GRI Content Index

GRI 100: Universal Standards

GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
102-1 Name of the organization Fibria Celulose S.A.
102-2 Activities, brands, products and services About Fibria

Note: Fibria does not produce prohibited or contested products.

102-3 Location of headquarters São Paulo (SP).
102-4 Location of operations About Fibria
102-5 Ownership and legal form About Fibria and Indicators Center
102-6 Markets served About Fibria and Indicators Center
102-7 Scale of the organization About Fibria and Indicators Center
102-8 Information on employees and other workers Employee Relations and Indicators Center
102-9 Supply Chain Supplier Relations
102-10 Significant changes to the organization and its supply chain Start of the new line in Três Lagoas, Horizonte 2, with a capacity of 1.95 million tons per year.
102-11 Precautionary principle or approach Fibria adopts the precautionary principle in the management and operation of its industrial and forestry activities, by adopting measures to control and monitor production, such as agronomic studies, genetic improvement in eucalyptus production, which includes the adaptation of species in different climatic conditions, monitoring of water consumption in forest areas, sector closure of industrial effluents, reuse of water in the manufacturing process, among others.
102-12 External initiatives Government, Organizations and Forums (National and International Forums)
102-13 Membership of associations Government, Organizations and Forums (National and International Forums)
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
102-14 Statement from senior decision-maker Message from the CEO and Message from the Chairman
102-15 Key impacts, risks, and opportunities Message from the CEO and Message from the Chairman
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
102-16 Values, principles, standards, and norms of behavior Our Culture
102-17 Mechanisms for advice and concerns about ethics Governance and Indicators Center
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
102-18 Governance structure Governance
102-19 Delegating authority Governance
102-20 Executive-level responsibility for economic, environmental, and social topics Governance
102-21 Consulting stakeholders on economic, environmental, and social topics Governance
102-22 Composition of the highest governance body and its committees Governance
102-23 Chair of the highest governance body In Fibria there is a separation between the Chairman of the Board of Directors and the CEO.
102-24 Nominating and selecting the highest governance body Governance
102-25 Conflicts of interest Governance
102-26 Role of highest governance body in setting purpose, values, and strategy Governance
102-27 Collective knowledge of highest governance body Governance
102-28 Evaluating the highest governance body’s performance Governance
102-29 Identifying and managing economic, environmental, and social impacts Governance
102-30 Effectiveness of risk management processes Governance
102-31 Review of economic, environmental, and social topics Governance
102-32 Highest governance body’s role in sustainability reporting Fibria’s Board of Directors is the highest body to formally analyze and approve the Report.
102-33 Communicating critical concerns Governance
102-34 Nature and total number of critical concerns Governance
102-35 Remuneration policies Governance
102-36 Process for determining remuneration Governance
102-37 Stakeholders’ involvement in remuneration Governance
102-38 Annual total compensation ratio Indicators Center
102-39 Percentage increase in annual total compensation ratio Indicators Center
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
102-40 List of stakeholder groups Employees and third parties, Shareholders, Investors, Suppliers, Communities, Clients, Press, Government and NGOs
102-41 Collective bargaining agreements 100%
102-42 Identifying and selecting stakeholders About the Report
102-43 Approach to stakeholder engagement About the Report
102-44 Key topics and concerns raised About the Report and Indicators Center
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
102-45 Entities included in the consolidated financial statements Information about the companies Veracel and Portocel are included in the Financial Statements and financial indicators of the Report, but are not in the scope of the social and environmental information reported.
102-46 Defining report content and topic Boundaries About the Report
102-47 List of material topics Indicators Center
102-48 Restatements of information Corrections in data are mentioned in the tables throughout the Report or in the Indicators Center.
102-49 Changes in reporting With the beginning of the new line in Três Lagoas, Horizonte 2, it is now included in the indicators.
102-50 Reporting period January 1 to December 31, 2017
102-51 Date of most recent report 2017
102-52 Reporting cycle Annual
102-53 Contact point for questions regarding the report comunicacaofibria@fibria.com.br

Rua Fidêncio Ramos, 302 – 3º andar – CEP 04551-010 – São Paulo – SP Phone.: +55 (11) 2138-4000

102-54 Claims of reporting in accordance with the GRI Standards Comprehensive
102-55 GRI content index Indicators Center
102-56 External Assurance

GRI 200: Economic aspects

GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Economic Management
103-2 The management approach and its components Economic Management
103-3 Evaluation of the management approach Economic Management
201-1 Direct economic value generated and distributed Economic Management and Indicators Center Economic Management
201-2 Financial implications and other risks and opportunities due to climate change The risks and opportunities related to climate change are presented below, by type:

Regulatory

1. Uncertainties about new regulations (regulatory restrictions arising from climate change).

Associated risks/opportunities: increased costs, image and reputation, and organizational climate.

Financial Implications: BRL 21,000,000/year, considering a carbon tax on total fossil emissions.

Management approach: the Company monitors international and national initiatives related to climate. It also proactively participates in multilateral forums and in industry associations to discuss this aspect.

2. Carbon taxes/carbon market.

Associated risks/opportunities: financial, image and reputation, legal and environment.

Management approach: the company produces energy from renewable sources and produces surplus electricity.

More than 90% of its energy sources are renewable, increasing its competitiveness in a carbon pricing scenario. In addition, the company practices certified forest management attesting the formation of forests in degraded areas and the conservation of native forests, which together capture and store carbon. Fibria maintains a carbon inventory of its forest areas and participates in multilateral forums to promote forests as valuable alternatives to mitigate climate change. Since the company’s forests capture and store carbon, a possible future market mechanism that considers both sides of the equation (emissions and sequestration) can also be seen as a business opportunity.

Physical

1. Changes in weather patterns

Associated risks/opportunities: loss of productivity and increase in the price of timber supply

Management approach: Fibria analyzed the IPCC scenarios for the next 30 years, mapping risk areas. The company has its own meteorological monitoring network and long-term studies to understand the effects of climate change on its plantations. In addition, it has in place a classical genetic improvement program to develop trees that are adapted and more resilient to the new climatic conditions.

2. Water shortage

Associated risks/opportunities: financial (increase in operating costs or investments), image and reputation, and legal restrictions.

Management approach: the Company monitors water use in its forestry and industrial activities, has in place a plan for water crisis situations and a forest restoration program for the spring areas and along watercourses.

Financial

1. Development of new products replacing others from fossil fuels

Associated risks/opportunities: financial, image and reputation, and legal.

Management approach: research and development aimed at new businesses, such as the production of bio-oil, new products from lignin and nanocrystalline cellulose, microfibrillated cellulose and cellulose for biocomposites. These new businesses bring a double climate benefit: they have renewable forest plantations as their raw material (instead of petroleum products) as substitute and replace pastures and degraded areas by sequestering more carbon.

2. Access to new markets (restrictions to carbon-intensive products and creation of seals and standards can generate new markets for the company’s products).

Associated risks/opportunities: financial, image and reputation, organizational climate, legal and environment.

Management approach: forest plantations replace degraded areas, capturing and storing carbon, and are renewable sources of raw material and energy. This management qualifies us as a company aligned to the low-carbon economy.

Costs associated with managing risks and opportunities have not been reported because they are considered to be confidential information Climate Change
201-3 Defined benefit plan obligations and other retirement plans Approximately 84% of Fibria’s employees participate in the pension fund of Fundação Senator José Ermírio de Moraes (Funsejem), a closed non-profit pension fund entity responsible for the administration of pension plans for the employees of the companies in the economic conglomerate of the Votorantim Group.

Participation in the Votorantim Prev benefits plan, structured in the contribution modality defined, is voluntary, and therefore complementary to the Social Security system with mandatory membership of the Brazilian State. It is offered to employees from the reserve formed in the respective individual accounts of the participants, resulting from the contributions to the plan, plus the return on investments, and kept separately from the resources of the sponsors’ organizations. The VotorantimPrev benefits plan is a multi-sponsored fund, and the companies Fibria Celulose SA and Fibria MS Celulose Sul MatoGrossense Ltda are part of the list of sponsors of this plan. The plan asset corresponds to 100% of the liability value. An evaluation is made annually in compliance with the current legislation. However, there is no risk of deficit, since it is a defined contribution plan, whose formation of the reserve results from the capitalization of the respective contributions to the plan.

