#1e Eldorado Brasil ELDORADO BRASIL 2016 SUSTAINABILITY REPORT#2PRESENTATION 2016 Highlights Message from the CEO ELDORADO New industry model Global presence GOVERNANCE Governance background Ethic and transparency STRATEGY AND PERFORMANCE Sectoral context Financial and operational performance Environmental performance VALUE CHAIN Employees Customers Sector associations Suppliers Communities ATTACHMENTS SUMMARY OF GRI CONTENT SUSTAINABILITY REPORT EXECUTIVE COMMITTEE 4 8 10 12 14 18 20 22 26 28 30 33 36 44 46 52 555 53 54 56 60 66 75#34 PRESENTATION PRESENTATION (G4-17, G4-18, G4-26, G4-28, G4-29 and G4-30) ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 5 Eldorado Brasil is publishing the new edition of its Sustainability Re- port presenting its main economic, social, environmental, management and governance results for 2016, its fourth year in business. Once again the company has adopted Global Reporting Initiative (GRI) G4 methodology, using the Core option. The report comprises the January 1 to December 31 in- terval. Nevertheless, whenever relevant, information from the first months of 2017 has been included. The definition of the report content is based on the principles set forth in Eldorado's Sustainability policy and on the topics considered most relevant in the company's current materiality matrix. These priori- ties were reevaluated in the first half of 2017 (further information ahead). The publication of the 2016 Sus- tainability Report reaffirms the company's commitment to the transparency of its processes for disclosing information, besides constituting an important man- agement tool which will enable Eldorado to enhance processes and evolve its business model in a consistent manner. Updating of the materiality matrix (G4-19, G4-24, G4-25, G4-26 and G4-27) Eldorado reviewed in May and June 2017 the most relevant top- ics for the business and for stake- holders in a process consisting of document analysis, online consul- tation and interviews with senior management. The first stage entailed a review of the company's previous sustain- ability reports, the reports of other players in the sector, Eldorado's most recent social impact matrix and other internal and external documents. Following this, on an online platform, employees, customers, suppliers, forestry partners, and members of neighboring communi- ties, settlements, representatives of public authorities and non-gov- ernmental institutions selected out of twenty the five most relevant topics for each stakeholder group's relations with Eldorado. In total, there were 96 participants, 74 from Brazil and 22 from overseas. The CEO and the other five board members were also interviewed. Cross referencing data resulted in a list with 10 priority topics for Eldorado, which will remain as per- manent and continuous corporation focus. The topics are: Developing human capital (in- vestment in retaining and develop- ing talent, employee benefits and satisfaction, knowledge and talent management and specialization of manpower); Generating employment and income (generating employment, income and driving the local econ- omy, social and economic impacts and incentives for education and culture in the locations in which the company operates); Social impact on the surrounding communities (reducing impacts, such as degradation of the local road network, increased violence, generation of dust and noise); Efficiency in the use of resources (responsible use and consumption of water, energy and other resourc- es, efficient waste and effluent management); Preserving biodiversity (strate- gies for combating the proliferation of insects and pests in the planta- tions and the preservation of local fauna and flora); Good forestry management prac- tices (sustainable forestry steward- ship, including the preservation and correct use of the soil); Corporate governance and trans- parency (good corporate gover- nance practices, ethics in business, anti-corruption mechanisms, in- cluding management of grievances and complaints); Climate strategy (impact of cli- mate change on operations, includ- ing the increase in average global temperatures, changes in rainfall patterns and the occurrence of prolonged droughts impacting the plantations and product transpor- tation, as well as the monitoring of greenhouse gas emissions, carbon sequestration and emissions reduc- tion measures); _ Transparency and engagement of stakeholder groups (projects to engage main stakeholders, making communication channels avail- able and boosting the company's response capacity); Business growth strategies (profitability, cost competitiveness, return for shareholders, business expansion and financial manage- ment). In the following table, Eldorado presents the stakeholder groups impacted by each topic, as well as the associated GRI aspects and impacts.#46 PRESENTATION ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 7 (G4-20 and G4-21) TOPICS Human capital development Generating employment and income Social impact on GRI ASPECTS EXTENSION OF IMPACTS¹ Colaboradores Sociedade Employment Training and education Indirect economic impacts Society Local communitie Society Local communities GRI INDICATORS LA1, LA2, LA9 and LA11 EC8 and S01 S02 surrounding communities Forestry partners Efficient use of resources Suppliers Employees Society Energy Water Effluents and waste EN3, EN8, EN10, EN22 and EN23 Preserving biodiversity Forestry partners Suppliers Society Biodiversity EN11 and EN12 Good forestry management practices² Corporate governance and transparency Forestry partners Suppliers Employees Society Society Public authorities Consumers Forestry partners Suppliers Anti-corruption Compliance Grievances and complaints SO3, S08 and S011 New organization (G4-22, G4-23 and G4-31) This year the report innovates with the presentation of an At- tachments section containing detailed data on some indica- tors reported by the company. It should be noted that strategic information continues to be pro- vided and duly contextualized in the chapters Eldorado, Governance, Strategy and Performance, and Value Chain. In addition to the indicators directly related to the ten most relevant topics for the company and for stakeholders, the docu- ment provides other data already monitored by Eldorado, as a means of ensuring the corporate information disclosure process. Any doubts or requests for clarification about the publication should be addressed to the email: sustentabilidade@eldorado brasil. com.br. Enjoy reading it! Commitments assumed in the Sustainability Policy > To supply products in an economically feasible, environmentally correct and socially fair manner; > To use natural resources sustainably and to maintain operations focused on preventing pollution; > To comply with legislation and other requirements applicable to the corporate activities; > To maintain ethical relations and transparent communications with stakeholders; > To provide a motivating work environment, with high health and safety standards; > To develop and apply technologies that ensure innovation and competitiveness; Climate strategy Forestry partners Suppliers Economic performance Employees Society Consumers Transparency and stakeholder engagement² Forestry partners Business growth strategies Emissions EC2, EN15, EN16, EN17, EN18 and EN19 Suppliers Employees Society Stakeholder engagement Public authorities Managers Employees Economic performance EC1 1 The extension of the impacts indicates the main stakeholder groups, inside and outside the organization, for whom the material topics are more critical. 2 The topics Forestry Management and Transparency and Stakeholder Engagement do not have GRI performance indicators that are directly related. However, Eldorado does account for how it manages these topics throughout the report. > To identify social and environmental improvements in all the organization's processes; > To focus on quality excellence in products and services; > To fulfill certification requirements in forestry management in accordance with Forest Stewardship Council principles and criteria; > To invest in employees and processes qualification to ensure continuous improvement in the corporate management system.#58 PRESENTATION 2016 HIGHLIGHTS ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 9 Financial and commercial results 1,638,000 metric tons of pulp produced, the company's highest volume ever >90% of the pulp exported - accounting for 12% of Brazil's pulp export volume > Ebitda of R$ 1.585 billion >1,665,000 metric tons sold, an increase of 6.6% over 2015 > Gross revenue of R$ 3.460 billion > Ebtida margin of 54%, the highest in the industry Forestry area > 239,000 hectares of eucalyptus plantations in Mato Grosso do Sul +% > Productivity: 45 m³ of timber per hectare/year in 2014 - the average in 2010 was 20m³/hectare/year > Certification by the Forest Stewardship Council and by the Brazilian Forestry Certification Program (CERFLOR®) > Conservation areas extending over more than 103,000 hectares Três Lagoas Industrial Plant > 5,3% reduction in water consumption compared with 2015, with higher production > Approximately 1.324 million MWh of clean energy generated > Water recirculation rate of 84,79%, compared with 81% in 2015 > 20% reduction in direct GHG emissions Value chain >4,780 company employees > 117 reuniões com comunidades do entorno e representantes de órgãos públicos* > 153,867 hours of training - 32,12 hours per employee > More than 22 metric tons of organic produce bought from producers in the PAIS (Produção Agroecológica Integrada e Sustentável / Sustainable and Integrated Agroeco- logical Production) program maintained by Eldorado and Sebrae.* * BETWEEN MARCH 2016 AND MARCH 2017.#610 PRESENTATION ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 11 MESSAGE FROM THE CEO ALTURA 5,60m Analyzing 2016, we can clearly see the progress Eldorado Brasil has made, which strengthen the com- pany's successful trajectory. Driven by innovation, competitiveness and sustainability pillars guiding the corporate activities -, we raised excellence in the forestry area, from the seedling nursery in An- dradina (SP), through the eucalyptus plantations to the transportation of timber to the Três Lagoas plant. These efforts resulted in gains in productivity, reduced costs and improved practices and processes in caring for the environment and developing surrounding commu- nities. In the industrial unit, the same pillars steer our work, aimed always at continuous improvement and enabling our production record (1,638,000 metric tons of pulp), while reducing energy and water consumption, as well as greenhouse gas (GHG) emissions. Innovatively, we also enhanced relations with customers, ensuring product quality, permanent contact with the specialized pre-sale and post-sale teams and faster deliver- ies. Here it is worth mentioning the consolidation of the operations of the Eldorado port terminal in Santos (SP), as well as the increased use of containers for exporting our pulp. Aligned with another company pil- lar, establish the permanent people valuing, we continued the process of insourcing our work force. We are certain that this is essential to strengthen organizational culture. With employees who are highly trained and valued and who think like owners, the work environment at Eldorado will be healthier and more promising for all. These factors, set forth in the com- ing pages of this sustainability re- port, were fundamental in enabling us to face a series of challenges in 2016, a year marked by the negative fluctuation of pulp prices and the appreciation of the real against the dollar. The results we have achieved so far show that our strategy is on the right track, which, considering the sector's potential for expansion, aims at maintaining and enhancing the high levels of excellence and productivity already reached, making Eldorado a bench- mark in the global pulp market. Part of this strategy is based on the Vanguarda 2.0 project, which