highest level of excellence in our activities. We revised our Code of Ethics and Conduct and strengthened its sovereignty over local laws and cus- toms in order to uphold the same integrity standards throughout our operations. We completed our first external monitoring report – as part of the agreement reached in the previous year with Brazilian and U.S. authorities –, which allowed us to identify opportuni- ties for improvement. We also launched the campaign #BETHEXAMPLE to promote internal compliance and rally our employees around the cause. The external acknowledgment that we have received is a sign that we are headed in the right direction. We were listed among the most transparent compa- nies in Brazil according to a report published by the non-profit Transparency International, which ranked us fourth overall and gave us the top score in the Anticorruption Program category. Seeking to foster disruptive innovation and research- ing new business models, we expanded our presence in the Silicon Valley (California) and Boston, and in- augurated the Embraer Business Innovation Center (EBIC) in Melbourne, Florida (USA). Through EBIC, we established a preliminary agreement with Uber Technologies to explore the development and deploy- ment of small electric Vertical Take-Off and Landing vehicles (VTOLs) for short urban commutes, with the potential of changing urban mobility as we know it. With the objective of improving efficiency, we imple- mented Passion for Excellence, an initiative that covers several disciplines, such as purchasing, logistics, engi- neering, production, services & support, organizational culture and design. Our Passion for Excellence is what gives us strength to keep up with the constant trans- formations taking place in our industry, and allows us to celebrate the significant progress being made in each of our business units. In Commercial Aviation, we celebrated the suc- cessful outcome of important tests for the second generation of E-Jets, for which we completed 100% of the E190-E2 certification program. In April 2018, the first aircraft will be delivered to the norwegian Widerøe. The new E-Jets family already has more than 700 purchase commitments from airlines and leasing companies. In addition, first-generation E-Jets account for 58% of our revenue, which will ensure a stable and mature portfolio transition. Our KC-390 military freighter achieved Initial Op- erational Capability (IOC). In 2018, we will make the first delivery to the Brazilian Air Force and will start selling it to other countries such as Portugal, which has already expressed interest in the aircraft. In 2017, we also entered into agreements for the sale of 18 units of the A-29 Super Tucano, which 5 5 E T H I C S , I N N O VAT I O N A N D E F F I C I E N CY Contents |102-14| attests to this model’s international suc- cess, now in operation in more than 13 countries. Also in Defense & Security, we launched the Strategic Defense and Communications Geostationary Satellite (SGDC, in Portuguese), through our sub- sidiary Visiona. The successful launch experience has inspired us to negotiate a potential new contract for a second satellite as early as 2018. In Executive Aviation, we delivered our 1,100th aircraft: a Phenom 300, the most-delivered jet model in its category since 2012, according to the General Aviation Manufacturers Association (GAMA). We also made enhancements to the Phenom 100EV – which in 2017 was certified by the Brazilian National Civil Aviation Agency (ANAC, in Portu- guese), in Brazil, the Federal Aviation Administration (FAA) in the U.S., and the European Aviation Safety Agency (EASA) – and we delivered Phenom 300E. We are confident that the segment will see a gradual recovery moving forward, as some signs indicate that the inventory of used aircraft for sale is starting to drop. In order to reinforce our commitment to offer the best experience to our custom- ers, we completed the structuring phase for the new Services & Support unit. By concentrating all services provided across the various sectors in which we operate, we ensure greater operational efficiency. The new unit will also expand our portfolio and ultimately diversify our revenues. By planning our growth, we advance our agenda of promoting sustainable IN APRIL 2018, WE WILL DELIVER THE FIRST E190-E2 THE NEW MODEL ALREADY HAS 280 FIRM ORDERS AND MORE THAN 700 COMMITMENTS local development. In this sense, we reiterate our commitments made un- der the Global Compact of the United Nations. Last year, we established the Embraer Foundation in the United States, which, similarly to the Embraer Institute in Brazil, establishes partner- ships, engages volunteers and helps build an entrepreneurial culture among members of the communities served. In 2017, we began discussions with Boeing – already a partner in engineer- ing, eco-efficiency and socio-cultural projects – for a possible business com- bination between the two companies. Negotiations are ongoing and any struc- ture will be subject to the approval of the Brazilian Government, national and international regulatory bodies and the two companies. There is no guarantee that the aforementioned business com- bination will materialize. We want to become the world’s best and the most efficient company in the aero- nautical industry, and we have the po- tential to do so. We will stay on this path, certain that we closed out the year stronger than ever. What drives our conviction is the trust of our customers, employees and business partners – whom we would like to thank for another round of achievements. Paulo Cesar de Souza e Silva President and CEO Contents MESSAGE FROM THE PRESIDENT OF THE BOARD OF DIRECTORS |102-14| COMMITMENT TO INTEGRITY It is our mission to transform Embraer into a ref- erence in ethics and compliance both in Brazil and around the world. We have made consis- tent strides in that sense, completing the first external monitoring report after entering into agreements with entities responsible for ethics and compliance in Brazil and abroad. The results steer our Compliance Program’s mechanisms and strategies, which combines prevention, de- tection and discipline actions, in addition to pro- moting the constant involvement of employees within the organizational culture through contin- uous training. The goal is to ensure the highest level of integrity and reinforce the ethics and compliance culture throughout the company. RENEWAL AND TRANSPARENCY IN BD In 2017, two new members joined our Board of Directors (BD). The six other independent members were reelected, representing a 25% renewal of the board. Voting was carried out in accordance with the company’s Bylaws and the Novo Mercado Listing Regulation. This trend of promoting diversity and renewal contributes to our continuous and efficient innovation, adding value to our employees. ORGANIZATIONAL IMPROVEMENT The Vice-Presidency of Strategy, Innovation, and Digital Transformation was established to explore disruptive business models, promote new service platforms and keep the company at the forefront of the aerospace industry. The new Services & Support Unit will consoli- date the capacities currently located in differ- ent business areas in order to deliver even more effective solutions to our customers. RESULTS In recent years, we have improved our portfo- lio by developing new aircraft and services – in compliance with specifications, budget, and deadlines. As a result of our effort and invest- ment, even in the challenging scenario cur- rently faced by the industry, we reached the end of 2017 with revenues of US$5.839 billion, US$18.3 billion in firm orders (backlog) and an adjusted net income of US$279.7 million. We are confident in the gradual recovery of the Executive Aviation industry and remain opti- mistic about the imminent certifications for the KC-390 military transport aircraft and for the second-generation of E-Jets. The new aircraft, added to the expansion and diversification of our service portfolio, will sustain Embraer’s competitiveness in the global market. Our com- mitment to excellence, ethics, and science re- inforces this belief. Thank you very much. Alexandre Silva President of the Board of Directors 7 7 Contents ABOUT EMBRAER 8 Contents Embraer is the leading exporter of high value-added goods in Brazil |102-7| Embraer is a Brazilian company with headquarters in São José dos Campos, São Paulo, and units located in 28 other cities in Brazil and abroad. It operates in the development, manufacturing and sale of aircraft and systems, in addition to providing after-sales support and services for Commercial Aviation, Executive Avia- tion and Defense & Security. In 2017, it started a busi- ness unit focused on services and support, with the aim of diversifying revenues and strengthening its business position in the more than a hundred countries where its products are sold. Embraer is the world leader in com- mercial jets with up to 150 seats, and the main exporter of high value-added goods from Brazil. |102-2, 102-6, 102-10| It is also the parent company of Embraer’s Equipment Division (EDE, formerly known as ELEB), Embraer Aero Seating Technologies (EAST), Atech, Savis and Bradar, in addition to holding a 51% stake in Visiona Tecnologia Espacial Telebras and 65% of OGMA, which develops in- tegrated solutions and aerostructures. In 2017, Embraer registered R$18,713 billion in net revenue and US$18.3 billion in secured orders – results that testify to the commitment of its 18,433 employees worldwide. VISION |102-16| Embraer will further consolidate its position as one of the leading forces in the global aerospace and defense and security industries. Embraer is a market leader in the segments in which it operates and commands a rep- utation for excellence. VALUES |102-16| • Ethics and integrity are at the core of everything we do. • Our people are what make us fly. • We are here to serve our customers. • We strive for business excellence. • We build a sustainable future. • Global presence is our frontier. • Boldness and innovation are our hallmarks. To learn more about the company, please go to our cor- porate site at: www.embraer.com 9 9 9 Contents THE SKY HAS NO LIMITS |102-4, 102-6| United States Memphis Dallas Nashville Fort Lauderdale Melbourne Mesa Windsor Locks Jacksonville Irwindale Titusville Mexico Chihuahua Brazil São José dos Campos (SP) Gavião Peixoto (SP) Botucatu (SP) Taubaté (SP) Sorocaba (SP) Campinas (SP) São Paulo (SP) Florianópolis (SC) Brasília (DF) Belo Horizonte (MG) Netherlands Amsterdam United Kingdom Farnborough Ireland Dublin Portugal Évora Alverca France Le Bourget SERVICE CENTER FACTORY ENGINEERING AND TECHNOLOGY CENTER LOGISTICS CENTER DISTRIBUTION CENTER China Beijing United Arab Emirates Dubai Singapore Singapore 10 Contents Ranked 2nd in the Aerospace & Defense segment of the Dow Jones Sustainability Index CORPORATE GOVERNANCE A publicly-traded company, Embraer stocks are traded on the New York Stock Exchange (NYSE: ERJ), through American Depositary Receipts (ADRs) level III, and on the Novo Mercado segment of São Paulo stock exchange (B3, in Portuguese), under the symbol EMBR3. The number of votes by shareholders in each Share- holders’ Meeting is less than 5% of the number of shares that comprise its cap- ital stock. The number of votes cast by foreign shareholders, individually or col- lectively, cannot exceed 40% of the total votes cast at any Shareholders’ Meet- ing. The company also imposes certain conditions on any shareholder holding a stake equal to or greater than 35% of the capital, including the requirement of a public tender offer to purchase all outstanding shares, and authorization from Brazil’s Federal Government, which owns a special class share that grants it veto power on strategic issues for the company and the country. |102-5, 102-25| It is affiliated to the Brazilian Institute of Corporate Governance (IBGC, in Por- tuguese), the Brazilian Association of Publicly-Traded Companies (ABRASCA, in Portuguese), the Brazilian Institute of Investor Relations (IBRI, in Portuguese), and the National Investors Institute of Brazil (INI, in Portuguese). It was listed on the Dow Jones Sustainabil- ity Index (DJSI) for the eighth consecutive year, with an overall score of 75 points that moved the company up to second place in the Aerospace & Defense segment ranking. Compared with 2016, Embraer maintained its leadership in the supply chain manage- ment and innovation management catego- ries, and moved up to first place in people development, labor practices and product lifecycle management. It was also listed on the Business Sustain- ability Index (ISE, in Portuguese), the Brazil Index (IBrX), the Differentiated Corporate Governance Stock Index (IGC, in Portuguese), the Differentiated Tag Along Stock Index (ITAG, in Portuguese), the Industrial Sector Index (INDX, in Portuguese), and the Brasil 50 Index (IBrX 50, in Portuguese), all in B3. Governance structure The members of the Board of Directors are chosen at a Shareholders’ Meeting: one is appointed by Brazil’s Federal Government, two are chosen by company employees and eight are elected by the other share- holders. The directors appoint the statu- tory executive officers and are advised by three committees on specific matters. A permanent and independent Fiscal Board also comprises the company’s corporate governance structure. |102-24| GOVERNANCE STRUCTURE |102-18| SHAREHOLDERS’ MEETING FISCAL BOARD BOARD OF DIRECTORS BOARD OF EXECUTIVE OFFICERS STRATEGY COMMITTEE AUDIT AND RISK COMMITTEE PEOPLE AND GOVERNANCE COMMITTEE COMPLIANCE INTERNAL AUDITING RISK AND INTERNAL CONTROLS The composition and all duties of the Board of Directors, the Committees, the Fiscal Board and Board of Executive Officers, as well as information on voting rights and convocations of the Shareholders’ Meeting are detailed in the Investor Relations Portal and in the Bylaws. |102-19, 102-22, 102-23, 102-26| Each member of the Board of Executive Officers is evaluated on an annual basis through exter- nal consulting or according to the 360° meth- odology. An external consultant supports the performance evaluation of directors, members from the Board of Directors and the President and CEO. The executives make a self-evaluation and evaluate the others every year. |102-28| 11 11 11 Contents RISK MANAGEMENT Seeking to ensure an efficient risk management, Embraer holds periodic reviews in order to properly assess the views of its executives regarding the main risks involved in the company’s operations and internal processes. Embraer’s risk management policy focuses on four cat- egories set out in the Risk Management Policy: strategic, operational, financial and regulatory/legal risks. The structure is strengthened by the work of the Internal Risk and Control department, which aims to ensure that the identification, prioritization, assessment and man- agement of the main business risks are carried out in accordance with the best practices established by the company and the market. In addition, an independent Internal Audit department reports directly to the Audit and Risk Committee in order to ensure the independence and objectivity of the auditors contracted to perform external audit services. More information is available in the Reference Form. For every risk identified, the policy assigns an employee who is responsible for monitoring the progress of the mitigation plans and the monitoring indicators. |102-11, 102-15, 102-30| On the specific issue of climate change, the company monitors international discussions on the subject, as well as current and future legislation, both in Brazil and in the countries where the company has a presence. In addition, the largest factories (which represent 47% of the total) are certified with ISO 14001, and Embraer maintains the goal of bringing certification to 100% of industrial plants. As for product sustainability, the company has the Integrated Development of the En- vironmentally Sustainable Product (DIPAS, in Portu- guese), project, as well as joint research with Boeing under the ecoDemonstrator program and the Biofuel Research Center (see chapter 5 of this publication). PASSION FOR EXCELLENCE Launched in 2007, the Embraer Business Ex- cellence Program (P3E, in Portuguese) seeks to promote excellence in the company’s man- agement, processes and products. The program is based on continuous improve- ment cells, encompassing all Embraer business units, locations and processes, connected to the value streams that define the strategies, and en- sure continuous value generation to stakeholders. The kaizen concept is widely disseminated and used to review processes for optimization, focus- ing on productivity gains and waste elimination. In 2017, Passion for Excellence was launched with the goal of transforming Embraer into the best and most efficient aerospace and de- fense company in the world. To operational- ize Passion for Excellence, the Transformation Office was created, being responsible for the management of all workstreams and aiming to guarantee the execution of the projects and the planned results, as well as the maintenance and the reinforcement of lean and excellence concepts, incorporated into the management of the company since 2007 with P3E. The Passion for Exellence is comprised by 15 workstreams: Direct Procurement, Indirect Procurement, IT, Design to Value (DtV), Inventory, Engineering, Manufacturing, Services & Support, G&A, Ze- ro-Based Budget, Organizational Design, Digital Transformation, Industrial Intelligence, Culture and Investment Forum. Based on risk management, projected results and stakeholder demands, the Board of Directors approves the strategic plan, with a 15-year hori- zon, which undergoes an annual review process that involves the company’s administrative and operational functions. EMBRAER: VALUE STREAMS • Win customers • Develop products • Deliver orders • Serve customers • Business management STAKEHOLDER VALUES |102-40| • Customers | Availability, Performance, Competitive Offering/Solutions, Safety • Shareholders | Financial return/ Financial health • People | Professional and personal fulfillment • Partners | Integrity and continuity • Civil society and the environment | Respect for society and the environment, with generation of wealth and well-being IN 2017, EMBRAER LAUNCHED THE PASSION FOR EXCELLENCE, A PROGRAM THAT AIMS TO TRANSFORM EMBRAER INTO THE BEST AND MOST EFFICIENT AEROSPACE AND DEFENSE COMPANY IN THE WORLD 12 12 Contents THEMATIC SCOPE Peace, justice and effective institutions ETHICS AND INTEGRITY |103-2, 103-3, 205-1, 205-2, Anti-Corruption| To ensure the integrity and legal compliance of all operations and sites, the Compliance area coordi- nates the Compliance Program, supervised by the Board of Directors, the Audit and Risk Committee and the CEO. One year after reaching agreements with Brazil’s Federal Prosecutor’s Office (MPF, in Portuguese), and its Securities and Exchange Com- mission (CVM, in Portuguese), and with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC), our first external audit report was completed. Its results guided the improvement of processes and controls under this program and the continuous training and work- shops on ethics, integrity and compliance. Thus, workshops and online training were held to ap- proximately 17,000 empolyees, and more than 250 compliance agents were trained to act as multipliers of internal ethical principles. All board members, executive board officers, leaders, employees and contractors are trained on the guidelines set out in these documents. Click here to learn more. |102-16| Still within the scope of the Compliance Program, the auditing system was extended to other com- pany functions in 2017. This is a tool that monitors critical operations, such as vendor payment, travel expenses, donations and sponsorships. In order to promote compliance practices and raise employee awareness on this issue, the company launched the internal campaign #BETHEEXAM PLE. The Code of Ethics and Conduct has been revised to strengthen its sovereignty over the laws and cus- toms of the different countries where the company operates. The Helpline has been set up to field any complaints concerning noncompliance. Contents