By joining the Votorantim Prev benefits plan, the employee chooses to contribute between 0.5% and 6% of base salary. For salaries below BRL 6,754.35, the equivalent to 15 URFs (Funsejem Base Units, in the 2017 base year, annually adjusted through the variation of the IPCA index, which determines the contribution salary), the company contribution will be up to the limit of 1.5% of the participant’s salary. For salaries equal to or higher than 15 URFs, Fibria contributes the same value as the participant. Employees in international offices are not eligible for the plan.

201-4 Financial assistance received from government In recent years, Fibria has signed contracts with institutions linked to the Brazilian government and governments of other countries. These agreements had the following situation at the end of 2017:

Banco Nacional de Desenvolvimento Econômico e Social (BNDES)

In 2017, BNDES released funds to the Parent Company totaling BRL 301.271 million, with amortization period from 2017 to 2024, subject to interest. The funds were allocated to industrial, forestry and technological innovation projects.

In 2017, BRL 523.069 million of the total amount of BRL 2,347,524 million contracted with BNDES was released, through its subsidiary Fibria-MS (merged by its parent company Fibria S/A on December 31, 2017), with maturity until 2026. The remaining balance will be released as the conditions of releases are met due to the requirements for settlement of the obligations related to Project Horizonte 2.

On December 31, 2017, the outstanding balance of Fibria’s loans with BNDES was BRL 3.045.982 million, of which BRL 1.940.532 million was pegged to the long-term interest rate (TJLP), BRL 80.884 million pre-fixed, BRL 526.031 million Selic interest rate, and BRL 498.535 million to a Basket of Currencies. Moreover, we have a balance of BRL 167,000 from the Credit for Machinery and Equipment (FINAME), received through transfer agents;

Midwest Development Fund (FDCO)

In January 2017, BRL 98.504 million, of a total of BRL 831.478 million taken from Banco do Brasil, was released through Fibria-MS, payment of principal and monthly interest starting in June 2019, and final payment in December 2027. The outstanding balance was BRL 569.719 million on December 31, 2017.

Funding Agency for Studies and Projects (FINEP)

Resources for the project Pulp Customization for Customers. The outstanding balance of this operation was BRL 1.155 million on December 31, 2017, with final payment in September 2019.

Agribusiness Receivables Certificate (CRA)

In September 2015, the company completed the public distribution of 675,000 agribusiness receivables certificates issued by Eco Securitizadora de Direitos Creditórios do Agronegócio S.A., totaling BRL 675 million, with a rate at 99% of CDI and payment of interest twice a year, and principal due in October 2021. The resources raised were used for the acquisition of assets or hiring of services associated with Project Horizonte 2.

In September 2017, the company completed the public distribution of 941 agribusiness receivables certificates issued by RB Capital Companhia de Securitização, totaling BRL 941 million, divided into two tranches, whereas the first tranche totals BRL 757 million, with final payment of the principal for 2022, biannual payment of interest, and cost of 97% of the CDI, and the second tranche totals BRL 184 million, with final payment of the principal in 2023, annual payment of interest, and IPCA cost + 4.5055% p.a. These resources were received by the company on September 22, 2017.

Finnvera (Finland’s Export Credit Agency)

In 2017, a total of USD 70 million (approximately BRL 231.706 million) of the contract signed in May 2016 by Fibria-MS was released, pertaining to the financing of imported equipment for the facilities of the second pulp production line in Três Lagoas (Project Horizonte 2), with payments up to December 2025. On December 31, 2017, the outstanding balance of this contract was BRL 1,321,738,000.

Forestry Financing – Banco do Nordeste (BNB)

In December 2016, the company signed a forestry financing contract with the Banco do Nordeste in the amount of BRL 150,427, with annual interest rate of 12.95% and final payment of principal and interest for December 2023. In December 2016, BRL 109,178 was released. In December 2017, BRL 21,511 was released. The remaining balance should be released by the end of 2018.

Since Fibria is mostly an exporting company, it uses the tax benefit that corresponds to the suspension of collection of PIS/Cofins (9.25%) on acquisition of raw materials, intermediate products, and packaging materials, including the freight hired in the domestic market for the transportation of products within the Brazilian territory of the corresponding products and products intended for export.

Government Relations
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Community Relations Regional and Local Development
103-2 The management approach and its components Community Relations
103-3 Evaluation of the management approach Community Relations
202-1 Ratios of standard entry level wage by gender compared to local minimum wage Indicators Center 1, 5, 8, 10
202-2 Proportion of senior management hired from the local community Indicators Center 1, 5, 8, 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Community Relations Regional and Local Development
103-2 The management approach and its components Community Relations
103-3 Evaluation of the management approach Strategy
203-1 Infrastructure investments and services supported Community Relations and Indicators Center 2, 7, 8, 9, 11
203-2 Significant indirect economic impacts Community Relations 2, 7, 8, 9, 11
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Supplier Relations Supply Chain Management
103-2 The management approach and its components Supplier Relations
103-3 Evaluation of the management approach Supplier Relations
204-1 Proportion of spending on local suppliers Indicators Center 12
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Governance Government Relations
103-2 The management approach and its components Governance
103-3 Evaluation of the management approach Governance
205-1 Operations assessed for risks related to corruption Governance

The information provided throughout the report is supplemented below:

Focusing on strengthening transparency and safety of its operations to the public and ensuring that the statements are as accurate as the business processes, Fibria has adjusted its internal control environment to conform to the requirements of the North-American Sarbanes-Oxley Act (SOx), and has had and maintained this certification since 2006.

In a broader sense, the practice adopted by the company for its Internal Controls and Compliance is an structured process that comprises the Board of Directors, the Executive Board, the advisory committees to the Board of Directors, the commissions that advise the Executive Board, the Departments, and all company employees, seeking to enable that business be conducted in a more secure, appropriate, and efficient manner, complying with the regulations in effect. All company’s process flows and systems are continuously reassessed and regularly undergo compliance tests to assess the effectiveness of the controls in place.

The company, with its ongoing effort to conform to best market practices in managing internal controls and compliance, consistently applies the Control Self Assessment (CSA) methodology, which is an integrated solution that assists in the quarterly documentation of the performance of the controls pertaining to the financial statements, management, compliance, key business obligations, ongoing monitoring of strict compliance with the laws, standards, regulations, policies, and procedures, and implementation and functionality of contingency plans and segregation of duties – avoiding conflict of interests and facilitating the assessment of risks through compliance with company controls.

The obligations arising out of internal standards, external requirements, and contracts are periodically monitored by Fibria, so as to follow up on the exposure to compliance risks and to establish actions to mitigate or reduce their impact. In the case of violation of the company’s internal rules and external requirements, disciplinary guidance and/or corrective measures are applied; if necessary, these violations are escalated to the Ethics and Conduct Committee, which is a collegiate body formed by the CEO, the Director of Organizational Human Development (DHO), the Director of Governance, Risk Management, and Compliance, and members of the Ombudsman’s Office.

Some actions strengthen and support Fibria’s internal control and compliance environment, such as:

– Revision and adjustment of the conflict of interest form, to be completed when hiring own employees and third parties;

– Inclusion of the conflict of interest assessment form for professionals at management level, including in promotions and transfers to other departments;

– Systemic revision of the control matrix, focusing on loss prevention;

– Management of Internal Controls and Compliance through a structured matrix composed of 125 Champions, who are the company’s Compliance Agents appointed by the Executive Board and endorsed by the Internal Controls and Compliance Department. These professionals should enforce compliance in their areas of activity, applying the GRC methodology, cascading these actions across the various processes;

– In addition to the policies and procedures, basic guidelines are made available by Fibria on the conduct expected (for example, guidelines on receiving or giving gifts, hospitality, and/or considerations in exchange for sponsorship);

– Implementation of online training courses on Anti-corruption and Fair Competition for the entire supervisory team and higher;

– Corporate Communication Campaign for the Compliance Program, focusing on the Anti-corruption and Fair Competition pillars;

– Continuous improvement of our Due Diligence process concerning the supply network and the on-site audit process; we have expanded the use of conflict of interest questionnaires; of minerals in areas of conflict; of controls for monitoring of sanctioned or embargoed countries via international compliance rules, among others.

In compliance with Section 404 of the Sarbanes-Oxley Act and with CVM Instruction 480/09, the effectiveness of the financial information controls is based on the criteria set out in Internal Controls – Integrated Structure (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). According to this assessment, the designs of the control processes are appropriate, and no deficiencies were found or comments were made to compromise Fibria’s certification. Compliance tests were conducted in connection with the examination of the financial statements of Fibria’s controls, on December 31, 2017, by PwC, an independent auditor.