en- tails the inauguration of our second industrial plant in Três Lagoas in 2020, with a production capacity of 2.5 million metric tons a year. In 2016, the project progressed with the conclusion of infrastructure works and launching a new timber storage patio. Eldorado's future depends on con- stant improvement on all business fronts. In addition to investments in maintaining excellence in our forestry, industrial, commercial and logistics operations, the company is determined to evolve in manage- ment and governance. The structur- ing of a dedicated compliance area is under analysis, which will further strengthen the existing processes. We are also committed to the re- sponsible use of natural resources and to generating value for employ- ees, neighboring communities and society as a whole. José Carlos Grubisich CEO#7e Eldorado Brasil 12108 Eldorado IN THIS CHAPTER: > NEW INDUSTRY MODEL > GLOBAL PRESENCE#814 ELDORADO With a sustainable forestry management model and a production plant focused on efficiency and quality, the company achieved a production record in 2016 and is now preparing for a new growth cycle (G4-3, G4-4, G4-5, G4-6, G4-7, G4-8, G4-9, G4-10 and G4-15) NEW INDUSTRY MODEL Founded in 2010, with the corner- stone of the industrial plant laid in Três Lagoas (Mato Grosso do Sul) on June 15, Eldorado Brasil is a joint stock corporation (business corporation) specialized in produc- ing eucalyptus pulp. In 2016, its fourth operation year, the company had its highest pro- duction and sales volumes ever, helping consolidate its position as a global benchmark in the industry. The company ended 2016 with 4,780 employees, advancing in the insourcing process initiated the previous year by hiring its own teams for the forestry, timber transportation, security and clean- ing areas, among others. Eldorado also continued to prioritize prac- tices aimed at developing and retaining employees. In 2016, the seedling nursery located in Andradina (SP) reached a quality index of 94% while reduc- ing production costs by 7%. By using company-owned and leased lands in Mato Grosso do Sul for planting eucalyptus, the company has been investing in obtaining its own forestry base as a means of driving excellence. During the year, approximately 70% of the timber processed at the Três Lagoas facil- ity came from company-owned forests certified by the Forest Stewardship Council. Another advance in the period was the 55 km reduction in the average forest radius, helping drive productivity and efficiency in forestry operations. In the industrial park, which runs clean processes for energy genera- tion, water withdrawal, effluent and waste generation, investments in technology and operational excellence contributed to the pro- duction record. The volume totaled 1,638,000 metric tons of pulp, 2.6% higher than in 2015. The company uses a flexible logis- tics model, with its own port termi- nal in Santos (SP) and the capacity to operate in terminals in other regions in the country. For exports, Eldorado has been investing in container transportation, which is more competitive than break bulk shipments. With customers in more than 50 countries, the company supplies the printing and writing, tissue (comfort and personal hygiene), packaging and special paper seg- ments. In addition to its commer- cial office in São Paulo, Eldorado has three other offices manned by specialized teams located strategi- cally in the United States, Austria and China. In 2016, sales reached 1,665,000 metric tons, an increase of 6.6% over 2015. To provide a sustainable response to the increased demand for pulp, influenced particularly by growth in consumption in the emerging countries and in the tissue and special papers segments, Eldorado is advancing in its Vanguarda 2.0 project, with a projected invest- ment of R$ 10 billion that will en- able an annual production of 2.5 million metric tons. 1.64 million metric tons, the compa- ny's record production in 2016, an increase of 2.6% ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 15 Eldorado <-ALTURA 5,60mMAKA PERNIT#9BUSINESS STAGES 1 Seedling nursery Located in the city of Andradina (SP), the Eldorado Brasil forestry nursery occupies a built area of 159,000 m² and has a produc- tion capacity of approximately 28 million seedlings a year. Eldorado also acquires seedlings from the market. While maintaining high levels of quality and efficiency, the nursery has also been steadily re- ducing production costs. The target for 2017 is to reach a production cost 8.5% lower than the market price. 2 044 Planting Eldorado ended 2016 with 239,000 hectares of eucalyptus forest in Mato Grosso do Sul, with 40,000 hectares planted in 2016. In a differentiated format, the company combines its own plant- ing areas with areas leased from partners on 14-year contracts, the equivalent to two production cycles. 3 4 Timber transportation In 2016, the timber transportation sector was totally insourced. An average of 5.6 million m3 of tim- ber is transported to the storage patio at the Três Lagoas plant per year. During the year, the aver- age distance between the planted areas and the industrial complex was around 274 km, optimizing costs and reducing environmental impacts. 5 Industrial process In the Três Lagoas pulp mill, the wood chips are cooked, producing an unbleached pulp. This brown- stock then undergoes a specific bleaching chemical treatment. After this, the pulp is dried and cut into sheets, which are stacked in bales and units. In 2016, the plant reached a production record of 1,638,000 metric tons. 6 Harvest With a highly trained team and state-of-the-art equipment, the harvest area fells the timber and removes the bark and branches from the trees for use as soil fertilizer. Already highly mecha- nized, a project in partnership with Eldorado suppliers aims at further elevating the level of excellence in the harvest process and reducing costs for the company. Logistics In the last stage of the process, the units are transported to the company-owned port terminal in Santos (SP), inaugurated in 2015, or to other ports around the country. With 90% of production destined for the overseas market, Eldorado pulp is exported to more than 50 countries either in bulk shipments or in containers.#1018 ELDORADO GLOBAL PRESENCE (G4-5, G4-6, G4-8 e G4-9) Markets served: more than 50 countries in Latin America, North America, Europe, Oceania, Africa and Asia International office in Branford, CT (United States) Administration head office and commercial office in São Paulo (SP) Seedling nursery in Andradina (SP) Industrial unit in Três Lagoas (MS) Company-owned and leased eucalyptus forests in Mato Grosso do Sul Industry segments Used by virtually everyone in their daily routine, the paper made from Eldorado pulp is split in four main segments: > Printing and writing: the most traditional use, present in notebooks, in office supplies, in printing books, newspapers, magazines and advertising banners, among others. > Tissue: used for personal hygiene and comfort products, such as toilet paper, paper towels, napkins and facial cleansing tissues. > Cartonboard: used mainly to make packaging for medicines, beverages, food contact products and make up, among others. > Special papers: used for the most diverse applications, such as thermal papers, decorative papers etc. ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 19 P International office in Vienna (Austria) International office in Shanghai (China) کے سستے#11Governance IN THIS CHAPTER: > GOVERNANCE PRACTICES > ETHIC AND TRANSPARENCY rado Brasil#1222 GOVERNANCE Committed to the best corporate governance practices and to transparency, Eldorado is focused on continuously improving its internal processes (G4-34) GOVERNANCE PRACTICES Although not listed on the B3 index (former-BM&FBovespa), Eldorado Brasil is registered at Brazil's Comissão de Valores Mobiliários (CVM) as a B category publicly traded company and, therefore, fol- lows the differentiated corporate governance practices established for companies on the Novo Mer- cado (New Market). The current corporate governance structure comprises the Board of Directors, the Fiscal Council, the Executive Board and four Advisory Committees. With the mission of conducting company business and tracking and overseeing execu- tive management and actions, the Board of Directors has seven members. All the shareholders are represented on this board. In compliance with Novo Mercado rules, the board has one inde- pendent member. Elected by the General Shareholders' Meeting for one-year term, with entitlement to reelection, the board members meet on a quarterly basis or when- ever deemed necessary. The chair- man of the board is not permitted to occupy the position of CEO of the company. The main duty of the Fiscal Council is to oversee the company's ad- ministration, analyzing the Annual Management Report, the balance sheet and the financial statements released quarterly. The council has three members. To provide support for the Board of Directors, Eldorado has the fol- lowing committees: Audit, Finance and Risk Management; Related Parties and Conflicts of Interest; People and Development; and Sus- tainability and Social Responsibil- ity. Both shareholders' and em- ployees' representatives take part in periodic committee meetings. Responsible for executing company strategy, the Executive Committee comprises the CEO and four other directors (detailed ahead). The di- rectors are appointed by the Board of Directors for one-year term which may run consecutively. ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 23 31:1 2431 1110 E or#13Executive Board 24 GOVERNANCE Eldorado Governance structure CEO Board of Directors Fiscal Council Industrial Director Forestry Director Financial Director Commercial Operations and Logistics Director ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 25 Mission (G4-56) To build relations based on trust with our shareholders and partners through the constant enhancement of our plant- ed, renewable forestry assets. Vision To consolidate Eldorado Brasil as a global leader in the pulp market, building new ways to generate value. Valores _ Owner mindset _ Determination _ Discipline Availability _ Simplicity. _ Humility Frankness Ownership breakdown 63.59% J&F FIP Florestal¹ FIP Olímpia² Eldorado stock consists exclusively of ordinary shares, the issue of preferred shares being prohibited. 0.03% 24.75% 34.45% 50.20% 24.75% 1.96% 1 Private equity fund comprising two Brazilian pension funds: Petros (Petrobras) and Funcef (Caixa Econômica Federal). J&F Investimentos Funcef Petros Outros 2 Private equity fund with quotas held by company management. Œ Investor relations With an Investor Relations area that reports to the CEO, Eldorado seeks to maintain objective, transparent relations with its shareholders and the market in general. Every quar- ter, the company organizes meet- ings with analysts and investors to disclose its results. The company also organizes roadshows in Brazil and overseas. Risk management G4-14 and G4-EC2 Risk management at Eldorado is conducted directly by senior man- agement with support from differ- ent company areas. In line with best market practice, the objective is to monitor, anticipate and minimize risks capable of impacting the future continuity of the business, within the overall macroeconomic context and the industry. The financial risks monitored in- clude, for example, exchange and interest rates, fluctuations in which could affect Eldorado's yield and generate losses. Environmental risks are also monitored, such as climate and social changes, which could affect the company's license to operate. Through technology, Eldorado tracks possible environ- mental impacts, entailing the online monitoring of airborne emissions from the production plant and of air quality. In the social scope, the strategy is to develop closer rela- tions with surrounding communities and other society actors. Grounded in transparency and continuous improvement, Eldorado also tracks risks related to its image and reputation, risks in the legal, information technology and sup- ply areas, as well as other ques- tions associated with the forestry, industrial, commercial and logistics operations.