Complaints are consolidated by an exter- nal company, which guarantees the ano- nymity of the complainant*, and sent to the Compliance function, which monitors verification and resolution. More informa- tion is available here. |102-17, 103-2| In 2017, Embraer conducted its Ethics Survey at all units in Brazil and abroad, with the purpose of assessing employee perception on ethics in the workplace. The methodology was developed by external consultants to ensure the confidentiality of respondents and the consequent adherence of most employees. The results are currently being compiled and will be used to develop action plans and training programs. Promotion for the helpline and the #BETHEEXAMPLE campaign is based on survey responses, and will continue throughout next year. |102-17| Committed to upholding a level playing field in the global market, the company supported the creation of a dispute settlement panel at the World Trade Organization (WTO) in Gene- va, to investigate the more than USD3 billion in subsidies received by Bombardier from the Canadian and Québec governments. After approving the Brazilian Government’s request, the WTO is now investigating more than 25 programs in support of the Canadian aviation industry. BUSINESS UNITS At the 52nd Paris Air Show, held in 2017, Em- braer celebrated 40 years of its first par- ticipation at the event – one of the most traditional aerospace events. The compa- ny repeated the strategy employed at the previous year’s Farnborough Air Show, in England, and showcased its Commercial Aviation, Executive Aviation and Defense & Security products, all in the same space, in addition to introducing its new Services and Support business unit. * Except in countries where legislation does not al- low anonymous complaints. In this case, Embraer observes the local legislation. Number of labor practice complaints fielded, processed and resolved through a formal mechanism in 2017 |103-2| Complaints made through the hotline Out of scope Within scope Measures implemented Warnings and suspensions Layoffs Coaching, monitoring, guidance, awareness campaign and improved processes and policies 492 48 444 106 16 16 74 14 14 EMBRAER IS THE WORLD LEADING MANUFACTURER OF COMMERCIAL JETS UP TO 150 SEATS The first generation of the E-Jets family reached the mark of 1 billion passengers carried worldwide Contents Commercial Aviation Embraer is the world leading manufacturer of commercial jets with up to 150 seats, with an approximate 30% share of the glob- al market. In 2017, the company delivered 101 commercial aircraft. The latest-generation E-Jets E2 program stayed on schedule, within the original budget and met specifications targets. The E195-E2 took its maiden flight in 2017. The model features an exclusive wing that allows it to have the highest aspect ratio among single-aisle jets, reducing fuel con- sumption and operating costs. The inaugural flight of the fourth E190-E2 prototype also took place in 2017, with more than 95% of the tests required for the certification campaign successfully completed, with emphasis in conditions and cabin evacua- tion tests. All six prototypes (four E190-E2 and two E195-E2) have conducted more than 1,850 flight-test hours, and more than 44,000 ground-test hours. In 2018, Embraer will start serial produc- tion of the E190-E2, whose first delivery is scheduled for April. The company will also continue to invest in other products of its aircraft family, namely the E195-E2 and E175-E2, which are scheduled to entry into service in the first half of 2019 and in 2021, respectively. Since their launch, the company received more than 700 pur- chase commitments for the E2, of which 280 as firm orders. 2017 was also the year that the company celebrated 20 years of commercial opera- tion of the 50-seat ERJ-145 jet, which de- livered around 900 aircraft in the period. LEARN MORE AT www.embraercommercialaviation.com/pt-br Contents Executive Aviation Embraer is among the world’s largest manufactur- ers of business jets. In 2017, the company delivered 72 small jets and 37 large jets, for a total of 109 aircraft. The global market seems to be recovering, as some signs indicate that the inventory of used aircraft for sale is starting to shrink. The year’s highlights include delivery of the first Legacy 500 executive jet assembled in Melbourne, Florida. Since the plant’s start-up in 2011, it has delivered more than 290 aircraft to the United States and 17 other countries, such as United Kingdom, Canada, Mexico and China. The company also celebrated the delivery of its 1,100th aircraft: a Phenom 300, the world’s most-delivered jet of its category since 2012, ac- cording to the General Aviation Manufacturers Association (GAMA). The year was also marked by improvements made to the Phenom 100 EV – which in 2017 earned certification from the Brazilian National Civil Aviation Agency (ANAC, in Portuguese), in Brazil, the Federal Aviation Administration (FAA) in the United States and European Aviation Safety Agency (EASA) – as well as the launch of the Phenom 300E, with the first delivery scheduled for the first quarter of 2018. LEARN MORE AT http://pt.embraerexecutivejets.com THE PHENOM 300 IS THE MOST DELIVERED JET IN ITS CATEGORY FOR THE SIXTH CONSECUTIVE YEAR One of the world’s largest manufacturers of business jets Contents Defense & Security Embraer is the leader of the Defense & Security seg- ment in Latin America and has expanded its opera- tions in the global market. In 2017, the KC-390 certi- fication has progressed as planned. Both prototypes used in the campaign exceeded 1,500 flight hours and performed well in high-altitude paratrooper airdrops, which included the use of night vision equipment. The aircraft reached Initial Operational Capability (IOC). There are sales campaigns in progress with several countries, and there are advanced negotiations on a deal for five aircraft (with an option for a sixth) and the logistics support package in Portugal. Serial production is moving forward with assembly of aircraft 003, 004 and 005, and the company has also started manufacturing parts for aircraft 006, 007 and 008.The first deliveries will take place in 2018, when the KC-390 will achieve Final Operational Clearance (FOC) certification. As for the A-29 Super Tucano program, Embraer Defense & Security has partnered with U.S.-based Sierra Ne- vada Corporation, and participated in the U.S. Air Force light attack platform capability assessment in August 2017. The A-29 Super Tucano met all desired mission requirements of the assessment and was approved for the second phase of testing. Also in 2017, four Phenom 100 light jets were delivered to Affinity Flight Training Services, completing the ful- fillment of their order. The aircraft was selected by the United Kingdom’s Ministry of Defense to be used in pilot training for the British Armed Forces. The contract with Affinity includes a firm order for five Phenom 100 and support services. This synergy between the Defense & Security and Executive Aviation units highlights Em- braer’s commitment and focus in meeting the needs of its various clients. During the first year of activities of the Project and Devel- opment Center for the Gripen fighter jet (Gripen Design Development Network, GDDN) in Gavião Peixoto, São Paulo, more than 100 Embraer engineers underwent full- time training for the development and maintenance of the Gripen NG aircraft, in cooperation with Saab engineers. And at Saab facilities in Linköping, Sweden, the Gripen E, a new generation model, made its inaugural flight in 2017. The contract with the Brazilian Air Force calls for the acqui- sition of 36 fighter jets, whose deliveries will start in 2019. With a focus on diversifying its portfolio, the segment also invests in air traffic control products and inte- grated border protection systems. Developed by Savis and Bradar, the Brazilian border monitoring project known as SISFRON, advanced in accordance with the agreemeent with the Brazilian Army. About two thirds of the project, which consists of an 800-kilometer border line in the state of Mato Grosso do Sul, has already been delivered. Final delivery is scheduled for 2019. The Strategic Defense and Communications Geosta- tionary Satellite (SGDC, in Portuguese), was launched in May and successfully completed the orbital testing period. The SGDC will provide internet coverage for the entire Brazilian territory, in addition to a safe en- vironment for Brazilian Government communications. Visiona, a joint venture between Embraer and Telebras, was responsible for integrating the SGDC Program. The satellite’s control was transferred to Telebras, and as- sisted operations have already begun. In addition, the companies entered into a Specialized Technical Assis- tance agreement for flight planning of the equipment. TO LEARN MORE ABOUT THE DEFENSE & SECURITY FIRMS, GO TO www.embraerds.com AGRICULTURAL AVIATION In continuous production for over 50 years, the Ipanema is the leading aircraft in the Brazilian agricultural aviation industry, with a 75% share. The model was the first world- wide to be certified to operate exclusively with ethanol. In 2017, Embraer introduced the Ipanema 203, an evolved version of the product that was showcased at Agrishow 2017, Brazil’s largest agribusiness event. The aircraft has already earned the Sus- tainable Aero-Agricultural Certification (CAS, in Portuguese). Customers of the new model have recorded an increase in productivity of up to 50% compared to the previous version, which demonstrates the benefits of the incremental changes made. Click here for more information. 17 17 THE NEW SERVICE & SUPPORT UNIT REINFORCES EMBRAER’S COMMITMENT TOWARDS CONTINUOUSLY IMPROVING ITS PORTFOLIO Contents Services & Support The creation of Embraer Services & Support reinforces the compa- ny’s commitment to its customers throughout the product lifecycle. Along with the new business unit, Embraer also launched TechCare, a platform that expands the portfolio of solutions geared towards operational efficiency and increasing the useful life of aircraft. These innovations result from more than 20 years of experience dedicated to building and enhancing high-quality service networks. In 2017, Embraer expanded its global support network by choosing the SIA Engineering Corporation (SIAEP) in the Philippines – a subsidiary of SIA Engineering Company Limited (SIAEC) – as an au- thorized service center for the E-Jets family of commercial jets. |102-10| The company announced that the Embraer Training Center in Johannesburg, South Africa, will open in 2018. The facility will be the first of its kind in the African continent to provide a wide range of training programs to qualified pilots, maintenance technicians and crew members on a single site. Once it is fully operational, the center will be capable of training approximately 2,000 aerospace professionals per year. |102-10| For Executive Aviation customers, Embraer named JF Services as authorized service centers for the Legacy 450 and 500 in Russia; in Argentina, it introduced Aero Baires, its first authorized service center for business jets in the country. With facilities located at the airfield in San Fernando, Buenos Aires, the center has been certified by the local Administración Nacional de Aviación Civil, Argentina’s local aviation authority, for maintenance of the Phenom 100 and Phenom 300 aircraft. The company also an- nounced the opening of Embraer Executive Jet Services, a repair station at Le Bourget Airport, outside Paris. For the second consecutive year, the customer support provided by the Executive Aviation unit ranked first in the satisfaction survey conducted by Aviation International News (AIN). The company earned a score of 8.4 points (out of ten) for new and semi-new busi- ness jets. The achievement reflects the unit’s continuous commit- ment to offering better services and experiences to its customers. LEARN MORE AT http://services.embraer.com/br/pt Contents THEMATIC SCOPE Industry, innovation and infrastructure TECHNOLOGY AND INNOVATION Embraer invests systematically in research, develop- ment, innovation and facility enhancement. To ensure competitiveness, intellectual property is protected via patents for inventions and designs. In 2017, 66 applications were filed, of which 46 were granted. Embraer’s patent portfolio reached 669 applications and 360 patents granted. In addition to product engineering and development teams at the manufacturing plants, the company op- erates Engineering and Technology Centers (ETCs) in Portugal, the United States and Brazil (see map). In 2017, the list was expanded with the opening of an ETC in Florianópolis, Santa Catarina, which reinforc- es the partnership between Embraer and the CERTI Foundation, established in 2015, and seeks to develop pre-competitive technology in aeronautical electronic systems. The project is part of the partnership with the CERTI Foundation, which began in 2015, and is supported by the Brazilian Agency for Industrial Re- search and Innovation (EMBRAPII, in Portuguese), and the Research Foundation of State of Santa Catarina (FAPESC, in Portuguese). |102-10| Another highlight was the start of activities for the innovation teams in Silicon Valley (California, USA) and in Boston (USA), whose goal is to identify oppor- tunities for the air transport business and establish partnerships with startups, investors, universities and other companies. The company began operating the Embraer Business Inovation Center (EBIC), its global business hub in Melbourne, Florida (USA), in order to drive innova- tion in a comprehensive way. The unit is connected and works in cooperation with all of the company’s engineering teams worldwide. |102-10| Some of the EBICs first projects include a preliminary agreement with Uber Technologies for the exploration of a new urban mobility concept. The vehicles will be small, electrically powered, with vertical takeoff and landing capability, with zero pollutant emissions and silent enough to operate in urban areas. Experimental flights are expected to start in 2020, while commer- cial operation is scheduled for 2023. In addition, the agreement includes the planning for support structures, such as passenger loading and alighting platforms, air traffic control systems, and more. Together with the German Aerospace Center (Deutsche Zentrum für Luft- und Raumfahrt – DLR), the company signed an agreement to expand its contribution to aer- onautical research. The focus of activities will be the search for solutions to reduce noise and emissions, improve performance of aircraft, development of new structural material for aviation, among others. Embraer also conducts research projects in cooper- ation with leading universities and research centers in Brazil and around the world, and has celebrated 22 new cooperations for technological development throughout 2017. In Brazil, Embraer highlights its participation in initia- tives such as the Aerospace Private Equity Fund, which allocated R$ 3 million to four companies with the ob- jective of strengthening the domestic production chain of the aerospace, and defense and security segments. Every year, the Embraer Technology and Innovation Seminar (SETI, in Portuguese), gathers employees from several fields and regions to share the main techno- logical advances developed internally by the company. This audience is also encouraged by programs such as Good Idea, aimed at enhancing routine activities. In 2017, the company adopted 6,200 ideas, resulting in a return of more than US$40 million for the company. In the field of disruptive innovation, another highlight is the Innova Program and its showcase initiative is Green Light, which provides financial support and offers employees as much as 100% of scheduled work hours to work on projects. The company received 78 proposals over the year, and approved 37 of them. Embraer also develops connected actions with startups, seeking innovations that can solve the challenges of its operation and add value to its clients. The company is one of the ten companies chosen for the Startup Industry Connection Program of the Brazilian Industrial Development Agency (ABDI, in Portuguese). Embraer encourages the strengthening of the Brazilian startups ecosystem by promoting mentoring in programs such as Inovativa Brasil (Federal Government), the Edital de Inovação para a Indústria (Senai-Sesi-IEL) and Acelera Fies, as well as sponsoring entrepreneur- ship programs such as promoted by the University of Campinas (UNICAMP). Nearly half of Embraer’s revenues today comes from innovations implemented over the past five years 19 19 Contents SUSTAINABILITY MANAGEMENT Contents |102-44, 102-47| In order to obtain a clear picture of the most relevant sustainability issues to the company and its stakeholders, Em- braer engages shareholders, clients, suppliers, social associations, labor unions and trade associations, as well as the executives themselves, in three- year consultation cycles. This process results in the company’s materiality. The current cycle started in 2017 and reflects the previous year’s work. At first, the company listed 21 topics in the consulta- tion process: biofuels; biodiversity; local community development; people devel- opment; socio-economic development in the local supply chain; dematerializa- tion; human and labor rights; availability of raw materials; diversity and inclusion; air emissions; ethics, transparency and compliance; product lifecycle manage- ment; natural resources and waste man- agement; risk and crisis management; chemicals management; research, de- velopment and innovation; noise; health, safety and well-being; product safety; information security; and economic and financial sustainability. Natural resources and waste Ethics, transparency and compliance Health, safety and well-being Economic and financial sustainability MATERIALITY M ATERIAL ITY Atmospheric emissions Product safety Research, development and innovation Personal development OTHER TOPICS ASSESSED • Biofuels • Biodiversity • Local community development • Socio-economic development in the local supply chain • Dematerialization • Human and labor rights • Diversity and inclusion • Availability of raw materials • Product lifecycle • Risk and crisis management • Chemicals • Noise • Information security The respondents – customers, partners and shareholders – were selected from the Embraer Enterprise System (EES). Industry and regulatory organizations, aviation specialists and civic associa- tions were also involved in the process, which included consultations with 46 representatives from the stakeholder categories: six shareholders; 11 cus- tomers from the Commercial Aviation, Executive Aviation, and Defense & Security business units; six vendors; 11 civil society representatives (consider- ing nonprofits, trade associations and subject matter experts), plus 12 employ- ees from various company functions. In order to ensure that the topics were aligned with the company’s business, Vice-Presidents and the CEO were also consulted. In addition, the materiality assessment was later validated by the Sustainability Committee, the Board of Executive Officers and the CEO. The topics identified are listed below, based on the consolidated score, consid- ering their relevance both to the compa- ny’s strategic plans and to stakeholders. These topics guide the new sustain- ability plan, which will be deployed in 2018 and have specific goals set by De- cember 2020. The year was also marked by the completion of the 2017 Master Sustainability Plan, available here. 21 Contents Sustainability Plan 2020 Item Water Indicator baseline 2016 172 m3/US$ MM Energy (electricity) 28.5 MWh/US$ MM Hazardous waste 0.81 tones/US$ MM Non-hazardous waste 3.36 tones/US$ MM Target (%) -2 -5 -3 -2 - ISO 14001 Certification Employee engagement in Ethics Survey TARGET: 100% certification of manufacturing PLANTS and service centers with more than 100 people (including third-party employees) TARGET: 90% (Base year 2017: 70%) Ethics, transparency and compliance Natural resources and waste Health, safety and well being Return on Equity (ROE) Net income (adjusted) Shareholders’ equity TARGET: ROE> cost of equity Economic and financial sustainability - Lost Time Injury Frequency Rate (LTIFR) for employees and third-parties TARGET: LTIFR less than or equal to 1 - OHSAS Certification TARGET: 100% certification of manufacturing plants and service centers with more than 100 people (including third-party employees) tCO2e (Scope 1*) net revenue TARGET: -3% Atmospheric emissions (Base year 2016: 2.44 tCO2e/US$ million) * Fuel consumption from development flights and new product certification are not considered. Research, development and innovation Personal development - Diversity Product safety Risk analysis within the target period Total reporting TARGET: 100% Pre-competitive* investment on research and technology development TARGET: 1% of the annual revenue TARGET: 2% increase in gender and afrodescendant (Base year 2017: women represented 16% and afrodescendant 8% of the workforce) Percentage of annual net revenue invested in total research, development and innovation - Volunteering TARGET: 5% of the annual net revenue TARGET: leverage the number of volunteer positions to equivalent 12% of Embraer employees (Base year 2017: ~4%) 22 Contents ECONOMIC PERFORMANCE Contents THEMATIC SCOPE Decent work and economic growth In 2017, Embraer met its annual targets for deliveries, net revenues, adjusted free cash flow (FCF) and investments. The result and the adjusted operating margin (EBIT), EBITDA and adjusted EBITDA margin* were below targets. Estimates vs. Actual in 2017 (US$ million) Deliveries Commercial Aviation Executive Aviation Defense & Security Net revenues Commercial Aviation Executive Aviation Defense & Security Others EBIT EBIT margin (%) Adjusted EBITDA EBITDA margin (%) Free cash flow Investments Research Development Capex Estimate 97-102 105-125 - 3,250-3,400 1,600-1,750 800-900 50 450-550 8.0-9.0 770-890 13.5-14.5 >(150) 50 400 200 Actual 101 109 7 3,372 1,485 951 31 397 6.8 713 12.2 405 49 385 176 * In order to maintain a comparative basis between the years, the results identified with the word “Adjusted” exclude non-recurrent items from its calculation (impacts arising from the end of the FCPA investigation, the Voluntary Dismissal Program (PDV, in Portuguese) and the bankruptcy of Republic Airways, among others). Contents Combined with the appreciation of the real, the decline in deliveries from 2016 to 2017 resulted in a net revenue of R$18,713.0 million, a 13% drop (R$21,435.7 in 2016); and a gross margin of 18.3%, down from 19.9% in 2016. Aircraft delivered per unit Commercial aviation Executive aviation Defense & Security TOTAL Net revenue by segment (%) Net revenue (R$ billions) Commercial aviation Executive aviation Defense & Security Others 2015 101 120 20 241 2015 20.3 56 29 14 1 2016 108 117 15 240 2016 21.4 57 28 15 - 2017 101 109 7 217 2017 18.7 58 26 16 - The North American market accounted for 57% of net revenues. The European market rebounded to reach a 12% share of the com- pany’s revenues. Brazil also increased its share and came in at 13%. All other regions (Latin America, China, Asia-Pacific, Africa and Middle East) remained stable compa- red with 2016, with a share of 18%. In 2017, net income and adjusted operating margin (EBIT) stood at R$1,280.9 million (US$397.1 million) and 6.8%, impacted by the increased costs in the Defense & Security segment, which were related to the develop- ment of the KC-390. Adjusted EBITDA came in at R$2,289.60 million (US$712.5 million) in 2017, 26% less than in 2016. Meanwhile, the adjusted EBITDA margin reached 12.2%. The 57% drop in 2016 regarding net opera- ting revenues from non-recurring items had a positive impact on Embraer’s net profits in 2017, which came in at R$795.8 million (a 36% increase from 2016). Profit per share was R$1.0838. The total added value to be distributed was R$5,546.2 million, and accounted for 27% of net revenues in 2017. 217 AIRCRAFT DELIVERED R$5,546.2 MILLION ADDED VALUE DISTRIBUTED R$18,713.0 MILLION IN NET REVENUE R$795.8 MILLION IN NET PROFIT 25 Contents SOCIAL PERFORMANCE Contents THEMATIC SCOPE Health and well-being Quality education Gender equality Decent work and economic growth Reduction of inequalities PEOPLE MANAGEMENT |103-2, 103-3 Diversity and equal opportunities, Non discrimination, Freedom of association and collective bargaining| At the end of 2017, Embraer had 18,433 em- ployees: 15,710 in Brazil and 2,723 abroad. More details on the company’s workforce can be found here. Attraction Amid a highly dynamic and ever-changing en- vironment, Embraer looks to attract young pro- fessionals who welcome change, are aligned with the new global trends, and capable of facing a wide range of challenges within the company and industry. College students can join Embraer through its Internship Program, while recent graduates can opt for the Trainee Program, which drew interest from over 11,000 young candidates for the 23 positions opened in Brazil during its first edition. Embraer also offers opportunities for young people aged 14 to 24 through a program for young apprentices, in partnership with the Federal Government. Embraer invests in specialized education through initiatives such as the Embraer Proj- ect Program and the Engineering Specializa- tion Program. The first is carried out through a partnership with the College of Technology of the State of São Paulo (FATEC, in Portu- guese), and offers technical education and internships with the company. Meanwhile, the latter offers a professional Master’s degree in Aeronautical Engineering, with a certificate issued by the Aeronautical Institute of Tech- nology (ITA, in Portuguese), which provides most of the students the opportunity of being hired at Embraer. In 2017, 68 people graduated from both initiatives. Aimed at fostering inclusion, Embraer also has a program called Embraer On The Path to Diversity, which since 2012 offers profes- sional education to persons with disabilities. So far, 80 people have been trained through this program. Click here to learn more about all of these initiatives. Development The company encourages career advancement and changes in functions through its Internal Hire Program, in which new job openings are, at first, disclosed exclusively to an internal audience. In 2017, there were 67 vacancies filled due to this initiative. Employees’ technical and behavioral skills are stimulated through the education programs. During the year, more than 7,000 courses and trainings were provided. The professionals undergo periodic assessments, the results of which help define the Individual Development Program and salary progressions for production employees starting their career who achieve positive results. Embraer also has the Embraer Leadership Program, where leaders undergo a 360° assessment, Performance Map and Calibration Committee. |404-3| In 2017, the company invested R$6,391,015 and offered 604,525 total training and education hours (for an average of 61 hours per employee). More details are available here. |404-1, 404-2, 404-3, 412-2| Health and safety The Environmental, Health and Safety Policy guides actions for the prevention of accidents and diseases, which are put into practice by the Behavioral Program, the Tensional Reeducation Training Program (PERTO, in Portuguese), the ergonomic risk management, the application of prevention through design and in the actions of the Well-Being programs. All the employees undergo annual medical examinations that al- low the epidemiological mapping of each area. In compliance with the legislation, the company maintains the Internal Commission for Acci- dent Prevention (CIPA, in Portuguese), which represents 85.1% of the workforce. It also nego- tiates formal agreements with trade unions and clauses to be included in collective bargaining agreements that contemplate all employees across Brazil. In its units abroad, the company strictly follows the laws and regulations of each country in which it operates. |102-41| In 2017, the number of accidents that resulted in medical leave was 33, and the rate of occu- pational disease was 0.03%. These data are monitored and analyzed on a monthly basis by the Board of Executive Officers and the Board of Directors, and reduction targets are con- templated under the Sustainability Plan 2020. PARTNER RELATIONSHIP MANAGEMENT |102-9, 103-2, 103-3, Procurement Practices, Supplier Environmental Assessment, non Discrimination, Freedom of Association And Collective Bargaining, Child Labor, Forced or Compulsory Labor, Supplier Social Assessment| Embraer maintains a commercial relationship with 1,200 vendors for product manufacturing. This group is evaluated via monthly monitoring of performance indicators, on-site audits and periodic environmental impact questionnaires. The Aeronautical Supply Chain Development Program (PDCA, in Portuguese), aimed at re- ducing costs and improving quality, is promot- ed in partnership with the Brazilian Agency of Industrial Development (ABDI, in Portuguese) to improve the contracted companies. The company also relies on support from 3,000 partners that perform technical and adminis- trative activities, who attend courses on lean management and guidelines for kaizen practic- es under the Management Excellence Program (PEG, in Portuguese). Participants are chosen after risks and cost reduction opportunities are identified. Approximately 80% of purchases are made from international vendors from North Amer- ica (55%), Europe (20%) and the rest of the world (5%). Transactions with national ven- dors account for 20% of the total purchasing amount. |204-1| All contracts contemplate clauses concerning human rights, labor and environmental laws. |308-1, 308-2, 407-1, 408-1, 409-1, 412-3, 414-1, 414-2| 4,200 vendors and business partners 27 Contents SOCIAL INVESTMENT |103-2, 103-3, 203-1, 203-2, 413-1, Direct economic impact, Local communities| Social investment in Brazil is coordinated by the Embraer Institute for Education and Research, which for more than 15 years promotes educa- tion-related projects, engagement with civil soci- ety and the historic preservation of the country’s aeronautical industry. The main initiatives include the Juarez Wan- derley (São José dos Campos, São Paulo) and Casimiro Montenegro Filho (Botucatu, São Paulo) schools, which offer free, full-time high school education to students coming from public schools and whose household income is lower than 9x the minimum monthly wage. Students also receive uniforms, textbooks, meals and transportation for the entire school year. In 2017, both schools were among the top-ranked institutions in the National High School Exam (ENEM, in Portuguese), and Juarez Wanderley was ranked 8th in the state of São Paulo. In addition, more than 80% of their alumni were admitted to public universities across Brazil. Con- sidering those admitted in private universities with full scholarships, the rate of graduates who attend a college-level institution exceeds 90%. Some of these students receive financial sup- port from the Scholarship Fund, an initiative supported by contributions from businesses and individuals as well as from former grantees, who refund the program after entering the job market. The Embraer Institute also provides finan- cial support to nonprofit social organizations, through the Social Partnership Program (PPS, in Portuguese). The initiative is aimed at sup- porting projects aligned with the United Nations Sustainable Development Goals (SDGs). In 2017, it supported 12 organizations by investing up to R$40,000 per project. The entity also operates the Embraer Historic Center, whose purpose is to preserve and pro- mote the history of the Brazilian aviation industry. It currently has exhibition spaces at Embraer units, organizes virtual exhibits and monthly guided tours to the São José dos Campos man- ufacturing plant to community members. Some of the highlights of 2017 include the “De- sign in Brazilian aviation” exhibit, which was at- tended by more than 40,000 visitors to the Museu da Casa Brasileira (MCB), in São Paulo. The Embraer Institute also earned the 2017 Aberje Award, the country’s leading corporate commu- nications award. The Institute was recognized by the Brazilian Association of Corporate Communi- cations (ABERJE, in Portuguese), in the Historical Responsibility and Business Memory category, for its efforts to preserve aeronautical memory over the course of the year. In 2017, the company created the Embraer Foun- dation, which consolidates all of the company’s social initiatives in the United States. As is the case with the Institute in Brazil, the Foundation establishes social partnerships, engages employ- ees in volunteering programs and promotes an entrepreneurial culture among members of the communities served. 2017 highlights R$20 million invested, approximately 3,160 graduates from both high schools since 2002, with more than 90% being admitted to public and private universities 244 university students received support from the Scholarship Fund 23 organizations supported by Embraer Institute and Embraer Foundation + 700 volunteers engaged worldwide FOR MORE INFORMATION, GO TO http://institutoembraer.org.br E http://embraerfoundation.org LEARN MORE AT www.centrohistoricoembraer.com.br 28 Contents Contents ENVIRONMENTAL PERFORMANCE Contents THEMATIC SCOPE Industry, innovation and infrastructure Responsible consumption and production Action against global climate change Environmental preservation, eco-efficiency and product lifecycle management are gui- ded by the Environmental, Health and Safety Policy (MASS, in Portuguese). ENERGY AND WATER In 2017, Embraer consumed 179,237 MWh, an in- crease of 1.33% compared to 2016 (176,889 MWh) due to the inclusion of the Jacksonville unit in the United States. To reduce consumption, the company promotes the improvement of proces- ses, facilities and equipment encouraging energy efficiency. |302-1, 302-4| In the year, Embraer consumed 982,826 m3 of water, of which 6% is related to recycled water. The volume of water in 2017 was considerably lower than in 2016 due to improvements made in the OGMA unit and the implementation of a water reuse project in Évora. Click here for more information. |303-1, 303-3| EFFLUENTS AND WASTE The effluents are destined to the public network, except for the units of Taubaté (São Paulo) and Gavião Peixoto (São Paulo), which dispense them in the Boçoroca and Mulada streams, respecti- vely. In order to be able to do this, this units have their own sewer treatment stations. The volume discarded is less than the carrying capacity of the water bodies and both are outside environ- mental protected areas. Click here to see the water disposal data of the units broken down by treatment and destination. |306-1| Embraer also has strict procedures for waste management in its units, which are carried out in accordance with the applicable legislation in each locality where the industrial plants are present. Dedicated programs continually seek the use of less harmful materials as well as the optimiza- tion of processes. All work is done in line with the selective collection program, based on the following order of priority: non-generation, re- duction, reuse, recycling, treatment and environ- mentally appropriate final disposal. Information regarding total weight of waste generated and destinations are available here. |306-2| GREENHOUSE GASES Embraer discloses an annual inventory of greenhouse gases (GHG), which is ISO 14064 certified and audited by Lloyd’s Register Qual- ity Assurance (LRQA). Detailed information for 2017 is available here. |305-1, 305-2, 305-3, 305-4, 305-5, 305-6, 305-7| Committed to the reduction of GHG emissions by the industry, the company is a signatory to the aviation industry sustainability commit- ment, which seeks carbon-neutral growth by 2020 and a 50% reduction of net carbon dioxide (CO2) emissions in aviation by 2050, compared to 2005 levels. PRODUCT LIFECYCLE Embraer funds a project titled Integrated Development of Environmentally Sustainable Products (DIPAS, in Portuguese), which aims to advance sustainable design, seek alterna- tives to materials whose use is restricted by environmental legislation, and develop stu- dies on the lifecycle of products. It also stri- ves to make new products more operationally efficient, emit less CO2 and noise, and con- sume less fuel. Fuel costs are responsible for most expenses incurred with operating an air- craft, whose lifecycle is longer than 15 years. The reduction of this consumption, paired with that of energy, meets both environmental and market needs. |302-5| To reduce consumption, the company promotes the improvement of processes, facilities and equipment, pursuing energy efficiency 30 Contents ATTACHMENT GRI Contents EMBRAER GRI STANDARDS INDICATORS 2017 102-3 – LOCATION OF THE ORGANIZATION'S HEADQUARTER Avenida Brigadeiro Faria Lima, 2,170 – Putim, São José dos Campos (SP). 102-8 – INFORMATION ON EMPLOYEES AND OTHER WORKERS 2015 2016 2017 20152 20162 20172 Men Women Men Women Men Women Number of employees by country By functional level Board of Executive Officers1 Manager Supervisor Pilot Engineer Professional Technical Administrative Operational Total by gender TOTAL By type of contract Determined time Undetermined time Total by gender TOTAL By work day Full work day Part-time Total by gender TOTAL 73 235 678 102 3,783 1,300 3,168 480 6,603 16,422 9 40 75 0 586 965 300 377 599 82 269 638 93 3,603 1,487 2,912 435 6,077 9 45 82 0 547 1,036 332 319 540 85 254 618 95 3,620 1,607 2,937 429 5,841 7 43 91 0 589 1,078 329 316 494 Brazil China United States France Netherlands Ireland Portugal Singapore Men Women Men Women Men Women 14,488 2,519 13,540 2,467 13,260 2,450 48 1,406 89 56 0 294 41 26 262 19 10 1 97 17 46 1,479 93 75 0 324 39 21 284 19 19 0 83 17 41 1,629 54 110 0 351 41 25 321 13 26 0 96 16 Total by gender 16,422 2,951 15,596 2,910 15,486 2,947 2,951 15,596 2,910 15,486 2,947 TOTAL 19,373 18,506 18,433 By workforce 2015 2016 2017 Men Women Men Women Men Women Direct employees 14,488 2,519 13,540 2,467 15,486 2,947 TOTAL 17,007 16,007 18,433 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. 19,373 18,506 18,433 2015 2016 2017 Men 217 16,205 16,422 Women 89 2,862 2,951 Men 306 15,290 15,596 Women 70 2,840 2,910 Men 366 15,120 15,486 Women 90 2,857 2,947 19,373 18,506 18,433 2015 2016 2017 Men Women Men Women Men Women 16,403 2,945 15,580 2,905 15,469 2,941 19 6 16 5 17 6 16,422 2,951 15,596 2,910 15,486 2,947 19,373 18,506 18,433 32 Contents 102-12 – EXTERNAL INITIATIVES All the initiatives mentioned below are voluntary. Name 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 Urban mobility Date of adoption 2008 2012 2012 2014 2014 2015 2016 2017 Scope Global Global Global Global Global Involved stakeholders Suppliers, manufacturers, transportation com panies and organizations from different sectors Suppliers, manufacturers, transportation companies and other organizations from the aerospace sector Organizations from other sectors Suppliers, manufacturers, transportation companies and other organizations from the aerospace sector Suppliers, manufacturers, transportation com panies and organizations from different sectors Brazil (with potential global impact) Partnership with Boeing Tests of technologies for products' performance improvement VTOLs development (electric vertical takeoff and landing vehicles for urban centres) Partnership with Boeing Partnership with Uber 33 Contents 102-13 – MEMBERSHIP OF ASSOCIATIONS Organization/association Seat on the Board of Governance Participation in projects/ commissions Strategic participation Organization/association Seat on the Board of Governance Participation in projects/ commissions Strategic participation National Agenda Brazilian Association of Public Companies (Abrasca, in Portuguese) Brazilian Association of Industries for Defense and Security Materials (Abimde, in Portuguese) Yes Yes Brazilian Association of General Aviation (Abag, in Portuguese) Yes Brazilian Association of Mechanical Sciences (ABCM, in Portuguese) Yes Aerospace Industries Association of Brazil (AIAB, in Portuguese) Yes 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) Yes Yes Yes National Confederation of Industry (CNI, in Portuguese)* No Federation of Industries of the State of São Paulo (Fiesp, in Portuguese) Yes Brazilian Institute of Corporate Governance (IBGC, in Portuguese) No Industrial Enterprise Development Institute (IEDI, in Portuguese) Yes Brazilian National Confederation of Industry (MEI, in Portuguese) 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 International Agenda Aerospace Industries Association (AIA) Air Transport Action Group (ATAG) Aviation Working Group (AWG) Brazil Industries Coalition (BIC) American Chamber of Commerce (Amcham) Yes Yes Yes Yes Yes Portuguese Chamber of Commerce in Brazil (CPCB, in Portuguese) Yes Brazilian Center for International Relations (CEBRI, in Portuguese) Yes Brazil-China Corporate Council (CEBC, in Portuguese) Yes Brazil-United States Corporate Council (CEBEU, in Portuguese) Yes European Policy Center (EPC) Global Compact Foundation No No Foreign Trade Study Center Foundation (Funcex, in Portuguese) Yes General Aviation Manufacturers Association (Gama) International Aerospace Environmental Group (IAEG) National Aeronautic Association (NAA) U.S. Chamber of Commerce (U.S. Chamber) World Economic Forum (WEF) 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 Yes Yes Yes Yes Yes Yes * Associative participation through the Fiesp system. The list does not present the totality of associations in which Embraer participates. The most meaningful associations were listed. 