Ramifications of Fibria’s governance model for Project Horizonte 2

Governance of Project Horizonte 2 was based on the enhanced model, already consolidated at Fibria, where decisions were made via a collegiate body. A committee called “Steering Committee – SC” was formed, responsible for evaluating, deliberating, and supporting the project’s strategic and critical decisions, working in accordance with the governance guidelines and policies and within the approval hierarchy previously determined by Fibria’s Board of Directors. The committee was composed of members of Fibria’s Board of Directors who monitored the project’s physical and financial progress reports and with periodic meetings with the Project Director for aligning and discussing demands that required deliberation.

In addition to the SC, the Governance, Risk Management, Ombudsman, Audit, Controls, and Compliance area was created, which reported administratively to the Project Director and, independently, to the Statutory Audit Committee (CAE), an advisory body to the Board of Directors of Fibria Celulose SA. Internal audits were conducted, according to the schedule approved by the CAE. Strategic Risk Workshops were held quarterly, so as to dynamically update the risk matrix of the project, with timely update of the action plans concerning the primary risks of the project. Permanent Expected Behavior Workshops were offered, according to the Compliance Program, to all those involved in the project and the conflict of interest statement form was given to all employees and entities upon hiring.

A master commission, composed of representatives from Fibria and from the companies, was set up with decision making autonomy to prevent, eliminate, or mitigate identified risks, which they were responsible for preventing whenever possible, to map and assess the risks and opportunities of the project, and to make timely decisions according to the internal and external rules of the organization. This commission convened monthly or whenever necessary, and its decisions were reported to the Project Director and to the Steering Committee.

We further highlight the revision of the due diligence process of the supply network, considering the rules and the use of the Compliance Assessment Prior to Approval (Compliance Check), in addition to training courses on the conduct expected from and by all individuals involved in the project, offered to all employees and third parties, with the dissemination of the Compliance Program Manual and Guide, available on the company’s intranet.

10 4, 16
205-2 Communication and training about anti-corruption policies and procedures Governance and Indicators Center 10 4, 16
205-3 Confirmed incidents of corruption and actions taken Indicators Center

None of the reports of suspected irregularities – such as fraud, bribery, undue benefits, and corruption – received in 2017 through the Ombudsman’s office were upheld after due investigation.

Of a total of 16 reports, four carried over from 2016, four were found groundless at the end of the investigation. Another four did not have sufficient information to open an investigation or had a conclusive opinion.

Eight were still under analysis on December 31, 2017, to be completed in 2018.

10 4, 16
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices Regarding the 2017 fiscal year, we were not party to any outstanding or unresolved lawsuits relating to unfair competition or violations of antitrust laws or monopoly regulations. 1, 5 16

GRI 300: Environmental topics

GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
301-1 Materials used by weight or volume Indicators Center 12
301-2 Recycled input materials used Fibria’s forestry operation does not use recycled materials, except for waste from its industrial operation, which is used in soil fertilization and correction (refer to dregs, grits, and lime mud). The pulp production process does not use recycled products. 8, 9 8, 12
301-3 Reclaimed products and their packaging materials We do not recover pulp bale packaging, since bales are packed in sheets of pulp used in the process. Wires are used to fasten the pulp bales and are eventually sorted and collected as scrap.
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Industrial Management Climate Change
103-2 The management approach and its components Industrial Management
103-3 Evaluation of the management approach Strategy
302-1 Energy consumption within the organization Indicators Center 7, 8, 12, 13
302-2 Energy consumption outside of the organization Indicators Center 7, 8, 12, 13
302-3 Energy intensity Indicators Center 8 7, 8, 12, 13
302-4 Reduction of energy consumption. Indicators Center 7, 8, 12, 13
302-5 Reductions in energy requirements of products and services In 2017, several projects were developed to increase energy generation, namely:

• Retrofitting of the power boiler, with an additional 30 ton/h of steam, equivalent to 594,115 GJ;

• White belt Project, for increased energy export, with gains of 57,600 GJ;

• White belt Project, for additional energy generation at the Power Boiler, with gains of 526,050 GJ;

• Increased energy consumption due to the consumption to commission the second production line in Três Lagoas, prior to the start of the operation.

Gains from these projects were calculated based on the amount of electricity that could be generated from the surplus steam.

7, 8, 12, 13
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Strategy and Forest Management Management of Water Resources
103-2 The management approach and its components Forest Management
103-3 Evaluation of the management approach Strategy and Forest Management
303-1 Water withdrawal by source Strategy and Indicators Center 8, 9 3, 6, 8, 12
303-2 Water sources significantly affected by withdrawal of water Três Lagoas Unit

The average flow rate of the Paraná River, which is the source of the water used in the Três Lagoas Unit, is 6,000 cubic meters per second. The average water withdrawal rate of Line 1 is 1.5 m³/s and of Line 2 is 2.0 m³/s, which corresponds to 0.058% of the river’s flow. Although no impact is caused to the river, Fibria conducts environmental monitoring to prevent, control, and check for eventual alterations. Water samples are collected for qualitative and quantitative analyses of physicochemical, biological, and microbiological parameters.

In 2017, there was an increase in the absolute indicators (water withdrawal and wastewater generation, in m³/year) caused by the start of operations of Line 2, on August 23, 2017. However, good performance was recorded for specific values, that is, m³/adt of water withdrawal, for example.

None of Fibria’s units uses the final effluents of the Wastewater Treatment Plants (ETEs). Some companies and processes use such effluents, such as for fertigation. There is no application in this case. The industrial processes prior to wastewater treatment recycle and reuse water, such is the case of cooling towers and the backwash circuit for filtration in the fiber line.

Jacareí Unit

The average flow rate of the Paraíba do Sul River, which is the source of the water used in the Jacareí Unit, is 75 cubic meters per second. The average water withdrawal rate of the Unit is 0.7 cubic meters per second, which corresponds to 0.93% of the river’s flow Although no impact is caused to the river, the unit conducts environmental monitoring to prevent, control, and check for eventual alterations. Water samples are collected for qualitative and quantitative analyses of physicochemical, biological, and microbiological parameters.

In 2017, the volume of water withdrawn at the unit dropped because of the increased operational control and of the actions that seek to ensure that the unit’s long-term goals are met.

Aracruz Unit1

Surface water is withdrawn from the Gimuhuna River (Captação Mãe Boa), which is influenced by the outflow of the Gimuhuna River Bay and by the significant outflow of the Caboclo Bernardo Canal (Doce River). Currently, no water resources are affected by water withdrawal.

1Fibria and the municipality of Aracruz were jointly and severally ordered, in the records of the Public-Interest Civil Action brought forth by the Federal Attorney General’s Office, to conduct an Environmental Impact Assessment and to prepare an Environmental Impact Report (EIS/EIA), within no more than six months, for the diversion of the waters of the Doce River to the Riacho River. Regarding the appeal filed by Fibria, the 2nd Region Federal Regional Court decided against the six-month deadline for submission of the EIS/EIA, given the short time frame and the complexity of the study. At the same time, Fibria filed another appeal challenging the existence of environmental damage that would support the need for an EIS/EIA for the project, among other issues. The appeal is still under review.