#1426 GOVERNANCE ETHICS AND TRANSPARENCY (G4-56, G4-LA9 and G4-S03) ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 27 The Eldorado Code of Conduct sets forth the ethical guidelines that all employees must follow in internal and external relationships, includ- ing interactions with customers, suppliers, service providers, share- holders, government and commu- nities. After being presented and trained under the Code of Conduct all new employees must formally commit to comply with the rules outlined in the document. Eldorado's Code of Conduct en- compasses the applicable laws in all the countries in which the company operates. It addresses different topics such as equality of opportunity and treatment for all employees, harassment and abuse of power, child and slave labor, conflicts of interest, political par- ticipation, gifts and relations with public entities, underscoring the prohibition of the offer of any kind of advantage or privilege for public authorities. The Ethics Committee, compris- ing representatives of the Human Resources, Legal, Finance and Supplies departments, must ensure the code is being strictly followed. The committee meets every two months or whenever necessary to analyze reports received via the Ombudsman channel and to decide on courses of action (further infor- Código de Conduta Widely disseminated, the Code of Conduct may be accessed via the website: www.eldoradobrasil.com.br mation on the Ombudsman ahead). The Ethics Committee activities are reported to the People and Devel- opment Committee, which provides support for the Board of Directors, on a quarterly basis. In 2016, a workshop was orga- nized for company leaders on Code of Conduct and compliance to em- phasize their role in disseminating best practices within the company. The company also carries out peri- odic audits to ensure the accuracy of its accounting practices. In July and September, two search and sei- zure warrants were issued against the Eldorado head office as part of cautionary measures taken by the federal public prosecution service to investigate alleged irregulari- ties in FI-FGTS fund management and in investments made by four supplementary pension plans (Petros, Funcef, Previ and Postalis). The warrants were aimed at col- lecting evidence of supposed illicit practices that might have been documented by the company. The company contracted the services of the legal practice Veirano Advo- gados Associados and an audit by Ernst&Young to conduct an inde- pendent investigation, which found no indications that the Public Pros- ecution service allegations were grounded. Eldorado reaffirms its willingness to collaborate with the competent authorities in fully clarifying the facts. Committed to transparency and continuous improvement, the company is now analyzing the establishment of a Compliance de- partment to strengthen its internal controls. Eldorado Ombudsman E-mail: [email protected] Telephone: 0800 5275 280 Consolidation of the Ombudsman (G4-58, G4-S03) One of Eldorado's main commu- nication channels with its stake- holders, the Ombudsman receives reports, complaints, praise and suggestions from employees, ex- employees, suppliers and business partners, members of neighboring communities, customers and the press. In 2016, management of the Ombudsman service was taken over by a specialized external company, reinforcing the channel's credibility. Contacts may be made in Portuguese and English, with full confidentiality guaranteed. Other company communication channels include the Sustainability area email address, face to face meetings with community mem- bers and neighbors, the Contact Us channel on the institutional web- site and the company's pages on Facebook and LinkedIn. In November 2016 and February 2017, measures to disseminate contact information for the Om- budsman and the Sustainability area in 16 communities with which Eldorado maintains relations were taken.#15Strategy and performance IN THIS CHAPTER: > SECTORIAL CONTEXT > FINANCIAL AND OPERATIONAL PERFORMANCE > ENVIRONMENTAL PERFORMANCE 291192 onul#1630 STRATEGY AND PERFORMANCE SECTORIAL CONTEXT ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 31 Adopting competitiveness, innovation, sustainability and valuing people as drivers, Eldorado pursues its strategy of consolidating the company as a benchmark in the global pulp market In 2016, the pulp sector was subject to a steady drop in market prices, due to the start up of new production and projections of increased supply. The reduction in prices was partially offset by increased demand. The global pulp market grew by 7.7% compared with 2015, which represented an additional volume of 1.6 mil- lion metric tons, according to the World Chemical Market Pulp Global 100 Report. The pulp sector continued contrib- uting to the Brazilian trade balance, accounting for 4.2% of all Brazilian exports in value. According to the industry association Ibá (Indústria Brasileira de Árvores), the country exported 12.9 million metric tons of pulp, an increase of 11.9% over the previous year. At US$ 5.6 bil- lion, export revenues were 0.5% down on 2015. The main destina- tion continues to be China, with a 16.3% increase in exports in 2016, reaching US$ 2.2 billion. For the coming years, the ex- pectation is that the global pulp market will continue its growth, even with the projected start-up of new plants. The emerging markets demand sustain these positive projections, in particular China, as well as in Brazil and other Latin America countries, depending on the positive economic outlook in these countries. The best prospects are in the tissue segment (comfort and personal hygiene), driven by higher incomes and consumption in the developing countries, and the higher added value special papers segment. In view of these projections, El- dorado is pursuing its Vanguarda 2.0 expansion project, with work scheduled to begin on its new industrial unit by the end of 2020. With this project, the company's production capacity will increase by 2.5 million metric tons of pulp per year. The goal is to achieve the lowest investment cost per metric ton and the lowest cash produc- tion cost in the global industry. In 2016, the land grading and basic infrastructure works were final- ized. The new timber patio was also concluded, providing storage capacity for 120,000 m³ of wood. The company is currently focused on selecting partners for construc- tion of the new unit. 7.7% was the growth in the global eucalyptus pulp market. Eldorado pursues its expansion project. Strategic directives With the challenge of consolidating Eldorado as a global benchmark in the pulp industry, in addition to its expansion project the company is working on boosting efficiency in the industrial, forestry, commercial and logistics areas to drive a more competitive cost structure while maintaining its commitment to quality and to environmentally and socially responsible practices. Company strategy bases on four major drivers: competitiveness, sus- tainability, innovation and valuing people. These pillars orientate Eldo- rado's activities at every stage of the business, focused on the future and on generating value for sharehold- ers, employees, surrounding commu- nities and partners. Since the company foundation, productivity in the forestry area has grown from 20m3 of timber per hectare/year in 2010 to 45m3/hect- are/year in 2014, besides around 19% reduction in forest formation costs. The gains are a reflection of constant investment in technology and innovation, such as the use of genetic material better adapted to the region, enhancement of the fertilization process and the forest monitoring system, which allows more effective and faster tracking of forest fires and pests, among others. Eldorado's performance in terms of mechanization of the plant- ing and harvest processes is also outstanding. In planting, mechaniza- tion stands at 80%, well above the industry average. In addition to the economic benefits for the company, mechanization ensures greater safety and comfort for employees and guarantees conscious use of the planting areas. Another advance has been the reduction in the average distance between the planted areas and the Três Lagoas industrial plant. In 2016, the average forest radius reduced by 55 kilometers over 2015, decreasing timber transporta- tion costs and the environmental impacts caused by transportation. In the industrial area, Eldorado makes use of a management model that prioritizes permanent engage- ment and an owner mindset in its team, generating greater operational stability, driving production volume and enhancing efficiency in the use of natural resources, such as water and energy. The result is the low- est cash cost of production in the sector, an indicator that measures operational efficiency, which cor- responded to R$ 619.21 per metric ton in 2016. Working with optimized stock levels and maintaining a diversified cus- tomer base, thus enabling operations on a global scale and reducing the risks of concentration on one par- ticular region or group of companies is part of the company's commercial strategy. Aimed at strengthen- ing partnerships with customers, Eldorado prioritizes close relations and differentiated performance. In logistics, the focus is also on excel- lence and competiveness. In 2016, Eldorado consolidated its flexibility in transportation to the overseas market, combining bulk and contain- er shipments, driving faster deliver- ies to customers at a lower cost.#1732 STRATEGY AND PERFORMANCE FINANCIAL AND OPERATIONAL PERFORMANCE (G4-EC1) ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 33 INNOVATION FOR PRODUCTIVITY With innovation and team work as key driv- ers, in 2016 the industrial area launched its Inovar Program, designed to encourage idea generation among employees in the opera- tional and maintenance areas of the Três Lagoas plant. The goal is to develop initia- tives that promote excellence and enhance the work environment. Since its introduction, the program has re- ceived 200 submissions, 50% of which have already been put into practice. The forestry area is also developing its Evo- lution program, designed to implement a se- ries of projects to enhance competitiveness and reduce costs in the seedling nursery and in the forestry, harvest and maintenance sectors. This program should be fully opera- tional by 2019. In 2016, Eldorado's gross revenue was R$ 3.460 billion, down 7% on the 2015 figure of R$ 3.721 billion. Ebitda (earnings before interest, taxes, depreciation and amortization) was R$ 1.585 bil- lion, compared with R$ 1.824 billion the previous year. Ebitda margin was 54%, still the highest margin in the sector. The company's financial perfor- mance was particularly impacted by the drop in pulp prices on the global market, due to new produc- tion capacity and the projected startup of new operations, as well as the appreciation of the Brazilian real against the dollar. However, operational efficiency and commercial strategy enabled Eldorado to partially offset these negative effects. During the year, the company posted a 6.6% increase in sales volume, which was actually higher than its an- nual production. In contrast, there was a 6.6% drop in the total value for distribution, which decreased from R$ 1,919.094 in 2015 to R$ 1,791,550 in 2016 (see the full Value Added Statement in the At- tachments section). In spite of the decrease in pulp prices and the exchange rate, net income was R$ 288 million in 2016. Cash availability at the end of the year was R$ 1.2 billion, while long-term indebtedness cor- responded to 74% of total debt. In June, the company accessed the international capital market with the issue of US$ 350 million in R$ 3.5 billion in net revenue, 7% down on 2015, due mainly to lower pulp prices debentures maturing in five years. The positive reception to this is- sue reinforced market recognition of Eldorado's level of business maturity. Production and sales volume Eldorado's operational results were outstanding in 2016. Production volume reached 1,638,000 metric tons of pulp, an increase of 2.6% over 2015 and 9% over the plant's nominal production capacity of 1.5 million metric tons/year. Out of 1,665,000 metric tons of pulp commercialized in the year 90% was exported, giving the company a share of approximately 12% in Brazilian pulp exports in 2016. The main destinations were Asia (49%) and Europe (29%). The business segments with the highest volumes were tissue (35%) and printing and writing (25%). The special papers niche was also worthy of note, growing 4 p.p. over the previous year.