102-20 – EXECUTIVE-LEVEL RESPONSIBILITY FOR ECONOMIC, ENVIRONMENTAL, AND SOCIAL TOPICS Responsible Level Carlos Alberto Griner* Vice President of People and Sustainability José Antonio de Almeida Filippo Executive Vice President Topics Human Resources and Sustainability Financial and Investors relations Fabiana Klajner Leschziner Legal Executive Vice President Legal and Compliance * Responsible for the annual report elaboration. 34 Contents Master Sustainability Plan 2017 |102-15| Aspect Indicator Goal (December 2017) 20151 2016 2017 Ethics Percentage of adherence to compli- ance policy and procedure2 100% 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 Managers: 94%* Non managers: 99%* * Considering the trainings held on Anti-Corruption – Code of Ethics and Conduct Attraction, development and retention of human resources Favorability percentage in the climate survey 80% 89% There was no survey in 2016; the company opted for a bi-annual engagement survey. Engagement survey will take place in May 2017 There was no survey in 2017 Attraction, development and retention of human resources Number of staff training hours per year 500,000 hours per year 557,077 hours 625,416 hours 604,525 hours Product safety Product safety Management of chemical substances Maintenance of type-approval certifi- cates (CHT, in Portuguese) for commer- cial and executive aviation planes Maintenance of company-approval certificates (CHE, in Portuguese) in all Embraer sites of interest as defined in conjunction with the business units 100% of type certificates valid 100% 100% of all sites of interest certified 100% 100% 100% 100% 100% Development of the new chemical substance management 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 environmen- tal legislation. As of December 2015, all registrations already incorporate the modifications made to the modified system Finished the structuring and definitions phases. Carried out training for all those involved in the registration of chemical substances in the SAP system. All inputs comply with current legislation New registration system for hazardous substances implemented. Continuous action in order to adjust past liability Management of supply chain Export control Percentage of suppliers clas- sified as “high environmental risk” in risk evaluations 0% 0% Percentage of adherence to export policy and procedure 100% adherence to the compliance evaluation survey 77% 0% 97% 0% 94% Sustainable new business, products and services Number of new business, products and services incorporating 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 demonstrator program. Technology tests aimed at reducing fuel con- sumption, CO2 emissions and noise Partnership with Uber for the development of electric air vehicles for urban mobility Management of natural resources and waste Consumption of energy (MWh) per equivalent plane Reduce by 3% consumption by equivalent plane, in relation to the base year 2014 (603.78 MWh/equiv- alent aircraft) 551.96 MWh/aircraft equivalent (reduction of 9%) 499.79 MWh/equivalent aircraft (reduction of 17%) 598,21 MWh/equivalent aircraft (reduction of 1%) 35 Contents |102-15| Aspect Indicator Goal (December 2017) 20151 2016 2017 Management of natural resources and waste 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%) 46.12 m3/per capita (increase of 3%). There was a significant reduction of employees because of the Voluntary Dismiss al Program Management of natural resources and waste Generation of solid waste/net revenue Management of natural resources and waste 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 ton/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 ton/million dollars) 3.21 ton/million dollars (increase of 16%) 2.95 ton/million dollars (increase of 7%) 2.80 ton/million dollars (increase of 1%) 0.57 ton/million dollars (increase of 14%) 0.5 ton/million dollars (maintenance) 0.54 ton/million dollars (increase of 8%) Management of natural resources and waste Percentage of manufacturing plants and Embraer service centers with ISO 14001 certification 100% of manufacturing plants and service centers that existed in 2014 with ISO 14001 certification 47.05% 47.05% 47.05% Management of natural resources and waste Percentage of manufacturing plants and Embraer service centers with relation to environmental liabilities Atmospheric emissions Emission of greenhouse gases (scope 1+2)/net revenue4 Atmospheric emissions Emission of VOC/net revenue Human and labor rights Percentage of individual suits and labor complaint procedures per employee Lost Time Injury Rate (LTIR) Employee health and safety Employee health and safety 100% of manufacturing plants and service centers that existed in 2014 with relation to environmental liabilities (and their respective treat- ment plans) New acquisitions of buildings, installations or businesses, must be preceded by evaluation of environ- mental liabilities (environmental due diligence), aiming to ensure access to necessary information for the company to make decisions Reduce by 3% the emission of greenhouse gases (scope 1+2) per million dollars of revenue, in rela- tion to the base year 2013 Reduce by 3% the emission of VOC per million dollars of revenue, in rela- tion to the base year 2013 (0.0063 ton/million dollars) Standard of excellence (to be a reference in the market), remaining below the national average for companies in the same sector, in accordance with each country’s regulating To reduce the frequency rates of lost time accidents by 30%, in relation to 2014’s accident fre- quency rate 76.47% (13 of 17 units) 76.47% (13 of 17 units) 76.47% (13 of 17 units) 5.48 ton/million dollars (increase of 8%) 4.09 ton/million dollars (reduction of 19%) 4.46 ton/million dollars (reduction of 12%) 0.0034 ton/million dollars (reduction of 46%) 0.0011 ton/million dollars (reduction of 82%) 0.0022 ton/million dollars (reduction of 65%) 0.391%* * Corrected number 0.306% 0.466% 2014 rate: 1.74 2015 rate: 2.25 1.19 (reduction of 31.6%) 0.99 (reduction of 44%) Percentage of manufacturing plants and Embraer service centers with OHSAS 18,001 certification3 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) 47.05% 36 Contents |102-15| Aspect Indicator Goal (December 2017) 20151 Transparency and communication Percentage of indicators responded to in the company’s Global Reporting Initiative (GRI) report Annual GRI Report Core option 89.65% 2016 89.65% 2017 71.52%5 Management of the product’s environmental life cycle Environmental requirements for developing products Incorporate environmental require- ments, in addition to those for sound and emissions, for 100% of products launched The incorporation of the product’s environmental 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 Integrated Development of Products (DIP) The incorporation of the product’s environmental 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 Integrated Development of Products (DIP) process The incorporation of the product’s environmental 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 Integrated Development of Products (DIP) process Management of the product’s environmental life cycle Use of the simplified evaluation of the product life cycle (DfE Matrix) Management of the product’s environmental life cycle Customer orientation regarding the end of the product’s life 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 New products in 2015: Legacy 450, which was evaluated using the DfE Matrix. Total portfolio: E-jets, Phenoms and Legacy 500/450 already evaluated, accounting for 86% of Embraer revenue Define document containing Embraer product strategic guidelines with relation to its end of life Concluded: the technical guide con- taining operational guidelines for customers for the proper disposal of products at the end of their life There were no product launches in 2016. Total portfolio: E-jets, Phen- oms and Legacy 500/450 already evaluated, accounting for 84.6 % of Embraer revenue There were no product launchs in 2017. Total portfolio: E-jets, Phenoms and Legacy 500/450 already evaluated, accounting for 82.9% of Embraer’s revenue Concluded: the technical guide con- taining 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 The technical guide containing operational guidelines for customers for the correct disposal of end-of-life products has been completed. Con- struction of the Corporate End-of-Life Policy of the product in progress Local socio-economic development Local socio-economic development Evaluation average (Balance Score Card) for the results of annually supported projects in the scope of the Social Partnership Program Number of Embraer volunteers engaged in Entrepreneurship programs, Social Partnership Program and other social projects recognized by the Embraer Institute Grade 4, in an evaluation of 0 to 5 points Increase 20% the number of volunteers 2.45 3.44 4.03 +12% (565 volunteers) +56.72% (793 volunteers) +43.87% (728 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 stu- dents 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 Embraer Juarez Wanderley High School: 84% of public university approval Embraer Casimiro Montenegro Filho High School: 75% of public university approval Research, development and innovation Percentage of annual investment in technological development applied to projects with environmental gains Continual increase of the percentage of annual investment in technologi- cal development applied to projects with environmental gains, up to the minimum of 50% for the base year 2017 (resource to be applied in 2018) 78% 80% 77% 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. 5. The Annual Report 2017 follows the recently released GRI Standards. In comparison to the old format (GRI G4), the new standard presents substantial changes, including topics revision and reformulation of indicators. 37 Contents 102-21 – CONSULTING STAKEHOLDERS ON ECONOMIC, ENVIRONMENTAL, AND SOCIAL TOPICS | 102-43 – APPROACH TO STAKEHOLDER ENGAGEMENT The main engagement mechanisms adopted by Embraer are represented in the table below and are part of the exercise of interaction between leadership and stakeholders. Every three years, the Materiality Matrix is revisited based on a formal consultation with stakeholders, with the objective of prioritizing the legal attendance of environmental, social and economic issues. SH Event Objective Responsible/ Frequency SH Event Objective Responsible/ Frequency Customers Embraer Operators Conference – EOC and Embraer Executive Operators Conference – EEOC Conferences, dedicated meetings and workshops with operators are intended to sustain and enhance the rela- tionship and discuss issues related to the aircraft (main- tenance, operations and field issues). It is a means for customers to regularly and frequently share their needs, wishes, satisfaction, technical items, and experiences with the products. The Customer Support areas collect, analyze, prioritize, and develop action plans for imple- menting improvements in the products and processes. This is a process of continuous improvement. Customer Support/ annual Shareholders Kaizens with customers Assist with implementing improvements in its products and processes, while improving the customer-Embraer interface. Studies to develop or improve products The technical knowledge of some customers for operating airplanes are used in the product improvement projects. Therefore, they are contacted by Embraer to hold meetings and give studies. Customer satisfac- tion surveys Knowledge of the level of satisfaction of Embraer's customers. Customer Support/ depending on demands Market Intelligence, Customer Support and Engineering/ depending on demands Customer Support/ annual Aeronautical fairs The primary objective is to announce and present products to potential customers and to sell aircraft. Sales/in accordance with calendar Strategic alignment, presentation of future scenarios, alignment of suppliers and Embraer's expectation as well as awarding the best suppliers of the year. CEO, VPs of business units and Executives/annual Society Suppliers Embraer Suppliers Conference (ESC) Supply Chain Alignment (SCA) Strategic and operational alignment, presentation of scenarios and challenges of the year, alignment of supplier and Embraer´s expectations, working and action plans. Executive Meeting Follow-up of indicators and action plans, alignment of Embraer's expectations and suppliers. Customer Support Meeting (CSM) Meeting dedicated to aftermarket issues for the purpose of closely following, with the executives of our suppliers, the subjecs that have an impact on the fleet and on our operators. In these executive meetings, action plans are discussed and presented for technical and commercial issues for the fleet and for individual operators. Program Managers, Directors and de- partment of Supplier Quality/annual CEO, VPs of busi- ness units and Exec- utives/quarterly CEO, VPs of busi- ness units and Exec- utives/quarterly Program Review Meeting (PRM) Technical/operational follow-up of the development of programs, series, and after-market. Follow-up of the action plan and route corrections. Program Directors and Managers/bi- annual Meeting of the Board of Directors Strategy Committee (CEST, in Portu- guese) People and Governance Committee Audit and Risks Committee (CAR, in Portuguese) Investor Relations Portal Follow-up of company performance and approval of the Strategic Plan (SP) and Action Plan (AP). Legal VP/in accordance with the calendar Advising on establishing SP and AP policies and guidelines, follow-up of management and results. Legal VP/in accordance with the calendar Assistance in electing and dismissing Company direc- tors, establishing their respective functions, setting remuneration and human resource policies etc. Legal VP/in accordance with the calendar Risks and statutory audit management. Mantain a communications channel between the company and its investors/shareholders, in order to transmit information transparency and fairness, watching over corporate governance. People and sustainability VP/in accordance with the calendar Department of Investor Relations/ continuous Management of Corporate Sustain- ability/annual Annual Report Communication and transparency tool to stakehold- ers about sustainable practices of the company. Embraer Day Create a moment of interaction of the company with its main analysts and investors, with a focus on the main company information in the period. Department of Investor Relations/ biannual Relationship with regulatory agencies, routine inspec- tions, and compliance with the law. Relationship with regulatory agencies, routine inspec- tions, and compliance with the law. Meetings for sur- veying the needs and expectations of the municipality related to education and social development. Discuss sector strategies and policies, and promote greater integration and learning with various sectors. Contribute to the debate, proposing strategies, best practices, and solutions for global issues, besides supporting the public-private dialogue. Meetings: Minis- try of Labor and Employment (MTE, in Portuguese) Meetings with CETESB, Sanitation Surveillance, Federal/ State Police/Ministry of the Army, Mayors, Municipal Secretaries of Education, profes- sional associations and Brazilian busi- ness associations Participation in forums and inter- national organiza- tions(WEF, ATAG, IATA, ICAO, UNDP, GlobalCompact, OMC, AWG, etc.) Management of Labor Safety, Occu- pational Health and the Environment/ bimonthly Management of Corporate Sustain- ability/throughout the current year Departments of Foreign Relations and Management of Corporate Sustain- ability/throughout the current year 38 Contents 102-21 – CONSULTING STAKEHOLDERS ON ECONOMIC, ENVIRONMENTAL, AND SOCIAL TOPICS | 102-43 – APPROACH TO STAKEHOLDER ENGAGEMENT 102-27 – COLLECTIVE KNOWLEDGE OF HIGHEST GOVERNANCE BODY Measurements taken to develop and improve knowledge Governance body Economic Environmental Social SH Event Objective Society Meetings with fed- eral, state and mu- nicipal governments and government agencies Ensure full understanding of Embraer's actions and projects; prepare mechanisms for strengthening private society and government relations; and con- tribute to making public policies of interest to the aerospace industry. Responsible/ Frequency Departments of Foreign Relations and Management of Corporate Sustain- ability/ Throughout the current year Training of corporate governance Board of Directors Presentation on environmental matters at company sites Board of Directors Presentation from the Embraer In- stitute of Education and Research (IEEP, in Portuguese) Board of Directors Annual compliance training Board of Directors People Blog of the CEO Direct communication channel of the President with all employees. President/contin- uous Presentation from the Committee of Financial Management Board of Executive Officers Follow-up meetings of the AP/PMS and Semester Alignment Meetings for accompanying the evolution of the AP and the PMS, where the leader gives instructions and takes correcting actions for achieving the goals agreed upon. Leaders/at least quarterly Helpline Messages to Leaders Confidential tool so that employees and stakeholders can informar or seek support regarding ethical and behavioral issues related to possible violations of Embraer's policies, or of laws and regulations. Communication instrument for all leaders, seeking to support leaders in guiding employees regarding specific subjects. Compliance Depart- ment/continuous Departments of Brand Manage- ment and Internal Communications/ continuous 102-23 – CHAIR OF THE HIGHEST GOVERNANCE BODY The Chairman of the highest governance body does not hold the position of Executive Officer according to the veto contained in the Company's By-laws, paragraph 4th of article 27: "...It is for- bidden for any member of the Board of Directors to hold simultaneously the Company's Executive officer position." x - - x x - - x - x - - - x x - - - x - - - x - Presentation of work from the Committee of Control and Environmental Risks (CCRA, in Portuguese) Presentation of work from Committee of Sustainability Board of Executive Officers Board of Executive Officers Presentation from the Committee of Ethics Board of Executive Officers 102-29 – IDENTIFYING AND MANAGING ECONOMIC, ENVIRONMENTAL, AND SOCIAL IMPACTS Additionally to the strategic planning with a 15-year horizon, Embraer's strategic plan is reviewed annually with the participation of all business, operating and corporate areas; it is approved by the Board of Directors (CA). The objective is to ensure that the management of impacts, risks and opportunities arising from economic, environmental and social issues is aligned to performance expectations and stakeholder interests. Critical due diligence processes, as well as their results, are expected to be forwarded to the CA for review and follow-up. In addition, the involvement of stakeholders in economic, environmental and social issues is per- ceived and analyzed through the company's Materiality Matrix, which is reviewed every three years in a deep and comprehensive internal and external research process. The materiality was last revised in 2016 and has given rise to new goals and action plans associated to each priority theme, targeting 2020. 