2012 sustainability report

Transcription

1

2 BRASIL KIRIN HEAD OFFICE, IN ITU, SÃO PAULO STATE. This is Brasil Kirin s first, and it follows the guidelines established by the GRI (Global Reporting Initiative) an international standard adopted by more than one thousand companies worldwide. All the information in this publication refers to the period of January 1 st to December 31 st. And by responding to 58 performance indicators, this achieves the application level B which requires a minimum of 20 indicators responses. [GRI 3.1] Through this publication, Brasil Kirin shares with its stakeholders all its initiatives in the economic, social and environmental front. This document also represents the beginning of a new cycle, which is the publication of s on an annual basis. [GRI 3.2, 3.3] About the If you have any doubts or recommendations, please get in touch via the [email protected]. [GRI 3.4] 1

3 About the Surprising the consumer Ensuring the ongoing success and growth of a company which has been in the market for more than 70 years, while at the same time review processes, procedures, goals and it s positioning to than relaunch it with a new corporate brand and a new vision. This was the complex challenge for. We faced many obstacles, but we were extremely proud to present Brasil Kirin brand to the Brazilian market in November. The new company combines the success history of the traditional Schincariol brand founded in the City of Itu, state of São Paulo, in 1939 with the innovation and strength of the Kirin Holdings Company, group of Japanese origin and tradition that acquired the former in The new brand launch was not the only reason to consider as a great year. The positive results proved that the restructuring of the operation and alignment with Kirin Group guidelines were carried out with maximum efficiency, involving a thorough remodeling of our corporate governance to capture market best practices. truly oriented to the consumer. This is to say that we understand the consumer and his preferences first; and only then we innovate in our products and processes. This will be an ongoing process geared to Brasil Kirin s medium and long-term strategic planning once it is oriented by our new Vision of being an innovative company that shares with its consumers moments of joy and pleasure. The year s target was to overcome the losses from the previous year. And this was accomplished successfully: revenues reached R$ billion, % higher than On top of that, our EBITDA (earnings before interest, taxes, depreciation and amortization) was R$ 601 million, two times bigger than the previous year. 2 These robust results were not only due to the major effort directed at reviewing processes, reducing costs and increasing efficiency, but also to what we consider one of the most important thrusts initiated by Brasil Kirin in : the transformation into a company GINO DI DOMENICO, COMPANY PRESIDENT

4 About the It is also worthy to note our portfolio restructuring. In, we carefully studied each product deciding to discontinue around 25% of the items not aligned with our strategy. On top of that, another important change was the decision to regionalize our portfolio, which we could highlight Schin No Grau, a new beer to sell exclusively in the North and Northeast of Brazil. The company s accomplishments in were not limited to the financial and business fronts. In, we increased the use of renewable fuels in our plants, which accounted for 34% of our entire energy matrix by the end of the year. We also achieved a recycling rate of 92% for the waste generated in the company production process. Together with industry associations, we also took an active part in discussions on the implantation of Brazil s national solid waste policy. We have maintained a robust partnership with the Fundação SOS Mata Atlântica for more than five years. During this period, we have planted some 2 million trees, with an annual production of 700,000 seedlings in Itu. The plan is to extend this project to other parts of the country in the coming years. In terms of people development, the highlight was employee trainings and qualifications, which totaled 491 thousand hours and consumed an investment of R$5.7 million. This means preparing 10,000 professionals to take advantage of growth opportunities available in our country. Even with robust numbers and consistent projects, we recognize that these measures were being implanted in a piecemeal fashion and that there is still much to be done with respect to our governance of. To drive consistent progress, in we initiated a program to systematize our projects. Our commitment for 2013 is to implant governance for in Brasil Kirin to enhance and consolidate our results and guarantee their relevance in the long term. An additional challenge in furthering the approach will be taking it beyond the boundaries of Brasil Kirin to guarantee the consistent engagement of our stakeholders. We are aware that we must find effective ways to influence our entire production chain, making a binding condition for doing business. [GRI 1.1, 1.2] Enjoy your read! 25% of the products not aligned with our strategy were DISCONTINUED. R$ 5.7 million invested in EMPLOYEE training. Executive president 3 Even with robust numbers and CONSISTENT projects, we recognize THAT measures were being implanted in a piecemeal fashion and THAT there is still much TO be done with respect TO our governance of.

