We are Fibria

Governance

Fibria’s governance is conducted by the President, who chairs the Executive Board; by the Chairman of the Board of Directors [see more on this structure at the end of this section] and eight board members responsible for defining strategic guidelines, approving policies, and setting goals; by the Fiscal Council, in charge of overseeing the administration’s actions; and by five Advisory Committees – Statutory Audit; Finance; Innovation; People and Remuneration; and Sustainability.

Fibria’s Executive Board. From left to right: Mariangela Bartz (Legal Director), Paulo Silveira (Industrial Director), Aires Galhardo (Director of Operations), Vinícius Nonino (Director of Strategy and New Business), Luiz Fernando Torres Pinto (Director of Human and Organizational Development), Adjarbas Guerra (Director of Governance, Risk and Compliance), Marcelo Castelli (CEO), Malu Pinto e Paiva (Director of Sustainability, Communication and Corporate Relations), Caio Zanardo (Forestry Director), Fernando Bertolucci (Director of Technology and Innovation), Henri Van Keer (Commercial and International Logistics Director), Julio Cesar Cunha (Director of Engineering and Projects), Wellington Giacomin (Director of Logistics, Procurement and IT), and Guilherme Cavalcanti (Director of Finance and Investor Relations).

Photo: Marcio Schimming

The topic was even broader in 2016 with the creation of a Governance, Risks, and Compliance, Department, which reports independently to the Chairman of the Board of Directors and provides technical information to the Statutory Audit Committee (CAE – Comitê de Auditoria Estatutária), which advises the Board of Directors. In addition, this Department, which manages the areas of risk and crisis management, internal controls, compliance, corporate governance, ombudsman’s office, and internal audit, is responsible for monitoring strategic, operational, compliance, and financial risks, as well as supporting the implementation and dissemination of the company’s principles and corporate policies, based on transparency, equal treatment of investors, and the clear definition of the roles played by the company through its representatives and by the stakeholders with whom Fibria relates.

IMPROVEMENT OF THE COMPANY’S CORPORATE DOCUMENTS

The company conducted a detailed review of its governance instruments in 2017 and concluded that there was a need to increase the transparency of practices and procedures. The process, which will be completed in 2018, involves revising the Bylaws, Internal Regulations of the Board of Directors, the Audit Committee, and the Company’s Advisory Committees and Corporate Policies, as well as the introduction of new policies.

CHANGES IN 2017

Fibria’s Board of Directors held elections last year. BNDES replaced Board member Eduardo Rath Fingerl, who remained on the Innovation Committee as an independent member, by the new member Paulo Fernando Fleury da Silva e Souza, who joined the Innovation Committee. The other members of the Board of Directors were reappointed.

Shareholder BNDESPar also appointed two members to the Finance Committee: full member Ernesto Lozardo and his alternate, Leonardo Mandelblatt de Lima Figueiredo.

In 2017, Fibria’s Board of Directors convened 12 times. The Board and the advisory committees also made visits to the company’s environmental and social operations and projects, and participated in continuing education programs, with activities that strengthen the company’s governance.

Fibria’s Board of Directors. From left to right: Carlos Augusto Lira Aguiar, Alexandre Gonçalves Silva, José Luciano Penido, Raul Calfat, João Carvalho de Miranda, Marcos Barbosa Pinto, Paulo Fernando Fleury da Silva e Souza, João Henrique Batista de Souza Schmidt, Ernesto Lozardo
Photo: Marcio Schimming

Compliance

In 2017, Fibria relaunched an internal campaign to communicate its Compliance Program in order to raise awareness among its employees and outsourced workers about the conduct expected in the business environment in order to prevent inappropriate attitudes. The word compliance, for Fibria, is understood as the adherence to and enforcement of internal and external laws, rules, regulations and commitments, whether or not they have been voluntarily assumed by the organization.

 

The campaign addressed aspects of Anti-Corruption and Antitrust, two of the pillars of the Compliance Program. Throughout its development in 2018, it will cover the other five pillars of the program: Laws and Regulations; Licenses, Authorizations and Certifications; Contracts and Agreements; External Reports and Loss and Fraud Prevention.

 

Also in 2017, three e-learning refresher courses on campaign topics were carried out, addressing the Code of Conduct, the Antitrust Law, and Anti-Corruption. At the same time, Compliance workshops were held for employees from all hierarchical levels of the company, including third parties contracted by Fibria’s partner companies. See some figures below:

40 communication

pieces on anti-corruption policies and procedures for 6,476 own employees and outsourced workers, where 456 for senior management (directors, managers, consultants, and coordinators).