39 Contents 102-31 – REVIEW OF ECONOMIC, ENVIRONMENTAL, AND SOCIAL TOPICS The Board of Directors holds regular meetings eight times a year and extraordinarily whenever as necessary, following its Internal Policies statement. At those meetings, the representatives from the advisory committees report their activities and discussions to define guidelines. In turn, the Board of Executive officers reports the activities progress and requests approvals from the Council. In 2017 the Board of Directors held 13 meetings in total. At all of them, the representatives of the Committees were present. The Board of Executive officers reported different matters, such as: visibility of the Company's Plan of Action, which occurred in all meetings; visibility segmented by business area (executive, defense and commercial aviation); monitoring of the work of Internal Audit and Compliance and visibility of the Committees who advise the Board: Sustainability, Fi- nancial Management, Environmental Risks, Ethics and Negotiation and Disclosure. The Board of Directors maintains a list of recurring matters, which supports organizing the meet- ings' agenda. Several subjects are defined as relevant and frequently reported by the directors. Other relevant topics (or those in need of prior analysis) are added and arranged in the agenda. Both the agenda and the materials that will be presented at the meeting are disclosed to the counselors at least one week in advance through a governance portal. 102-32 – HIGHEST GOVERNANCE BODY’S ROLE IN SUSTAINABILITY REPORTING The Annual Report is reviewed by the entire Board of Executive Officers and, ultimately, by the Chief Executive Officer. 102-33 – COMMUNICATING CRITICAL CONCERNS The Board of Executive Officers and the Advisory Committees of the Board communicate the company's critical concerns at regular meetings of the Board of Executive Officers or, if neces- sary, demand extraordinary meetings. 102-35 – REMUNERATION POLICIES | 102-36 – PROCESS FOR DETERMINING REMUNERATION The Executive Compensation Policy (PRE, in Portuguese) states that part of the compensation of its executives is granted as a Long-Term Incentive (ILP, in Portuguese) aiming at maintaining and attracting qualified personnel that contribute effectively to the best performance of the company. Details about the compensation processes are available on the Embraer Reference Form. Learn more at item 13.1 – Description of remuneration policy or practice, including the non-statutory board until item 13.16 – Other relevant information. 102-37 – STAKEHOLDERS’ INVOLVEMENT IN REMUNERATION Embraer respects and understands the importance of the role played by the unions with whom the company relates and maintains a relationship with, in accordance with current legislation. In the Brazilian units, 5.6% of the employees are unionized, nevertheless, all of employees, union- ized or not, are contemplated by salary adjustments and social clauses, which are negotiated in the collective labor conventions signed with the representative union of the employees. The company negotiates collective labor agreements directly with these entities, covering 100% of the represented employees. Collective labor conventions contain social clauses that guarantee the right of unions to carry out unionization campaigns in the company's premises. 102-42 – IDENTIFYING AND SELECTING STAKEHOLDERS Embraer, in its value stream management, identifies the following stakeholders: people (employ- ees), company, clients, shareholders and partners (suppliers). They are engaged through a Corpo- rate Procedure that contains the guidelines for each group. Learn more at: https://embraer.com/ global/en/sustainability. GRI 103: MANAGEMENT APPROACH 103-1 – EXPLANATION OF THE MATERIAL TOPIC AND ITS BOUNDARY | 102-46 - DEFINING REPORT CONTENT AND MATERIAL TOPICS BOUNDARIES In order to clearly define the sustainability issues of greatest relevance to the company and its stakeholders, Embraer engages shareholders, customers, suppliers, representatives of social or- ganizations and class entities, in addition to its own executives. The engagement is made through consultation cycles every three years. This process results in the company's Materiality. The cur- rent one came into force in 2017 and gave rise to the 2020 Sustainability Plan, with indicators and targets for each material topic. Material Issue Stakeholder Scope Impacts Ethics, transparen- cy and compliance All stakeholders of the company Inside and outside of the organization Economic and financial sustainability All stakehold- ers of the com- pany, specially shareholders and employees Inside and outside of the organization Unethical behavior may damage reputation of a compa- ny: causing negative effects on customers, employees and investors; causing financial penalties and, as a result, affecting profits. The commitment to achieve the business goals with social responsibility is crucial, con- sidering the relationship with shareholders, employees and suppliers, protecting the environment and contrib- uting to community development. The poor economic performance of a company directly impact its shareholders, as it may reduce the compen- sation and often damages investors. Also, in a long term, this can lead to direct impacts on employees and the community in which the company is inserted. Impacts may be extended to the whole value chain reaching suppliers and customers. 40 Contents 103-1 – EXPLANATION OF THE MATERIAL TOPIC AND ITS BOUNDARY | 102-46 – DEFINING REPORT CONTENT AND MATERIAL TOPICS BOUNDARIES Material Issue Stakeholder Scope Impacts 103-2 – THE MANAGEMENT APPROACH AND ITS COMPONENTS | 103-3 – EVALUATION OF THE MANAGEMENT APPROACH The management and policies associated to each identified material issue are explained in the table below: Product safety Employees and customers Inside and outside of the organization Research, development and innovation Shareholders and customers Inside and outside of the organization Atmospheric emissions Society and customers Inside and outside of the organization Health, safety and well-being Employees Inside of the organization Natural resources and waste Shareholders and society Inside and outside of the organization There are laws, regulations, and certifications that require high standards for aviation safety. Besides, there is a need of monitoring risks to ensure the perfect oper- ation of aircraft, in order to prevent malfunctioning and potential accidents that may affect customers (airline companies) and employees of Embraer itself. Staying on the edge of technology is a fundamental condition to Embraer. Innovation enables the develop- ment of highly competitive products with permeability in international markets. The absence of it, both in products and in company services, may lead to losses of the Marketplace value. Aviation produces around 2% of the global emissions of CO2. Thus, the sector has responsibility in the fight against climate change and its impacts on society. On the other hand, less polluting aircraft may be preferential for customers, especially in a scenario of new regulations for emissions that have been rising around the world. The human cost relative to health and accident problems is the main negative consequence of not preventing risks. Other costs involved (loss of time due to accidents and illnesses, production interruption, employees replace- ment, payment of overtime, recovery of employee health, wages paid to employees on leave, etc.) can also affect the profitability of the company. Employee well-being is also directly related to talent retention and engagement, which may directly impacts the company's performance. The management of natural resources and waste is essential for the company's efficiency, as well as for en- suring the minimization and mitigation of impacts on the environment and the community in which it is inserted. In addition, the poor management of disposal and raw of waste can lead to fines and loss of reputation regarding to the organization's brand value. Also, it can potentially affect the community, as it impacts the environment quality and, consequently, the people's health. Material Issue Ethics, trans- parency and compliance Responsible area Vice-Presidency for Legal Affairs Economic and financial sus- tainability Vice-Presidency for Financial and Investors Relations Product safety Vice-Presidency for Engineering Indicators 2020 target Management 90% Employee engagement in Ethics and Compliance survey Return on Equity (ROE) ROE > cost of equity 100% Risk analisys within the target period/total reportings the area has received In addition to the climate research, Helpline reports are also monitored, as well as the re- sponses to the Ethics and Compliance research, which generate action plans specifically to each case. This theme is governed by the Anti-Cor- ruption Policy and by the Code of Ethics and Conduct, applicable to all Embraer units in Brazil and abroad, as well as companies controlled by the holding company. The company's economic and financial perfor- mance is accompanied by responsible areas, with routine visibility to the Board of Directors and quarterly market reports. Reports are sub- mitted to CVM and SEC. Embraer has the safety of its products as a fundamental pillar for its business excellence and sustainability. Aiming at achieving higher levels of safety performance and sustaining the perception of comfort and safety of the company's aircraft users, Embraer promotes a proactive approach to the life cycle of its products. This includes the commitment to develop, implement, maintain and constantly improve strategies to ensure that Embraer continues to build safe products that meet and exceed national and international certification standards. For an efficient security management strategy, it is necessary encouraging reporting of observed risk situations, analyz- ing these within appropriate time frames and constructing indicators. The indicator defined for Product Safety (percentage of product safety related reports analyzed within the term excel- lence references) reflects the essence of these actions, which allows us to measure and monitor the efficiency of the safety process. 41 Contents 103-2 – THE MANAGEMENT APPROACH AND ITS COMPONENTS | 103-3 – EVALUATION OF THE MANAGEMENT APPROACH Material Issue Responsible Indicators 2020 target Management Material Issue Responsible Indicators 2020 target Management People development Vice-Presidency for People and Sustainability Diversity and Volunteering Research, de- velopment and innovation Vice-Presidency for Engineering Pre-com- petitive investment on research and technology development 2% increase in women and afrodescendant employees. Leverage the number of volunteer positions to equivalent 12% of Embraer employees. 1% of the revenue. Embraer created in 2017 the Embraer Business Innovation Center (EBIC) in Melbourne, Florida (USA). Atmospheric emissions Vice-Presidency for People and Sustainability tCO2e/net revenue -3% in com- parison to the base year 2016. Health, safety and well-being Vice-Presidency for People and Sustainability Zero. Lost Time In- jury Frequency Rate (LTIFR) for employees and third-parties The targets are deployed for each Embraer unit and monitored through the integrated quality management system. Those are supervised by the Environment, Health and Safety Area, as well as monitored by the Sustainability Area. The theme is governed by the Environment, Health and Safety Policy, applicable to all compa- ny units and also to its controlled subsidiaries. OHSAS Certi- fication Natural resources and waste Vice-presidency for People and Sustainability Water con- sumption (m3/ net revenue) Energy con- sumption Hazardous waste gener- ation (ton/net revenue) Non-hazard- ous waste generation (ton/net revenue) ISO 14001 Certification 100% certification of manufac- turing plants and service centers with more than 100 people (including third-party employees). -2% in com- parison to the base year 2016. -5% in com- parison to the base year 2016. -3% in com- parison to the base year 2016. -2% in com- parison to the base year 2016. 100% certi- fication of manufacturing plants and service cen- ters with more than 100 peo- ple (including third-party employees). The targets are deployed for each Embraer unit and monitored through the integrated quality management system. Those are supervised by the Environment, Health and Safety Area, as well as monitored by the Sustainability Area. The theme is governed by the Environment, Health and Safety Policy, applicable to all compa- ny units and also to its controlled subsidiaries. 42 Contents ECONOMIC STANDARDS GRI 201: ECONOMIC PERFORMANCE 201-1 – DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED In 2017, the total added value to be distributed was R$5,546.2 million, equivalent to 27% of net rev- enue. R$207.0 million were distributed to shareholders in interests on own capital and dividends; R$3,342.8 million to employees; and R$559.6 million to the Federal and Municipal Governments as taxes and contributions. ADDED VALUE STATEMENT (AVS) The AVS demonstrates the wealth generated by Embraer and its distribution to society segments, which are represented by shareholders, employees, financial institutions and Government (mu- nicipal, state and federal). The added value to be distributed totaled R$5,546.2 million and repre- sented 27% of net revenue in 2017. Consolidate (R$ million) Revenue Inputs acquired from third parties Gross added value Depreciation and amortization Net added value produced by company Added value received in transfer Total added value distributable Added value distribution Personnel Government (tax. fee and contributions) Interest and rental Interests on equity and dividends Retained profits and losses for the financial year Participation of non-controllers 2015 22,360.1 (16,364.1) 5,996.0 (1,073.3) 4,922.7 605.2 5,527.9 5,527.9 3,342.5 1,251.6 652.2 92.3 149.3 40.0 2016 23,416.0 (17,157.2) 6,258.8 (1,265.5) 4,993.3 739.9 5,733.2 5,733.2 3,557.0 592.7 991.7 174.0 411.4 6.4 2017 20,405.0 (14,337.2) 6,067.8 (1,085.6) 4,982.2 564.0 5,546.2 5,546.2 3,342.8 559.6 796.4 207.0 588.8 51.6 201-2 – FINANCIAL IMPLICATIONS AND OTHER RISKS AND OPPORTUNITIES DUE TO CLIMATE CHANGE Embraer's corporate governance includes a structured process of risk and opportunity man- agement based on best market practices and methodologies applied by leading global consult- ing companies. Corporate risk management is under the responsibility of the Risk and Internal Controls Department, which reports directly to the Audit and Risk Committee (CAR). The Man- agement advises the main executives by mapping, identifying, classifying and monitoring busi- ness risks in all units. The results of this process have not indicated vulnerability to the compa- ny on its substantial operational changes, revenues or expenses which involve risks relative to changes in legislation, physical climate parameters or another aspect related to climate change. The analysis carried out had considered, within a five year period, topics such as environmental legislation in Brazil and other countries where Embraer operates, the European Union Emis- sions Trading Scheme (EU ETS) and discussions on carbon taxation. The Brazilian environmen- tal legislation does not impose strong demands through the theme (currently, the only require- ment is the elaboration of a Greenhouse Gas inventory), and EU ETS determinations have low impact to Embraer as part of the global aviation industry. No real threats to carbon taxation have been identified. In reference to the operations, the main manufacturing units are located in Brazil, which is a country not susceptible to extreme natural phenomena, settled in regions with very low risks of flooding or frost. The units overseas also present very low possibilities of risks and impacts. All units follow Crisis Management guidelines to minimize the effects of contingencies. 201-3 – DEFINED BENEFIT PLAN OBLIGATIONS AND OTHER RETIREMENT PLANS SCOPE OF THE RETIREMENT PLAN The company offers the Embraer Prev – a private complementary retirement plan – to all employ- ees in Brazil and some of its controlled subsidiaries. The participation is voluntary, as required by national legislation. There is no restriction for employees to participate, however its time of ser- vice in the company is considered for the purpose of redeeming the benefit. Similar benefits are offered at Embraer's overseas units, according to the applicable conditions and market realities. As sponsors, Embraer or its controlled subsidiaries deposit the same amount of monthly con- tribution chosen by the participant – with a ceiling up to 8% of the wage. There is no charge on monthly contributions to participants; they are funded entirely by the sponsors. The Embraer Prev is a non-profit entity with independent management, board of directors and its own fiscal and deliberative councils. In adition, this is exclusively directed to the administration of the participants patrimony. Retirement plan documentation: • Embraer's Statutes Prev • Regulation of the Embraer Complementary Retirement Plan Prev • Participant Manual https://embraerprev.com.br/ 43 Contents GRI 202: MARKET PRESENCE GRI 203: INDIRECT ECONOMIC IMPACTS 202-1 – RATIOS OF STANDARD ENTRY LEVEL WAGE BY GENDER COMPARED TO LOCAL MINIMUM WAGE In Brazil, the minimum wage is established by the minimum from union category. Country Gender Reference 2015 2016 2017 Local minimum Brazil (R$) Men 1,339.80 1,502.80 United States (US$) Women Men Women Portugal (€) Men Women France (€) Men Women 1,470.55 1,733.33 2,080.00 700.00 700.00 1,891.99 1,513.59 1,470.55 2,142.40 2,102.53 700.00 700.00 1,851.39 1,556.80 1,504.80 1,504.80 2,185.21 2,426.62 728.20 784.19 1,800.00 1,513.59 wage 937.001 1,430.002 649.833 1,480.274 Ratio relation (%) 161 161 153 170 112 121 122 102 (1) Minimum wage in Brazil. (2) Minimum wage in the state of Florida, United States. (3) Minimum wage in Portugal. (4) Minimum wage in France. Important operating units are those where Embraer is present and which have a significant amount of cash. The offices of Singapore, China and the Netherlands were not considered. 