5 Tradition and innovation BRASIL KIRIN SUSTAINABILITY REPORT

6 Now a subsidiary of one of the LARGEST beverage manufacturers worldwide, the COMPANY WAS founded in São PAULO state in OUR PRODUCTS ARE MANUFACTURED IN 13 PLANTS: About the Brasil Kirin is a subsidiary of the Kirin Holdings Company, one of the largest beverage companies in the world. Based in Japan, the Kirin Group operates in 15 countries, has global revenues of R$ 52 billion, 46 thousand employees and 270 companies worldwide. Acquired by the Kirin Group in 2011, Brasil Kirin existed for 73 years as Schincariol, founded in 1939 as a small soft drink manufacturer in Itu in the state of São Paulo, where the company s headquarters are still located. [GRI 2.1, 2.3, 2.4, 2.8] Amazonas 1. Manaus Pará 2. Benevides Maranhão 3. Caxias Ceará 4. Horizonte Pernambuco 5. Recife 6. Igarassu Bahia 7. Alagoinhas Goiás 8. Alexânia Rio de Janeiro 9. Cachoeiras de Macacu Our products are manufactured at 13 plants located in the following cities in 11 states: Manaus (AM), Benevides (PA), Caxias (MA), Horizonte (CE), Alagoinhas (BA), Recife and Igarassu (PE), Alexânia (GO), Blumenau (SC), Igrejinha (RS), Cachoeiras de Macacu (RJ), Campos do Jordão and Itu (SP). Brasil Kirin has 15 distribution centers and 194 resellers serving 600 thousand points of sale nationwide. Headcount at the end of stood at 10,929 employees. [GRI 2.5, 2.8] São Paulo 10. Campos do Jordão 11. Itu Santa Catarina 12. Blumenau Rio Grande do Sul 13. Igrejinha 13 12

7 The Brasil Kirin portfolio comprises alcoholic and non-alcoholic beverages, ranging from beer to soft drinks, juices and water. THE COMPANY S PORTFOLIO COMPRISES ALCOHOLIC AND NON-ALCOHOLIC BEVERAGES. About the Alcoholic portfolio (available in diverse sizes and both returnable and disposable packs): Nova Schin, Devassa, Baden Baden, Eisenbahn, Cintra and Glacial. Non-alcoholic portfolio (available in diverse sizes and pack types): Água Schin, Schin Soft Drinks, Itubaína, Fruthos (fruit nectar) and Skinka (mixed fruit beverages). [GRI 2.2, 2.8] The company also runs the Cervejaria Devassa franchise chain, with 28 units located in the South, Southeast and Central West regions at the end of. Sonar, Brasil Kirin s franchise operation, also offers investors the Mini Cervejaria and Ponto Devassa kiosk business models, which are formatted in accordance with the level of investment, location and space available. [GRI 2.2, 2.7] 6

8 A 73 year history About the 1939 Primo Schincariol opens a small soft drink factory in his backyard in Itu (SP) and initiates production of cocoa liqueur, cordials, low alcohol content wine with cinchona, anise (aniseed flavored liqueur) and the soft drink Itubaína, which still features in the company s portfolio Plant is transferred to current location, now the company s head office in Itu Start up of large-scale soft drink production Launch of company s first beer, Pilsen Schincariol Launch of Schin soft drinks in PET bottle Company expands production and inaugurates second plant in Alagoinhas, Bahia Inauguration of Cachoeiras de Macacu plant in Rio de Janeiro Launch of Nova Schin beer, the company s flagship product, substituting Pilsen Schincariol. Other launches in the year are Glacial beer, Schin Tônica and Schin Citrus soft drinks. Expansion continues with the opening of manufacturing units in Alexânia (Goiás) and Recife (Pernambuco) Launch of MiniSchin soft drink line and inauguration of plants in Igrejinha (Rio Grande do Sul) and Benevides (Pará) Construction of plant in Horizonte (Ceará) Launch of Fruthos nectar product line and acquisition of Devassa brand in Cachoeiras de Macacu (Rio de Janeiro), Baden Baden in Campos do Jordão (São Paulo), as well as Igarassu plant (Pernambuco) Acquisition of Eisenbahn, in Blumenau (Santa Catarina), expanding company s presence in the premium beer segment. Acquisition of Cintra brand beer Start up of production at Caxias plant in Maranhão. Launch of Skinka line of mixed fruit juices and Primus beer Launch of Devassa Bem Loura beer Schincariol is acquired by Kirin Company in November. Launch of new corporate brand, Brasil Kirin. The Schin No Grau and Devassa by Playboy beers are also launched during the year. 7