1,147 employees

were trained on the topic*

*To learn more, visit the Indicators Center

In all training sessions, workshops , and the Compliance, communication campaign, special attention was given to the operation of Fibria’s Ombudsman’s Channel (see table with indicators), as a tool for questioning and reporting irregularities, with a guarantee of secrecy and confidentiality

Fibria’s Ombudsman’s channel answers questions and receives suggestions and complaints of non-compliance with the Code of Conduct, such as corruption, discrimination, and fraud. The Ombudsman’s office serves the internal and external audience with impartiality, transparency and confidentiality, and it is up to the whistleblower to identify himself or herself.

In 2017, the Ombudsman’s office received 465 reports: 107 on human rights issues; 18 complaints concerning business relations and contracts; 147 complaints about labor practices, mainly concerning outsourced companies; 10 complaints involving situations of conflict of interest; 12 reports of irregularities, such as favoritism, fraud and/or undue benefits; 10 environmental claims; and 14 reports on community relations. The other 147 contacts refer mainly to inquiries, lack of adherence to standards, and aspects outside the scope of the Ombudsman’s Office. For more information on this matter, visit the Indicators Center.

Based on these reports, the company terminated 14 employment agreements, two supplier and service agreements, and applied one suspension, four warnings, and three notifications to suppliers, and simultaneously carried out two internal workplace transfers, 11 changes in procedure, and other actions.

CONFLICTS OF INTEREST

The two pillars chosen to launch the campaign to communicate the Compliance Program directly refer to situations that could challenge Fibria’s independence concerning two of its main audiences: government agents on the Anti-Corruption pillar; and the company’s industrial and business competitors on the defense of the competition and Antitrust pillar.

In both cases, the Campaign and Compliance Program initiatives reinforced processes aimed toward eliminating the threat of conflicts of interest during the entire career of Fibria’s employees. During the selection process, for example, candidates for a job or position in the company evaluate their exposure to this type of conflict using a specific form. The process will be repeated every time the employee’s conflict condition changes with respect to Fibria.

New Times for the Sustainability Committee

In its last meeting of the year, Fibria’s Sustainability Committee decided that the time had come to reformulate its composition, in view of the new challenges facing the company.

The decision was the recognition that a cycle is closing in the Committee’s activity, marked by the need to address the conflicting social relationships that existed when the company was created, in particular with indigenous communities, quilombolas, and groups fighting for land. In addition, it was instrumental to clearly express to its stakeholders Fibria’s social and environmental commitments.

We found that these goals were achieved, for the most part. We will continue to work on engaging with communities in an ongoing effort toward open dialogue and mutually beneficial solutions. We still need to move forward on some issues concerning indigenous and quilombola communities, but we are prepared to face other challenges as well.

In this context, the new composition of the Sustainability Committee will focus on topics related to Fibria’s future journey, such as human rights, diversity and the development and application of new technologies to the planted forests business – an example is the creation of innovative products and materials that foster the low-carbon economy. At the same time, Fibria must remain a benchmark in social investment and environmental asset management strategies. In this case, it is worth mentioning the discussions carried out by the Committee and Fibria’s Technology Center on possible risks in a scenario indicating the increase in temperature on Earth, up to 2ºC in the coming years, according to studies by the Intergovernmental Panel on Climate Change (IPCC).

Aracruz (Espírito Santo state)
Photo: Marcio Schimming

Human Rights

Fibria’s position statement on human rights issues follows the Organization for Economic Co-operation and Development’s (OECD) Human Rights Principles. We highlight the company’s commitment to respect and support fundamental human rights. We further established guidelines and principles for protection, respect, and remediation (in case of breach of these rights) throughout our direct or indirect operation and throughout our production chain.

See document on Fibria’s position statement on Human Rights.

CRISIS MANAGEMENT

In 2017, Fibria’s Crisis Commissions participated in training and workshops to improve their members’ sense of readiness. The following training was carried out: a crisis drill for the alternate members of the Corporate Commission; a workshop on the role of the Board of Directors in crisis management with a presentation of case studies, lessons learned (with examples of positive and negative aspects of crisis management in the market) and reflections to improve actions before, during, and after a crisis.

We also evolved in the development of new Business Continuity Plans, as well as in the identification of topics with potential for crisis, such as cyber attacks.

Crisis Management at Fibria involves the work of six commissions, of which four are regional (Aracruz, Jacareí, Três Lagoas, Portocel), one is Corporate (Executive Board and Presidency), and one of the Board of Directors. It is worth noting that during the works of Project Horizonte II, a specific Crisis Commission was implemented, with monthly meetings.

Each Crisis Commission is composed of a multidisciplinary team that convenes quarterly to discuss the unit’s main issues with potential for crisis, such as roadblocks. Member multidisciplinarity within the commissions allows for a certain aspect to be explored by many different areas. During the discussions, the areas present to the commission the indicators and ongoing action plans to mitigate the associated risks, as well as the evolution of the Business Continuity Plans established for the year.