8, 9 3, 6, 8, 12
303-3 Water recycled and reused  Forest Management and Indicators Center
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Forest Management Sustainable Forest Management
103-2 The management approach and its components Message from the Chairman and
Forest Management
103-3 Evaluation of the management approach Strategy
304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas Indicators Center 8, 9 6, 15
304-2 Significant impacts of activities, products, and services on biodiversity Forest Management 8, 9 6, 15
304-3 Habitats protected or restored Indicators Center 8, 9 6, 15
304-4 IUCN Red List species and national conservation list species with habitats in areas affected by operations Indicators Center 8, 9 6, 15
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Strategy, Forest Management and Industrial Management Climate Change
103-2 The management approach and its components Forest Management and Industrial Management
103-3 Evaluation of the management approach Strategy
305-1 Direct (Scope 1) GHG emissions Indicators Center 7, 8, 9 3, 8, 12, 13
305-2 Indirect (Scope 2) GHG emissions Indicators Center 7, 8, 9 3, 8, 12, 13
305-3 Other indirect (Scope 3) GHG emissions Indicators Center 7, 8, 9 3, 8, 12, 13
305-4 GHG emissions intensity Indicators Center 7, 8, 9 3, 8, 12, 13
305-5 Reduction of GHG emissions Indicators Center 7, 8, 9 3, 8, 12, 13
305-6 Emissions of ozone-depleting substances (ODS) Indicators Center 7, 8, 9 3, 8, 12, 13
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions Indicators Center 7, 8, 9 3, 8, 12, 13
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Strategy and Industrial Management 7, 8, 9 3, 6, 8, 11, 12, 14, 15
103-2 The management approach and its components Industrial Management 7, 8, 9 3, 6, 8, 11, 12, 14, 15
103-3 Evaluation of the management approach Strategy 7, 8, 9 3, 6, 8, 11, 12, 14, 15
306-1 Water discharge by quality and destination Indicators Center Management of Water Resources 7, 8, 9 3, 6, 8, 11, 12, 14, 15
306-2 Waste by type and disposal method Industrial Management and Indicators Center Sustainable Forest Management 7, 8, 9 3, 6, 8, 11, 12, 14, 15
306-3 Significant spills There were no significant spills in Fibria’s operations. 7, 8, 9 3, 6, 8, 11, 12, 14, 15
306-4 Transport of hazardous waste Fibria does not transport waste listed under the Basel Convention. 7, 8, 9 3, 6, 8, 11, 12, 14, 15
306-5 Water bodies affected by water discharges and/or runoff At the Aracruz Unit, wastewater is discharged into the Atlantic Ocean; at the Jacareí Unit, it is discharged into the Paraíba do Sul River, at an average flow rate of 75 cubic meters per second; and at the Três Lagoas Unit, it is discharged into the Paraná River Drainage Basin. These discharges do not significantly affect the aforementioned bodies of water or their habitats. 7, 8, 9 3, 6, 8, 11, 12, 14, 15
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Governance Transparency and Leadership
103-2 The management approach and its components Governance
103-3 Evaluation of the management approach Governance
307-1 Non-compliance with environmental laws and regulations Governance and Indicators Center

In 2017, eight notices were registered due to non-compliance with environmental laws and regulations, only one notice having a significant amount of BRL 1,700,000.00 (one million, seven hundred thousand reais). The notice was drawn by the Municipality of Caravelas (Bahia state), which questions the operation of a temporary wood storage yard without authorization from the competent environmental agency. Fibria was also notified in three non-monetary sanctions procedures regarding the absence of environmental authorizations, for which the necessary information was provided to the competent agencies.

7, 8, 9 16
MONETARY VALUE OF ENVIRONMENTAL FINES
2016 2017
Paid BRL 158,150 BRL 0
Pending decision BRL 2,391,674 BRL 4,203,518
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Supplier Relations Supply Chain Management
103-2 The management approach and its components Supplier Relations
103-3 Evaluation of the management approach Supplier Relations
308-1 New suppliers that were screened using environmental criteria Supplier Relations and Indicators Center 7, 8, 9 8, 11, 15
308-2 Negative environmental impacts in the supply chain and actions taken Supplier Relations and Indicators Center 7, 8, 9 8, 11, 15

GRI 400: Social topics

GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Employee Relations Human Capital Management
103-2 The management approach and its components Employee Relations Existem metas do tema que são geridas internamente e não são públicas.
103-3 Evaluation of the management approach Employee Relations
401-1 New employee hires and employee turnover Indicators Center 6 5, 8, 10
401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees Fibria has no part-time or temporary employees; therefore, all benefits are offered to full-time employees. These benefits include: health and dental plans (for the units in the states of Espírito Santo and Bahia), daycare assistance, child disability benefit, public transportation vouchers and meal tickets, food basket (except for directors), private pension plan, Christmas-food basket, Christmas toys, back-to-school kits, funeral assistance, and life insurance. 6 5, 8, 10
401-3 Parental leave Indicators Center 6 5, 8, 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
402-1 Minimum notice periods regarding operational changes There were no significant changes to the organizational structure that required any interaction or communication with trade unions/employee representatives. 8
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Employee Relations Human Capital Management
103-2 The management approach and its components Employee Relations and Industrial Management There are goals concerning this aspect that are managed internally and are not public.
103-3 Evaluation of the management approach Employee Relations and Indicators Center
403-1 Workers representation in formal joint management–worker health and safety committees Indicators Center

99.95%. The remaining 0.05% correspond to the international offices.

1, 3 8, 16
403-2 Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities Indicators Center 1, 3 8, 16
403-3 Workers with high incidence or high risk of diseases related to their occupation In general terms, the activities that could pose higher risks of occupational disease are:

1) Activities at the nursery of seedlings (planting, micro-cutting, and shipping) – currently performed by outsourced workers

2) Activities involving operation of machinery and forestry equipment – performed by employees and outsourced workers (including wood harvesting, dragging, transportation, and loading)

3) Mechanical maintenance activities – performed by employees and outsourced workers in industrial and forestry operations

Fibria has in place an initiative called “Processo Ergonomia” (Ergonomics Process), which, for 18 years, has identified and dealt with ergonomic issues involving workstation-related risks, and reporting of occupational diseases associated with the aforementioned activities is rare. In 2017, the inauguration of “Fábrica de Mudas” (Seedling Factory), in connection with the Horizonte 2 Project, (second pulp production line in Três Lagoas-MS) the concept included picking of micro-cuts and their planting into tubes by robots, minimizing handling of seedlings.

In 2017, three occupational diseases, with very peculiar characteristics, were recorded:

Six employees of the company Mar Azul were performing industrial maintenance services near the chemical recovery boiler at the Jacareí unit and were exposed to a “sodium sulfate” leakage, which caused upper airway irritation and required medical support and a hospital stay of 1-8 days; in all, these six professionals were absent from work for 18 days. The diagnosis was: chemically induced bronchitis and pneumonitis caused by, gases, smoke, and vapor. All individuals recovered, with no lasting effects.

1, 3 8, 16
403-4 Health and safety topics covered in formal agreements with trade unions In general terms, all agreements entered into with trade unions deal with aspects concerning workers’ physical integrity and health, pursuant to the regulatory standards set out by the Ministry of Labor and Employment. 1, 3 8, 16
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Employee Relations Human Capital Management
103-2 The management approach and its components Employee Relations There are goals concerning this aspect that are managed internally and are not public.
103-3 Evaluation of the management approach Employee Relations
404-1 Average hours of training per year per employee Indicators Center 1, 6 4, 5, 8, 10
404-2 Programs for upgrading employee skills and transition assistance programs Employee Relations 1, 6 4, 5, 8, 10
404-3 Percentual de empregados que recebem regularmente análises de desempenho e de desenvolvimento de carreira Employee Relations and Indicators Center 1, 6 4, 5, 8, 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Our Culture Human Capital Management
103-2 The management approach and its components Our Culture There are goals concerning this aspect that are managed internally and are not public.
103-3 Evaluation of the management approach Our Culture
405-1 Diversity of governance bodies and employees Our Culture and Indicators Center 5, 8, 10
405-2 Ratio of basic salary and remuneration of women to men Employee Relations and Indicators Center 5, 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Governance Management of Human Capital

Transparency and Protagonism

103-2 The management approach and its components Governance There are goals concerning this aspect that are managed internally and are not public.
103-3 Evaluation of the management approach Governance
406-1 Incidents of discrimination and corrective actions taken Indicators Center 1, 2, 3, 4, 5, 6 5, 8, 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Supplier Relations Supply Chain Management
103-2 The management approach and its components Supplier Relations
103-3 Evaluation of the management approach Supplier Relations and GRI Content Index
407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk Internally, Fibria’s DHO department conducts quarterly checks to assess compliance of its practice with the labor legislation. Twenty items are analyzed, including apprentice employment agreements, documents of the professionals hired, work hours and breaks, and rehabilitated professionals, among others. In this control, coordinators and managers attest that local practices comply with the laws and which points should be improved or handled in a more secure and proper manner, according to labor principles and the collective bargaining agreements. All information gathered and the descriptive analyses prepared by DHO managers are recorded in the CSA (compliance system) and their results are presented to the Executive Board.

The Procurement department has a number of measures to mitigate risks concerning company suppliers. Below is the description of the processes/projects/systems of the Department and associated measures:

Supplier Performance Assessment

Description: process that seeks to ensure monitoring of the performance of the partnership between Fibria and its suppliers in order to maintain the performance of products (inputs/raw materials) and services provided, including identification, monitoring, and mitigation of risks associated with the provision of products and services. The process is conducted via Portal de Fornecedores – Módulo Avaliação (Supplier Portal – Assessment Module), in which contract managers complete questionnaires. The assessment process is conducted biannually. Products and services listed under one of the concepts below are assessed (affecting the quality of the products/environment and/or occupational health and safety):

· Industrial and forestry inputs/raw materials and their carriers, for FOB shipments.

