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2 SUMMARY 1. Message from the Board of Directors Parameters and Engagement The Marcopolo Businesses Corporate Governance Communication Channels Economic Performance Environmental Performance Social Performance GRI Index Expedient 70 2 SUSTAINABILITY REPORT

3 1.MESSAGE FROM THE BOARD OF DIRECTORS Standing from left to right : Gelson Luiz Zardo, Oscar Barbieri, Paulo Gilberto Corso, Fabio Dahlem da Rosa, Paulo Andrade de Jesus, Carlos Alberto Casiraghi, Edson Dalle Molle Mainieri, Nelson Gehrke, Milton Susin, Mateus Ritzel, Alberto Calcagnotto, Lusuir Grochot, José Fernando Bettoni, Ruben Bisi. Seated from left to right: Carlos Zignani, José Rubens de La Rosa (CEO), José Antonio Valiati. Marcopolo presents the third edition of its Sustainability Report as a way to share with the society, a summary of its performance in the economic, environmental and social areas aligned with the corporate governance practices of the Company. Founded in 1949, the company has always had as pillars the respect, appreciation and transparency in relationships with people. The year 2013 was characterized as a period of turmoil and new challenges for the bus industry in Brazil, especially along the second half. In this scenario, Marcopolo net revenue grew 9.1% domestically and 7.5% in the export Market, compared with the previous year. Marcopolo has carried on the expansion and modernization of productive areas in Caxias do Sul and Rio de Janeiro; it has begun the construction of the new Volare factory in São Mateus in Espírito Santo; and the new Logistics Centre, which will concentrate the distribution of material from the Ana Rech unit. In addition to that, significant investments were made to improve working conditions and welfare of the employees, such as new sanitary facilities; adequacy of rest areas and services such as banks, pharmacies and covenants. Marcopolo has also carried on the renovation of the restaurant at the Ana Rech unit, serving more than 5,000 employees / day. Marcopolo Foundation, the corporate arm of the company, has been carrying out actions for social development, especially targeted to children and adolescents in the cities where its manufacturing plants are located. The Foundation also coordinates the allocation of corporate taxes of Marcopolo units in Brazil and its employees, in order to support projects that generate direct benefits to the community. Since 1990, the company maintains the Marcopolo Professional Training School, which has trained more than 1,000 young professionals. Its concern with professional qualification is extended to all employees through training courses, scholarships and language programs. During the year 2013, Sustainability indicators were included and followed up in the Balanced Score Card (BSC) of the company, and in 2014 a target of 5% improvement was established in all areas. Regarding the involvement of interested parties, the company conducted research with different stakeholders. The results formed the basis for the Materiality Matrix that will guide the actions of Marcopolo in relation to sustainability in the future. Moreover, the channels of internal and external ombudsman had undergone a revision in order to facilitate communication with its various audiences. Finally, Marcopolo reaffirms its commitment to management focused on sustainable development and encourages the practice of the values that make it a business of solid economic, environmental and social image. 4 MESSAGE FROM THE BOARD OF DIRECTORS SUSTAINABILITY REPORT MESSAGE FROM THE BOARD OF DIRECTORS 5

4 2.PARAMETERS AND ENGAGEMENT For the third consecutive year, Marcopolo discloses its Sustainability Report, which is based on international guidelines of the Global Reporting Initiative (GRI). Reported information refers to the year 2013, and presents comparative results data of 2011 and GRI 3.5/3.6/3.7/3.9/4.14/4.15/4.16/4.17 The report has been improved every year, seeking transparency with the support of the public of the Company, who were invited to contribute with their opinion, identifying sustainability issues of greatest relevance. To make this query, Marcopolo has identified and elected these priority stakeholders to participate in the Materiality Test, prepared on the basis of GRI indicators. This activity was developed by the Marcopolo Sustainability Committee with the help of related areas. The Sustainability Committee was created in 2008 and consists of representatives from the Financial, Social and Environmental areas. The indicators are being monitored monthly and since 2013, some of them are part of the BSC (Balanced Score Card) of the company with performance goals by area. COMPOSITION OF THE REPORT When reading this publication, it is possible to observe that the company s actions are aligned to the results of the Materiality Matrix. It is noticed that the indicators that were evaluated as less important are precisely the topics that have been worked by the Company over the years; therefore they are no longer perceived as in need of attention. This year, the qualification programs for labor, health and safety and waste disposal for employees, were again scored as very important, but with a subtle shift in priority by the company. As an immediate action, proper disposal of waste and reduction of waste materials were included among the indicators of the Company Profit Sharing Program (EFIMAR Marcopolo Efficacy). In the composition of the social and environmental indicators, the company reports only transactions with operations in Brazil, however, the financial indicators have consolidated data from across the whole Company in accordance with accounting practices adopted in Brazil and IFRS - International Financial Reporting Standards. Marcopolo measuring techniques and base of calculations use the Universal System (Human Resources) and SAP (other areas). 6 PARAMETERS AND ENGAGEMENT SUSTAINABILITY REPORT PARAMETERS AND ENGAGEMENT 7

5 6 Materiality Matrix 7 1 Use of Recyclable Materials 6 Health and Safety Program for Employees BUSINESS MANAGEMENT POLICY Marcopolo (Management) Stakeholders Reduction of Energy Consumption 3 Reduction of Water Consumption 4 Disposal of Waste 5 Environmental Education Programs 7 Labor Qualification Program 8 Actions to Combat Child Labour 9 Social Programs for the Community 10 Hiring Local Suppliers Very Important Important Moderately Important Less Important The Company has mechanisms to ensure that Quality, Environment, Social Responsibility and Health and Safety are implemented, maintained and continuously improved. The company is committed through its Business Management Policy, which provides that: Ensure increasing customer satisfaction through continuous improvement and quality excellence; Consider environmental, occupational, social and quality variables in the development of new products and processes; Ensure the implementation of laws, rules and other regulations to effectively achieve planned objectives; Permanently prevent pollution, accidents at work and occupational diseases; Being an ethical and socially responsible company to all audiences. The Integrated Management Standards (GIN) includes the following certifications: ISO Quality (since 1996), OHSAS Occupational Health and Safety (since 2002), SA Social Responsibility (since 2003) and ISO Environment (since 2005). Every three years the company undergoes a periodic recertification process and the requirements of the standards are checked with higher criticality, which contributes to the refinement of sustainable practices. Certifications ISO 9001 Quality OHSAS Health and Safety ISO Environment SA 8000 Social Responsibility 8 PARAMETERS AND ENGAGEMENT SUSTAINABILITY REPORT PARAMETERS AND ENGAGEMENT 9