9 Building a new brand The guiding principles behind the creation of the Brasil Kirin brand on November 12th, were the fusion of two company traditions to demonstrate the potential for innovation and the transmission of essential values for doing business, such as respect, responsibility and commitment to sustainable growth. At 8 a.m. on November 12th,, all our employees stopped work for the official announcement of the creation of the Brasil Kirin brand. This was delivered simultaneously by the CEO at company headquarters in Itu and by leaders at 24 other locations (with the exception of the Cachoeiras de Macacu operation, which was being audited). Prior to the launch, a wide-ranging diagnosis of the business, its beliefs and its organizational culture was undertaken. Working groups were set up not only to determine the new name and brand, but also a new vision, mission and values for the company, as well as a new positioning for an operation intent on being more competitive, more innovative and more sustainable. The announcement, made first to employees and then to the market, marked the end of the first major stage of a transition which Brasil Kirin conducted with full transparency and respect for all those who contributed to the company s success. Employees assembled for LAUNCH of Brasil Kirin brand on November 12 th. About the Strength and respect are fundamental pillars of this proposal. Strength that may be measured by the diversity of the portfolio, the quality of the plants, the extensive distributor network and the thousands of employees. This is allied with respect for employees who work towards achieving outstanding results, for consumers and for resellers. Brasil Kirin represents the fusion of the vision, long-term planning and innovative technology of the Kirin Group with the passion, the energy and the strength of the Brazilian operation. 8

10 New brand: Brazil in first place 1 2 About the 1. The logo contains an ideogram in which Brazil is in first place, symbolizing respect for the country and its people. 9 water 2. It consists of icons that stand for the elements of nature: earth, air, fire and water. Furthermore, it includes green and yellow, symbolizing Brazil. In Japanese culture, the union of all the elements means the source of life and our main raw ingredient: water.

11 [GRI 4.8] About the VISION To be an innovator in beverages that give pleasure and joy. MISSION To surprise consumers with innovation, gaining their trust and admiration. VALUES People: loyalty, passion and commitment. Services: consumer focus, presence and innovation. Results: strong brands, superior results and recognition. OUR BELIEF Making a toast! At this very moment, someone somewhere is making a toast. It might be because of a personal or professional achievement, an idea, the birth of a child, a business deal or simply because they are happy. Whatever the reason, a toast is the celebration of something positive, it brings people together, making them smile, stirring their emotions. It represents fun. Brasil Kirin wants to give people joy through its products. We believe that our joy in doing what we love is also good for others. 10 CAXIAS PLANT IN MARANHÃO

12 Record gross revenues BRASIL KIRIN SUSTAINABILITY REPORT

13 Gross revenues grew % compared with 2011; the company accounted for 5% of the Kirin Group s profits About the 12 The transformations in Brasil Kirin s structure and operations produced positive results in the first full year of activities. Gross revenues totaled R$ billion, % up on Ebitda (earnings before interest, taxes, depreciation and amortization) was R$ 601 million, twice the year ago figure. A loss of R$ 78 million in 2011 was converted into net earnings of R$ 298 million in. In its first year under the new brand, the company accounted for 5% of the Kirin Group s earnings. Net revenues totaling R$ billion represented growth of 14.6% over 2011, and a new record for the Group. Sales volume topped the 3.25 billion liter mark, 7.4% up on This volume growth was driven by both the beer category (the Nova Schin, Glacial and Devassa brands, in addition to the special beers Baden Baden and Eisenbahn), and nonalcoholic categories, particularly worthy of note being soft drinks, which grew 10.9% compared with the previous year. The improved results were well balanced among sales and distribution channels throughout the country s different regions. In the course of the year, the portfolio was repositioned in several regions and channels to meet demand by extending brand presence at points of sale. In parallel, profitability was improved, with benefits perceived both by customers and end consumers. [GRI 2.7] These robust results are also reflected in increased market share. In an audit carried out by the tax authority Receita Federal via the electronic beverage production control seal system (Sicobe), we ended with 15.24% volume share in the beer segment, compared with 14.4% in 2011, and 6.1% volume share in the soft drink segment, up from 5.4% the previous year. A number of factors explain our strong business performance in. In addition to a favorable macroeconomic situation, the new Brasil Kirin management model, the strategic decision to focus on innovation (read more in the chapters and Best Practices) and the initiative to improve consumer understanding (read more in the chapter ) contributed to the positive figures. Incentives and tax policy are a competitive differential, for which reason these data are considered strategic and confidential. [GRI EC4] Environmental and social performance are presented in the chapters Best Practices and. R$ 298 million profit in billion liters of beverages COMMERCIALIzed in.