· Equipment calibration services affecting the product – such as: lab equipment.

· Testing and equipment calibration services within the scope of accreditation ABNT NBR ISO/IEC 17025.

· On-site long-term services ≥ 12 months (mill, office, forests, field, storage areas, terminals, ports) performed continuously and with annual spend equal to or greater than BRL 1.9 million.

· Services that affect the internal climate (transportation, meals, and health plan).

· Suppliers that receive forest and industrial waste (provision of services).

Suppliers are deemed: (i) “qualified” when their final score is greater than 80; (ii) “qualified with restrictions” when their final score is between 80 and 40; (iii) “disqualified” when their final score is less than 40. Suppliers scoring below 80 should implement an action plan with corrective actions.
Action: : the sustainability questionnaire covers aspects concerning eradication of forced or compulsory labor and compliance with laws against child labor. Thus, the manager in charge of assessing the contract carries out the appropriate check for feedback of the assessment.

Supplier Screening

Description: process that defines Fibria’s supplier screening system, considering the risks (quality, occupational health and safety, environmental, legal/labor, technical, and sustainability) associated with the supply of inputs/raw materials/packaging and the services provided within Fibria’s facilities. The process is conducted via a web portal Portal de Fornecedores – Módulo Homologação (Supplier Portal – Screening Module), in which suppliers complete questionnaires and submit supporting evidence, when applicable. The screening process is valid for three years

According to the type and frequency of supply, screening is applied depending on the product/services to be hired.

– Frequency: (i) Temporary: services performed for less than 12 (twelve) months, whether continuously or not; or, (ii) Permanent: services performed for 12 (twelve) months or more, whether continuously or not.

– Supply Type: (i) Forestry and Industrial Inputs/Raw Materials; or, (ii) Services: those which affect some of the criteria set out in attachment 2 of the procedure

– Assessment Criteria: quality, environmental, health and safety, forest management, sustainability, technical, and legal/labor.

Actions: The sustainability questionnaire covers aspects concerning eradication of forced or compulsory labor and compliance with laws against child labor. Whenever deviations are identified in these aspects, the reviewer disqualifies the supplier.

Contract Management (COA – Controle das Obrigações Acessórias – Accessory Obligation Control)
Description: process that sets out procedures to formalize contracts and legal documents at Fibria and for their follow-up. This process defines a system to monitor labor and social security obligations of the companies providing services and their subcontractors that continuously provide services within Fibria’s facilities.

After a Services Agreement is executed, the Contract Management department will conduct an assessment, using a specific form, to check whether the service provider and its eventual subcontractors fit the monitoring model. For suppliers monitored through COA, the process is conducted via a web portal (Portal de Fornecedores – Módulo COA, Supplier Portal – COA Module), through which suppliers send their documentation. The monitoring process is carried out monthly or biannually, according to the classification of the service provider.

Actions: the COA monitoring checks whether service providers are in good standing with regard to their labor obligations.

Draft Contracts/Boilerplate Clauses for Purchase Orders

Description: To formalize hiring of suppliers, Fibria has in place the following mechanisms:

(i) Draft Contracts;

(ii) Boilerplate clauses used in Procurement Documents.

Both are in line with instructions from the Legal Department.

Actions: clauses that determine that suppliers cannot use or have in their production chain, under no circumstances, forced or child labor, under penalty of contract termination.

On-Site Audits

Description: in 2017, the new concept of on-site supplier audits was consolidated. The aspects verified in the audits are based on the topics set out in the Fibria and Supplier Relations Guide:

· Integrity in commercial relations;

· Human rights and social engagement;

· Decent labor relations; and,

· Environmental protection.

The audits seek to perform an on-site assessment, during the term of the service provision, that attests to Fibria the current situation of suppliers, so as to mitigate eventual risks concerning the provision. Audits are followed up closely by a Fibria employee and are conducted by an independent auditor to ensure impartiality. Suppliers to be audited are selected through a frequency, value, and activity matrix and are approved by the PSS group (Programa Suprimentos Sustentáveis – Sustainable Procurement Program).

Actions: the aspect “Decent Labor Relations” addresses aspects such as forced and child labor. Whenever deviations are identified in these aspects, as set out in the specific provision, the agreement will be terminated.

Fibria and Supplier Relations Guide

Description: implemented in 2017, the Fibria and Supplier Relations Guide aims to create an environment where company and suppliers can interact through clear and balanced communication and align their expectations concerning aspects and practices to create shared value. In order to disseminate the content and goal of the Guide, a number of events were held to engage the internal and external audiences.
The Guide is available to all audiences, on Fibria’s website. Moreover, the document can be found on e-Proc (Electronic Procurement Portal) and is made available to all suppliers that receive a request for quotation. In addition, Fibria added a clause to its supplier agreements recommending the reading and adoption of best practices contained in the Guide.

Actions: the Guide prohibits the use of forced, involuntary, or compulsory labor and child labor.

e-Proc/Hiring Terms

Description: “E-Proc” is an Electronic Procurement Portal that seeks to strengthen compliance of the processes and to streamline the steps of the transactions. In 2017, the sourcing module was implemented, whose functionality is to standardize the sending out of requests and receipt of quotations and to ensure that the bidders have the same information and deadline to return their proposals. In order to have access to information to prepare/submit their proposals, bidders must accept the “Contract Terms.” This is a document that sets out the minimum conditions for becoming a Fibria supplier.

Actions: clauses that determine that suppliers cannot use or have in their production chain, under no circumstances, forced or child labor, under penalty of contract termination.

1, 2, 3, 4, 5, 6 8, 16
408-1 Operations and suppliers at significant risk for incidents of child labor 1, 2, 6 8, 16
409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor 1, 2, 3 8
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Forest Management Human Capital Management
103-2 The management approach and its components Forest Management
103-3 Evaluation of the management approach Indicators Center
410-1 Security personnel trained in human rights policies or procedures Indicators Center 1, 2, 5 4, 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Community Relations Community Relations
103-2 The management approach and its components Community Relations
103-3 Evaluation of the management approach Strategy
411-1 Incidents of violations involving rights of indigenous peoples There were no incidents involving violation of the rights of indigenous peoples. 1, 2, 4 10, 11
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Governance
103-2 The management approach and its components Governance
103-3 Evaluation of the management approach Governance
412-1 Operations that have been subject to human rights reviews or impact assessments 100% of Fibria’s operations have been assessed for human rights risks and impacts.

As a standard process, upon hiring of services, Fibria requires suppliers to present all documents attesting their compliance with the labor legislation and their employment agreements, which includes hiring of minors (which is not allowed at Fibria, except for legal hiring of apprentices in compliance with the appropriate parameters). This information is entered into a unified and auditable database.

Service providers must periodically submit to one of Fibria’s control departments documents attesting their good standing with regard to tax and social security payments, which supports continuous compliance with the labor legislation (regular payment of rights and obligations). This practice is set out in Fibria’s list of procedures.

As an operating standard, an annual on-site audit is conducted with a representative sample of Fibria’s service providers, focusing on checking compliance with work, management, safety, environmental, and infrastructure conditions. This process is recorded through individual interviews with employees and any deviation is treated by means of corrective or preventive intervention from Fibria. This process ensures compliance with the terms of the International Labor Organization to which Brazil is a signatory and the prevention of inadequate working conditions.

In addition to this information, all workers are represented by specific trade unions, which have open access to/dialogue with the companies and Fibria, and Fibria has a formal ombudsman channel, which can be contacted by anyone who wants to report a deviation.

412-2 Employee training on human rights policies or procedures Indicators Center Human Capital Management 1, 2, 3, 4, 5, 6 4, 8, 10
412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening Supplier Relations and Indicators Center Economic Management 1, 2, 3, 4, 5, 6 4, 8, 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Community Relations Community Relations
103-2 The management approach and its components Community Relations
103-3 Evaluation of the management approach Strategy, Governance and Community Relations
413-1 Operations with local community engagement, impact assessments, and development programs Community Relations

I. Assessment of social impacts from forest management

Social impacts are defined as any effect on society, whether adverse or beneficial, arising, in whole or in part, out of Fibria’s forest management activities, products, or services.

The Sustainability department is responsible for coordinating the identification and classification of social aspects and impacts; its analyses are approved by the managers of the processes involved, and the final sign-off is given by the Local Relationship Commission (Comissão de Relacionamento Local- CRL).