202-2 – PROPORTION OF SENIOR MANAGEMENT HIRED FROM THE LOCAL COMMUNITY Governance body Total Work in the country of origin (%) Does not work in the country Board of Executive Officers 11 82 of origin (%) 18 203-1 – INFRASTRUCTURE INVESTMENTS AND SERVICES SUPPORTED Embraer invested about R$20 million in the Embraer Institute and the Embraer Foundation, in 2017. The initiatives are conducted aligned with public authority, local partners and committed volun- teer employees. There is also an increasing participation of local communities in the definition of strategic priorities through public consultations and opinion polls. The Embraer Institute and the Embraer Foundation are governed by formal documentation ac- cording to the country in which they operate. The documents are submitted to the public au- thority and provide transparency and accountability for the organizations activities, as well as regulation of the attributions of its Deliberative/Fiscal Councils and the Executive Board GRI 205: ANTI-CORRUPTION 205-1 – OPERATIONS ASSESSED FOR RISKS RELATED TO CORRUPTION The analysis of risks related to corruption is carried out through the due diligence process, introduced in 2014 with the publication of Due Diligence Procedure. Since then, both new and existing service providers attend to a reputational assessment undertaken by the Compliance team, which includes searches in official databases and media about corruption involvement, tax evasion, fraud, terrorism, etc. If no restrictions are found, the Compliance team issues a certificate. There is a systemic lockout for payments from any suppliers that are not certified by due diligence. Regarding the number of certified suppliers between the end of 2013 and May 2014 – when the re- quests for analysis were still made by e-mail –, there were 608 suppliers approved; between May and December 2014 – when requests were made via the portal –, there were 1,107 more; in 2015, 2,704; in 2016, 5,164; and in 2017, 3,099 providers. In total, by 2016, there were 12,682 suppliers and third parties certified. Operation Total number of operations Percentage of operations submitted to risk assessments submitted to risk assessments related to corruption related to corruption Due dilligence of suppliers Due dilligence of sponsorships Due dilligence of donations Due dilligence of class entities 3,099 118 9 38 100 100 100 100 44 Contents Risks related to corruption Conflicts of inter- est (improper or in- correct payments in order to obtain favors) Improper account- ing (incorrect records and/orpro- visioning) Improper commer- cial discounts (ab- sence of approval or alteration of prices) Failure to observe proper anti-corrup- tion procedures in the M&A process Improper or duplicated payment (to publicauthorities and certifying entities) Bribery or improp- er benefits (im- properlyreceiving or paying suppli- ers, commercial- representatives, customers, public authoritiesand external entities) Risk assessment type Qualitative Qualitative Actions for risks mitigation 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 implemented 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. Qualitative Qualitative Qualitative The Compliance team's carrying out of the due diligence analyses, in addition 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 implemented 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 consultations made to the Compliance team. 205-2 – COMMUNICATION AND TRAINING ABOUT ANTI-CORRUPTION POLICIES AND PROCEDURES In 2017, Embraer provided training and conveyed information about anti-corruption policies and procedures to all 36 professionals, members of its governance bodies – mostly located in the Southeast Region. Regarding to employees and other groups, the training and communication were carried out as follows: Functional categories Number of Number of Percentage of Number of Percentage of employees in employees who employees who trained trained each functional were notified of were notified employees employees category the anti-corrup- of the regarding an- regarding an- tion procedures anti-corruption ti-corruption ti-corruption and policies procedures Leaders Non-leaders 1.052 16,714 985 16,546 and policies 94 99 985 16,546 94 99 Types of trading partners Number of each type of Number of suppliers trading partner which werenotified of the anti-corruptionprocedures 3,003 96 and policies 3,003 96 Suppliers Third parties (commercial- representatives, law firms and logisticsagents) 205-3 – CONFIRMED INCIDENTS OF CORRUPTION AND ACTIONS TAKEN In 2017, the company recorded no cases of corruption. 45 Contents ENVIRONMENTAL STANDARDS In 2017, the unit in Jacksonville, U.S., was included. GRI 302: ENERGY 302-1 – ENERGY CONSUMPTION WITHIN THE ORGANIZATION Embraer manages the environmental indicators through the Integrated Occupational Health, Safety and Environment System, with the Occupational Health, Safety and Environment Policy as its main document. Its environmental guidelines related to this indicator are: • To promote and enhance the development of technologies so that its products, processes and equipment have less impact on the environment and people, in a sustainable manner. • To promote the improvement of processes, facilities and equipment by encouraging energy efficiency, ultimately mitigating risks and hazards, environmental aspects and impacts, and consumption of natural resources. • Consider the adoption of new energy sources, investing in the use of renewable energy. Total consumption (MWh) Non-renewable fuels Diesel/Brazil Gasoline/Brazil Aviation gasoline Liquefied Petroleum Gas (GLP) Natural gas Aviation kerosene TOTAL Renewable fuels Hydrous ethanol 2015 734 209 21 12,693 35,313 70,448 119,418 2015 172 2016 736 319 0 12,087 31,805 102,113 147,060 2016 83 2017 625 411 1 1,536 39,576 118,579 160,727 2017 72 Electricity consumption per unit (MWh) Faria Lima Botucatu Évora Eugênio de Melo Gavião Peixoto OGMA EDE (ELEB) Melbourne Taubaté Nashville Fort Lauderdele Sorocaba Harbin* Belo Horizonte Beijing São Paulo Jacksonville Brazil (Master Plan Units) Brazil (ISO 14064 Certified Units) 2015 65,864 17,291 14,218 13,707 13,443 12,929 10,959 8,147 4,031 3,626 2.18 900 830 636 179 – – 125,295 126,831 2016 62,472 15,683 16,021 15,32 15,601 13,326 10,987 13,299 4,264 4,853 3,232 925 0 612 183 111 – 124,327 125,975 2017 56,518 15.01 16.28 15,866 16,186 15,338 10,346 17,306 3,921 5,367 4,436 841 0 629 171 351 671 117,847 119,668 TOTAL 168.94 176,889 179,237 * Embraer Divisão Equipamentos (EDE, then ELEB). In 2017, the unit in Jacksonville, U.S., was included. The consumed non-renewable fuels include consumption at the units certified in ISO 14064 – Part I concerning Scope 1 (SKJ, EGM, TTE, EDE – ELEB, BOT, GPX, BHZ, SOD and SPO). Therefore, the consumption related to Embraer’s units abroad was not taken into account. 302-2 – ENERGY CONSUMPTION OUTSIDE THE ORGANIZATION The reported amounts relate to the quantity of fuel consumed upstream, for the purchased goods and services, transport and distribution, business trips and employee commuting categories. Total consumption (MWh) Non-renewable fuels Diesel/Brazil Gasoline/Brazil Liquefied Petroleum Gas (LPG) Natural gas Aviation kerosene TOTAL Consumo total (MWh) Precursor group Precursor Renewable fuels Hydrous ethanol 2015 31,188 4,174 24 34 81,042 116,462 2016 30,581 5,821 25 24 65,404 101,855 2017 27,646 5,093 24 - 48,953 81,716 2015 1,840 2016 2,233 2017 2,084 46 Contents The consumed renewable fuels includes consumption at the units certified in ISO 14064 – Part I concerning Scope 3 (SKJ, EGM, TTE, EDE – ELEB –, BOT, GPX, BHZ, SOD and SPO). Therefore, the consumption related to Embraer's units abroad was not taken into account. 302-3 – ENERGY INTENSITY In 2017, a total of 197 equivalent aircraft were produced – 20% less than in 2016. Therefore, there was a significant increase when comparing the 2016 (500 MWh/equivalent aircraft) and 2017 indicators (598 MWh/equivalent aircraft). Nevertheless, compared to the base year of 2014, the end result remained stable (1% decrease). Despite the production decline, the development of new programs demanded higher level of en- ergy consumption in 2017. The analysis of energy consumption based on the company's net revenue was constant over the past four years. 302-4 – REDUCTION OF ENERGY CONSUMPTION All energy reduction projects are cataloged in an information sharing virtual environment. The Corporate Environment, Health and Safety Policy foresees investment in the improvement of processes, facilities and equipment with incentive to reduce hazards and risks, aspects, environ- mental impacts and consumption of natural resources. 302-4 – REDUCTION OF ENERGY CONSUMPTION Project Improvements in lighting Reduction in the consumption of compressed air Exchange of compressors Installation of photovoltaic panels Replacement of vacuum pumps TOTAL Unit EDE EGM SJK TTE BOT EDE SJK SJK Annual savings (MWh) 31 10 580 229 535 300 12 1,896 3,593 The gains of projects involving the improvement in lighting, exchange of compressors and replacement of engines and vacuum pumps were estimated considering the power of the new and old equipment. For the project regarding economy of compressed gas in Botucatu, the estimated electricity sav- ing was calculated considering the electricity used before and after its implementation, when changes in habits were encouraged, and a compressed air consumption manager was installed. The savings due to the installation of photovoltaic panels was directly measured, represent- ing the amount of energy generated in December 2017, when the project was completed. 302-5 – REDUCTIONS IN ENERGY REQUIREMENTS OF PRODUCTS AND SERVICES The development of the new E-Jets family focuses on improving efficiency. Besides the ex- change of engines, there was a structural redesign of the aircraft, especially the wings, spe- cially designed for each model. As for fuel consumption, the E190-E2 (first to receive certification from regulatory agencies) was 1.3% better than originally expected, representing an advance of 17.3% over the first gen- eration E190. The E190-E2 thus becomes the most environmentally friendly aircraft in the category, with the lowest external noise level and emissions. Data from the other E2 family jets will be available after the certification process for each. 47 Contents GRI 303: WATER 303-1 – TOTAL WATER COLLECTED BY SOURCE Total water collected by source Water sources Surface waters, including wetlands, rivers, lakes and oceans Groundwater Rainwater directly collected and stored by the organization Wastewater from another organization Municipal water supply or other water supply companies Quantity (m3) 2015 - 2016 - 2017 - 616,545 563,845 571,415 - - - - 60,315 91,237 The SJK, EGM, EDE (ELEB) and GPX units are supplied by groundwater collected at the compa- ny’s area. The Taubaté, Botucatu, Belo Horizonte and Sorocaba units in Brazil, and Évora, OGMA, Fort Lauderdale, Nashville, Melbourne and Beijing abroad, use municipal water supply or water supplied by other companies. In 2017, it was started to report the water consumption of the Jack- sonville unit, in the United States. The reported values were based on direct measurements. 303-2 – WATER SOURCES SIGNIFICANTLY AFFECTED BY THE COLLECTION OF WATER The company does not use any water source that is significantly affected. 344,268 503,066 320,174 303-3 – RECYCLED AND REUSED WATER Total water collected 960,813 1,127,226 982,826 Total water Total recycled and Percentage of Total water Total recycled and Percentage of Total water Total recycled and Percentage of 2015 2016 2017 Site SJK EGM TTE EDE (ELEB) GPX BOT EVO FLL BNA MLB BJS BHZ OGMA SOD JAX Embraer Brazil Embraer S.A. used reused water recycled water 960,152 20,906 2 used 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 reused water recycled water 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 used 359,162 128,862 27,557 54,963 69,800 77,708 60,726 28,891 2,011 7,317 2,190 4,236 122,887 2,168 269 724,456 948,747 The amounts related to recycled and reused water were estimated according to the consumption of equipment using recycled and reused water, and also according to the volume of the reservoir in which it is stored. The total amount of water used is sum of the consumed water (GRI 303-1) and the recycled and reused water. In 2017, the Jacksonville unit, in the United States, started collecting information. In 2017, the installation of the water reuse system was completed at the Steel Structures unit in Évora. reused water recycled water 5,280 0 8,422 29,952 6,140 0 3,800 0 0 0 0 0 3,564 0 0 49,794 57,158 1 0 31 54 9 0 6 0 0 0 0 0 3 0 0 7 6 48 Contents 305-1 – DIRECT GREENHOUSE GAS EMISSIONS – SCOPE 1 The reported amounts refer to the mobile combustion, stationary combustion, and fugitive emis- sion categories. Scope 1 Gas family CH4 CO2 HFC N2O PFC TOTAL Gas CH4 CO2 HFC N2O PFC-218 2015 11.68 28,164.26 3,053.97 171.43 0 2016 10.79 35,704.63 2,105.83 239.76 0 2017 10.36 39,104.41 3,138.49 271.08 18.99 31,401.34 38,061.01 42,543.33 Biogenic emissions (tCO2e) 2015 64.81 2016 48.11 2017 49.2 The values reported for Scope 1 emissions include units certified in ISO 14064 – Part I (SKJ, EGM, TTE, EDE – ELEB –, BOT, GPX, BHZ, SOD and SPO), that is, they disregard the consumption re- lating to overseas units. The observed increase is mainly due to the consumption of aviation kerosene, which increased due to the development and certification flights of the E2 and KC390 programs. Management form: company’s policies and guidelines that assist in the management of the indicator. The company carries out its Greenhouse Gas (GHG) Emission Inventory, which is annually in- spected and validated by a third party at ISO 14064 Part I. This and all correlated procedures are defined and detailed in the corporate standard doc.emb 6968. Embraer manages the environmental indicators by means of the Integrated Occupational Health, Safety and Environment System, with the Occupational Health, Safety and Environment Policy as its main document, which establishes the following guidelines: • Prevention and response to pollution, respect to biodiversity, and the concern with climate changes. • Cooperate towards the development of sustainable products, processes, equipment, and al- ternative fuels with lower emission of Greenhouse Gases. 305-2 – INDIRECT GREENHOUSE GAS EMISSIONS – SCOPE 2 Scope 2 (tCO2e) Gas CO2 TOTAL GWP 1 2015 15,699.16 15,699.16 2016 10,217.33 10,217.33 2017 11,130.72 11,130.72 Scope 2 emissions were calculated considering the operational control, and exclusively repre- sent the purchase of electricity. Despite the reduction in the electricity consumption the Scope 2 emissions increased due to the emission factor of the National Interconnected System, which presented an increase of more than 10% between 2016 and 2017. The methodology for calculating Scope 2 emissions based on the market in Brazil is under development, and therefore, the same calculation methodology is adopted for the market and location approaches. The values reported for Scope 2 emissions include units certified in ISO 14064 – Part I (SKJ, EGM, TTE, EDE – ELEB –, BOT, GPX, BHZ, SOD and SPO), that is, they disregard the con- sumption relating to overseas units. GWP: Global Warming Potencial. 305-3 – OTHER INDIRECT GREENHOUSE GAS EMISSIONS – SCOPE 3 The reported amounts relate to the emissions generated upstream for the purchased goods and services, transport and distribution, business trips, employee commuting and residues generated in operation categories. GEE (tCO2e) CO2 CH4 N2O TOTAL Gas 1 25 298 Biogenic emissions (tCO2e) 2015 1,086.24 2015 31,979.47 1,862.90 278.61 34,121 2016 1,348.55 2016 26,185.27 1,250.07 381.18 27,817 2017 20,736.68 1,169.86 322,93 22,229 2017 1,284.33 The values include the consumption at the units certified in ISO 14064 – Part I related to Scope 2 (SKJ, EGM, TTE, EDE – ELEB –, BOT, GPX, BHZ, SOD and SPO), that is, they do not consider the consumption relating to overseas units. The reduction in CO2 emissions is mainly due to the Business trips category, which was 23.6% lower in comparison to 2016, and also the Purchased goods and services categories, which pre- sented a decrease of 18.3% on the same bases. 49 Contents 305-4 – INTENSITY OF GREENHOUSE GAS EMISSIONS Embraer calculates the intensity indicator of GHG emissions by adding the emissions from Scopes 1 and 2 against its net income. The target is to reduce 3% until 2017, using 2013 as a reference. The indicator considers the emissions in Scope 1 regarding fugitive emissions, burning of fuels other than aviation kerosene (QAV) and burning of QAV in production flights (airplanes in the cur- rent portfolio). It does not consider the emissions of development flights and certification of new products, nor aircraft in the Defense and Security business unit. In this way, the 2017 indicator presented 12% reduction when compared to 2013. All gases listed in Scopes 1 and 2 were considered in the calculation of the indicator. 305-7 – EMISSIONS OF NOX, SOX AND OTHER SIGNIFICANT ATMOSPHERIC EMISSIONS For all production processes involving stationary sources of atmospheric pollutants, Embraer adopts effective emission control systems, considering the best technology available on the market. Embraer manages the indicators through the Integrated Occupational Health, Safety and Environ- ment System, whose primary document is the Occupational Health, Safety and Environment Policy. Its environmental guidelines related to energy consumption are: • To promote and enhance the development of technologies so that its products, processes and equipment have less impact on the environment and people, in a sustainable manner. 305-5 – REDUCTION OF GREENHOUSE GAS EMISSIONS Embraer continuously invests in eco-efficiency projects, seeking the reduction of the consump- tion of resources and the increase of the efficiency in its processes. In 2017, several projects have been implemented that contributed to reducing GHG emissions, especially related to Scope 2, due to the decrease in the consumption of electricity. Emissions in tons Categories NOx SOx 2015 (tCO2e) 2016 (tCO2e) 2017 (tCO2e) Volatile Organic Compounds (VOC) Persistent Organic Pollutants (POP) Particulate Matter (PM) Reductions Process redesign – Scope 1 Equipment modernization conversion – Scope 2 Equipment modernization conversion – Scope 1 Changes in employee behavior 98 239 0 0 0 185 0 19 263 306 0 28 305-6 – EMISSIONS OF SUBSTANCES THAT DEPLETE THE OZONE Embraer has a program to replace the ozone layer-depleting refrigerant gases by others with lower environmental impact, such as HCFC-407a and HCFC-404a. The data reported in the following table is related to the amount of imported ozone layer-deplet- ing substances. Precursor ODP (tCFC-11E/ton 2015 (ton) 2016 (ton) 2017 (ton) HCFC-22 HCFC-141b TOTAL gas) 0.055 0.11 - 0.08 0.03 0.11 0.04 0.02 0.06 0.07 0.02 0.08 Emissions in tons of CFC-11 equivalent calculated through the Ozone Depleting Potential (ODP), as adopted by the Montreal Protocol. Values obtained from http://www.epa.gov/ozone/science/ods/index.html. 2015 2016 97 2 0 20 26 91 2 0 7 19 2017 68 0.5 0 13 20 The reported amounts refer to the SJK, EGM, EDE (ELEB), GPX and BOT productive units. The technical standards of the Environmental Company of the State of São Paulo (Cetesb) and the Environmental Protection Agency (EPA) are adopted for the calculations. At the facilities, the atmospheric emissions originating from stationary sources are monitored on an annual basis or as requested from the local environmental agency, according to internal procedure doc.emb 2314 and the Atmospheric Emission Monitoring Plan (PMEA). The PMEAs identify all stationary sources installed, the analyzed parameters and the pollution control systems. The following emissions are monitored: Particulate Matter, Volatile Organic Compounds, Nitrogen Oxides, Sulfur Oxides and Carbon Monoxide. The emissions, measured in mg/Nm3, are converted to ton/year to verify if they have not exceeded the thresholds set forth in the legislation. The re- sults are filed at the local environmental agency and have not exceeded the threshold, and therefore, no compensation project is required. The emissions of volatile organic compounds were significantly reduced in recent years due to the installation of robots on the main paint booths, which decreased the amount of paint used on the aircraft. In addition, the improvements on the control procedures for calculating the emissions. 