#1834 STRATEGY AND PERFORMANCE Gross revenue (R$ million) Sales volume (thousands of metric tons) ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 35 2013 2014 2015 2016 R$ 1,782 2013 R$ 2,236 2014 R$ 3,721 2015 R$ 3,460 2016 var. -7.0% 1,154 DISTRIBUTION OF ADDED VALUE (%) 1,561 G4-EC1 2013 2014 2015 2016 1,562 1,665 Employees (remuneration, benefits and charges) 37.0% 49.0% 20.5% 28.2% var. 6.6% Government (taxes, charges and contributions) 6.0% -30.0% -7.4% -5.9% EBITDA (R$ million) Total added value for distribution (R$ million) Retained profit/loss in the year -41.0% -39.0% 12.3% 16.1% 2013 R$ 443 2013 R$ 1,209 Interest and rents (remuneration of third-party capital) 98.0% 120.0% 74.6% 61.6% 2014 R$ 825 2014 R$ 1,085 2015 R$ 1,824 2015 R$ 1,919 Total 100.0% 100.0% 100.0% 100.0% 2016 R$ 1,585 2016 R$ 1,792 var. -13.11% var. -6.6% Production capacity (millions of metric tons) 2013 1.5 2014 1.7 2015 1.7 2016 1.7 6,6% growth in Eldorado's sales volume during the year, totaling 1.6 million metric tons Actual production (millions of metric tons) 2013 1.276 2014 1.568 2015 1.597 2016 1.638 var. 2.6% Sales by region Sales by segment 13% 9% 29% 49% 22% 19% 35% 25% Asia Europe Latin America (including Brazil) North America Tissue (comfort and hygiene) | Printing and writing Special papers Card#1936 STRATEGY AND PERFORMANCE ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 37 ENVIRONMENTAL PERFORMANCE (G4-EC2) Eldorado's business success is directly linked with environmen- tal care and preservation. Having ended 2016 with 239,000 hectares planted, the company recognizes that the extension of its activities goes far beyond this area. For this reason, it acts as the guardian of adjacent preservation and legal reservation areas and ensures ap- propriate soil use. The eucalyptus trees are planted in anthropized areas that have previously been used as pasture. The company also invests in lead- ing edge technology to continuous- ly improve its productivity rates, driving higher and higher volumes of eucalyptus pulp per hectare planted. Currently, the major environmental risk that could affect business con- tinuity for Eldorado is the occur- rence of long periods of drought, which could have a significant impact on the production process, highly dependent on the availabil- ity of water. Through responsible management practices, which include preven- tive and mitigation strategies, the company makes every effort to en- hance its activities and processes and ensure the maintenance of natural resources. The withdrawal and devolution of water are com- pliant with all the limits estab- lished by the competent authori- ties, and the Três Lagoas industrial plant is self-sufficient in green energy. Moreover, Eldorado has implanted processes that moni- tor and seek to reduce the plant's emission levels and other impacts related to different stages of the business, such as timber and pulp transportation. Managing water resources (G4-EN8 e G4-EN10) To enable industrial processes at the Três Lagoas plant, Eldorado withdraws water from the River Paraná, which basin presents a high biodiversity value and is widely used for fishing, tourism and leisure activities by communities in the region and by visitors. The average flow rate of the River Rio Paraná is more than 4,000 times greater than the volume withdrawn by the com- pany, as established by the permit from the Brazilian water authority ANA (National Water Agency). In practice, the volume withdrawn by the company is 0.025% of the water body's average flow rate. At times of drought, this may increase to 0.087%, which still does not affect other users of the basin. In 2016, the total volume of water consumed by the company, count- ing surface and ground water (the Periodic monitoring Fully committed to maintaining the quality of water resources, every two months Eldorado monitors the quality of surface water and aquatic communities at six points around the Três Lagoas plant, in accordance with a specific resolution issued by the national environment council CONAMA. The company also participates in the PROMAB water basin monitoring and modeling cooperative program, a partnership between the Instituto de Pesquisas e Estudos Florestais (IPEF, Forestry Studies and Research Institute) and the Forestry Hydrology Laboratory (LHF) of the Forestry Sciences Department of ESALQ/University of São Paulo. The quantitative and qualitative monitoring has been in place since the second half of 2016 at the Barraca farm in the town of Inocência (MS). The objective is to analyze the effects of forestry stewardship on water resources, taking into account the water balance in the micro-basin, physical and chemical variables, as well as rainfall and flow rates. nursery in Andradina/SP), was the lowest since 2014. In the comparison with 2015, there was a 5.3% reduction in water con- sumption in spite of the increase in pulp production volume. This perfor- mance reflects efficient management of the industrial plant, based on continuous improvement processes. In the plant maintenance shutdown in 2016, a series of improvements were carried out in the production process, resulting in savings of 200 m³ of clean water per hour. Regarding irrigation, the company has specific procedures that ensure the most appropriate use of water in accordance with the season of the year. Another advance in 2016 was in reuse of water in the plant. The recirculation rate, which refers to the volume of water reused by the chilling towers and the recovery of condensates, reached 84.79%, com- pared with 81% the previous year. EFFLUENTS (G4-EN22) AThe Três Lagoas industrial unit monitors the effluents generated during pulp produc- tion on a daily basis. Before returning to the River Paraná, the wastewater is subject to an activated sludge treatment process. Follow- ing a downward trend already evident in 2015, the volume of water discharged into the basin was 11.3% lower in 2016, reaching almost 34 million m3. One of the initiatives that contributed to this was the utilization of the water used to clean the wastewater treatment filters in the boiler in the chilling tower, avoiding the need for treatment. The company is committed to returning the water used in its industrial processes to the River Paraná without jeopardizing other users in terms of quality or flow rate. The process is conducted in accordance with the limits established in the industrial plant's environmental impact study and is compliant with the standards of CONAMA and the state environmental authority CECA. TOTAL WATER WITHDRAWN BY SOURCE (M³/YEAR) G4-EN8 Surface water (rivers, lakes, wetlands, oceans) Ground water (Andradina Nursery/SP) Total 2013 39,478,754.00 2014 2015 46,588,677.00 45,611,125.14 2016 43,181,518.35 475,498.00 45,263.00 348,817.00 350,642.00 39,954,252.00 47,039,940.00 45,959,942.14 43,532,160.35#2038 STRATEGY AND PERFORMANCE G4-EN10 Percentage and total volume of water recycled and reused Total volume of water recycled and reused (m³/year) 2013 2014 2015 2016 Recirculation rate (%) 213,489,311.00 2013 278,412,434.00 2014 240,240,677.98 283,977,832.92 2016 G4-EN22 Total water discharged (m³/year) 2013 2014 2015 35,158,579.00 41,668,361.39 38,314,552.06 2016 33,975,291.29 G4-EN 18 Energy Intensity (tCO2e/ADT) 12 2012 0.33 2013 0.28 2014 0.27 82.00% 2015 0.21 83.00% 1 Taking into account scopes 1 and 2: direct emissions and emissions from purchased energy 2015 81.00% 84.79% 2 Taking into account scopes 1 and 2: direct emissions and emissions from purchased energy ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 39 ENERGY CONSUMPTION BY SOURCE (T) (G4-EN3) 2015 2016 VARIATION (%) NON-RENEWABLE SOURCES Fuel oil LPG used in forklifts Diesel (used in generators and internal vehicles) 1 Gasoline (Eldorado fleet) 1 RENEWABLE SOURCES 53,814.54 25,961.98 -99.95% 185.78 50,234,712.05 647,648.63 Green energy (G4-EN3) The recovery and biomass boil- ers installed in Três Lagoas mill, which produces energy based on residual from pulp production, such as lignin and wood chips, ensures that Eldorado is self-sufficient in energy. In 2016, the company gen- erated almost 1.324 million MWh of clean energy, a little less than the previous year. The company also acquired an additional 20,688 MWh. A major part of the energy was consumed in the plant and by the chemicals suppliers also installed in the industrial complex. Even so, a total of 182,957 MWh was com- mercialized via the national energy Grid, generating revenues of ap- proximately R$ 34 million. In addition to electricity, the company uses energy from non- renewable sources in its processes. In 2016, there was a 99.95% reduc- tion in the consumption of fuel oil as a result of the substitution by natural gas in the industrial plant's lime kiln, which impacted the com- pany's total energy consumption and direct greenhouse gas (GHG) emissions. Biomass Black Liquor 186,452.54 236,143.46 26.65% 2,465,228.82 2,567,460.45 4.15% 1 Even though they were used in previous years, reporting of the other fossil fuels was only begun in 2016. 2 Measured in liters. ELECTRICITY (MWH) Internally Produced Purchased Consumed Sold 2015 2016 VARIATION (%) 1,338,036.65 1,323,634.01 -1.08% 13,997.63 20,688.57 47.66% 1,179,048.81 1,161,365.27 -1.50% 172,985.47 182,957.31 5.76%#2140 STRATEGY AND PERFORMANCE Managing emissions (G4-EN15, G4-EN16, G4-EN17, G4-EN18 and G4-EN19) Aware of the potential conse- quences of climate change for the business and for society as a whole and of the impacts caused at some stages of its production cycle, Eldorado is attentive to discussions around this question and seeks to enhance its processes and decrease its greenhouse gas (GHG) emissions. The company's first production stage, however, generates positive impacts. Using responsible planting practices the company's eucalyp- tus forests, which have a planting to harvest cycle of around seven years, sinks more CO₂ from the atmosphere than older forests. Eldorado monitors its emissions on an annual basis and publishes its greenhouse gas inventory based on the Brazilian GHG Protocol pro- gram, which takes into account the emission factors established by the Intergovernmental Panel on Cli- mate Change (IPCC). From 2015 to 2016, the company's direct emis- sions were reduced by 20%, from 369,774.82 tCO₂e to 295,770.75 tCO,e. The decrease was the result of the substitution of fuel oil with natural gas in the lime kiln, one of the stationary sources at the Três Lagoas industrial plant. There was also a decrease in indi- rect emissions (scope 2 and relative to purchased energy) and in other relevant indirect emissions (scope 3, which includes, for example, emissions from the transportation of timber and pulp by third-parties and the emissions generated by business travel). Eldorado's energy intensity, measured by the quantity of tCO,e generated over the quan- tity of pulp produced, decreased from 0.27 to 0.21 tCO,e/ADT (see the following chart and the compa- ny's complete emissions data in the Attachments section). Reductions in 2016 29,450.84 tCO₂e of emissions avoided by Eldorado in 