The procedure adopted by Fibria to identify and assess social aspects and impacts classifies and prioritizes significant social aspects and impacts on the anthropogenic environment and defines the need for controls, drivers, and/or monitoring based on the magnitude of such social aspects and impacts.

According to this procedure, all relevant social impacts associated with Fibria’s various operational processes and activities have been mapped. Once identified, these impacts have been classified according to their class (adverse or beneficial), detection (actual or potential), and incidence (direct or indirect). Their relevance is defined based on the application of the Social Impact Matrix, which weights factors such as severity, frequency, likelihood, and extent of the impact identified. This weighting is followed by a qualitative analysis and by the validation of the level of significance of the social impact by the CRL.

The final result is the relevance of the impacts identified. Impacts classified as “acceptable” are assessed in terms of their need for control or monitoring. Impacts classified as “moderate” or “substantial” are deemed significant and will be subject to controls, associated with the definition and/or documentation of operational criteria, specific operating procedures, parameters for dealing with suppliers, planning, and training and awareness, and maintenance requirements, including machinery, equipment, and/or infrastructure.

Impacts classified as “moderate” or “substantial” are deemed significant and will be subject to controls, associated with the definition and/or documentation of operational criteria, specific operating procedures, parameters for dealing with suppliers, planning, and training and awareness, and maintenance requirements, including machinery, equipment, and/or infrastructure.

This procedure produced a Social Impact Matrix for each unit of the company. Annually, the Local Relations Committee evaluates the need to revise this Matrix, considering the results of monitoring and of critical evaluation of the processes related to the Annual Stakeholders Relations Plan. In order to identify and analyze social aspects and impacts, relevant stakeholder demands received through Fibria’s communication channels and/or information from the Engagement processes, Operational Dialogues, and Face-to-Face Agendas are also considered.

The list of significant social impacts is disclosed to relevant stakeholders or to stakeholders affected by the operation via the Operational Dialogue, Face-to-Face Agendas, and public summaries of the Forest Management Plan of the units, available at http://www.fibria.com.br/midia/publicacoes/.

Operational Dialogue

The impacts of forestry operations are also identified in the Operational Dialogue, which is a direct communication channel through which the company informs, in advance, the residents of neighboring communities about the forestry operations programmed for the region and discusses their adverse impacts and how to mitigate them. This tool allows company decisions to consider the needs of communities.

After the forestry operations, residents of the communities involved assess the process based on a questionnaire applied by the Operational Dialogue team. Each answer receives one of the following scores: good (3), fair (2), poor (1), bad (0). The final score is a weighted average.

In 2017, a total of 1,063 dialogues were held, with nearly 10,000 participants from all communities impacted by forestry, harvesting, and wood transportation operations.

All demands arising out of the Dialogues are critically analyzed and validated with the operational areas in order to revise the social impact matrix and generate improvements in the forest management adopted by the company.

Despite all actions taken by the company to prevent and mitigate its adverse impacts, unforeseeable loss or damage may occur, with direct impact on the resources or on the livelihood of the communities. In this case, such loss and damage will be compensated or mitigated, as mutually agreed upon and according to the peculiarities of each case, in a fair and equitable manner.

In order to ensure a fair and equitable solution, the following procedures are adopted:

• Initiative to restore the damage, not expecting the filing of complaints by the injured party;

• Guarantee, to the affected party, the freedom to choose among the possible solutions;

• Guarantee that the amount defined for potential compensations for loss and damage be considered fair by the affected party;

• Prioritization of the search for a friendly and equitable solution, seeking a consensus;

• Involvement, if necessary, of a council of a dispute resolution entity, so that the process is equitable for both parties.

II. Local development programs based on the needs of local communities

Fibria has many types of relationships with a number of communities (traditional or otherwise) that are affected mainly by its forestry activities.

Thus, based on structured engagement processes, Fibria strives to understand the reality and demands of municipalities and communities to allocate its social and environmental investments, with the purpose of contributing to social inclusion and improving the quality of life of these neighboring urban centers.
These programs are developed collaboratively and with participatory engagement methodologies that foster the strengthening of social capital, the generation of employment opportunities and income, and the improvement of quality of life, through the support to local and regional production chains.

The assessment of the needs and demands of communities is the cornerstone of Fibria’s Community Relations and Social Investment Strategy; it is conducted in the processes of engaging priority communities, according to impact, vulnerability, and importance criteria.

A diagnostic is the first step of the process and is conducted through commercial and proprietary tools developed for Participatory Rural Diagnostics (Diagnósticos Rurais Participativos – DRP), which enable the identification of:

• the needs and type of access communities have to a set of public services, such as health, education, transportation, and basic sanitation;

• the environmental issues pertaining to how the space is occupied by the community, such as waste disposal and discharge of domestic sewage and location of the sources that supply water to the households and of areas where extractivist activities – such as fishing and hunting – take place and show signs of degraded soil or erosion;

• the talent and economic potential of families;

• the community’s trade channels and its access to the market.

PDRT

Launched in 2011, the main goal of the program is the participation in territorial development through the dialogue with the neighboring rural communities, strengthening their organizations and networks, based on agroecological principles. These principles allow for a systemic view of the farmers’ families, considering their production, ecological, environmental, social, and political interfaces.

The program has three main guidelines: technical assistance to farmers; stimulus for the use of low-cost technologies, with reduction of environmental impact; incentive and guidance for access to public policies, which allow for improvements in the quality of life and increase the possibilities of marketing the products.

In 2017, the program contributed to increasing the income of about 4,000 families in over 80 locations in the states of Bahia, Espírito Santo, Mato Grosso do Sul, and São Paulo.

Colmeias

The objective of the Colmeias (Hives) project in the states of São Paulo, Mato Grosso de Sul, Espírito Santo, and Bahia is to strengthen the beekeeping activity, generating employment and income from the improvement of the production chain of eucalyptus honey.

The project is a Fibria initiative in partnership with associations and cooperatives of beekeepers that promotes the multiple use of eucalyptus planted forests, the diversification of agricultural activities, and above all, the quality of life of the people involved.

From production to marketing, the project offers support towards implementing new technologies and training in strategic handling, managing, and marketing the product.

The project’s strategy for the next few years is to increase the use of technologies with low environmental impact that add value to the production chain, such as honey traceability, and the genetic improvement of bee colonies, as well as supporting the producers placing honey in new markets.

Alvorecer Project

Created in 2011 from the negotiations between the National Institute of Colonization and Agrarian Reform (Incra), the government of the state of Bahia, and MST (Landless Workers’ Movement) for the expropriation of 11,000 hectares within one of Fibria’s properties in the south of Bahia, it is considered an unprecedented experience of sustainable rural production.

It was developed in partnership with the Luiz de Queiroz School of Agriculture (Esalq), of the University of São Paulo (USP) and MST, and aims to provide settlers with access to technical, educational, and organizational information for the production of food, based on agroforestry and agroecological principles and on social organization.

The project has a local Training Center in which settler families approximately 1,200 and neighboring communities have access to professional, technical, educational, and organizational training.

Fishing communities

Fibria has a relationship with fishing communities in the two regions where it operates maritime terminals: in the district of Barra do Riacho, municipality of Aracruz (Espírito Santo state), where Portocel is located (a terminal specializing in the shipment of pulp for export, of which Fibria has 51% of the shares), and in Caravelas, in southern Bahia state, where barges ship a portion of the local production of eucalyptus that supplies the Aracruz Unit, distant only 4.3 kilometers from Portocel.

In these two areas of operation, the company seeks to strengthen its relationship with the community through dialogue, social actions, and measures to support fishing activity.

The engagement process in Caravelas aims to strengthen associations related to the fishing activity in the region and to foster entrepreneurship by structuring a local fishing production chain.

In Barra do Riacho, the Fibria-led engagement initiative aims to stimulate social dialogue and the integrated and participatory development of the community, involving companies, society, and the government. The process started in 2010, with a comprehensive diagnosis and integrated participatory planning with the community, whose results were the basis for planning social intervention and coexistence actions

Indigenous communities

The relationship with the indigenous population is developed by an interdisciplinary team, including anthropologists and indigenists, and focuses on the feasibility of an agroecological production model similar to that proposed by the PDRT, and reinforces the value of the culture and original language in the communities.

In the state of Espírito Santo state, Fibria has had in place the Tupiniquim and Guarani Sustainability Program (PSTG) since 2012 This initiative aims to provide a set of integrated and long-term actions that will allow the Tupiniquim and Guarani people to restore the environmental conditions necessary for their social and cultural practices, affirmation of their ethnic identity, and sustainable economic activities. There are about 760 families, distributed in 12 villages, of which 152 participate in social and environmental projects developed under the PSTG.