14 Main financial results (millions of R$) Value added statement (IN 000 s of R$) [GRI EC1] Shareholders (remuneration of own capital) Employees (remuneration, benefits and charges) Government (taxes, charges and contributions) , , ,780 1,048,928 1,257,743 1,575,314 Retained profit/loss 48,893-78, ,980 Interest and rent (remuneration of third-party capital) 174, , ,337 Community investments About the ,082 Gross revenues 3,159 Net revenue 268 Ebitda -78 Net profit ,886 Gross revenues 3,623 Net revenue 601 Ebitda 298 Net profit

15 A YEAR OF RESTRUCTURING BRASIL KIRIN SUSTAINABILITY REPORT

16 About the CORPORATE governance at Brasil Kirin WAS RESTRUCTURED in, with the new model DRAWING on best market practice. The restructuring of corporate governance at Brasil Kirin in incorporated best market practice Corporate governance at Brasil Kirin was restructured in, with the new model drawing on best market practice. The company s main decision-making body is the Board of Directors, which meets periodically in accordance with a predetermined schedule. The Board s responsibilities encompass achievement of governance targets, the dissemination and adaptation of Kirin Holdings global strategies and values, as well as overseeing internal Brasil Kirin policies. The Executive Board, presided by the CEO, establishes guidelines for and manages the organization s economic, social and environmental performance. The Board of Directors consists of six people, all of whom are men, with two being independent or non-executive members. The executive president, Gino Di Domenico, is a member of the Board of Directors. The composition of the Board of Directors is aligned with Kirin Holdings guidelines, with recruitment of the independent members assisted by an external consultancy. The Board of Directors performance is governed by Kirin Holdings guidelines. The Board complies with the Charter set forth by Kirin Holdings. This Charter determines the appropriate decision-making spheres, the management structure and the key organizational elements of the board. It also sets forth guidelines for the Board of Directors to guarantee the integrity, accountability, relevance, effectiveness and impact of the operation. The board members compensation is considered strategic and is therefore confidential. 15

17 GOVERNANCE in brasil kirin In conjunction with other executives, the members of the Board of Directors also participate in three auxiliary committees: Strategy; Audit and Finance; and People. These committees also meet according to a pre-determined schedule. About the Board of Directors Executive President Audit and Finance Committee People Committee Strategy Committee The Audit and Finance Committee, which s directly to the Board of Directors, is responsible for supervising, identifying and managing risks in the company (further information in the texts on risk management). Additionally, the company has an internal audit and fraud prevention department that regularly s any risks identified to the Audit and Finance Committee. Brasil Kirin has a Compliance group, subordinated to the Control area, which is responsible for the dissemination and adherence to the company s codes of conduct, standards and policies. Within the People Committee, there is a Disciplinary Affairs sub-committee which decides on sanctions and punishment for any breaches of the code of conduct, norms and procedures. [GRI 4.8] Tax Management and Institutional Relations Executive Board Human and Organizational Development Operations Commercial North/ Northeast Commercial South/ Southeast/ Center West and REM* Finance/ Control/IT** Marketing In addition to the Talk to Brasil Kirin channel, there are other mechanisms for communication between employees and senior management. One of these is the President s Blog, open to all employees. The president frequently provides information on company strategy, targets and results, projects and programs and other important business initiatives. The president himself responds to questions from all employees. (*) States of Rio de Janeiro/Espírito Santo/Minas Gerais (**) Information Technology On an annual basis, Brasil Kirin receives an independent audit from Japan mandated by the Kirin Holdings Company. [GRI 4.1, 4.2, 4.3, 4.4, 4.6, 4.7, 4.9] 16