2016 ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 41 2,300 forestry area employ- ees were trained to identify the fauna on Eldorado's lands Waste management (G4-EN23) Solid waste management at Eldo- rado complies with the directives set forth in Brazil's national solid waste policy and the solid waste management plan, including ac- tions related to the generation, disposal and reduction of this type of waste. Although there was an 8.8% increase in the total volume of waste generated due to larger waste volumes in the growing areas, the company made a series of advances during the year. After new procedures adopted in the wastewater treatment plant at the Três Lagoas industrial unit, it was possible to reduce the volume of biological sludge, driving a positive impact on waste disposal in land- fills. The volume of waste recycled also grew during the year (complete information in the Attachments section). Managing biodiversity (G4-EN11 and G4-EN12) As part of its environmental man- agement strategy, Eldorado is con- stantly engaged in the preserva- tion of conservation areas located near the company's planting areas. The farms in which the eucalyp- tus forests are concentrated are located in the Cerrado biome and are spread over 13 municipalities in Mato Grosso do Sul: Água Clara, Anastácio, Aparecida do Taboado, Bataguassu, Brasilândia, Dois Irmãos do Buriti, Inocência, Pa- ranaíba, Ribas do Rio Pardo, Santa Rita do Pardo, Selvíria, Terenos and Três Lagoas. These areas extend over 103,000 hectares, of which more than 81,000 hectares have consolidated vegetation, while the remainder is being reconstituted. The Canoas and Pântano farms, in Selvíria, and the Serrinha farm, in Três Lagoas, have High Conser- vation Value Areas (AAVC in the Portuguese acronym) for which reason they are the target of an integrated protection, conserva- tion and monitoring plan. The plan includes actions such as property surveillance; signs prohibiting hunting, fishing and the extraction of timber; fire hazard warnings; environmental education initiatives for nearby communities; training programs for Eldorado employees; and ongoing monitoring of flora and fauna, in particular medium- sized and large birds and mammals (see the complete list of protected and restored habitats in the Attach- ments section).#2242 STRATEGY AND PERFORMANCE HIGH CONSERVATION VALUE AREAS MONITORING FAUNA ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 43 Pântano Farm (Selvíria) Total area: 89.05 km² | Productive area: 57.74 km² | Permanent Protection and Legal Reserve areas: 29.04 km² Pasture, reservoirs and roads: 2.27 km² Serrinha Farm (Três Lagoas) Total area: 8.47 km² | Productive area: 2.11 km² Permanent Protection and Legal Reserve areas: 3.74 km² Pasture, reservoirs and roads: 2.62 km² So far, in its areas Eldorado has identified the presence of 144 species of fauna on conservation lists in 2015, 44 species had been identified. The greater part of these species are classified as being of minimum concern. Only four species are in the status of almost under threat (maned wolf, Pampas deer, jaguar and rhea) and 11 are considered vulnerable, including the blue macaw and the giant anteater. From 2015 to 2016, the number of species identified grew signifi- cantly thanks to the program Você e o Bicho ("You and the Animal"), which trained around 2,300 em- ployees in various sectors of the forestry area to identify the fauna in Eldorado areas. The initiative represents a means of stimulating the environmental awareness of the work force, as well as contrib- uting to the company's monitoring processes. In 2017, the program will be extended to other farms, which should generate a further increase in the number of species identified. 4 species in Eldorado's areas are classified as almost under threat: the maned wolf, the Pampas deer, the jaguar and the rhea Technology at the service of the environment Planning the planting of eucalyptus, both on compa- ny-owned land and in areas leased from partners, is now aided by the agility and precision of unmanned aerial vehicles (UAVs). Currently, three drones moni- tor on average 500 hectares per day and are able to identify any environmental damage, erosion and un- covered areas. Eldorado was recognized by the For- est Stewardship Council (FSC) as the forestry company that most employs leading edge technology in Brazil. Canoas Farm (Selvíria) Total area: 56.26 km² | Productive area: 40.02 km² I Permanent Protection and Legal Reserve areas: 15.84 km² Pasture, reservoirs and roads: 0.40 km²#23Value chain IN THIS CHAPTER: > EMPLOYEES > CUSTOMERS > SECTORAL ENTITIES > SUPPLIERS > COMMUNITIES#2446 VALUE CHAIN ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 47 Number of employees by gender and by region - 2016 G4-10 Number of employees by age group G4-10 Eldorado is striving to consolidate practices that drive the development of its work force and its business. The company also promotes a series of initiatives aimed at reinforcing relations with customers and suppliers, as well as generating development for local communities Men Midwest ☐ Southeast 147 Total by gender Women 2015 3,851 Up to 30 years 1,791 From 31 to 50 years 2,590 3,998 Over 50 years 377 Total 4,758 EMPLOYEES The people in the Eldorado team are the company's most important asset. It is not by chance that they are the focus of one of the com- pany's strategic drivers: ensuring employees are constantly valued. As a relatively young company, Eldorado is engaged in disseminat- ing and strengthening its organi- zational culture, directly aligned with the company's values, among the people working in every area. For Eldorado, adherence to the company culture drives positive results for the business and creates a healthy, satisfying work environ- ment that prioritizes a balance between employees' professional and personal lives. The talent attraction process offers a good example of the importance of this question for the company. Using a differentiated model, after the conventional selection stage involving the requester and the hu- man resources team, the candidate goes before the so-called "Selection Committee", comprising represen- tatives from different areas. In an informal conversation, the com- mittee weighs candidates' fit with company values and with expected behaviors and mindsets. Conducted for all positions - regardless of functional level -, the practice helps ensure new employees develop a feeling of belonging and con- tributes towards the retention of talents. In 2016, as in previous years, the people management area promoted several initiatives to consolidate the organizational culture. This is the case of the "HR in the Field" program, aimed at disseminating the corporate culture and engag- ing employees in the forestry area, who work distant from the Três Lagoas industrial plant. Through periodic visits, the human re- sources staff ensures the connec- tion between these professionals and the rest of the team, providing them with relevant information and gathering their perceptions and specific demands. Communication to reinforce the company culture Eldorado's internal communication strategy has been reinforcing the dissemination of organizational culture by means of institutional cam- paigns and ones disclosing the main events in the company, always promoting the active participation of employees. Worthy of note is the weekly radio program for workers in the planting areas, yet another initiative to bring these individuals closer to Eldorado and strengthen their feeling of belonging. Midwest 629 2016 Southeast 153 Up to 30 years 1,737 Total by gender 782 From 31 to 50 years 2,581 Total Over 50 years 462 4,780 Total 4,780 Employee profile (G4-10) Eldorado ended 2016 with 4,780 employees. The workforce compris- es 84% men and 16% women, all of whom work full time. The number of employees the previous year was 4,758. The operational areas continued to employ the largest number of peo- ple (3,348 men and 555 women), followed by technical and supervi- sory positions and administrative functions. The majority (4,480) were concentrated in the Midwest, where the company's industrial unit and eucalyptus plantations are located. Consolidating the insourcing pro- cess, Eldorado had no third parties in its work force at the end of the year. In 2013, the company had 1,603 third-party workers. Having its own in-house team enhances workflows, engagement and the consolidation of the company culture, in addition to optimizing resources for the business. Even though it already had in- terns because of partnerships with teaching institutions, in 2016 the company established its own intern program called "Supertalento" ("Supertalent"). In the first cycle, 15 young professionals were hired to work in the most diverse areas of the company (detailed information about the employee profile in the At- tachments section).#2548 VALUE CHAIN ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 49 Development initiatives (G4-LA9) With the mission of retaining employees and developing their competencies as a means of boost- ing their career and motivating them, Eldorado has a robust train- ing program. In 2016, the amount spent on development initiatives was approximately R$ 1.3 million, an average of R$ 2.567 invested in each employee. The total number of hours training was 153,867, cor- responding to an average of 32.12 hours per employee. Technical and operational training courses were organized for the forestry harvesting area, which, in addition to practical knowledge, addressed behavioral aspects and environmental education. The company also fulfilled its schedule of safety training and promoted an online program on the sexual exploitation of children and ado- lescents. In all, 48% of the work force took part in distance training programs totaling 8,072 hours. Particularly for leaders, the com- pany provides financial support for external courses, such as language programs. In 2016, a coaching pro- gram was also organized. At the end of 2016, Eldorado launched its Renovar program, aimed at the professional requalifi- Edição 01 Fevereiro 2017 House Press Editora TRILHA TRILHA DE CARREIRAS VEJA COMO CRESCER NA... Eldorado cation of employees working with the maintenance and operation of tractors in the silviculture area. Projected also to reinforce the Eldorado culture and strategic driv- ers, some 600 employees should undertake a total of 68,000 hours of training. Training G4-LA9 2015 2016 Total number of hours Average number of hours/ employee Men 105,687.06 26.37 Women 48,180 61.61 Total 153,867.1 32.12 Brasil House Press Editora DE CARREIRAS e Eldorado e Eldorado A trajetória é sua escolha! e Eldorado Brasil Prezado colaborador, MAPA DA DIRETORIA FLORESTAL A Trilha de Carreiras é representada por áreas, cargos e requisitos de cada cargo que, a partir de sua complexidade e responsabilidade, interagem em prol dos objetivos e alcance de resultados da Eldorado. A partir deste mapa você conhecerá as diversas possibilidades de crescimento e ascensão profissional da Diretoria Florestal da Eldorado. CAREER PATH Projected to ensure greater chances of profes- sional growth and boost internal promotion, in 2017 Eldorado launched its Career Path program, which will help employees in the forestry and industrial areas to map their op- portunities for development inside the com- pany. Based on current skills and profile and on competencies that could be acquired, the program will, for example, identify employees with the potential to occupy leadership and management roles in the future. The Career Path program was created based on suggestions provided by the employees them- selves in a round of discussions organized by the people management area from July 2016. Involving employees from different areas, the meetings reinforced internal transparency and dialogue and also provided Eldorado with a reference for measuring organizational climate. Performance appraisal (G4-LA11) To support its employee develop- ment strategy, Eldorado has a performance appraisal process that evaluates fulfillment of corporate and individual targets and mea- sures the quantitative and behav- ioral results of eligible employees. At the moment, the appraisal cycle is only conducted with the compa- ny's 279 (248 men and 31 women) management level employees. One of the company's challenges is to extend this process to the other levels, which should occur as the initiative matures over the coming years. In addition to self-appraisal and appraisal by peers, in 2016 the participating managers were also assessed by senior level ana- lysts and professionals from their respective teams. The results are discussed by the People Commit- tee, which comprises the people management team and the peers of each person being appraised. The committee then develops action plans for the appraisees, which can range from promotion and external training courses to job rotation.