6 3.THE MARCOPOLO BUSINESSES Marcopolo SA is a publicly traded joint-stock Brazilian multinational corporation based in Caxias do Sul, RS. The company markets its products in more than 100 countries on five continents. Consecrated in the passenger transport industry, it has over 65 years of tradition in the market. The Company manufactures complete buses, bus bodies and components, offering the market a comprehensive product line with a variety of road models, urban, micro and minis in addition to Volare vehicles commercialized in the market in a complete format including chassis and body. In 2013, Marcopolo has released a new version of Torino, a model that has been in line since 1983 and is one of the best urban buses sold in Brazil. The new Torino offers more comfort and modernity, technology, ergonomics and safety for passengers at lower operation costs. Volare has also introduced a new vehicle in the light segment: the W-L, with greater transport capacity of up to 36 passengers in the light weight segment. GRI 2.1 /2.6 PHILOSOPHY GRI 4.8 Vision Be a relevant corporate group in business and geographies in which it is acting, with a sound socio-environmental and economic image. Mission Develop solutions valued by customers, based on the principles of innovation and sustainability, contributing to the evolution of collective passenger transport and social progress. VALUES GRI 4.8 Respect and People Valuing Marcopolo s relationship with people is one of respect, appreciation and transparency. Its main differential is the joint work carried out by committed and prepared teams constantly motivated by opportunities for growth and professional development. Any person - either of the company or outside it - should be treated with dignity and fairness. 10 THE MARCOPOLO BUSINESSES SUSTAINABILITY REPORT THE MARCOPOLO BUSINESSES 11

7 Ethics Marcopolo adopts an attitude of responsibility and respect towards the people and institutions of its relationships. It is of great importance to the company that conflicts of interest are avoided, and when it happens, they are resolved in a transparent manner in accordance with the guidelines of the Code of Conduct. Environment and Communities Marcopolo and its employees have a major commitment to health, safety, the environment and the communities where they operate. Through programs aimed at environmental and social causes, the company consolidates its management policy focused on sustainable development. Economic and Financial Soundness Marcopolo has as its basic premise that the economic and financial soundness of the business is the key to sustainable growth. The commitment to excellence and value generation must guide the day-to-day of professionals and partners of Marcopolo. Customer Satisfaction Customer satisfaction is the reason of Marcopolo success. Efforts must be made to identify what is the perceived value by customers, establishing any and all actions capable of transforming this principle into mutually generating value realities that are backed up by long-term relationships. Proximity and trust are key requirements for bond creation. Partnerships Partners, mainly characterized by suppliers, manufacturers, sales representatives, financial institutions, distributors and dealers, are fundamental to Marcopolo. The company believes that long-term relationships with clear rules and practices that result in joint success should be built. INVESTMENT STRUCTURE 99,99% MARCOPOLO RIO Brazil 99,99% SYNCROPARTS Brazil 99,90% VOLARE - SP Brazil 99,90% VOLARE - ES Brazil 99,99% TRADING S.A Brazil 100% MONEO investments Brazil 50% FCO Brazil 0,10% VOLARE - SP Brazil 0,10% VOLARE - ES Brazil 10% REI Brazil 0,01% MARCOPOLO RIO Brazil 100% BANCO MONEO Brazil 45% SAN MARINO Brazil 99,99% SAN MARINO Mexico 99,99% ROTAL DO SUL Brazil 100% ILMOT Uruguai 50% SUPERPOLO Colombia 100% LAUREANO Argentina 74% POLOMEX Mexico Marcopolo S.A. 49,87% HANEGAS Colombia 49% TMML India 100% MIC Virgin Islands 100% MAPLA Argentina 100% MASA Africa 30% MPC Portugal 100% MAC China 50% LOMA Argentina 1% METALPAR Argentina 74% POLOMEX Mexico 51% METALSUR Argentina 98% METALPAR Argentina 99% MARSA Argentina 70% MPC Portugal 100% POLOAUTORUS Russia 49% GB POLO Egypt 50% KAMAZ MARCO Russia 100% MARCOPOLO Austrália Australia 75% POLOGREN Australia 100% VOLGREN Australia 40% SPHEROS Brazil 99,99% SPHEROS MÉXICO Mexico 99,99% SPHEROS COLOMBIA Colombia 30% WSUL Brazil 26% MVC Brazil 100% PAINÉIS Brazil 40% MERCOBUS Peru 12 THE MARCOPOLO BUSINESSES SUSTAINABILITY REPORT THE MARCOPOLO BUSINESSES 13