This set of information, guidelines and procedures in a structured manner allows for efficient and agile communication between the operational and corporate areas. As such, it protects the company’s value and minimizes any adverse impacts that, if not managed in a timely manner, could compromise the organization’s image and reputation.

Additional Information

In 2017, we were not party to any outstanding or unresolved lawsuits relating to unfair competition or violations of antitrust laws or monopoly regulations. For more information, click here and see the GRI Content Index.

GOVERNANCE FRAMEWORK

Fibria’s Board of Directors is composed of nine members, two of whom are independent (having no ties to the signatories of the shareholders’ agreement, Votorantim S.A. and Banco Nacional de Desenvolvimento Econômico e Social Participações (BNDESPar), pursuant to current regulations), and an equal number of alternates, so as to ensure full attendance of the members at all meetings. Members convene at least four times per year and must attend all Board meetings and Committees of which they participate. The minutes of the meetings of the Board of Directors, as well as those of the Audit Committee, are available at https://ri.fibria.com.br/reuniões39a-corporativa/reuniões-daadministracao.

This committee is composed of three sitting members and an equal number of alternates, elected in a General Shareholder’s Meeting, pursuant to the applicable legislation. The committee’s main objective is to supervise the actions of the administration, in addition to other duties provided for in article 163 of Brazilian Corporate Law. Its members convene at least four times a year, at the end of each quarter.

This committee is fully composed of independent members and must oversee the quality and integrity of financial reports, as well as compliance with legal, statutory, and regulatory standards, the adequacy of risk management, internal controls and compliance processes, and activities of internal and independent auditors. Its members convene monthly, conducting meetings to assess quarterly financial information jointly with the company’s Fiscal Council.

Assists the Board of Directors and the Executive Board in analyzing the Brazilian and global economic situation and its potential effects on the company’s financial position, as well as in the preparation of scenarios and trends, in the evaluation of opportunities and risks, and in the definition of financial policy strategies to be adopted by the company.

Advises the Board of Directors in their analysis of initiatives associated with research and technological innovation, in the forestry, industrial, and management areas, concerning new products and processes.

Its purpose is to review the human resources policies, structures, and practices proposed by the Executive Board in light of best practices adopted by domestic and foreign companies. The committee also assesses strategies and opportunities and risks to which the company is exposed, in addition to proposing remuneration policy for directors and members of the Board of Directors, considering short-and long-term, regular and extraordinary salaries and benefits.

Advises the Board on all aspects of sustainability in identifying, addressing, and dealing with issues, including climate change, that pose risks or may impact business, long-term results, relationships with stakeholders, and company image. The Committee meets three times a year.

DECISION-MAKING PROCESS

The appetite for risk and the approval purviews of the company are defined by the Board of Directors. The Board of Directors delegates to the Executive Board the purview to manage economic, environmental, social and operational topics, within the boundaries governed by the Company’s Bylaws, involving the Board of Directors in matters that require the evaluation and official approval of the highest governance body. In addition, there are economic, social, and environmental issues that are evaluated by the Advisory Committees, which recommend strategic guidelines to the Board of Directors. Additionally, the Department of Governance, Risks, and Compliance (DGRC) is a link between the strategies and policies defined by the Board of Directors and the Committees, and the activities carried out by the business areas, under the responsibility of the Boards.

RESPONSIBLE FOR ECONOMIC, SOCIAL, AND ENVIRONMENTAL TOPICS

Economic, environmental, and social topics, including those related to climate change, are the responsibility of all company directors, who in turn report to the CEO, who reports to the Board of Directors.

PROCESSES TO CONSULT STAKEHOLDERS

Stakeholder evaluation and feedback surveys are regularly presented to the Board of Directors, involving the opinions of the various stakeholders, such as investors, customers, and communities.

GOVERNANCE FRAMEWORK

Composition of governance groups 2015 2016 2017
Board of Directors
Members 9 9 9
Alternates 9 8 9
Total 18 17 18
Gender
Men 17 (95%) 16 (94%) 16 (89%)
Women 1 (6%) 1 (6%) 2 (11%)
Age Group
Under 30 0 0 0
From 30 to 50 6 (33%) 4 (24%) 6 (33%)
Over 50 12 (67%) 13 (77%) 12 (67%)
Advisory Committees to the Board of Directors + Fiscal Council
Total 27 28 28
Gender
Men 26 (96%) 25 (89%) 26 (93%)
Women 1 (4%) 3 (11%) 2 (7%)
Age Group
Under 30 0 0 0
From 30 to 50 8 (30%) 8 (29%) 8 (29%)
Over 50 19 (70%) 20 (71%) 20 (71%)

SELECTION CRITERIA FOR NEW MEMBERS OF THE BOARD AND COMMITTEES

The Chairman of the Board of Directors is responsible for the initial selection of candidates who will compose the Company’s Board of Directors. The candidates chosen by the Chairman of the Board are submitted to the Company’s controlling shareholders, and once approved, are submitted, along with any candidates nominated by other shareholders when applicable, for approval by the Company’s General Assembly.