#2650 VALUE CHAIN ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 51 54 50 Remuneration and benefits (G4-LA1 and G4-LA2) Eldorado remuneration strategy is aligned with the market and the industry and is aimed at recogniz- ing employees' skills and behaviors as a means of motivating team engagement to drive business con- tinuity. As part of its commitment to generate value for the region in which its largest operation is located, whenever possible Eldo- rado prioritizes the hiring of local work force. In 2016, the lowest remuneration paid by the company was R$ 937, 6.48% higher than the national minimum salary (R$ 880). Remu- neration policy makes no distinc- tion between men and women, meaning that any differences in salary are the result of perfor- mance appraisals related to the employee's position. Especially among operational personnel, the majority of whom are men, remu- neration may be higher in function of the activities exercised. In addition to fixed remuneration, the company offers variable remu- neration and a series of benefits, which also helps consolidate the organizational climate and drive professional satisfaction and busi- ness results. The benefits package includes meal vouchers or meals, transportation, life insurance, medical and dental assistance, cov- erage for incapacity and invalidity, private pension plan and maternity and paternity leave. The number of admissions and dis- missals remained stable in 2016. Maternity and paternity leave All the 226 employees who took leave returned to work and re- mained in the work force in 2016 d The turnover rate was similar to that of previous years, with a higher turnover among operational personnel in the Três Lagoas plant and in the silviculture area, where the size of teams tends to fluctu- ate during the course of the year in function of the planting sched- ule (more complete information on remuneration in the Attachments section). Managing health and safety More than anything, valuing the El- dorado work force means ensuring a safe and healthy work environ- ment for all. This commitment is evident in the diverse practices already consolidated into work routines and in the company's low accident and incident rates. In 2016, the number of injuries remained stable compared to the previous year, while the number of days lost when an employee is unable to work due to a workplace accident or occupational disease decreased significantly. - In addition to safety training, provided for new employees and reinforced periodically for older ones, the company organizes Daily Safety Dialogues (DSD), which address a different subject each day, strengthening the concepts of workplace safety and clarifying any employee doubts. The com- pany also encourages employees to communicate risks and incidents, without exposing the individuals involved. Another measure is the Internal Accident Prevention Week (SIPAT in the Portuguese acronym), which involved almost 2,000 people in 2016. Focused on the theme of safe behavior, the programming in- cluded talks, measurement of blood pressure and tests for glycaemia, as well as musical presentations and awards. The forestry area also participated with its Rural Work Internal Acci- dent Prevention Week (Sipatr), with theater performances, talks on subjects such as the environment, employee health, draws with prizes and a number of interactive events over a two-week period. Around 1,800 people took part in the activities, organized in the munici- palities of Selviria, Inocência, Santa Rita do Pardo and Água Clara. In February, Eldorado organized its "Programa Dias" (Days Program) for the third time, focused on pre- vention and involving more than one thousand employees. The measure engaged the entire forestry safety area and partners in wide-ranging discussions on safety, further reinforcing company culture. Health and well-being The company also organized a campaign aimed at timber trans- porters in Santa Rita do Pardo, with safety actions under- taken on the roads used by the company. In addition to raising community awareness, the initia- tive is applied in training for truck drivers. The community is also en- couraged to report any deviations, such as imprudent driving, acci- dents and the like, via the toll-free telephone 0800 7279906. The initiatives to promote employee health and well-being included a vaccination campaign against influ- enza H1N1, quick massage sessions on Fridays and the organization of an internal five-a-side soccer tour- nament and running activities. + Number of injuries¹ 2015 Men Women 8 Total 2016 Men Women 13 Total Number of days lost¹ 2015 Men Women 86 Total 2016 Men Women 166 Total 454 62 62 63 63 684 620 770 1 As in previous years, Eldorado did not record any occupational diseases or fatal accidents in 2016.#2752 VALUE CHAIN ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 53 Eldorado maintains close relations with customers by means of frequent visits both in Brazil and overseas SECTORIAL ENTITIES (G4-16 and G4-26) CUSTOMERS For Eldorado, relations and dia- logue with representative bodies and peer companies are indispens- able for the joint evolution of the industry as a whole. Based on this vision, the company participates actively in the main associations representing its area of activity. Currently the Eldorado Forestry director steers the Forestry Re- search and Studies Institute IPEF (Instituto de Pesquisas e Estudos Florestais), focused on research and development in forestry sci- ences. The company is also repre- sented in Ibá (Indústria Brasileira de Árvores), which comprises the main forestry-based companies in Brazil, ranging from pulp producers to manufacturers of wooden panels and laminated flooring. The central focus of Eldorado's commercial strategy is to maintain close relations with a customer base spread over more than 50 countries. The objective is to build long-term relationships and part- nerships based on trust aimed at driving sustainable growth for both the company and its customers. In addition to the head office in Brazil, which serves the domestic market and Latin America, there are offices in strategic regions worldwide: in Austria, focused on the European, African and Middle Eastern markets, in China, respon- sible for serving the Asian con- tinent, and in the United States, for the US, Canadian and Mexican markets. To ensure rapid fulfillment of the specific requirements of each cus- tomer, Eldorado has highly trained professionals in the commercial, technical and financial areas. They are engaged throughout the process from pre- to after-sales, providing the best possible solu- tions, prioritizing the quality of the product, on-time delivery and the optimization of resources. Maintaining close relations with customers entails series of visits to partners in Brazil and abroad, dur- ing which it is possible to gather feedback, measure satisfaction levels qualitatively and identify opportunities for improvements in relations, developing specific measures for each customer. Using a responsible pulp produc- tion model, Eldorado is certified by the Forest Stewardship Council (FSC) and the Brazilian forestry certification program Cerflor for the major part of its forestry stew- ardship area. This attests to the company's adoption of the most adequate environmental, economic and social practices. The company is certified by the FSC - an inde- pendent international organiza- tion-, since 2012 and undergoes annual audits. Eldorado will un- dergo recertification in 2017. Additionally, the company is compliant with the criteria estab- lished by international bodies and legislations, such as the European Timber Regulation (EUTR), from the Bundesinstitut für Risikobewertung (BfR) in Germany, and the United States Food and Drug Administra- tion (FDA) and the Lacey Act, in the United States. The company also responds to customer question- naires designed to determine the sustainable origin of timber and compliance with environmental and quality management systems, among others. The main associations in which Eldorado has a strategic participation are: Instituto de Pesquisas e Estudos Florestais (IPEF) > Tolerance of Clonal Eucalyptus to Hydric and Thermal Stress Program (TECHS) > Forestry Certification Cooperation Program (PCCF) > Forestry Protection Program (PROTEF) > Silviculture and Stewardship Program, (PTSM) > Forest Improvement Cooperative Program (PCMF) > Polyploidy in Eucalyptus Plants Program > Water Basin Monitoring and Modeling Cooperative Program (PROMAB) Viçosa Federal University > NUTREE Program (study center and cross-disc plinary projects in forestry soil and nutrition) - Soils Department Associação Brasileira Técnica de Celulose e Papel (ABTCP) > Water Resources Technical Commission > Environmental Licensing Technical Group Indústria Brasileira de Árvores (Ibá) > Certification Committee > Climate Change Committee > Sustainability Committee > Biodiversity Technical Group > Environmental Licensing Technical Group Associação Sul-Mato-Grossense de Produtores e Consumidores de Florestas (Reflore) > Forest Consumers (Reflore) > Environmental Technical Group > Forest Fire Fighting Technical Group World Wide Found for Nature (WWF) - MS > Participation in Dialogue Notebooks > Mato Grosso do Sul Forestry Forum Agroicone SP > Participation in meetings on the roadmap for the implementation of the Forestry Code for the Planted Forests Chain#2854 VALUE CHAIN SUPPLIERS (G4-12) Improvements in supply chain management In the second half of 2016, the "Equipo Por- tal" was implemented to simplify the regis- tration of Eldorado suppliers. Registration involves the electronic analysis of a series of documents from potential partners to dem- onstrate their compliance with labor, human rights and environmental legislation. Partners may also access the Code of Conduct on the portal, and sign the required commitment term digitally. ANDRITZ ANDRITL Automation GERAL STOCAGE PROD DADD UNHAS ESTOCAGE ANDRITZ Pulp & Paper 3254-08-1955 ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 55 Flaper Partners in the Eldorado supply chain are fundamental for the exe- cution of company strategy and for its good performance on all busi- ness fronts. Relations with these partners are guided by appropriate commercial practices, development incentives, and compliance with standards of ethics and integrity. In 2016, the Eldorado supplier base consisted of some 1,500 companies -including effective and potential suppliers, broken down into the categories of inputs and services for the company's forestry, indus- trial, logistics and transportation areas. Aware of the contribution that a company of its size may make to the region in which it operates, since its foundation; Eldorado has undertaken initiatives to develop local companies with a view mak- ing them commercial partners in the future. In 2016, the company contracted 172 suppliers based on the positive impacts these partner- ship generate for the community. At the same time, Eldorado takes care to minimize the risks of small suppliers becoming economically dependent, carrying out a pains- taking analysis of each partner's financial situation. A good example is the PAIS (Integrated and Sustain- able Agro-ecological Production) program, a partnership between El- dorado and Sebrae, which enabled the production of organic foods by smallholders in the region. In 2016, the company started buying produce from this group of agricul- tural producers (further information about this initiative in the sub- chapter Communities). Aimed at reinforcing traceability in its supply chain and ensuring com- pliance with all legal requirements, in 2016 Eldorado concluded the distribution of its Code of Conduct to its suppliers, who signed and returned the term of commitment, including a specific clause on the non-use of child or slave labor. Worth to remind that the Ombudsman channel is also open to suppliers. All of the suppliers contracted in 2016 were assessed based on compliance with human rights and labor criteria, as well as environ- mental legislation. No significant negative impacts were proven after this process. Eldorado ter- minated commercial partnerships with only seven companies upon discovering that they did not com- ply with its requisite human rights parameters.