18 About the Strategic planning and management model In the Kirin Group, strategic planning is undertaken in long-term cycles lasting nine years. Each of these is divided into medium term cycles of three years. In, the company elaborated a new medium term cycle which will come into force in This plan was fully based on the concepts, standards and methodologies used by the Kirin Group worldwide. Baptized 2015 Vision, this planning is focused on understanding the market, building strong brands, strengthening commercial and distribution activities, improving operational efficiency, seeking synergies within the group, expanding the program and prioritizing employee development. Brasil Kirin aims to achieve significant growth and market gains by the end of this cycle in The 2013 Strategic Map, focused on Brands, Distribution and People. The corporate Strategic Map is broken down into other specific maps by business unit, manufacturing unit and distribution center. These secondary maps ensure that all employees are aligned and committed to the targets established by Brasil Kirin. Employees variable remuneration is directly linked with the targets set forth in these maps. This means that the entire team is responsible for achieving company targets, including diverse aspects of, such as environmental and social questions (read more in ). Balanced Scorecard (BSC) methodology has driven company management for more than five years. This methodology aims to ensure the disciplined execution of strategy through the establishment of goals, targets and indicators. This enables the measurement of results and management of performance through constant operational alignment with the company vision. All the strategic goals are inserted in the map in four dimensions: People and Learning, Internal Processes, Market and Financial Results. [GRI 4.5, 4.8, 4.9] Other important management tools at Brasil Kirin are Total Performance Management (TPM) and Sales and Operations Planning (S&OP). TPM is a Japanese methodology focused on maximizing plant performance and reducing losses, based on the use of indicators, sharing best practices and disseminating knowledge (read more in Best Practices). S&OP is aimed at sales accuracy, that is, balancing company production with sales to prevent both overproduction and stock shortfalls. 17 The 2013 strategic map is focused on brands, distribution and people. This is then broken down INTO other specific maps. The company also has a strategic Project Management Office, which is open to collaboration and suggestions from all company areas, enabling employees to suggest work fronts and projects that contribute to company strategy.

19 Internal controls About the Internal audit In, we introduced improvements to the internal audit process. To drive greater professionalization and apply best market practices, the company initiated the adoption of Institute of Internal Auditors (IIA) guidelines, considered a global benchmark in internal audit. The scope adopted by companies following IIA recommendations encompasses a systemic, process view of risk management, as well as control points. As a result of this process, the company reviewed its internal audit statute, developed a technical manual and established a charter attesting to the full independence of our auditors. Currently the audit area s functionally to the Audit and Finance Committee, which has independent members, and administratively to the Brasil Kirin s executive directors. Kirin Internal Audit-KIA, attached to Kirin Holdings in Japan, performs an annual assessment of the quality of the local audits in accordance with IIA guidelines. Four members of the internal audit team have been trained in J-SOX (see box on following page). Risk management and finance Risk management is a strategic focus for the organization. By means of a structured process, we identify the most relevant risks for the company and for our stakeholder groups, mapping them in terms of likelihood and impact. This exercise results in a risk map which is monitored constantly, and which guides the elaboration of corrective action plans. This process also serves as a starting point to determine the scope of the internal audit, which uses the risk map as one of the bases for its planning. In, the 13 Brasil Kirin manufacturing units were assessed in terms corruption-related risk. In 2013, unit managers are being interviewed as part of an exercise to identify possible risks. [GRI SO2] The Brasil Kirin finance area was also restructured in to incorporate best market practice and Kirin Group recommendations. In addition to the formal control and treasury structures, the area was reinforced with a group of finance business partners dedicated to projecting and monitoring business performance in conjunction with other areas. All 13 plants were assessed in terms of corruption- RELATED risk. Brasil Kirin does not use child or slave labor in its operations. All our employees are over 18 years of age or are contracted as apprentices (from 14 to 23 years and 11 months). All third-party contracts drawn up by the legal area contain clauses prohibiting the use of child or slave labor. The proven use of child, forced or slave labor implies the immediate rescission of such contracts. [GRI HR6, HR7] 18