8 ORGANIZATIONAL STRUCTURE The Organizational Structure proposed aims to contribute in the strengthening of Marcopolo s capacity of generating value through innovation, enthusiasm and commitment of all professionals with attitudes that strengthen confidence, entrepreneurship, solidarity and cooperation. The premises for the structure of Marcopolo are: Sustaining the growth strategy of the company; Attending the needs of flexibility, agility and competitiveness; Simple structure with competitive costs; OPERATIONAL STRUCTURE Clear definition of authority and responsibility through results; The bus manufacturing is performed in 16 manufacturing units, four in Brazil (two units in Caxias company SPHEROS (acclimatization and air-conditioning), 30% in WSUL (foams for seats), 26% Overview of processes such as integration, alignment and accountability; do Sul, RS, one in Duque de Caxias, RJ, in addition to the participation of 45.0% in the company Components) and 19.99% in the Canadian com- in MVC -. Componentes Plásticos Ltda. (Plastic San Marino Ônibus e Implementos Ltda.(San pany New Flyer. In addition to the companies Proximity to the Customer, Operational Excellence Marino Bus and Implements), also located in mentioned, Marcopolo has full control of Banco and Quality; Caxias do Sul, RS) and 12 abroad, one unit in Moneo S.A. (Moneo Bank), created to support the Collegiate operation of teams in a cooperative and South Africa, three in Australia; subsidiaries / financing of Marcopolo products. supportive manner. affiliates in Argentina (2), Colombia, Egypt, India (2) and Mexico; there is also a manufacturing Marcopolo is also investing in the installation of To give support to this strategy, the areas of the company unit of parts and components for bus bodies in a new unit of Volare vehicle assembly line in São were arranged in departments that act in an integrated China. Marcopolo also holds 40% stake in the Mateus, ES. manner. GRI 2.3 MARCOPOLO WORLDWIDE AND ITS BRANDS GRI 2.5 In 2013, the total number of professionals who contributed to the business of Marcopolo worldwide, including employees of the affiliated / subsidiaries was 21,002 employees. In Brazil, it totaled 8,066 employees in the controller and 3,495 employees in the subsidiaries. (Read more about the employees in the Social Performance chapter) SHAREHOLDERS FAMILY COUNCIL MANAGEMENT BOARD FISCAL COUNCIL Executive Commitee Audit and Risks Commitee HR and Ethics Commitee Strategy and Innovation Commitee (JV COMERCIAL) UNITED STATES CEO EGYPT BRAZIL International Business Strategy Research & Development HR&DO Controllership, Finance, IT & Legal Acquisition & Logistics Sales & Mkt Industrial Quality & Post-sales Engineering Marcopolo Rio Volare Moneo SOUTH AFRICA MARCOPOLO ANA RECH CONTROLLER SUBSIDIARIES JOINTLY CONTROLLED SUBSIDIARIES AFFILIATES INVESTMENTS 14 THE MARCOPOLO BUSINESSES SUSTAINABILITY REPORT THE MARCOPOLO BUSINESSES 15

9 BUSINESS UNITS COVERED IN THE REPORT GRI 2.2 Marcopolo Ônibus Caxias - Marcopolo Bus Caxias Considered one of the world s largest bus body manufacturers, it is also an active participant in the development and implementation of solutions for the public transport of passengers in some of the major markets worldwide. The Bus Business is concentrated in the Ana Rech unit in the city of Caxias do Sul, with the support of manu- facturing areas located at the Planalto neighborhood. This unit stands out for the production of intercity buses for the Brazilian market and also for export. Constant investments in design and technology make Marcopolo pave new paths, presenting to the world market innovative solutions based on the guidelines for efficiency, comfort and safety for bus users. Industrial unit in Xerém - Duque de Caxias, RJ Industrial unit in Ana Rech - Caxias do Sul, RS Marcopolo Rio Marcopolo Rio is located in Duque de Caxias city, RJ, and it keeps a high speed production and productivity pace. Today, it concentrates 100% of the production of bus bodies destined for urban transportation. The installed capacity is for 8000 vehicles per year and it has about 2500 employees. The company was founded in 1955 and had 50% of its capital acquired by Marcopolo in Five months later, it was launched in the market a new urban product called Turquoise, demonstrating that the investment had been appropriate. Two years later, in 2001, Ciferal became a 100% Marcopolo company, enabling the consolidation of the concepts of safety, cost efficiency and reliability to the urban bus market. Originally called Ciferal, the company was renamed Marcopolo Rio. 16 THE MARCOPOLO BUSINESSES SUSTAINABILITY REPORT THE MARCOPOLO BUSINESSES 17

10 Operations Center Volare - São Paulo, SP Moneo Bank - Caxias do Sul, RS Volare Banco Moneo - Moneo Bank Located in Caxias do Sul, Volare inaugurated in São Paulo, in February 2013, its Operations Center. The complex has a total area of 8 thousand square meters and will include a model dealership, a training center for the entire dealer network and also a distribution center for spare parts. The development of Volare Operations Center is part of the company s investments and it took a year of studies and market research focused on best practices from the automotive sector and best service concepts. The unit was created in 1998 to meet the market demands for a fast, safe, economical and comfortable vehicle in the public passenger s transportation service. The first model was intended for urban transport, but gradually Volare developed into a complete family of vehicles with different models and versions, ranging from alternative transportation and cooperative transportation to special applications such as mobile units. In 2012, Volare proved once again its compliance with the innovative philosophy by launching the four-wheel drive model, a novelty in the market that it operates. Banco Moneo (Moneo Bank) serves the domestic market in a broad and comprehensive manner for the inland passenger transport segment, whether road, urban, charter, school or leisure. The products offered meet the specific needs of each customer through Finame, Leasing, CDC or prepayment of receivables with current market rates offered by or with more competitive interest rates than those offered by other institutions. Moneo began its operations in 2005 and counts on effective distributed in offices located in the cities of Recife, Salvador, Belo Horizonte, São Paulo, Curitiba, Porto Alegre, and Caxias do Sul, where the headquarters and administrative area are located. 18 THE MARCOPOLO BUSINESSES SUSTAINABILITY REPORT THE MARCOPOLO BUSINESSES 19

11 AWARDS RECEIVED GRI 2.10 IDHO Indicator of Human and Organizational Development 2013 Awards Management & HR Editorship. The 150 Best Companies in People Management Practices Awards. The 50 Best Companies for Corporate Citizenship 2013 Awards Management & HR Editorship. AutoData Awards 2013 Best in the Automotive Sector Categories Exports, Bus Body Manufacturer, Bus Vehicle. Brands of Whom Decide 2013 Journal of Commerce. Bigger and Best in Transportation Awards Modern Transportation Magazine and Technibus. Inclusive Stamp Company City Council of Caxias do Sul. Top of Mind Awards 2013 Tomorrow Magazine. RS Export Awards 2013 ADVB / RS. Pioneers of Transportation Trophy Awards Modern Transportation Magazine and Technibus. Medal of Farroupilha Merit - Legislative Assembly of Rio Grande do Sul. MVC JEC Europe 2013 Innovation Awards Categories Innovation in Thermoplastics and Sofia Project - new concept of manufacturing vehicle bodies. Best Company of the Year Award Maiores e Melhores 2014 Special Edition Exame Magazine. Creating Value Awards 2013 Brazilian Association of Listed Companies (ABRASCA). Best Company of the Automotive Industry Sector Award Maiores e Melhores 2014 Special Edition Exame Magazine. 20 THE MARCOPOLO BUSINESSES SUSTAINABILITY REPORT THE MARCOPOLO BUSINESSES 21