50 Contents GRI 306: WASTEWATER AND SOLID WASTE 306-2 – TOTAL RESIDUAL WEIGHT, BROKEN DOWN BY DISPOSAL TYPE AND METHOD 306-1 – TOTAL DISPOSAL OF WATER, BROKEN DOWN BY QUALITY AND DESTINATION The company establishes robust internal procedures for the management of the topic, available in its internal system (doc.emb), among which, Procedure 1805 – Treatment of Domestic and In- dustrial Wastewater, which establishes procedures for the management of services relating to the domestic and industrial wastewater treatment stations. The indicators are managed through the Integrated Occupational Health, Safety and Environment System, supported mainly by the Occupational Health, Safety and Environment Policy. The envi- ronmental guidelines related to the generation of wastewater are: • Compliance with legal, environmental, health, safety, fire prevention and emergency require- ments applicable to the company’s business. • Prevention and response to pollution, respect to biodiversity, and the concern with cli- mate changes. • Promotion and enhancement of the development of technologies, so that its products, pro- cesses and equipment cause an impact on the environment and people. Total water disposal, broken down by quality and destination Total volume of water disposal (m3) 2015 2016 2017 Treatment Destination Domestic 373,299 291,422 265,938 SJK EGM GPX TTE 164,318 153,752 148,434 56,970 48,270 35,545 Primary treatment – screening Primary treatment – screening Public sewage collection network Public sewage collection network 34,465 34,319 35,380 Anaerobic treatment Local stream 13,311 12,440 11,852 Aerobic treatment Local stream OGMA 104,165 42,641 34,727 Biological treatment Industrial 116,129 108,047 100,040 SJK BOT EGM GPX 25,690 24,619 20,622 37,670 28,918 30,179 4,200 3,540 2,760 827 577 555 EDE (ELEB) 4,714 3,699 2,840 OGMA 19,562 19,530 19,388 EVO 23,466 27,164 23,696 Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment Physical-chemical treatment Public sewage collection network Public sewage collection network Public sewage collection network Public sewage collection network Local stream Public sewage collection network Public sewage collection network Public sewage collection network 2015 2016 2017 Disposal method Not dangerous (ton) Dangerous (ton) Total (ton) Not dangerous (ton) Dangerous (ton) Total (ton) Not dangerous (ton) Dangerous (ton) Total (ton) Sanitary landfill Incineration Composting Coprocessing Decontamination Sterilization Recycling Recovery Sewage treatment Physical-chemical treatment 1,408 2,009 1,408 374 1,008 9 0 0 0 12 0 386 1,008 1,091 1,100 0 0 0 0 394 867 12 0 0 12,284 113 12,397 12,454 2,490 2,217 695 29 758 128 4,707 1,453 157 846 679 23 Industrial landfill 0 30 30 0 0 28 0 977 1 1 97 2,009 2,147 422 867 989 1 1 42 690 695 0 0 12,551 11,476 2,080 2,926 1,479 2,158 118 27 141 27 0 316 0 0 0 21 0 2,147 63 690 923 1,618 0 1 41 0 1 11,517 2,132 2,132 0 0 0 316 0 0 Total 18,297 4,349 22,646 17,284 4,808 22,092 15,366 3,119 18,484 The data reported in the table represent the waste generated in the Brazilian production units (Faria Lima, Eugênio de Melo, Taubaté, Embraer Equipment Division, Botucatu and Gavião Peixoto) and the United States units (Melbourne, Nashville and Fort Lauderdale), and meth- ods of disposal given to them is directly confirmed by the organization. With regard to waste generated in the units of Portugal (Évora and OGMA), the information is provided by the company contracted for the management of waste, of which, for hazard- ous waste, 2,900 tons are subject to disposal processes and to 133 recovery processes. For non-hazardous waste, 498 tonnes are subject to disposal and 2,881 tonnes are recovered. 306-3 – SIGNIFICANT LEAKS In 2017, the company had no registered cases of significant leaks. 51 Contents 308-2 – SIGNIFICANT NEGATIVE ENVIRONMENTAL IMPACTS ON THE SUPPLIER CHAIN AND MEASURES ADOPTED Most of the supplier base has undergone some type of assessment related to the Risk Assess- ment or Due Diligence (REACH) processes. SOCIAL STANDARDS GRI 401: EMPLOYMENT 401-1 – HIRING OF NEW EMPLOYEES AND TURNOVER The hiring and retaining of people at the company must be based on equity regarding color, gen- der, race, nationality, social position, religion, marital status and physical characteristics, respect- ing the exceptions set forth in the current legislation or the specific requirements of the jobs. Total number of employees and turnover by age group, gender and region 2017 Country Age group Men Women Grand total Brazil Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 TOTAL China TOTAL France TOTAL Portugal TOTAL Netherlands Under 30 Between 30 and 50 Over 50 TOTAL Singapore Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 TOTAL USA TOTAL GRAND TOTAL Total 108 452 239 799 0 6 0 6 9 6 1 16 26 26 0 52 1 3 1 5 0 3 2 5 133 98 41 272 1,155 % 0.59 2.45 1.30 4.33 0.00 0.03 0.00 0.03 0.05 0.03 0.01 0.09 0.14 0.14 0.00 0.28 0.01 0.02 0.01 0.03 0.00 0.02 0.01 0.03 0.72 0.53 0.22 1.48 6.27 Total 35 110 25 170 0 3 0 3 2 1 0 3 2 14 0 16 2 0 0 2 1 2 0 3 27 17 9 53 250 % 0.19 0.60 0.14 0.92 0.00 0.02 0.00 0.02 0.01 0.01 0.00 0.02 0.01 0.08 0.00 0.09 0.01 0.00 0.00 0.01 0.01 0.01 0.00 0.02 0.15 0.09 0.05 0.29 1.36 Total 143 562 264 969 0 9 0 9 11 7 1 19 28 40 0 68 3 3 1 7 1 5 2 8 160 115 50 325 1,405 % 0.78 3.05 1.43 5.26 0.00 0.05 0.00 0.05 0.06 0.04 0.01 0.10 0.15 0.22 0.00 0.37 0.02 0.02 0.01 0.04 0.01 0.03 0.01 0.04 0.87 0.62 0.27 1.76 7.62 52 Contents 401-1 – HIRING OF NEW EMPLOYEES AND TURNOVER Total number of employees and turnover by age group, gender and region 2017 Country Age group Men Women Grand total 401-2 – BENEFITS GRANTED TO FULL-TIME EMPLOYEES THAT ARE NOT EXTENDED TO TEMPORARY OR PART-TIME EMPLOYEES All full-time employees have benefits that include life insurance, health insurance, disability and incapacity allowance, maternity/paternity leave, and pension fund. Brazil Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 TOTAL China TOTAL USA TOTAL France TOTAL Netherlands Under 30 Between 30 and 50 Over 50 Under 30 Between 30 and 50 Over 50 TOTAL Portugal TOTAL Singapura Under 30 Between 30 and 50 Over 50 TOTAL GRAND TOTAL Total 369 209 9 587 1 2 0 3 129 220 67 416 0 1 0 1 0 4 1 5 41 29 0 70 1 4 3 8 1,090 % 2.00 1.13 0.05 3.18 0.01 0.01 0.00 0.02 0.70 1.19 0.36 2.26 0.00 0.01 0.00 0.01 0.00 0.02 0.01 0.03 0.22 0.16 0.00 0.38 0.01 0.02 0.02 0.04 5.91 Total 126 69 0 195 4 3 0 7 27 40 22 89 1 2 1 4 0 1 0 1 11 12 0 23 0 1 0 1 320 % 0.68 0.37 0.00 1.06 0.02 0.02 0.00 0.04 0.15 0.22 0.12 0.48 0.01 0.01 0.01 0.02 0.00 0.01 0.00 0.01 0.06 0.07 0.00 0.12 0.00 0.01 0.00 0.01 1.74 Total 495 278 9 782 5 5 0 10 156 260 89 505 1 3 1 5 0 5 1 6 52 41 0 93 1 5 3 9 1.410 % 2.69 1.51 0.05 4.24 0.03 0.03 0.00 0.05 0.85 1.41 0.48 2.74 0.01 0.02 0.01 0.03 0.00 0.03 0.01 0.03 0.28 0.22 0.00 0.50 0.01 0.03 0.02 0.05 7.65 401-3 – MATERNITY/PATERNITY LEAVE Eligible – leave Total eligible Took the leave Returned to work Returned to work (+12 months) Percentage of return Paternity Maternity Total Geral 15,486 2,947 18,433 581 576 576 99 132 118 118 89 713 694 694 97 GRI 403: OPERATIONAL HEALTH AND SAFETY Since 1971, all Embraer’s industrial units in Brazil have Internal Accident Prevention Commissions (Cipa), with the number of members established by NR-05 – regulatory standard from the Ordi- nance No. 3,124/78 from the Ministry of Labor (MTE, in Portuguese). Cipa is composed of employ- ee representatives elected in a secret voting session once a year, along with the representatives appointed by the employer, in the same proportion. The coordination is the responsibility of its President, who is appointed by the company. The Vice-President is chosen by the elected and assigned employees. The Commission meets at least once a month to discuss issues related to the health and safety of employees, recording the meeting in minutes which are then sent to the unions. Once a year, the Cipa organizes a week dedicated to the prevention of accidents, during which several activities are carried out, involving all the employees. Embraer seeks excellence in its occupational health and safety performance, a topic considered essential internally. Therefore, it holds continuous educational and preventive actions guided by the MASS (Occupational Health, Safety and Environment) Policy, with a global reach. This is a guidance to set targets connected to the company’s business excellence criteria. In order to establish the accident reduction targets, it adopts the best and most recognized global parameters as a reference, using for this end the Dow Jones Sustainability Index (DJSI), which is listed for the eighth consecutive year. The largest manufacturing units have the OHSAS 18001 international certification for 16 years, having implemented all tools provided in this requirement. Through the five Health and Safety Golden Rules, the company establishes ongoing communication with all employees, visitors and contractors, guiding them on preventive attitudes both inside and outside the organization. 53 Contents Embraer maintains and develops programs focused on reducing accidents and improving the work environment conditions. They include continuous and preventive actions, such as Edu- cational and Communication Action Plan, Behavioral Program, Embraer Occupational Tension Rebalancing Program (Perto) and Ergonomic Risk Management, in addition to holding accident prevention methodology (Prevention Through Design). 403-1 – REPRESENTATIVENESS OF WORKERS IN FORMAL HEALTH AND SAFETY COMMITTEES Name of the formal health and safety committee made up of employees from different hierarchical levels Level at which it operates within the organization Internal Accident Prevention Commission (Cipa) Brazil – at all hierarchical levels in the organization Total workforce Workforce represented in formal health and safety committees consisting of employees from different hierarchical levels in the organization Percentage of the workforce represented in formal health and safety committees consisting of employees from different hierarchical levels in the organization 403-2 – TYPES AND RATES OF INJURIES, OCCUPATIONAL DISEASES, LOST DAYS, ABSENTEEISM, AND NUMBER OF WORK-RELATED DEATHS Lost-time accidents to the total number of workers (own employees) Region Women Men Total South America (Brazil) North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL 2 0 2 0 4 21 8 0 0 29 23 8 2 0 33 Lost-time accidents to the total number of workers (outsourced employees) Region Women Men Total South America (Brazil) North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL* 0 0 1 0 1 15 0 2 0 17 15 0 3 0 18 18,290* 15,568 85.12 * The amount of lost-time accidents includes death. * Global workforce in 2017 – headquarters and branches. The data has a global scope, as described in the workforce representation, and does not include the affiliates. Rate of lost-time accident to the total number of workers (own employees) Region South America (Brazil) North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL Total employees 15,568 1,942 655 125 18,290 Women + men Number of injuries Percentage of injuries 23 8 2 0 33 0.82 2.29 1.69 0 0.99 Rate of lost-time accidents to the total number of workers (outsourced employees) Region South America (Brazil) North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL Total employees 5,175 0 127 11 5,313 Women + men Number of injuries Percentage of injuries 15 0 3 0 18 1.16 0 13.54 0 1.37 54 Contents Rate of occupational diseases to the total number of workers (own employees) Rate of lost days (accidents + diseases) to the total workers (outsourced employees) Region South America (Brazil) North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL Total employees 15,568 1,942 655 125 18,290 Women + men Number of injuries Percentage of injuries Region 1 0 0 0 1 0.03 South America (Brazil) 0 0 0 North America (United States) EMEA (Europe, Middle East and Africa) Asia 0.03 GRAND TOTAL Total employees 5,175 0 127 11 5,313 Women + men Number of lost days 165 0 136 0 301 Rate of lost days 12.79 0 613.66 0 22.91 Rate of occupational diseases to the total number of workers (outsourced employees) Region Total employees Women + men Number of injuries Percentage of injuries Absenteeism rate to the total number of workers (own employees): not available. Absenteeism rate to the total number of workers (outsourced employees): not provided by the companies South America (Brazil) 5,175 Not available Not available Region North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL 0 127 11 Not available Not available Not available Not available Not available Not available 5,313 Not available Not available Rate of lost days (accidents + diseases) to the total workers (own employees) Region South America (Brazil) North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL Total employees 15,568 1,942 655 125 18,290 Women + men Number of lost days 638 119 20 0 777 Rate of lost days 22.67 34.00 16.93 0 23.49 Total workforce deaths Deaths of outsourced (permanent employees) parties working on site Women + men (outsourced) Women + men South America (Brazil) North America (United States) EMEA (Europe, Middle East and Africa) Asia GRAND TOTAL 0 0 0 0 0 0 0 0 0 0 Note: 1. Data for self-employed personnel is not applicable. 2. For tables that require separation by gender, the information was only possible for those presenting absolute values. This separation was not possible for tables using rates since our system does not segregate the man-hour worked information by gender in some countries. 3. The data has a global scope, and does not include the affiliates. 55 Contents 403-3 – EMPLOYEES WITH HIGH INCIDENCE OR HIGH RISK OF DISEASES RELATED TO THEIR OCCUPATION There are no employees involved in occupational activities presenting high incidence or high risk of specific diseases. Based on its health and safety policy, the company holds preventive and treatment actions focusing on occupational health, quality of life and the well-being of its employees, family members and trainees. They are developed from the epidemiological profile, arising from the regular medical check-up. Among the actions, the Estar de Bem Program is worth emphasizing, which aims to contribute to improvements in the quality of life and well-being through the encour- agement and the provision of conditions that lead to healthy habits. The following initiatives are part of the program: Estar de Bem sem o Cigarro (Being Well Without Smoking): has the purpose of providing spe- cialized treatment to those who wish to quit smoking, combining medication and psychological support. The company pays 100% of the treatment. Estar de Bem sem Drogas (Being Well without Drugs): encompasses prevention and support actions in the outpatient or of hospitalization, of chemical dependence. Comprises specialized treatment for drug addicts and their family (codependence), as well as support and guidance to the manager. It also includes drug testing, early diagnosis for drug addiction to recover the addict and his reinsertion in the work and social environment. Estar de Bem com a Maternidade (Being Well with Motherhood): action to support mothers and fathers through the possibility of extending the maternity leave from 120 to 180 days; extension of paternity leave from five to 20 days; on-site or online pregnant women courses; pregnant women booklet; psychological support to the mother for better adaptation to work upon return from mater- nity leave; absence allowance once a month for mothers with children with disabilities aged up to 12-years’ old; absence allowance for up to two days for fathers who wish to accompany the medical appointments and complementary examinations during the pregnancy term of their companions; absence allowance once a year for parents to accompany children aged up to 6-years’ old in medi- cal appointments; absence allowance once a year in the case of hospitalization of child or spouse; daycare assistance for 18 months after the mother returns to work; vaccine benefit. Estar de Bem com Você (Being Well with Yourself): includes several actions aiming to improve the health of employees with obesity, overweight and/or chronic diseases such as hypertension, cholesterol, dyslipidemia, diabetes and heart diseases. The actions include, among others: • Since 2013, employees are seen by a multidisciplinary team (physician, dietitian and psy- chologist). After the medical or nursing screening, the employees are referred to nutritional care within the company. For better adhesion to the therapeutic proposal, if re-quired, the employee may also be referred to in-company psychological care with the duration of six to 12 months, depending on each case. • Care to employees with cardiovascular diseases: provision of guidance and monitoring for cardiac rehabilitation through follow-up with cardiologist on a one-to-one basis, seeking re- integration to routine activities. Estar de Bem com a Atividade Física (Being Well with Physical Activity): provides stimulating actions and facilitating means to the practice of physical activities and sports, in partnership with Associação Desportiva Embraer (ADCE), where several physical activity modes are developed, such as Academia 30’, which aims at general fitness, simultaneously developing aerobic capacity and muscular resistance, and street running. Cycle of Lectures: promotes the dissemination of topics such as quality of life, prevention and promotion of health in an ideal environment for raising awareness, providing guidance and re- flecting on the attitudes. Minuto Estar de Bem (Being Well Minute): weekly newsletter sent by email and published on the intranet with quick and objective texts, providing guidance and tips to encourage healthy habits and the search for quality of life. Vaccination Program: focusing on prevention, Embraer’s Vaccination Program is extended to all employees and their direct family members. The company participates with 80% on the costs of the vaccines not provided by the Government and referred to by the Federal Council of Medicine. There are also collective vaccination campaigns, such as against influenza, where Embraer spon- sors 100% of the cost to the employees and 80% of the costs to direct family members. PERTO (Embraer’s Occupational Tension Rebalance Program): preventive program for muscu- lar conditioning in the spiking, sanding, laminating, machining and painting activities. This pro- gram generates physical, psychosocial and productive benefits to the company. PERTO has been distinguished by being a pioneer in using occupational biomechanics concepts, including the analysis of human movement in the work station, and allowing to assess the biomechanical risks in the productive process. Assistance for family members with disabilities: health plan to disabled direct family mem- bers, including: coverage even after reaching 21 years old, and differentiated participation in treat- ments such as speech therapy, occupational therapy and psychotherapy. 403-4 – TOPICS RELATED TO HEALTH AND SAFETY COVERED BY FORMAL UNION AGREEMENTS In 2017, 12 agreements were signed with unions that cover safety and health issues, such as personal protective equipment; leadership and employee health and safety committees; participation of workers' representatives in safety and health surveys and accident audits; training and education; and system of complaints and periodic surveys. All agreements con- templated the themes mentioned above. 56 Contents GRI 404: TRAINING AND EDUCATION 404-1 – AVERAGE HOURS OF TRAINING PER YEAR PER EMPLOYEE Employee category Total Total employees – Total employees – employees (unit) women (unit) men (unit) Board Manager Supervisor Pilot Engineer Professional* Technician Administrative Operational TOTAL 92 297 709 95 4,209 2,685 3,266 745 6,335 18,433 7 43 91 0 589 1,078 329 316 494 2,947 85 254 618 95 3,620 1,607 2,937 429 5,841 15,486 * Professional: develops analysis, development and technical application activities in treating information, specific interpretations requiring the holder to have higher education degree. Employee Category Board Total workload Total employees in the category Hours per employee in the category Manager Total workload Total employees in the category Hours per employee in the category Supervisor Total workload Total employees in the category Hours per employee in the category Pilot Total workload Total employees in the category Hours per employee in the category Engineer Total workload Total employees in the category Hours per employee in the category Professional Total workload Total employees in the category Hours per employee in the category Technician Total workload Total employees in the category Hours per employee in the category Administrative Total workload Total employees in the category Hours per employee in the category Operational Total workload Total employees in the category Hours per employee in the category TOTAL Total workload Total de colaboradores Horas por colaboradores Men 1,041 85 12 7,942 254 31 17,843 618 29 985 95 10 126,639 3,620 35 27,516 1,607 17 103,337 2,937 35 8,239 429 19 231,421 5,841 40 524,962 15,486 34 Women 330 7 47 738 43 17 2,149 91 24 0 0 0 19,070 589 32 22,759 1,078 21 13,520 329 41 4,488 316 14 16,509 494 33 79,563 2,947 27 57 Contents 404-2 – EMPLOYEE KNOWLEDGE IMPROVEMENT PROGRAMS AND CAREER TRANSI- TION PROGRAMS In 2017, the Voluntary Dismissal Program started in 2016 was closed. In order to support the pro- fessionals who have joined the program, Embraer offered the Career Transition Support Program, which aims to guide the employee who left the company in the planning of the new stage in his life. Under the initiative, two lectures (SJC and GPX) were held. Each of them with four hours, provid- ing support and guidance from the Social Security (INSS, in Portuguese) to employees who are about to retire. 