Selection Criteria:

For selection, among other aspects, the following are taken into consideration: reputation in the business community, recognition for adopting the highest ethical and moral standards of behavior, independence, experience and relevant knowledge on finance, accounting, corporate governance, business sustainability and the Company’s business environment, cultural diversity and varying viewpoints, the absence of conflicts of interest, and the availability of adequate time to dedicate to the responsibilities related to the position.

Independence of members is considered, even for those who are appointed by the controllers and those who are internal members. Under Brazilian law, Board members are legally responsible for the company.

Knowledge and experience related to economic, environmental, and social topics:

The Board of Directors values a vision of competencies that include knowledge of the industry and business, strategic vision, economic management, knowledge of innovation and new technologies, capital market and investor relations, legal, experience in people management, corporate governance, risk management and compliance, knowledge of cyber risks and digitization in business, customers and the market, social and environmental sustainability, climate change, adaptation and resilience, management and certification systems, management of intangible assets, and others.

There is no direct involvement of stakeholders in the Board of Directors. In the composition of the Sustainability Committee, the diversity of the members has been considered, as well as the experience in critical aspects, such as climate change, social issues, public policy, and knowledge on innovation.

PREVENTION OF CONFLICT OF INTEREST

The information below is available on the reference form (referencing 2017)
Cross-interest: Items 12.6 and 12.7
Shareholding interest: Items 12.6 and 12.7

Related parties: the company has in place a transaction policy with related parties available on the company’s website

The shareholders’ agreement is available on Fibria’s website..

ROLE IN DEFINING POLICIES AND GOALS

The Board of Directors is responsible for establishing and changing the company’s mission, vision, and values, as well as establishing strategic guidelines. Based on these guidelines, the Executive Board works on policies and goals, some of which are evaluated and approved by the Board of Directors and its advisory Committees.

MEASURES FOR IMPROVEMENT

Members of Fibria’s Board of Directors undergo continuous learning processes, which include annual visit to operations and semiannual lectures on scenarios, markets, and corporate governance, as well as workshops on strategy and innovation. In addition, the advisory Committees to the Board of Directors maintain a direct and regular report to the Board on various aspects.

SELF-ASSESSMENT PROCESSES

Performance of the Board of Directors is assessed annually. The process is conducted with the assistance of an independent external consultant and includes the assessment of the Board as a body, of its individual members, and an assessment of the performance of the Board’s Advisory Committees. As a result of the assessment, an action plan is proposed by the Chairman of the Board of Directors and approved by the other members. In this action plan, measures for improvement are suggested, ranging from continuing education on specific aspects or promoting training for moments of crisis, to improving the processes and transparency of the Board of Directors.

ANALYSIS OF RISK MANAGEMENT PROCESSES

According to the agenda, the Statutory Audit Committee oversees the company’s risk management activities, analyzes the organization’s Risk Matrix, assesses adherence to action plans, and monitors risk indicators related to economic, environmental, and social aspects. Risks related to climate change are handled in the same way as other risks, evaluated under these same indicators.

Annually, the Board of Directors reviews the Company’s Risk Matrix, according to criticality and priority, as well as the action plans suggested by Management to mitigate such risks and thus reduce residual risk.

CRITICAL COMMUNICATIONS

Follow-up items are submitted to the Board of Directors by the Executive Board or by the Board members themselves. These are material and critical aspects that have a potential impact on the company’s results and do not have a short-term solution.

CRITICAL CONCERNS

The current items cover aspects such as strategy, market, logistics, tax issues, legal proceedings, and investment in innovation.

PROCESS ADOPTED TO DETERMINE REMUNERATION AND POLICIES ON REMUNERATION AND BENEFITS

The Board of Directors has the support and analysis of the People and Remuneration Committee to define the remuneration and benefits process of the Board of Directors, Advisory Committees, Audit Committee, and the Company’s executives. This Committee relies on the advice of specialized companies, which conduct annual surveys to identify market parameters. The CEO’s remuneration is paired against a panel of hundreds of CEOs of companies operating in Brazil.

The Executive Board is evaluated by a panel from sectors and of sizes similar to Fibria, involving approximately 30 companies. The fees of members of the Board and of the committees are compared with a select panel of 20 companies listed on B3 – Brasil, Bolsa, Balcão. This survey is evaluated by the People and Remuneration Committee, which annually presents it to the Board of Directors for approval of any recommended changes.

Several channels are used to provide feedback regarding remuneration, such as organizational climate survey, union negotiation meetings (employees, unions). These issues are analyzed by the Human and Organizational Development area and by the People and Remuneration Committee.