12 4.CORPORATE GOVERNANCE By following the principles of transparency, fairness, accountability and corporate responsibility, Marcopolo has adopted the best practices of Corporate Governance. Since 2002, the Company has been listed on Level 2 of Corporate Governance of BM&FBovespa, being bound to arbitration by the Market Arbitration Chamber, as according to Clause registered in its By-Laws. The management of Marcopolo is made formal based on the distinction between the roles and responsibilities of the Administration Board, the Executive Committee and the Board of Directors. The Company also has an Audit Committee composed of three members. The powers of each body are defined in the By-laws of the company. In order to assist, review and support the conduct of the business, the Board of Directors also counts on the following Committees: Audit and Risk; HR and Ethics; and Strategy and Innovation. With the adoption of new By-laws, these three committees had their competencies amended in All members of the Administration Board, Audit Committee, Executive Committee, Board of Directors and advisory committees were elected on March 27, President Emeritus The President Emeritus of Marcopolo, Paulo Bellini, oversees the company s culture, contributing to strengthen ethical values and principles and the ongoing motivation of employees. He mentors executives, follows the political-institutional activities and ensures also the Marcopolo brand and image as well as the fulfillment of its social function. Bellini was named Emeritus President in 2012, a position that has honorary, personal and nontransferable character. Shareholding Structure in 2013 SHAREHOLDERS IN BRAZIL 39,39 % SHAREHOLDERS ABROAD 34,96 % CONTROLLING GROUP 25,65 % 22 CORPORATE GOVERNANCE SUSTAINABILITY REPORT CORPORATE GOVERNANCE 23

13 GOVERNANCE STRUCTURE Administrative Board GRI 4.1/4.3 The Administrative Board consists of seven members, four of whom are independent, one appointed by the minority shareholders, one by the holders of preference shares, and the other two by the controllers. They are all elected in the General Meeting through an unified term of up to two years. The Board also has a Secretary, appointed by the President. The Chairman of the Administration Board is not a member of the Board of Directors. GRI 4.2 The Board of Directors counts on a permanent basis with an advisory statutory technical committee known as the Executive Committee, which helps, supports and advises about conducting business. Besides that, to assist the work of the Council in order to turn it more efficient, improving strategic discussions with based recommendations, and to assist in the performance of legal and statutory duties, there are also the following committees to support and advice: Audit and Risk ; HR and Ethics; and Strategy and Innovation. Each committee is composed of at least three and at most six members for a term of two years. Executive Committee Board of Directors Audit Board Name Position Elected in Mandate of Mauro Gilberto Bellini Sitting Member and Coordinator march 2014 two years Paulo Pedro Bellini Sitting Member march 2014 two years José Rubens de La Rosa Sitting Member march 2014 two years Luciano Moisés Bado Appointed Member march 2014 two years José Antonio Valiati Appointed Member march 2014 two years Carlos Alberto Casiraghi Guest Member march 2014 two years Ruben Antonio Bisi Guest Member march 2014 two years Carlos Zignani Secretary march 2014 two years Name Position Elected in Mandate of José Rubens de La Rosa General Director march 2014 three years Carlos Zignani Director march 2014 three years José Antonio Valiati Director of Accounting and Finance and Investor Relations march 2014 three years The Audit Board consists of three members, one appointed by the minority shareholders, one by the holders of preferred shares and one by the controlling, with an equal number of alternates. Administrative Board Francisco Sergio Quintana da Rosa Name Position Elected in Mandate of President and Advisor appointed by the Controllers march 2014 one year Nome Position Elected in Mandato de Mauro Gilberto Bellini President march 2014 two years Egon Handel Augusto Marcos de Campos Advisor Appointed by Preferred shareholders march 2014 one year Advisor appointed by the Minority shareholders march 2014 one year Oscar de Paula Bernardes Neto Vice-President march 2014 two years Luciano Moisés Bado Advisor march 2014 two years Maria Letícia de Freitas Costa Advisor (independent) march 2014 two years Paulo Cezar da Silva Nunes Advisor (independent) march 2014 two years Odair Lucietto Manuela Cristina Lemos Marçal Advisor(independent) Representative of Minority shareholders march 2014 two years Advisor (independent), Representative of Preferred shareholders march 2014 two years Carlos Zignani Secretary march 2014 two years HR and Ethics Committee The HR and Ethics Committee responsibilities are: Constantly revaluate and recommend improvements to practices and management policies of the Company, including its Code of Conduct (such Policies, Codes and Standards will always be deliberated by the Council); Analyze, recommend and monitor the succession plan of the key executives of the Company; Analyze and monitor the implementation of policies and practices of Human Resources and, when necessary, to elaborate improvement proposals; Analyze and recommend criteria for compensation of the Executive Board, including short and long term incentive plans, and benefits for employees and administrators; Evaluate and recommend guidelines for performance evaluation and the proposed performance plan (individual goals and procedures) of the executives of the Company and subsidiaries as well as coordinate the process of evaluating these executives; Assess the social responsibility practices adopted by the Company and its impact on corporate image; Evaluate and monitor the management of organizational climate and the actions taken to improve it; Coordinate the selection process of the CEO and key executives; 24 CORPORATE GOVERNANCE SUSTAINABILITY REPORT CORPORATE GOVERNANCE 25