#2956 VALUE CHAIN ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 57 SOCIAL IMPACT MATRIX COMMUNITIES (G4-26, G4-27, G4-EC8, G4-S01 and G4-S02) At the beginning of 2017, Eldorado updated its social impact matrix for the second time. This assesses the positive and negative social, economic and operational impacts the cultivation of eucalyptus has on the region. For this review, meetings and interviews were conducted with communities located up to 3 km away from com- pany areas or timber transportation routes (11 settlements and 4 districts), in addition to representatives of public authorities and unions. In general terms, the study indicated a significant improvement in positive perceptions on the part of the community and a sharp decrease in negative manifestations. Among the positive impacts generated by the company, worthy of note is the generation of employment and improved road networks. The most mentioned negative impacts were noise, dust and a reduction in employment. To address these first two impacts, Eldorado invests in publicizing its community communication channels. Also periodically, it em- ploys water tankers to sprinkle roads in order to mitigate problems caused by dust. In the latter case, the response came after a strate- gic Eldorado decision to dismiss a number of employees at the end of 2016, including some members of these communities. Strengthened relations To make the commitment to local development come true, the first step is to build close, trans- parent relations with these communities. Based on the guidelines established in its Social Moni- toring Plan, Eldorado has an annual schedule of visits and meetings with stakeholders. From March 2016 to March 2017 a total of 117 meetings were held including: 20 encounters with representatives of public au- thorities (municipal education, environment and agriculture departments, and the public prosecu- tion service, among others); 97 meetings focused on community en- gagement, such as the monitoring of the execution of projects and works, as well as environmental education initiatives. There is also the Demands Center, an elec- tronic database in which all community requests are recorded. During this same period, there were 810 entries in the Demand Center, of which: 641 were requests for information, duly answered; and 124 were requests for action, 21 of which were fulfilled and 101 stored in the Demand Center for future analysis and/ or action. After just a few years in opera- tion, the dimensions of Eldorado's activities have been generating growth and wealth for the mu- nicipality of Três Lagoas and the other cities in Mato Grosso do Sul where the company operates. This includes a series of benefits that directly affect the public, such as the development of companies in the regions, a stimulus to consume locally produced goods, the gen- eration of employment and income, investments in infrastructure and the modernization of labor relations. On the other hand, the company's activities also generate some negative impacts, such as noise from the forestry operations, dust raised and damage caused to roads serving the eucalyptus plantations. Aware of these challenges, but also of the progress that Eldorado promotes in its surroundings, the company remains committed to local development, prioritizing actions that enhance economic, health and educational indica- tors in the region. There are even community engagement initiatives in the areas in which Eldorado makes its presence felt through its forestry partners. Considering all company work fronts, monitoring impact and development actions now cover 50% of the operations. The objective is to grow in an inte- grated manner, ensuring business sustainability and value generation for local communities, who endorse the company's license to operate on a daily basis.#3058 VALUE CHAIN ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 59 Other social initiatives led by Eldorado in 2016 were: > Donation of equipment for the Hospital Auxiliadora in Três Lagoas; وله > Roof for the Três Lagoas Fire Brigade's multi-sport court in function of the "Bom- beiros do Amanhã" project, which orga- nizes physical, play, school reinforcement and accident prevention activities for underprivileged children aged from 9 to 14 years; > Construction of a public clinic in the Novo Oeste district of Três Lagoas, and donation of two ICU ambulances to the Três Lagoas Municipal Administration; > Construction of an Infant Education Center in the Novo Oeste district of Três Lagoas; 目 > Construction of a multi-sport court at the Moranga school in the city of Inocência; 押 > Construction of a clinical analysis labotory in the municipality of Inocência; A PAIS: driving results for everyone involved Eln partnership with Sebrae, Eldorado conducts the PAIS (acro- nym in Portuguese for integrated, sustainable agro-ecological produc- tion) program, which disseminates sustainable land management and organic agricultural techniques among small farmers, helping drive economic development, food security and the preservation of the environment in Mato Grosso do Sul. Over its three years, the program distributed 45 kits in the munici- palities of Três Lagoas, Selvíria and Aparecida do Taboado. In the latter, the technology was implemented in an institution that cares for un- derprivileged children and adoles- cents, with the organic produce be- ing consumed by the very program participants. In February 2016, Eldorado started acquiring organic produce planted in the settlement Pontal do Faia in Três Lagoas for use in the factory restaurant. In June, the company also began to buy produce from the Alecrim settlement in Selvíria for the restaurants in its forestry units in Inocência and Selvíria. Between March 2016 and March 2017, Eldorado bought more than 22 metric tons of vegetables from the program, ensuring a healthier diet for company employees and generating income for the produc- 2017 project schedule Ongoing measures to foment local develop- ment and drive improved education, health- care and income levels are under execution or scheduled for 2017: ers. Project participants also sell produce to some municipal govern- ments, for meals served in schools and other entities. The Pontal do Faia and Canoas settlements, which join the PAIS program, benefited from other El- dorado actions in 2016. Producers participating in the program in the two communities received screens and shades to protect their planta- tions. At the Canoas settlement, a limestone donation to enrich the soil was also concluded. In 2017, five protected cultivation units will be provided for producers in the Pontal do Faia and Alecrim settlements. Practical benefits The social matrix results are used in the definition of company strategy to drive positive impacts, reduce, and mitigate negative ones. Each stage of every project focused on local development is monitored and perception of its effectiveness is measured among the communities involved. Specific action plans are developed in case any need for adjustment or im- provement is identified. One of the measures undertaken by Eldorado in 2016 offered pro- fessional training in the Garcias district of Três Lagoas, meeting a community demand. In partnership with Senai, a 360-hour course on brickwork and building was offered for residents. At the end of the program, participants were given the mission of remodeling the local community center, where the main leisure and entertainment activi- ties in Garcia take place and which could be used for future training courses. The company enabled the execution of the course and pro- vided the building materials for the remodeling of the center, inaugu- rated in August 2016. > Infrastructure improvements at the school Escolinha Master Clube Recanto do Galo, in Três Lagoas, which organizes sporting activities for underprivileged children; > Vocational baking and dressmaking courses in the Garcias district of Três Lagoas; > Donation of vehicle to transport organic produce from the PAIS project in the Pontal do Faia settlement; > Donation of a school bus to transport children in the Selvíria rural zone; > Donation of a bus for the Três Lagoas Court, aimed at ensuring access to justice for low- income families in the city; > Donation of materials for the old people's home Lar de Idosos - Grupo da Fraterni- dade Espírita José Xavier, in Três Lagoas. > Donation of an ICU ambulance to the Santa Rita do Pardo Municipal Health Department; > Expansion of the clinical area in the Hospi- tal Auxiliadora, in Três Lagoas.#3160 ATTACHMENTS ATTACHMENTS Financial and operational performance G4-EC1 Direct economic value generated and distributed¹ ADDED VALUE STATEMENT (R$ THOUSANDS) Revenues Sales of merchandise, products and services Non operating Inputs acquired from third- parties Cost of goods and services sold 2013 2014 2015² ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 61 VARIATION 2016 2015/2016 (%) VARIATION ADDED VALUE STATEMENT 2016 2015/2016 (%) (R$ THOUSANDS) 2013 2014 2015² -7.8% Added value for distribution R$ 1,209,244 R$ 1,085,337 R$ 1,919,094 R$ 1,791,550 R$ 2,351,624 R$ 2,451,315 R$ 3,435,174 R$ 3,168,529 R$ 3,243,863 R$ 2,996,140 -7.6% Added value distributed R$ 191,311 R$ 172,389 -9.9% Personnel and charges -R$ 995,263 -R$ 1,165,871 -R$ 1,335,735 -R$ 1,218,313 -8.8% Taxes, charges and contributions Interest and rent -R$ 1,335,735 -R$ 1,218,313 -8.8% Retained profit/loss in year Gross added value R$ 1,356,361 R$ 1,285,444 R$ 2,099,439 R$ 1,950,216 -7.1% Retentions Depreciation, amortization and exhaustion -6,6% R$ 1,919,094 R$ 1,791,550 -6,6% R$ 393,979 R$ 504,686 28,1% -R$ 142,895 -R$ 104,915 -26,6% R$ 1,431,300 R$ 1,103,392 -22,9% R$ 236,710 R$ 288,387 21,8% 1 Includes revenues, operating costs, remuneration, donations and other community investments, accumulated profits and payments to capital providers and governments. -R$ 171,465 -R$ 212,652 -R$ 231,591 -R$ 256,862 -10.9% 2 2015 figures restated. -R$ 231,591 -R$ 256,862 -10.9% Net added value produced R$ 1,184,896 R$ 1,072,792 R$ 1,867,848 R$ 1,653,354 -11.5% by organization Added value received in transfer R$ 24,348 R$ 12,545 R$ 51,246 R$ 98,196 91.6% Financial revenue R$ 51,246 R$ 98,196 91.6%#3262 ATTACHMENTS Environmental performance G4-EN15, G4-EN16 and G4-EN17 Total direct, indirect and other relevant indirect emissions, by weight ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 63 Employees G4-10 Total number of workers, by functional level, type of employment, work contract and region, discriminated by gender EMISSIONS (tCO₂e) 2013 Total direct emissions (scope 1)1 416,082.57 Total indirect emissions (scope 2)² Total other relevant indirect emissions (scope 3)3 2014 439,996.14 2015 369,774.82 295,770.75 2016 VARIATION 2015/16 (%) NUMBER OF 2013 2014 2015 2016¹ EMPLOYEES BY FUNCTIONAL LEVEL -20.0% AND GENDER MEN WOMEN MEN WOMEN MEN WOMEN MEN WOMEN CEO 1 0 1 0 15,637.84 1,838.71 2,165.17 1,794.75 -17.1% Board 11 1 16 1 10 0 261,010.75 314,275.62 275,432.9 120,341.52 -56.3% Executive Board 5 0 6 0 4 0 4 0 1 Includes the use of fertilizers; the generation of electricity, heat or steam resulting from the burning of fuel from stationary sources (boilers and kilns etc.); transportation of materials, products, waste, employees and passengers in trucks, buses and internal combustion-powered vehicles belonging to the company; solid waste and liquid effluents; and fugitive emissions resulting from deliberate or accidental releases, hydrofluorocarbon emissions and methane leaks. Gases included in the calculation: CO2, CH4, N₂O, HFC-134a, R-22, R-410ª and SF6. 