404-3 – PERCENTAGE OF EMPLOYEES WHO REGULARLY RECEIVE CAREER DEVELOP- MENT AND PERFORMANCE ANALYSES Assessment The employee skill assessment process took place between April and July 2017. The supervisors’ assessment took place in May 2017. Leadership Aims to establish development actions, promote a high performance culture, generate support for career development and succession planning. In order to do so, a 360° assessment is used, as well as Performance Map and Calibration Committee. All leadership levels at the Company are assessed, including the CEO. The leadership assessment process (Managers and Directors) was postponed to the first quarter of 2018. Employee category Total employees – Number of women who Percentage of women women (unit) receive regular career who receive regular development and career development and performance assessment performance assessment Board Manager Supervisor Pilot Engineer Professional Technician Administrative Operational TOTAL 7 43 91 0 589 1,078 329 316 494 2,947 0 0 72 0 500 756 212 192 300 2,032 0 0 79 0 85 70 64 61 61 69 Employee category Total employees – Number of women who Percentage of women men (unit) receive regular career who receive regular development and career development and performance assessment performance assessment Board Manager Supervisor Pilot Engineer Professional Technician Administrative Operational TOTAL 85 254 618 95 3,620 1,607 2,937 429 5,841 15,486 0 0 600 73 3,237 982 1,868 303 4,131 11,194 0 0 97 77 89 61 64 71 71 72 58 Contents GRI 405: DIVERSITY AND EQUAL OPPORTUNITIES 405-1 – DIVERSITY OF GROUPS RESPONSIBLE FOR GOVERNANCE AND AMONG EMPLOYEES Governance Entity Board of Directors Board Total 11 11 Women (%) Men (%) 18 9 82 91 Governance Entity Total Under 30 (%) Between 30 and Older than Board of Directors Board Employees by functional category Board Manager Supervisor Pilot Engineer Professional Technician Administrative Operational GRAND TOTAL Employees by functional category Board Manager Supervisor Pilot Engineer Professional Technician Administrative Operational GRAND TOTAL 11 11 0 0 50 (%) 50 (%) 0 27 100 73 Total Under 30 (%) Between 30 and Older than 50 (%) 50 (%) 92 297 709 95 4,209 2,685 3,266 745 6,335 18,433 0 0 1 1 17 18 21 30 17 17 46 68 81 42 73 71 63 58 78 72 54 32 18 57 10 12 15 12 5 11 Total Women (%) Men (%) 92 297 709 95 4,209 2,685 3,266 745 6,335 18,433 8 14 13 0 14 40 10 42 8 16 92 86 87 100 86 60 90 58 92 84 59 Contents 405-2 – CORRELATION BETWEEN MINIMUM WAGE AND COMPENSATION BETWEEN WOMEN AND MEN Correlation between minimum wage and compensation between women and men by category and location Average salary paid (local currency) Brazil Administrative Engineer Leader Operational Pilot Professional Technician TOTAL China Administrative Engineer Leader Pilot Professional TOTAL USA Administrative Engineer Leader Operational Pilot Professional Technician TOTAL France Administrative Engineer Leader Operational Professional Technician TOTAL 0.87 0.88 0.91 0.86 - 0.87 0.70 0.91 - - 0.32 - 0.55 0.42 1.06 0.90 0.92 1.04 - 0.79 0.88 0.93 0.89 - - 1.07 0.95 1.09 1.01 3,677 10,499 16,093 4,143 7,725 4,353 7,332 20,542 34,903 19,620 24,010 3,678 6,257 9,939 3,572 5,823 3,997 5,251 3,212 3,376 2,654 3,537 2,755 3,254 4,243 11,868 17,732 4,827 26,930 8,846 6,210 8,041 28,530 109,043 107,192 35,702 57,162 3,473 6,958 10,816 3,428 9,070 7,379 4,541 5,660 3,596 6,316 2,481 3,719 2,518 3,221 Correlation between minimum wage and compensation between women and men by category and location Country Category Ratio Netherlands Administrative Engineer Leader Operational Pilot TOTAL Portugal Administrative Engineer Leader Operational Professional Technician TOTAL Singapore Administrative Leader Professional Technician TOTAL GRI 406: NON-DISCRIMINATION 0.73 0.87 0.98 - 0.76 0.67 - 0.87 0.45 0.97 0.93 0.41 0.89 1.06 0.72 0.82 0.50 0.65 Average salary paid (local currency) Women 3,611 4,929 10,500 5,035 4,639 1,179 1,951 2,789 857 2,127 1,044 1,330 3,746 11,119 7,043 3,710 6,520 Men 4,966 5,685 10,762 6,564 6,619 6,961 2,252 6,258 880 2,297 2,569 1,501 3,537 15,354 8,587 7,440 9,967 406-1 – DISCRIMINATION INCIDENTS AND CORRECTIVE MEASURES ADOPTED The Helpline received no reports of incidents connected to discrimination during the assessed period. GRI 412: HUMAN RIGHTS ASSESSMENT 412-2 – EMPLOYEE TRAINING ON POLICIES AND PROCEDURES RELATED TO HUMAN RIGHTS In 2008, Embraer formally joined the United Nations Global Compact, which aims to mobilize the international business community to adopt basic human rights and anti-corruption values in business practices, labor relations and environmental protection matters. The company also collaborates with the Sustainable Development Goals (SDG), from the United Nations. Embraer believes and puts into action the principles for multinational corporations and social policies (established by the International Labor Organization), as well as the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises, which may be noted in business practices, corporate values and company's management transparency. 60 Contents 412-2 – EMPLOYEE TRAINING ON POLICIES AND PROCEDURES RELATED TO HUMAN RIGHTS Country Number of hours Total number of hours Percentage of hours dedicated to training dedicated to training in dedicated to training in employees (unit) policies or procedures policies or procedures related to human rights related to human rights South Africa Brazil China United States United Arab Emirates France Netherlands Portugal Mexico United Kingdom Singapore TOTAL 10 547,816 409 51,015 4 65 1,214 3,519 25 97 349 604,515 (unit) 0 582 69 178 0 2 2 20 0 1 3 856 0.0 0.1 16.9 0.3 0.0 3.3 0.2 0.6 0.0 0.5 0.9 0.1 Country Total number of Number of employees Percentage of employees employees (unit) trained in policies trained in policies or procedures related or procedures related to human rights (unit) to human rights Brazil China United States United Arab Emirates France Netherlands Portugal Mexico United Kingdom Singapore TOTAL 15,710 66 1,950 0 67 135 447 0 1 57 988 67 355 0 4 4 32 0 1 6 18,433 1,458 6.3 101.2 18.2 0.0 6.3 3.1 7.1 0.0 106.1 11.2 7.9 412-3 – AGREEMENTS AND SIGNIFICANT INVESTMENT CONTRACTS THAT INCLUDE HUMAN RIGHTS CLAUSES OR THAT WERE SUBMITTED TO HUMAN RIGHTS ASSESSMENTS The Code of Ethics and Conduct is applicable to all Embraer employees, suppliers and other partners, as provided in the agreements. The document provides penalties for breaches: “The Board members, directors, employees and all individual or companies who develop activities on behalf of or in the name of Embraer are subject to administrative or legal disciplinary measures in case of violation of the principles and values established by this Code, including the termination of employment or the contractual business relationship, as appropriate.” Before establishing any business relationship, Embraer requires the business partners and third-party intermediaries to undergo a comprehensive due diligence analysis. Thus, the company holds important prior information in order to meet the ethics, integrity and compliance standards throughout the chain. Embraer’s Code of Ethics and Conduct features among the various docu- ments considered in the due diligence process. This document is based on corporate values, on the principles set forth in the United Nations Global Compact and OECD, as well as on the best corporate governance and accounting practices. GRI 416: CUSTOMER HEALTH AND SAFETY 416-1 – ASSESSMENT OF THE HEALTH AND SAFETY IMPACTS OF PRODUCT AND SERVICE CATEGORIES 416-2 – NON-COMPLIANCE CASES REGARDING HEALTH AND SAFETY IMPACTS OF PRODUCTS AND SERVICES AT THE CLIENTS Manufacturers of any aircraft must demonstrate the compliance of their product with requirements such as structure, engines, control systems, electric systems and performance during flight. This demonstration of compliance is done through analysis during soil tests (such as structure tests to support bird attacks, fatigue tests and simulator tests), as well as through in-flight testing. In order to be approved for use, the aircraft must meet all requirements. 61 Contents GRICONTENT INDEX Contents STANDARDS CORE OPTION |102-54, 102-55| General disclosures ORGANIZATIONAL PROFILE 102-1: Name of the organization 102-2: Activities, brands, products, and services 102-3: Location of headquarters 102-4: Location of operations 102-5: Ownership and legal form 102-6: Markets served 102-7: Scale of the organization 102-8: Information on employees and other workers 102-9: Supply chain 102-10: Significant changes to the organization and its supply chain 102-11: Precautionary principle or approach 102-12: External initiatives 102-13: Membership of associations 102-14: Statement from senior decision-maker 102-15: Key impacts, risks, and opportunities 102-16: Values, principles, standards, and norms of behavior 102-17: Mechanisms for advice and concerns about ethics 102-18: Governance structure 102-19: Delegating authority GRI 102: General disclosure 2016 STRATEGY GRI 102: General disclosure 2016 ETHICS AND INTEGRITY GRI 102: General disclosure 2016 GOVERNANCE GRI 102: General disclosure 2016 102-20: Executive-level responsibility for economic, environmental, and social topics 102-21: Consulting stakeholders on economic, environmental, and social topics 102-22: Composition of the highest governance body and its committees 102-23: Chair of the highest governance body GRI 101: FOUNDATION 2016 Item Page Omissions SDG 4 9 32 10 4 and 11 9 and 10 9 32 27 9, 18 and 19 12 33 34 5 to 7 12 and 35 to 37 9 and 13 14 11 11 34 38 and 39 11 11 and 39 8 16 16 16 5, 16 16 63 Contents General disclosures Item Page Omissions SDG 102-24: Nominating and selecting the highest governance body 102-25: Conflicts of interest 102-26: Role of highest governance body in setting purpose, values, and strategy 102-27: Collective knowledge of highest governance body 102-28: Evaluating the highest governance body’s performance 102-29: Identifying and managing economic, environmental, and social impacts GRI 102: General disclosure 2016 102-30: Effectiveness of risk management processes 102-31: Review of economic, environmental, and social topics 102-32: Highest governance body’s role in sustainability reporting 102-33: Communicating critical concerns 102-35: Remuneration policies 102-36: Process for determining remuneration 102-37: Stakeholders’ involvement in remuneration STAKEHOLDER ENGAGEMENT 102-40: List of stakeholder groups 102-41: Collective bargaining agreements 102-42: Identifying and selecting stakeholders 102-43: Approach to stakeholder engagement 102-44: Key topics and concerns raised GRI 102: General disclosure 2016 REPORTING PRACTICE 102-45: Entities included in the consolidated financial statements 102-46: Defining report content and topic boundaries GRI 102: General disclosure 2016 102-47: List of material topics 102-48: Restatements of information 102-49: Changes in reporting 102-50: Reporting period 102-51: Date of most recent report 102-52: Reporting cycle 102-53: Contact point for questions regarding the report 102-54: Claims of reporting in accordance with the GRI Standards 102-55: GRI content index 102-56: External assurance 11 11 11 39 11 39 12 40 40 40 40 40 40 4 and 12 27 40 38 and 39 21 4 4, 40 and 41 21 4 4 4 April 2017, as of 2016 Annual 4 4, 63 63 4 5, 16 16 4 16 16 8 64 Contents Material topic ECONOMIC PERFORMANCE Disclosure GRI 103: Management approach 2016 GRI 201: Economic performance 2016 MARKET PRESENCE GRI 103: Management approach 2016 GRI 202: Market presence 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 201-1: Direct economic value generated and distributed 201-2: Financial implications and other risks and opportunities due to climate change 201-3: Defined benefit plan obligations and other retirement plans 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 202-1: Ratios of standard entry level wage by gender compared to local minimum wage 202-2: Proportion of senior management hired from the local community INDIRECT ECONOMIC IMPACT GRI 103: Management approach 2016 GRI 203: Indirect economic impact 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 203-1: Infrastructure investments and services supported 203-2: Significant indirect economic impacts PROCUREMENT PRACTICES GRI 103: Management approach 2016 GRI 204: Procurement practices 2016 ANTI-CORRUPTION GRI 103: Management approach 2016 GRI 205: Anti- corruption 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 204-1: Proportion of spending on local suppliers 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 205-1: Operations assessed for risks related to corruption 205-2: Communication and training about anti-corruption policies and procedures 205-3: Confirmed incidents of corruption and actions taken Pages 40 and 41 41 and 42 41 and 42 43 43 43 40 and 41 41 and 42 41 and 42 44 44 40 and 41 28, 41 and 42 28, 41 and 42 28 and 44 28 40 and 41 27, 41 and 42 27, 41 and 42 27 40 and 41 13, 41 and 42 13, 41 and 42 13 and 44 13 and 45 45 Omissions Global Compact 1, 5, 8, 16 2, 5, 7, 8, 9 13 1, 5, 8, 16 1, 5, 8 8 1, 5, 8, 16 2, 5, 7, 9, 11 1, 2, 3, 8, 10, 17 1, 5, 8, 16 12 1, 5, 8, 16 16 16 16 65 Contents Material topic ENVIRONMENTAL STANDARDS ENERGY Disclosure Pages Omissions Global Compact GRI 103: Management approach 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 302-1: Energy consumption within the organization 302-2: Energy consumption outside of the organization GRI 302: Energy 2016 302-3: Energy intensity 302-4: Reduction of energy consumption 302-5: Reductions in energy requirements of products and services WATER GRI 103: Management approach 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 303-1: Water withdrawal by source GRI 303: Water 2016 303-2: Water sources significantly affected by withdrawal of water 303-3: Water recycled and reused EMISSIONS GRI 103: Management approach 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 305-1: Direct (Scope 1) GHG emissions 305-2: Energy indirect (Scope 2) GHG emissions 305-3: Other indirect (Scope 3) GHG emissions GRI 305: Emissions 2016 305-4: GHG emissions intensity 305-5: Reduction of GHG emissions 305-6: Emissions of ozone-depleting substances (ODS) 305-7: Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions 40 and 41 42 42 30 and 46 46 47 30 and 47 30 and 47 40 and 41 42 42 30 and 48 48 30 and 48 40 and 41 41 and 42 41 and 42 30 and 49 30 and 49 30 and 49 30 and 50 30 and 50 30 and 50 30 and 50 1, 5, 8, 16 7, 8 , 12 ,13 7, 8 , 12 ,13 7, 8 , 12 ,13 7, 8 , 12 ,13 7, 8 , 12 ,13 1, 5, 8, 16 6 6 6, 8, 12 1, 5, 8, 16 3, 12, 13, 14, 15 3, 12, 13, 14, 15 3, 12, 13, 14, 15 13, 14, 15 13, 14, 15 3, 12, 13 3, 12, 13, 14, 15 66 Contents Material topic EFFLUENTS AND WASTE Disclosure GRI 103: Management Approach 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 306-1: Water discharge by quality and destination GRI 306 306-2: Waste by type and disposal method 306-3: Significant spills SUPPLIER ENVIRONMENTAL ASSESSMENT GRI 103: Management Approach 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach GRI 308 308-1: New suppliers that were screened using environmental criteria 308-2: Negative environmental impacts in the supply chain and actions taken Omissions Global Compact 1, 5, 8, 16 3, 6, 12, 15 3, 6, 12 3, 6, 12, 15 1, 5, 8, 16 Pages 40 and 41 42 42 30 and 51 30 and 51 51 40 and 41 27 27 27 27 and 52 Item Pages Omissions Global Compact Specific topics Social standards EMPLOYMENT GRI 103: Management Approach 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 401-1: New employee hires and employee turnover GRI 401 401-2: Benefits provided to full-time employees that are not provided to temporary or part-time employees 401-3: Parental leave OCCUPATIONAL HEALTH AND SAFETY GRI 103: Management Approach 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 403-1: Workers representation in formal joint management–worker health and safety committees 403-2: Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities GRI 403 403-3: Workers with high incidence or high risk of diseases related to their occupation 403-4: Health and safety topics covered in formal agreements with trade unions 40 and 41 42 42 52 and 53 53 53 40 and 41 27 and 42 27 and 42 54 54 56 56 1, 5, 8, 16 5, 8 8 5, 8 1, 5, 8, 16 8 3, 8 3, 8 8 67 Contents Specific topic SOCIAL STANDARDS TRAINING AND EDUCATION Item Pages Omissions Global Compact GRI 103: Management approach 2016 GRI 404: Training and education 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 404-1: Average hours of training per year per employee 404-2: Programs for upgrading employee skills and transition assistance programs 404-3: Percentage of employees receiving regular performance and career development reviews DIVERSITY AND EQUAL OPORTUNITY GRI 103: Management approach 2016 GRI 405: Diversity and equal oportunity 2016 NON DISCRIMINATION GRI 103: Management approach 2016 GRI 406: Non discrimination 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 405-1: Diversity of governance bodies and employees 405-2: Ratio of basic salary and remuneration of women to men 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 406-1: Incidents of discrimination and corrective actions taken FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING GRI 103: Management approach 2016 GRI 407: Freedom of association and collective bargaining 2016 CHILD LABOR GRI 103: Management approach 2016 GRI 408: Child labor 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 407-1: Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 408-1: Operations and suppliers at significant risk for incidents of child labor 40 and 41 27 and 42 27 and 42 27 and 57 27 and 58 27 and 58 40 and 41 27, 41 and 42 27, 41 and 42 59 60 40 and 41 27, 41 and 42 27, 41 and 42 60 40 and 41 27 27 27 40 and 41 27 27 27 1, 5, 8, 16 4, 5, 8 8 5, 8 1, 5, 8, 16 5, 8 5, 8, 10 1, 5, 8, 16 5, 8, 16 1, 5, 8, 16 8 1, 5, 8, 16 8, 16 68 Contents Specific topic FORCED OR COMPULSORY LABOR Item GRI 103: Management approach 2016 GRI 409: Forced or compulsory labor 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 409-1: Operations and suppliers at significant risk for incidents of forced or compulsory labor HUMAN RIGHTS ASSESSMENT GRI 103: Management approach 2016 GRI 412: Human rights assessment 2016 LOCAL COMMUNITIES GRI 103: Management approach 2016 GRI 413: Local communities 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 412-2: Employee training on human rights policies or procedures 412-3: Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 413-1: Operations with local community engagement, impact assessments, and development programs SUPPLIER SOCIAL ASSESSMENT GRI 103: Management approach 2016 GRI 414: Supplier social assessment 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 414-1: New suppliers that were screened using social criteria 414-2: Negative social impacts in the supply chain and actions taken CUSTOMER HEALTH AND SAFETY GRI 103: Management approach 2016 GRI 416: Customer health and safety 2016 103-1: Explanation of the material topic and its boundary 103-2: The management approach and its components 103-3: Evaluation of the management approach 416-1: Assessment of the health and safety impacts of product and service categories 416-2: Incidents of non-compliance concerning the health and safety impacts of products and services Pages 40 and 41 27 27 27 40 and 41 41 41 27, 60 and 61 27 and 61 40 and 41 28 28 28 40 and 41 27 27 27 27 40 and 41 41 and 42 41 and 42 61 61 Omissions Global Compact 1, 5, 8, 16 8 1, 5, 8, 16 1, 5, 8, 16 1, 5, 8, 16 6, 8, 16 6, 8, 16 1, 5, 8, 16 16 69 Contents CREDITS General coordination Vice-President of People and Sustainability, Corporate Sustainability Department Consultancy for indicators, publishing coordination, design and editing TheMediaGroup Written by KMZ Conteúdo (coordination: TheMediaGroup) Translation (English version) Bureau Translations Photos Embraer collection 

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