14 Promote the dissemination of the Code of Conduct and disseminate the appropriate Company s standards of conduct; Providing guidance when queried or if in doubt about the application of the Code of Conduct as well as the determination and decision making when verified cases of violation of the principles laid down, always reporting all cases to the Board of Directors; Audit and Risk Committee The responsibilities of the Audit and Risk Committee are: To recommend to the Administrative Board the selection and recruitment of independent auditors and their fees, as well as their replacement, if necessary, among internationally renowned companies for development of independent external audit or any other service; Supervise the activities of independent auditors to assess their independence, quality of services, and the adequacy of their services to the needs of the Company; Evaluate compliance by the administration of the recommendations made by the independent auditors and internal auditors and recommend to the Board the resolution of any conflicts between the independent auditors and the Board of Directors; Monitor the quality and integrity of the internal control system, the financial statements, quarterly financial information, interim financial statements and annual financial statements, and the information disclosed and measurements based on adjusted accounting data and non-accounting data that add elements not contained in the structure of the usual financial reports and statements; Review the annual audit plans and assess the final reports both submitted by the internal audit; Strategy and Innovation Committee The Innovation and Strategy Committee has the following responsibilities: Assessing the management processes associated with the business plan, financial planning, budgeting and performance monitoring; Assess the general assumptions (macroeconomic and business) for business plan, planning and budgeting; Monitor the Company s performance through the analysis of its results, financial metrics, market developments and permanent internal and external benchmarking; Evaluate and recommend proposals on the process of development and review of the Strategic Plan, including Represent the Administrative Board in the implementation and evaluation of conflicting situations to the Code of Conduct related to the positions of managers and executives, as well as in cases that exceed the powers of the Central Committee. Determine any changes in the scope of internal audit and report to the Administrative Board on areas of high risk, significant deficiencies, significant breakdowns in internal controls and illegal acts to the Council; Periodically assess the most appropriate structure for internal audit, as well as the way their services are run; assess and monitor along with management and internal audit, the adequacy of related party transactions as performed by the Company and their respective evidence; Analyze their content and monitor periodic reviews conducted by the internal audit of complaints, anonymous or not, concerning the accounting, internal control, audit and on risks of any kind, and eventually determine specific actions; Recommend procedures for receiving and processing information about noncompliance with laws and regulations applicable to the Company; Establish appropriate relationships and communication with management and the Audit Board; Assess and monitor the risk exposures of the Company and to monitor progress on the implementation of risk management in the Company and the actions that the upgrade process; Report nonconformities (fraud) directly to the Board of Directors. adherence to market trends, innovation and competitiveness in products and services, suitability of investments for value creation and sustainability; Analyze and monitor opportunities for new products and services, including economic and financial evaluation of projects; Review other matters that the Board of Directors may consider relevant and of interest to the company; Monitor the execution and implementation of the Strategic Plan, recommend contingency plans, suitability and action plans where necessary. Rules for identification and management of conflicts of interest The Administrative Board must approve the execution of agreements between the Company and its management and / or controlling shareholders, or between the Company and parties directly or indirectly controlled or controlling by the controlling shareholder. With regard to the Code of Conduct of the Company, which is also applied to management, there is a Conduct Committee which is in charge of providing guidance to interested parties in case of doubt as to the application of the Code, as well as assessment and decision making when verified cases of violation of principles. When faced with situations that may cause discomfort or embarrassment for judgment, the Committee shall submit the case to the Human Resources and Ethics Committee and if the standoff persists, you can seek support from an impartial and independent outside arbitrator, to issue seem that help in the solution of the case. For an effective action, the Conduct Committee must act in three instances: Management Remuneration The total annual amount of fixed remuneration is set by the General Assembly and distributed among the directors by the Administrative Board. The largest individual fixed annual remuneration of the Executive Committee / Board of Directors amounted to R$ 2,110.8 thousand in 2013, the average pay was R$ thousand and the lowest was R$ 325 thousand. In the statutory board, the highest individual compensation was fixed at R$ 1,568.4 thousand in 2013, the average was R$ 1,030.6 thousand and the lowest was R$ thousand. In the Fiscal Council, the highest individual compensation was fixed at R$ 195 Disclosure and Use of Relevant Information and Trading Policy The Policy on Disclosure of Marcopolo Information aims to maintain consistency, simultaneity and transparency in the disclosure of acts and events involving the Company s businesses. It also establishes the procedures to be adopted for the disclosure of information about Marcopolo, including information involving relevant acts and facts, and maintaining confidentiality of Procedures and Performance Evaluation The Administrative Board assesses bimonthly in face to face meeting, the Company s performance reported by the Board. The results are also examined by the Audit Board and by an independent external audit every quarter. The Executive Board is the governing body responsible for identifying relevant risks and opportunities GRI 4.6/4.8/4.11 Committee of Human Resources and Ethics, representing the Administrative Board - is the highest level of implementation and evaluation of conflicting situations to the Code of Conduct related to the positions of Directors or shareholders, also for cases that exceed the powers of the Central Committee. Central Committee - Its main function is to coordinate the adoption of the Code of Conduct by all who are part of the Marcopolo context, regardless of geographic location or area, reporting directly to the Committee of Human Resources and Ethics. Local Committees - Its main function is to coordinate the adoption of the Code of Conduct in operations whose geographical location is outside the geographical context of the Head office (Caxias do Sul, RS, Brazil). The local committees report directly to the Central Committee. marcopolo.com.br/cc Read the full version of the Code of Conduct on the Company s website. thousand in 2013, the average was R$ 169 thousand and the lowest was R$ 156 thousand. The biggest single variable remuneration of the Executive Committee / Board of Directors was R$ 1,950 thousand in 2013, the average variable remuneration was R$ thousand and the lowest was zero. In the statutory board, the largest single variable compensation in 2013 was de R$ 1,414.3 thousand, the average was R$ 948, 8 thousand and the lowest was R$ 715 thousand. The members of the Administrative Board and the Audit Board do not receive variable compensation, only Directors and Executive Committee members receive it. undisclosed material information. The Director of Investor Relations is responsible for the implementation, monitoring and general administration of the Trading Policy and all communication between the Company and the CVM and the Stock Exchanges, as well as between the Company and the market, investors and analysts. to the Company, proposing, based on Strategic Planning, actions necessary to the Audit and Risk Committee and subsequently to the Administrative Board, also implementing them in case of approval. Indicators of Sustainability are now also incorporated into the agenda of the meetings of the Council. 26 CORPORATE GOVERNANCE SUSTAINABILITY REPORT CORPORATE GOVERNANCE 27