2 Takes into account acquired energy. Although the volume of energy bought was higher in 2016, there was a decrease in indirect emissions due to the significant reduction in the Average Annual Emissions Factor, from 0.1244 tco₂e/MWh in 2015 to 0.0817 tco₂e/MWh in 2016. 3 Includes air travel by executives; employee commuting; and timber and pulp transportation by third-parties. Gases included in the calculation: CO2, CH4, N₂O. G4-EN23 Total weight of waste, by type and disposal method (T) Management 22 4 19 5 OT 23 4 22 22 6 Heads/ 56 8 58 8 64 7 Coordination Technical/ 80 7 218 10 336 29 Supervision 29 Administrative 259 174 372 240 385 193 190 170 Operational 2,069 435 2,938 546 3,539 589 3,348 555 ORIGIN OF VARIATION CLASSIFICAÇÃO WASTE DESTINATION 2013 2014 2015 2016 2015/16(%) Trainees 0 30 1 0 0 Industrial Re-refining 8.36 4.92 12.32 11.80 -4.2% Third-parties 1,122 481 935 55 0 0 Class I Industrial and Forestry Class 1 industrial landfill (external) 88.08 144.37 192.86 409.50 112.3% Apprentices 8 5 4 8 0 0 29 4 Interns 17 18 12 3 14 6 4 11 Class 2 industrial landfill (internal)¹ 121,347.50 119,637.26 124,695.19 109,513.59 -12.2% Total by gender 3,649 1,133 4,608 877 3,966 792 4,008 782 Industrial Recycling 2,3 3,953.20 6,227.42 748.50 2,990.63 299.5% Total 4,782 5,485 4,758 4,790 Class II Co-processing4 181,642.25 196,858.11. 186,452.54 226,424.80 21.4% Forestry Class 2 industrial landfill (external) 42.80 68.07 153.79 338.97 120.4% 1 Board members are not direct company employees. Therefore, the number of employees given in other parts of this report does not take into account the ten board members and corresponds to 4,780. Recycling 50.35 102.57 48.00 0.00 -100.0% Total 307,132.54 t 323,042.72 312,303.2 t 339,689.29 t 8.8% 1 Sum of organic and inorganic waste. 2 The following were taken into account: primary sludge (used in the recycled paper and packaging industry), dry fiber, paper, cardboard, plastic and metal scrap. 3 Biomass for third-parties was included under recycling. 4 Waste for energy recovery was taken into account, such as biomass for third-parties, biomass burned in the auxiliary boiler and dejects from wood chip production.#3364 ATTACHMENTS ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 65 2013 2014 2015 2016 TURNOVER RATE (%) BY AGE GROUP NUMBER OF EMPLOYEES BY Up to 30 years REGION MEN WOMEN MEN WOMEN MEN WOMEN MEN WOMEN Between 31 and 50 years Midwest 2,386 421 3,536 638 3,852 651 3.851 629 Over 50 years 2015 2016 47.5% 50.3% 39.1% 36.1% 30.6% 36.8% Southeast 141 231 136 184 114 141 147 153 TURNOVER RATE (%) BY REGION 2015 2016 Midwest 40.5% 42.2% Southeast 60.6% 28.2% NUMBER OF EMPLOYEES BY TYPE OF EMPLOYMENT MEN WOMEN MEN WOMEN MEN WOMEN MEN WOMEN Permanent 22 15 18 23 3,966 792 3,908 760 Fixed term 2,505 637 3,655 799 0 0 90 22 ADMISSIONS BY GENDER 2015 2016 Total by gender 2,527 652 3,672 822 3,966 792 3,998 782 Men 1,751 1,605 Total 3,179 4,494 4,758 4,780 Women 356 383 ADMISSIONS BY AGE GROUP 2015 2016 Up to 30 years 908 934 G4-LA1 Total number and rate of new employee admissions and employee turnover, by gender, age group and region Between 31 and 50 years 1,098 906 Over 50 years 101 148 TERMINATIONS BY GENDER Men 2015 2016 ADMISSIONS BY REGION 1,456 1,568 Midwest Women TERMINATIONS BY AGE GROUP Up to 30 years 394 395 Southeast 2015 2016 Total 2015 2016 1,942 1,878 165 110 2,107 1,988 792 812 NEW ADMISSIONS RATE (%) BY GENDER 2015 2016 Between 31 and 50 years 928 959 Men 36.8% 33.6% Over 50 years 130 192 Women 7.5% 8.0% TERMINATIONS BY REGION 2015 2016 NEW ADMISSIONS RATE (%) BY AGE GROUP 2015 2016 Midwest 1,706 1,904 Up to 30 years 19.1% 19.5% Southeast 144 59 Between 31 and 50 years 23.1% 19.0% Total 1,850 1,963 Over 50 years 2.1% 3.1% TURNOVER RATE (%) BY GENDER 2015 2016 NEW ADMISSIONS RATE (%) BY REGION 2015 2016 Men 40.4% 39.7% Midwest 40.8% 39.3% Women 47.3% 49.7% Southeast 3.5% 2.3%#3466 SUMMARY OF GRI CONTENT ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 67 SUMMARY OF GRI CONTENT General disclosures Aspect Strategy and analysis Organizational profile Description G4-1 Message from the CEO G4-2 Description of main impacts, risks and opportunities G4-3 Name of the organization G4-4 Primary brands, products and/or services G4-5 Location of the organization's headquarters G4-6 Countries in which the operation's main or most relevant units for the sustainability aspects of the report are located G4-7 Nature of ownership and legal form G4-8 Markets served Page/response External assurance Omission Material aspects identified and boundaries G4-11 Percentage of employees covered by collective bargaining agreements G4-12 Description of organization's supplier chain G4-13 Significant changes in the organization's size, structure, ownership, and supplier chain G4-14 Description of how the precautionary approach or principle is addressed by the organization G4-15 Social charters, principles, or other initiatives developed externally G4-16 Participation in associations and organizations G4-17 Entities included in the organization's consolidated financial statements, and entities not included in the report 100% of the employees are covered by collective bargaining agreements In 2016, there were no changes in size, structure or ownership G4-9 Scale of organization G4-10 Employee profile G4-18 Process for defining the report content G4-19 List of material aspects#3568 SUMMARY OF GRI CONTENT Aspect Stakeholder engagement Description G4-20 Boundary within the organization for each material aspect G4-21 Boundary outside the organization for each material aspect G4-22 Restatements of information provided in previous reports G4-23 Significant changes in scope and boundaries of material aspects in relation to previous reports G4-24 List of stakeholder groups engaged by the organization G4-25 Basis for identification and selection of stakeholders with whom to engage G4-26 Approach to stakeholder engagement G4-27 Key topics and concerns that have been raised through engagement, by stakeholder group Page/response External assurance G4-28 Reporting Omission Report profile period G4-29 Date of most recent previous 2015 report G4-30 Reporting cycle Annual ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 69 Governance G4-31 Contact point for questions regarding the report or its contents G4-32 Option of application of guidelines and location of GRI table G4-33 Policy and current practice with regard to seeking external assurance for the report G4-34 Organization's governance structure The 2016 Sustainability Report was not subject to external assurance Ethics and integrity G4-56 Values, principles, standards and norms of behavior in the organization G4-58 Internal and external mechanisms for communicating concerns about non- ethical behavior#3670 SUMMARY OF GRI CONTENT SPECIFIC DISCLOSURES Economic category Aspect Economic performance External Description Page/response Omission assurance G4-DMA Management approach G4-EC1 Direct economic value generated and distributed G4-EC2 Financial implications and other risks and opportunities for organization's activities due to climate change G4-DMA Management approach Indirect economic impacts G4-EC8 Description of significant indirect economic impacts Environmental category Aspect Description G4-DMA Management approach Energy G4-EN3 Energy consumption within the organization G4-DMA Management approach Water G4-EN8 Total water withdrawn by source G4-EN10 Percentage and total volume of water recycled and reused Page/response External assurance Omission Biodiversity Emissions G4-DMA Management approach G4-EN11 Operational sites owned, leased, managed or adjacent to, protected areas and areas of high biodiversity value outside protected areas G4-EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas G4-DMA Management approach G4-EN15 Direct greenhouse gas (GHG) emissions G4-EN16 Indirect greenhouse gas (GHG) emissions from the acquisition of energy G4-EN17 Other indirect greenhouse gas (GHG) emissions G4-EN18 Greenhouse gas (GHG) emissions intensity G4-EN19 Reduction in greenhouse gas (GHG) emissions ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 71#3772 SUMMARY OF GRI CONTENT ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 73 Aspect Description Page/response External assurance Social category - society Omission Aspect Description Page/response G4-DMA Management approach External assurance Omission G4-DMA Management approach G4-S01 Percentage Effluents and waste G4-EN22 Total water discharge, discriminated by quality and destination G4-EN23 Total weight of waste, by type and disposal method Social category - labor practices and decent work Aspect Employment Training and education Description G4-DMA Management approach G4-LA1 Total number and rates of new employee admissions and employee turnover, by age group, gender and region G4-LA2 Benefits provided for full-time employees G4-DMA Management approach G4-LA9 Average hours training per year G4-LA11 Percentage of employees receiving regular performance and career development reviews Page/response External assurance Omission of operations with implemented local community engagement, Local communities impact assessment, Anti-corruption and development programs G4-S02 Operations with significant actual and potential negative impacts on local communities G4-DMA Management approach G4-S03 Units assessed for corruption-related risks G4-DMA Management approach Compliance G4-S08 Monetary value of significant fines and total number of non- monetary sanctions for non-compliance with laws and regulations Fine nº9.114.487 in the amount of R$ 194,850.00. Corresponding to improper disposal of timber material from the construction of line 1 on the Eldorado site. Fine nº 9.103.284 in the amount of R$ 50,500.00. Corresponding to potentially polluting activity (transportation of hazardous products - diesel oil diesel S500- UN 1202 - without license or authorization from the competent environmental authorities).#3874 SUMMARY OF GRI CONTENT Aspect Description Page/response External assurance Omission ELDORADO BRASIL 2016 SUSTAINABILITY REPORT 75 Grievance and complaint mechanisms for impacts on society G4-DMA Management approach G4-S011 Number of grievances and complaints about impacts on society filed, addressed, and resolved through formal grievance mechanisms From January to December 2016, Eldorado received 64 complaints related to odor, dust, dangerous driving, improper waste disposal, illegally parked vehicles etc. In all, 22 complaints were sent to the Sustainability area email, 14 to the Ombudsman, one to the Contact channel on the institutional website, 14 to the Strategic Operations Center, and 13 to the Odor Alert Network. All were addressed and resolved. SUSTAINABILITY REPORT EXECUTIVE COMMITTEE Overall project coordination - Eldorado Elcio Trajano Júnior Fábio José de Paula Rafael de Araujo da Silva Sidnei Ramos Michele Dantas GRI and materiality consulting, editorial coordination, content and design Report Sustentabilidade Revision Assertiva Mindfulness Editora e Treinamentos Photography Eldorado Archives