In the municipality of Brasilândia, in Mato Grosso do Sul state, Fibria has a relationship with about 30 families from a village of Ofayé Indians, who live on a reserve after their original land was flooded by the Porto Primavera dam in 1998. The action plan prepared by the company and its partners in the community involves making resources available, regularizing the land, appreciating the culture, and providing means of livelihood.

III. Formal grievances and complaints processes by local communities

Ombudsman

Fibria Ombudsman’s Office, associated with the Governance, Risks, and Compliance Department, is the reporting channel for violations to the Code of Conduct. It serves the internal and external audiences, which can contact the Ombudsman’s Office via phone, regular mail, or email. All reports are confidential and recorded in a system that keeps track of the history of all cases.

The Ombudsman’s Office provides clarification and analyzes reports and complaints about Code of Conduct violations, such as corruption, bribery, environmental harm, false information, inadequate accounting records, misuse of company assets, unethical behavior and procedures, and discrimination of any kind (race, skin color, religion, gender, disability, or social class, among others).

Fale com a Fibria (Talk to Fibria)

The communication channel Fale com a Fibria (Talk to Fibria) is available in all units of the company; it offers internal and external call centers (toll free), website, and face-to-face support to receive questions, suggestions, information requests, and complaints pertaining to the company’s forestry and industrial operations.

In order to manage the process, guidelines and procedures have been established for receiving, recording, assessing, addressing, and monitoring incidents reported by stakeholders in relation to the environmental, economic, and social aspects and impacts arising out of Fibria’s activities and products. In addition, the company uses a corporate management system to register and keep records of the entire service process, in a unified, up to date, and centralized way.

All area that directly interfacing with stakeholders are responsible for entering incidents in the system through specific professionals selected for this activity (feeders), and the General Sustainability Management (SUSTENT) is responsible for managing the incident handling process.

The Sustainability department conducts monthly assessments, with the filing parties, of the quality of the service provided and the effectiveness of the response actions adopted.

The results are reported in the forestry and industrial results meetings and in the meetings of the Local Relations Committee of each Unit.

Each year, the Sustainability area develops a critical evaluation of the demands related to the forestry operations in order to identify and propose improvements in the forest management adopted by the company.

2, 11
413-2 Operations with significant actual and potential negative impacts on local communities Fibria considers that “social impacts on communities” arising out of its forest management are any changes (whether adverse or beneficial) caused, in whole or in part, by its forestry operations within a radius of three kilometers from its properties or areas leased for eucalyptus production.

The relevance of such impacts is defined based on the application of the Social Impact Matrix, which weights factors such as severity, frequency, likelihood, and extent of the impact identified. This weighting is followed by a qualitative analysis and by the validation of the level of significance of the social impact by the CRL.

Impacts classified as “moderate” or “substantial” are deemed significant and will be subject to controls, associated with the definition and/or documentation of operational criteria, specific operating procedures, parameters for dealing with suppliers, planning, and training and awareness, and maintenance requirements, including machinery, equipment, and/or infrastructure.

Significant adverse social impacts from forestry operations identified are:

2, 11
Significant Adverse Impact Activity
Modification to the local land structure Expansion of the forest base
Isolation of properties and communities
Changes to the (visual) landscape and loss of reference points
Changes to the production agenda in municipalities – changes to local production
Land appreciation
Adverse effect on food safety
Disruption in the way of life of local communities
Unemployment in families that live in the properties acquired
Changes to the archaeological and historical heritage
Increased risk of traffic accidents (people and animals) Transportation
Adverse effect on the road network’s capacity and quality
Damage to public and private property
Generation of dust Transportation and Construction, and road maintenance
Generation of noise Harvesting, Transportation, Construction, and road maintenance
Changes to water availability and quality Forestry, Harvesting, Construction, and road maintenance
In 2017, the main impacts arising out of forestry operations identified by communities during the operational dialogues relate to dust, increased risk of accidents, damage to public and private property, adverse effects on the road network’s quality, and noise.
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Supplier Relations Supply Chain Management
103-2 The management approach and its components Supplier Relations
103-3 Evaluation of the management approach Supplier Relations
414-1 New suppliers that were screened using social criteria Supplier Relations and Indicators Center
414-2 Negative social impacts in the supply chain and actions taken Supplier Relations and Indicators Center
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and its Boundary Government, Organizations and Forums Government Relations
103-2 The management approach and its components Government, Organizations and Forums There are goals concerning this aspect that are managed internally and are not public.
103-3 Evaluation of the management approach Government, Organizations and Forums
415-1 Political contributions In 2016, the Guide for Relations with Government Officials was produced and sets out the main guidelines for institutional/governmental relations. In addition to making clear the company’s decision to not make donations, this document details what may and may not be done by company employees, executives, and directors in this period. Fibria does not make any kind of donation, whether financial or material, nor of its employees’ working hours, to political parties, candidates, or campaigns of any kind. 10
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
416-1 Assessment of the health and safety impacts of product and service categories 100% 3, 12
416-2 Incidents of non-compliance concerning the health and safety impacts of products and services There is no history of non-compliance with regulations and voluntary codes pertaining to the impacts of pulp on health and safety during the lifecycle of this product. 3, 12
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
417-1 Requirements for product and service information and labeling Every bale of pulp produced bears Fibria’s logo, three characters that describe the product (according to the production unit, product type, and certification), tracking information (year, manufacturing date, packing line, lot number, and unit number), and the barcode that stores all this information. 3, 12, 16
417-2 Incidents of non-compliance concerning product and service information and labeling There is no history of non-compliance with regulations and voluntary codes pertaining to product and service information and labeling. 3, 12, 16
417-3 Incidents of non-compliance concerning marketing communications There are no records of penalties arising out of any advertising or marketing activity. 16
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data There is no history of non-compliance related to violation of privacy and the loss of customers data. 16
GRI Standard Disclosure Disclosure Title Direct disclosure or link to the section Omission Material Aspects Principles of the Global Compact SDG
103-1 Explanation of the material topic and it Governance Transparency and Leadership
103-2 The management approach and its components Governance
103-3 Evaluation of the management approach Governance
419-1 Non-compliance with laws and regulations in the social and economic area Governance and Indicators Center

Administrative and Judicial Tax Proceedings

In the second quarter of 2017, Veracel, a company of which Fibria is a shareholder, received a tax assessment notice (Administrative Proceeding) related to IRPJ/CSLL for the period of 2012 and 2013, totaling BRL 226 million (Fine: BRL 75.8 million). Considering that Fibria is a 50% (fifty percent) shareholder of Veracel, the difference between the year 2016 and 2017 in the table below corresponds to half the amount of the fine in this case.

The item Monetary Value of Fines “Pending decision,” relative to 2017, includes amounts referring to judicial proceedings (BRL 511 million) that were already in this sphere in previous years and that do not yet have a final decision.

The principal amount (BRL 417.4 million) relates to a lawsuit filed in 2016, which discusses the non-payment of income tax and social contribution related to the alleged capital gain arising from the industrial asset swap operation and forestry activities carried out with International Paper, in 2007.

It should also be noted that there were no other relevant changes.

10 16
MONETARY VALUE OF FINES – ADMINISTRATIVE AND JUDICIAL TAX PROCEEDINGS¹
Paid 2015 2016 2017
BRL 0 BRL 0 BRL 0
Pending decision BRL 1,328,156,872 BRL 1,108,147,317 BRL 1,145,237,944
Total BRL 1,328,156,872 BRL 1,108,147,317 BRL 1,145,237,944

1 Includes only fines per case with amounts above BRL 98 million

Civil, Labor, and Real Estate Proceedings

Public Civil Suit for excess cargo

In June 2012, a Public Civil Suit was filed by the Federal Public Prosecutor’s Office, aiming to obtain a preliminary injunction to restrain the company from hauling excess weight and causing damage to federal highways, to the environment, and the economy. The restated amount, on December 31, 2017, was BRL 1,771,782,610.92 (one billion, seven hundred and seventy-one million, seven hundred and eighty-two thousand, six hundred and ten reais, and ninety-two cents). The Company filed an appeal against the injunction that prevented it from traveling on federal highways with alleged excess weight, in which it was successful, and presented defense regarding other issues pleaded in the suit. The process is under investigation and awaiting decision, and the likelihood of loss is considered possible.