15 5.COMMUNICATION CHANNELS GRI 4.4 EMPLOYEES The ViaPolo Internal Communication Network, launched in March 2012, unified the various communication channels used by the company for the relationship with employees and their families. In 2013, changes in the network were consolidated by facilitating access to information in the units of Caxias do Sul and Duque de Caxias. The ViaPolo network consists of wall newspapers, intranet, posters, magazine and Corporate TV. Its operation is in charge of the Internal Communications department, which is also responsible for the information, engagement and relationship campaigns that can involve both employees and their families. Marcopolo uses the intranet to conduct periodic surveys in order to assess the understanding and effectiveness of information and actions of the company. The remodeling of the Ombudsman was very important to improve the control of actions and responses, including the retraining of all managers. The Ombudsman program is an important channel of communication between employees and Marcopolo, it allows the company to constantly monitor the organizational environment, taking actions to improve people management practices. Marcopolo has two channels of the Ombudsman program for the employees: the Free Channel and the Conduct Committee. The Free Channel is a program that welcomes suggestions, criticisms, complaints or praise from employees; arising issues can be about relationships at work and the management of the company. The Conduct Committee has the responsibility to provide guidance to employees in case of doubt as to the application of the Code of Conduct, as well as assessment and decision making when cases of violation of principles are verified. To address any situation to the Free Channel or the Conduct Committee, employees must use the link on the corporate Intranet page. The system is 100% safe, and the individuals do not need to identify themselves to use the Ombudsman. The manifestations are forwarded to the responsible for the matters, and the answer must be provided in the allotted time. When the employee is not identified, the answers are placed on the intranet and the sender has access through the password received when sending the message. The practice is also foreseen by the regulation SA 8000, which aims to ensure workers rights. Employees and people in general can use the External Ombudsman, through the open channel to make complaints of potential fraud, theft and related topics, which will be segregated and sent for evaluation of Internal Audit, under the management of the Audit and Risks Committee. Employee Satisfaction The company carries Organizational Environment Survey to verify the satisfaction of its employees towards management as well as the services and benefits offered. A sample survey with 30% of the workforce was performed in 2012 and the overall result for Brazil is 69% satisfaction. After the research, improvement actions were defined and they have been implemented since then. By 2014, Marcopolo aims to carry out a new survey of all the employees in Brazil. 28 COMMUNICATION CHANNELS SUSTAINABILITY REPORT COMMUNICATION CHANNELS 29

16 CLIENTS GRI PR.5 SOCIAL MEDIA A set of communication channels are available in order to approach the customers and the company such as the customer service center s telephone number, s and website. In addition to that, Marcopolo publishes three quarterly magazines: Traveller, Moneo and Volare Club Magazine of news and trivia related to the brand or topics of interest of their audiences. The Network of Representatives and Distributors is a strong ally of the company to help with the operation of actions for the approximation with customers, promotion of relationships and dissemination of information. In 2013, Marcopolo fan page counted on 720,000 followers, from which 27% women and 73% men. In this period, the page presented an average per publication of 25.5 thousand people, 12,100 clicks in publications and 1,100 interactions (like, comment or share). The fan page was created to facilitate access to the company s info as well as market-related topics about urban mobility / public transportation, among others by customers, partners, community and also for those who are passionate about the brand. The Company has been consolidating its project to expand operations on digital platforms such as the website, Twitter, YouTube and Flicker, by doing so it maintains a proactive attitude in order to increase the satisfaction and admiration towards the brand. Monitoring and supply of relevant information contribute to the brand s reputation, besides serving as a source for research and development of products and services. Access to Marcopolo and Volare sites Satisfaction Survey Marcopolo Social Media In 2013, Marcopolo remodeled its way to assess relationship with customers through the use of the Image and Competitive Position Research, by interviewing 88 clients in person. The research has revealed the level of importance of the main attributes related to product and service, and to evaluate the level of customer satisfaction in every attribute (Representative Service; Operational Cost of Bus Bodies, Brand, Delivery time, Bus Body Quality; Support of the factory and Resale Value). This research considers, besides scoring, the degree of influence of each item in decision making. In the 2013 survey, respondents were only clients of the Bus Business (Brazil). YEAR 2013* GRADE 8.1 8, * The Customer Satisfaction Survey 2013 was made in different way from the previous one. Customer Service and Open Channel (Marcopolo) (Volare) Volare Social Media thousand visits 3,3 million page views 584 thousand visits 2,5 million page views 478 thousand visits 2,4 million page views The methodology used by Marcopolo in the years 2011 and 2012, involved quantitative and qualitative research with users of foreign and domestic markets, whereas the research with customers from abroad is only qualitative. s contato@marcopolo.com.br contato@volare.com.br Facebook Statistics Marcopolo and Volare Fans per countries and cities YouTube Statistics Marcopolo and Volare SUPPLIERS In 2013, the Company counted with 3,523 active suppliers, of which 0.77% belong to the curve A; 4.38% to curve B and 94.40% to curve C. Every two years a Supplier Meeting is held to strengthen strategic alliances. Last year Marcopolo gathered about 150 suppliers, all of them belonging from curves A and B, or regarded as strategic. Marcopolo s relationship with its suppliers is guided by three directives which resulted in the acronym MEC, which means Mature, Ethical and Trusted. Suppliers can count with the online Supplier Portal, where they are invited to learn about the Vision, Values and Code of Conduct of the company, available in the website. Read more about suppliers on page 41. Mexico Costa Rica Venezuela Colombia Equator Peru Brazil Bolivia Chile Paraguay Argentina Uruguay More than 1 million video views 1,390,619 minutes of videos watched (23,177 hours) Contact for new suppliers mec@marcopolo.com.br Egipt (52.043), USA (4.830), Guatemala (3.970), Panama (2.838), Angola (2.621), Spain(1.153), India (828), Congo (575), Italy (528), France (375), Indonesia (347), United Kingdom (337), El Salvador (299), Puerto Rico (217), Portugal (175). Font: facebook.com/stats More than 2,700 entries. 30 COMMUNICATION CHANNELS SUSTAINABILITY REPORT COMMUNICATION CHANNELS 31

17 INVESTORS Marcopolo s relationship with its shareholders and potential investors is made through the area of Investor Relations. In 2013, analysts from the country and abroad have been received and numerous telephone contacts were made, in addition to the 7th edition of Marcopolo s Day. This event was held in the Caxias do Sul unit, where analysts and investors could learn more about the company and its strategy as well as its products and production processes. Meetings with the Association of Investment Analysts and Professionals of the Capital Market (APIMEC) in São Paulo, Rio de Janeiro and Porto Alegre were held, as well as non-dealroad shows in Brazil and abroad. COMMUNITY Through the areas of Human Resources, Marketing and the Marcopolo Foundation, the company maintains a relationship of partnership and dialogue with the communities where its industrial plants are located. By identifying community needs, Marcopolo defines its social projects with assertiveness, institutional support, financial resources, or public / private partnerships. The Company provides fair and equal treatment to all minorities, whether of capital or other interested parties (stakeholders). To meet legal requirements and enhance the information provided to the market in general and in particular to foreign shareholders, the financial statements are disclosed under the standards established by IFRS - International Financial Reporting Standard. The website of Marcopolo Investor Relations has updated content to cater to investors as well as providing the GRI - an important communication tool for current and potential investors. Access the request form to require Marcopolo s support for projects via incentive laws: fundacao/pt/contato/lei_de_incentivo Mr.Valter Gomes Pinto leaves a legacy to be followed The director Mr. Valter Gomes Pinto passed away in 2013, with 81 years old, leaving a legacy of innovation and ideas for Marcopolo and being an example to everybody of the company which he helped to build along with Mr. Paulo Bellini. During 49 years he dedicated to the company, revealing to be very much ahead of his time, besides being very gentle, affectionate, elegant and very attached to details. He started in the company in 1964, when it was still called Nicola. By that time, the company depended almost exclusively on the center of the country, due to the receiving of raw material or sales operations. In this way, in 1967 he transferred to São Paulo, where he got the position of general sales supervisor of the national market, assisting in the opening of new markets. Returning to Caxias do Sul, his activity turned to the commercial area, covering national and international markets. Since the very beginning, he had a direct and determinant participation in the planning and definition of strategic actions of communication. He was responsible for changing the name of the company from Nicola to Marcopolo, for the construction of a solid identity that reflected the policy of quality and partnership with the client, besides strongly contributing for the expansion of businesses, due to his visionary guidance through different cultures and countries around the world, in the five continents. Mr. Valter Gomes Pinto left a very important legacy for the company and will be remembered as a great supporter of the improvement of the policy of relations with clients, through the expansion of networking and qualification of the processes of commercialization of products. He was also one of the greatest supporters of the Marcopolo Memory Documentation Center. He believed that the act of preserving the past is a way to honor all who made part of the history, allowing future generations to learn and develop from previous experiences. Marcopolo Memory Documentation Center The Marcopolo Memory Documentation Center created in 1999, highlights the importance of the company for the development of the city as well as the transport for passengers. It provides information related to the Company s performance and subsidies for present and future actions, therefore it counts with specialized professionals in the treatment of the technical acquits and research. It has approximately 122,000 items ranging from photos, magazines, newspapers, audio and video recordings, certificates, reports, newsletters, trophies and other objects that preserve the documentary and informative heritage of Marcopolo. In order to be recognized as a historical space that strengthens the identity of the company with its stakeholders and the general community, the Marcopolo Memory Documentation Center was opened to visitors in It has since received about 800 visitors. In 2013, 225 visitors were received, mostly students and tourists. 32 COMMUNICATION CHANNELS SUSTAINABILITY REPORT COMMUNICATION CHANNELS 33

18 6.ECONOMIC PERFORMANCE MARCOPOLO IN 2013 Bus manufacturing in 16 plants; units produced; 89,6% units produced in Brazil; employees; R$ 3.659,1 million in net revenue, 8,6% above the fiscal year 2012; Leadership in the Brazilian market with a market share of 39,8%; GRI 2.8 In intercity buses the market share was 56%; Marketing products to over 100 countries on five continents. GRI , AN OVERCOMING YEAR GRI 2.9 The year 2013 was characterized as a year of new challenges and turmoil for the bus manufacturing and bus bodies industry in Brazil, especially in the second half. In June, popular demonstrations, which began as a result of the announced increase of bus fares, leaded to claims that demanded tariff reductions and improvements in public transport, which resulted in the freezing of urban bus fares by local governments. Until then, Marcopolo had been operating with a good volume of orders, both for road and urban models. From the fourth quarter onwards the demand for city buses was reduced due to the freezing of bus tariffs. Added to this, is the publication of the invitation to bid on interstate lines by the National Transportation Agency (ANTT), which also brought uncertainty to the market for intercity buses, affecting the entry of new orders. Despite the challenging scenario, Marcopolo s net revenue grew 9.1% domestically and 7.5% in the export market compared with the previous year. Production in Brazil increased 5.0% compared to 2012, and the consolidated global production rose 4.0% in the same period. Although undeniable efforts in all spheres of the government, federal, state and municipal, aimed at providing a more organized public transport system with newer buses providing more speed and comfort for users, especially through BRT systems (Bus Rapid Transit); the short-term impacts reflected in the demand for buses in the end of 2013, bringing uncertainties to the bus sector in Brazil. However, in the medium to long term these actions should converge to acceleration in the renewal of the bus fleet in order to meet the new requirements and regulations, such as the limitation of maximum age and higher frequency of operations benefiting bus body manufacturers. In foreign markets, the revenue from Brazilian exports benefited from the devaluation of the BRL against the USD, and the Special Regime for Reintegration Securities Tax (REINTEGRA), valid until the end of Regarding the subsidiaries of Marcopolo abroad, the highlight was Volgren - Australia, where production rose 21.6% in 2013 compared to Altogether, transactions outside Marcopolo contributed with a volume of 2,154 units in As for financing, FINAME - PSI of BNDES credit line was renewed until the end of 2014 with interest of 6.0% per year, which is still attractive for the acquisition of capital assets in Brazil. At the end of the year, the Federal Government announced a new electronic auction of the project Road to School, for the purchase of up to 8,000 units. On January 23, 2013, Marcopolo has signed a strategic investment contract worth C$ million (Canadian dollars) to subscribe 34 ECONOMIC PERFORMANCE RELATÓRIO SUSTAINABILITY DE SUSTENTABILIDADE REPORT ECONOMIC PERFORMANCE 35