Public Civil Suit to Suspend Financing for Eucalyptus Plantation or Pulp Production Activities

In November 2013, a Public Civil Suit was filed by the Federal Public Prosecutor’s Office, aiming to obtain an injunction to suspend financing operations for the Company intended for eucalyptus plantation or pulp production activities in the Municipalities of Conceição da Barra and São Mateus, as well as the unavailability of the Company’s properties, and at the end, the nullity of the ownership titles in the northern region of the State of Espírito Santo, which they claim to be public lands, and the Company’s conviction to pay collective moral damages. An injunction was granted to block real estate and suspend financing operations regarding properties in the northern region of Espírito Santo. The Company filed an appeal and a defense for the case, and a decision was made to suspend financing for eucalyptus plantation and pulp production activities only related to the properties discussed in the lawsuit. The amount attributed to the suit, on December 31, 2017, was BRL 1,945,393.46 (one million, nine hundred and forty-five thousand, three hundred and ninety-three reais and forty-six cents). The process is under investigation and the likelihood of loss is considered possible.

Public Civil Suit to Suspend Financing for Eucalyptus Plantation or Pulp Production Activities

In March 2015, another Public Civil Suit was filed by the Federal Public Prosecutor’s Office under the same basis as the aforementioned lawsuit, but directed to other properties in the Municipalities of Conceição da Barra and São Mateus, in the northern region of the State of Espírito Santo, requesting a preliminary injunction of the property and at the end, the nullity of the ownership titles, which they claim to be public lands. The Company filed an appeal and case defense, and it was determined that these records were joined to the first Public Civil Suit filed and rendered a decision to suspend financing for eucalyptus plantation or pulp production activities only related to the properties discussed in the lawsuit. The amount attributed to the suit, on December 31, 2017, was BRL 1,574.64 (one thousand, five hundred and seventy-four reais and sixty-four cents). The process is under investigation and the likelihood of loss is considered possible.

Public Civil Labor Suit for excess cargo

In July 2017, a Public Civil Suit was filed by the Public Ministry of Labor, seeking, in a preliminary injunction, that the company be ordered to refrain from determining, permitting, or tolerating the circulation of vehicles, its own or of outsourced parties, with excess weight or size, under penalty of a daily fine of BRL 10,000.00 (ten thousand reais) for each trip in noncompliance with the obligation, and payment of not less than BRL 100,000.00 (one hundred thousand reais) for collective moral damages, to the argument of protecting the rights of workers to health and safety at work, since the employer’s imposition that the driver travel with excess weight prevents the worker from complying with traffic legislation and is consequently exposed to the risk of accidents. The adjusted amount attributed to the suit up to December 31, 2017 was BRL 105,096.09 (one hundred and five thousand, ninety-six reais and nine cents). The preliminary injunction was granted to assess a fine of BRL 10,000.00 (ten thousand reais) for each infraction committed. The company presented a defense with respect to the points raised in the suit. The process is in its initial phase and the likelihood of loss is considered possible.

Public Civil Suit – Outsourcing – Case No. 0025137-80.2014.5.24.0072

In June 2014, the Ministry of Labor filed a Public Civil Suit against Fibria-MS, alleging that, following the initiation of a public civil inquiry to establish a complaint about illegal outsourcing, it found that the activities carried out by the employees of outsourced companies would be inserted in the dynamics of the company in a structural and permanent way – elements that would subsidize the formation of employment bond under the theory of structural subordination. On September 15, 2015, a hearing was held with the testimony of the parties, and a condemnatory sentence in June 2016. Both appealed against that decision, and, at the end, the ordinary appeal filed by Fibria was unanimously approved, where activities outsourced by Fibria were considered lawful. After that decision, the Ministry of Labor filed an Appeal of Review that was not admitted by the Regional Labor Court. On October 19, 2017, the Ministry of Labor filed an appeal against the decision by the Regional Labor Court. The updated amount of the lawsuit is BRL 34,508,239.56 (thirty-four million, five hundred and eight thousand, two hundred and thirty-nine reais and fifty-six cents). The probability of loss is estimated as remote.

Tax Enforcement Suit – Outsourcing – Case No. 0001309-09.2013.5.02.0038
In August 2013, the Federal Government filed a tax enforcement suit against Fibria-MS, a tax enforcement proceeding originating from Administrative Proceeding no. 45312.0044331/2010-00 resulting from a notice of infraction based on art. 41 of the CLT (Consolidation of Labor Laws). Illegal outsourcing of the defendant’s main activity in the forestry activity. Filing of appeal to the Tax Enforcement by Fibria on September 26, 2013. Guaranteed enforcement through a deposit form collected on August 27, 2013 in the amount of BRL 975,027.21 (nine hundred seventy-five thousand, twenty-seven reais and twenty-one cents). Opinion by the Federal Government on October 11, 2013 and return of the case on October 30, 2013 without appreciation of the opinion. Filing of a response to appeal to the tax execution by the Federal Government and records received by notary on August 25, 2016. On April 17, 2017 a petition for appeal was filed by Fibria. The updated amount of the lawsuit is BRL 1,930,917.83 (one million, nine hundred and thirty thousand, nine hundred and seventeen reais and eighty-three cents). The probability of loss is estimated as possible.

Tax Enforcement Suit – Case No. 0000535-86.2015.5.02.0012 (precautionary action – AI 025178008)

In March 2013, Fibria-MS filed a precautionary action requesting a preliminary injunction, through escrow payment, in connection with Administrative Proceeding 46300.000573/2013-82 – AI 025178008. After delivery of the precautionary action, the order was issued on March 30, 2015, for the Federal Government to issue their opinion. The Federal Government, on the other hand, was summoned on April 6, 2015. Petition filed on April 13, 2015, requesting withdrawal of the action. The company was ordered to pay attorney fees of 10% (ten percent). After the ordinary appeal and the oral arguments, the conviction was reduced to 5% (five percent). On November 28, 2016, a denial order was issued of the Appeal for Review filed on August 15, 2016. On June 12, 2017, the Superior Labor Court received the records. The last records for said lawsuit was August 30, 2017, and the conclusion records are at the Superior Labor Court for votes. The updated amount of the lawsuit is BRL 3,306,014.91 (three million, three hundred and six thousand, fourteen reais and ninety-one cents). The probability of loss is estimated as possible.

Tax Enforcement Suit – Outsourcing – Case No. 0024669-85.2015.5.24.0071

In April 2015, the Federal Government filed a tax enforcement suit against Fibria-MS, Tax Enforcement originating from Case 46300.000573/2013-82 (AI 25178008). A petition requesting the production of testimonial evidence was filed. On July 25, 2016, a petition was filed informing about the preclusion of the gathering of documents by the Federal Government. On August 11, 2016, a petition was filed by the Federal Government, reiterating the motion to deny the appeals to the tax enforcement. The hearing date was scheduled for November 28, 2018. The adjusted amount of the suit is BRL 5,675,775.41 (five million, six hundred seventy-five thousand, seven hundred seventy-five reais and forty-one cents). The probability of loss is estimated as possible.

Civil action – Eldorado Brasil – Case No. 0805287-13.2015.8.12.0021 (injunction 0801792-29.2013.8.12.0021)

In August 2015, the company filed a civil action against Eldorado Brasil Celulose S/A, resulting from a provisional measure filed in April 2013, with the objective of producing expert evidence to indicate the similarity/genetic identity between the Eldorado eucalyptus trees and Sample VT02 eucalyptus trees, owned by Fibria. The main lawsuit is in progress in the municipality of Três Lagoas, Mato Grosso do Sul state and its purpose is to discuss the violation of Sample VT02 by Eldorado, terminate its use by said company, and obtain compensation for material and moral damages. In March 2017, through an injunction, the immediate cessation and abstention of the planting and propagation of VT02 eucalyptus clones by Eldorado throughout the national territory was granted, under penalty of a daily fine arbitrated at BRL 100,000.00 (one hundred thousand reais). The hearing was set for February 2018. The updated amount of the lawsuit is BRL 144,922,287.74 (one hundred forty-four million, nine hundred twenty-two thousand, two hundred and eighty-seven reais and seventy-four cents).

Agreements

All agreements entered into by the company are included in the company’s monitoring systems and are being complied with in a timely manner. Only one new TAC (Terms of Adjustment of Conduct) was signed with the Justice Department of Bagé, (Rio Grande do Sul state), in the year 2015, whose obligation consisted of a donation of BRL 1,369.20 (one thousand three hundred sixty-nine reais and twenty cents) to the Cultural Protection and Environmental Fund.