19 11,087,834 in two installments new common shares of New Flyer Industries Inc. (NFI), representing 19.99% of the share capital of this Company. The first installment was used by NFI to acquire the branch of the replacement parts (aftermarket) of Orion Company, and the second part was used to finance the acquisition of NABI (North American Bus Industries). On August 5, the Company announced the increase of the social capital, which went from R$ million to R$ 1.2 billion. The approved increase happened with 448,450,042 bonus shares. Thus, the total number of ON shares increased to 341,625,744 shares and 555,274,340 PNs shares, totaling 896,900,084 shares. This capital increase was due to the need of incorporating the Company s share of profit reserves, whose limit had been exceeded. On 25 November, the Administrative Board approved the repurchase of up to twenty million preferred shares corresponding to 3.6% of the total preferred shares issued by the Company in the market, with closing date on 25 March Still in 2013, Marcopolo has launched the new generation of the urban model called Torino. The new model employs modern and lighter materials to increase the efficiency and functionality of the vehicle. CONSOLIDATED NET INCOME Consolidated net revenues totaled R$ 3,659.3 million in 2013, 8.6% above the R$ 3,369.9 million in fiscal year Sales to the domestic market generated revenues of R$ 2,509.1 million or 68.6 % of total net revenue (68.2% in 2012). Exports added to overseas business revenue have reached R$ 1,150.2 million or 31.4% of the total, compared to R$ 1,070.0 million in the previous year, an increase of 7.5%. Revenue by product and target market is presented in the table below. BY PRODUCTS AND MARKETS (R$ MILLIONS) PRODUCTS TOTAL DM FM DM FM CONSOLIDATED FINANCIAL STATEMENTS GRI 3.10/3.11 In 2013, Marcopolo complied with the new regulation for the consolidation of financial results (IFRS 10/CPC 36), by changing the method of accounting used until then. The results of the companies relating to 2012 have been adjusted and are presented in this report in the new format. Interstate 863,7 418,3 789,2 350, ,3 Urban 570,1 495, , , ,5 Micro 75,9 42,4 60, ,3 100,2 Mini LCV Subtotal bodies 1.509, ,4 856, , Volare (1) 794,3 38,3 693,1 67,9 832,6 761 Body 103, , ,5 130,6 Moneo Bank, Parts, Others 101,6 103,9 92,8 102,5 205,5 195,3 GRAND TOTAL 2.509, , , , ,9 (1) Volare s income includes bus bodies. Origin of consolidated revenue by product line (in %): GRI 2.2 Intercity 35% Intercity 33,8% Urban29,1% 2013 Micros 3,2% Bus Bodies4,3% Urban 31% Micros 2,9% 2012 Bus Bodies 3,9% Volare 22,8 % Moneo Bank, Parts, Others 5,6% Moneo Bank, Parts, Others 5,8% Volare 22,6 % 36 ECONOMIC PERFORMANCE SUSTAINABILITY REPORT ECONOMIC PERFORMANCE 37

20 Direct Economic Value Generated and Distributed GRI EC.1 The economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings and payments to capital providers and government added in December 2013, the amount of R$ 1,392.3 million, a growth of 7.86% compared with the previous year. Of this amount: (i) R$ million or 56.12% were used for compensation of employees; (ii) R$ million or 16.48% were intended for return capital of third parties; (iii) R$ million or 16.06% were related to retained earnings in the year; (iv) R$ 89.5 million or 6.42% were allocated to the Government in the form of contributions, taxes and fees; and (v) R$ 68.7 million or 4.92% was allocated to shareholders for dividends and interest payments. MARKET SHARE In 2013, Marcopolo s consolidated production totaled 20,643 units, 4.0% higher than the 19,853 units manufactured in the year Of this total, 89.6% correspond to production in Brazil and 10.4% abroad. AREA Total added value to distribute (in thousand R$) R$ R$ Participation in the Brazilian Market (%) PRODUCTS (1) Distribution of Added Value 6,42% 56,12% 4,92% 16,48% 16,06% Government Employees Shareholders Third parties Withheld 8,36% 52,81% 11,09% 15,4% 12,34% Government Employees Shareholders Third parties Withheld Intercity 56 58,9 Urban 34,7 34,6 Micros 24,9 22,8 CAPITAL MARKET Performance of the Shares on BM & FBovespa The company has a registered capital of R$ 1.2 billion, divided into 896,900,048 shares, of which 341,625,744 are common shares (38.1%) and 555,274,340 are preferred shares (61.9%), all nominative, with no par value. Preferred shares of Marcopolo depreciated 20.1% in 2013, against 15.5% devaluation of the Bovespa index. In 2013, million transactions were held, an increase of 59.8% over the 328,200 thousand performed in 2012 and traded million shares. Negotiations with shares of Marcopolo moved R$ 4.0 billion in the year, a volume 16.9% higher than in The participation of foreign investors in the capital of Marcopolo totaled 51.7% of preferred shares in , and 34.4% of the total share capital. In October 2013, Marcopolo received the Abrasca Value Creation Award in São Paulo, standing out as the best case of value creation from 2010 to During the period, Marcopolo has created 62.17% of shareholder value. In addition to the economic and financial highlights, Marcopolo has received an excellent appraisal in the categories of corporate governance, risk control, transparency and performance of the area of investor relations in qualitative research conducted among specialized analysts in the Company. The following table shows the evolution of the main indicators related to the capital market: Minis (2) - - TOTAL 39,8 39,5 Source: FABUS and SIMEFRE (1) Includes 100,0% of Marcopolo Rio. (2) Volare does not count for purposes of market share. Marcopolo Consolidated Worldwide Production By Model PRODUCTS/ MARKET (1) (units) DM FM (2) TOTAL DM FM (2) TOTAL Intercity , Urban INDICATORS Number of transactions (thousands) 1.106,4 692,5 396,8 Traded shares (millions) 455,8 328,2 298,2 Transacted value (R$ million) 3.971, , ,2 Market Value (R$ million) (1) (2) (*) 4.553, , ,8 Equity value per share (R$) (*) 1,69 1,45 1,30 Quotation POMO4 (Last working day) (*) 5,10 6,38 3,55 Interest on capital and dividends per share (R$/share) (*) 0,145 0,160 0,186 (1) Price of the last transaction of the period of preferred shares (PE), multiplied by the total shares (OE + PE) in the same period. (2) Of this total, 4,134,874 preferred shares were held in treasury in (*) The data are adjusted to reflect the bonus of 100.0% granted as according to the Administrative Board in Micros Minis (LCV) SUBTOTAL Volare (3) TOTAL (1) DM = Domestic Market; FM = Foreign Market. (2) In the total production of FM are included the exported units in KD (partially or completely knocked down bus bodies). (3) The production of Volare Buses is not part of the data of SIMEFRE and FABUS or the production sector. 38 ECONOMIC PERFORMANCE SUSTAINABILITY REPORT ECONOMIC PERFORMANCE 39