20 About the Compliance Brasil Kirin s compliance area was initiated in 2011 and formally implemented in. Its main mission is to ensure company and employee compliance with legislation, internal regulations and policies based on a three-part compliance program: Prevent, Act and Assure. The compliance area manages the conduct and ethics channel. This is a confidential channel through which employees and third parties may breaches or suspected breaches of conduct. The contact details are readily available inside and outside the company, and s may be made by telephone or . In, 1,292 s were received, averaging 120 per month. All of these were examined. The persons making s may access the company response confidentially via a case number. [GRI 4.4] During the year, 288 human rights-related cases were ed through the company s conduct and ethics channel. Of these, 284 were from employees and 4 from external stakeholders. In all, 258 cases were concluded, 7 are under investigation and 23 were deemed ungrounded. [GRI HR11] Three of the cases ed through this channel concerned racial discrimination two at the company s distribution unit in Curitiba and one at the Itu plant. All of these have been finalized. Where managers were involved, the Human and Organizational Development (DHO in the Portuguese acronym) area took action to realign their conduct. In the cases involving work colleagues, the issue of discrimination was raised in an on-site meeting, since no specific people were named in the. [GRI HR4] In 2013, the company will conduct a campaign to inform the change of the name of the conduct and ethic channel to Talk to Brasil Kirin and to explain how it should be used and its main purpose: to help establish a wholesome and fair working environment. During the year, the DHO will develop preventive measures focused on harassment and undertake complementary measures jointly with the commercial, operational and other corporate areas. The compliance area will be reinforced in 2013 with the indication of multipliers denominated compliance champions. These are employees selected from each of Brasil Kirin s units and operations nationwide who will be trained to disseminate and raise awareness of the importance of compliance among colleagues in their respective work places and areas of activity. In the area was engaged in two important projects: the implantation of the controls required under J-SOX (read in box) and the review of the Code of Conduct, which was modified to incorporate Kirin Group principles and J-SOX requirements. The document provides guidance for employees on the conduct expected of them and on the values, ethical principles and attitudes governing the company s relations with its stakeholders: employees, suppliers, customers, consumers and the community (read more in the chapter ). [GRI 4.14] J-SOX In 2011, the company became part of a group of publicly traded companies. As a result Brasil Kirin is required to comply with the Financial Instruments and Exchange Law, a set of regulations better known as Japan-SOX (or J-SOX), stemming from the United States SOX (Sarbannes- Oxley) Act. There are some differences between J-SOX and the North American act, but the objective is the same: to ensure transparent corporate management. 19

21 The review of the Code also addressed the alignment of Kirin Group values and competencies and involved diverse company areas: Human and Organizational Development (DHO), Institutional Relations, Legal, Information Security, Quality, Risk Management, Internal Audit, Process Management, Marketing, Supplies, Sustainability and Safety, Health and Environment (SSMA in the Portuguese acronym). [GRI 4.8] The document was distributed to all employees in June as part of the Code relaunch communication plan aimed at ensuring proper conduct in the company. The Code is also part of the induction process for new employees. [GRI SO3] The new Code of Conduct addresses relations with public authorities, in addition to providing information related to conflicts of interest and ethical conduct, including fraud, improper behavior and falsification, among others. [GRI SO3, SO4] In 2009, in conjunction with other companies in the foods and beverages sector, Brasil Kirin signed the Pledge a public commitment related to foods and beverages advertising for children. [GRI 4.12] No corruption-related judicial actions were concluded during the ing period. Neither were there any suits related to anticompetitive or monopolistic practices pending or concluded during the year. [GRI SO4, SO7] The Code of CONDUCT WAS distributed TO all EMPLOYEES in June. About the In 2013, the company is scheduling the elaboration of an anti-corruption policy, measures to raise employee awareness of corruption, the adaptation of the Code of Conduct to incorporate Kirin Holdings guidelines and the inclusion of an anti-corruption clause in all new Brasil Kirin service contracts and in existing ones as they come up for renewal. [GRI SO3] We are compliant with all Brazilian legal standards, including administrative rulings such as the Brazilian advertising self-regulatory code, the consumer defense code, the civil code, Law 9.294/96 (restrictions on the use and advertising of alcoholic beverages), Decree /72 (about the free distribution of prizes) and the Finance Ministry Rulings 41 and 422. For all campaigns and regulations, we consult the legislation to ensure company compliance. [GRI PR6] 20 We ensure that all the products the company commercializes are compliant with Brazilian legislation. [GRI PR6]

22 About the There were four cases of administrative or judicial sanctions for noncompliance with laws and regulations where the amounts involved were not significant (above R$100,000). These were related to the bottling and quality sector and caused no damage to consumer health. The cases related to labeling involved the 1 liter bottle of Nova Schin (in which the expression Litrão was substituted with Litro) and the beer Lust (due to an old label which was already being modified). The amounts of the sanctions are confidential. During the ing period there were no cases involving arbitration mechanisms. [GRI PR4, SO8] In, we had no cases of non-compliance related to product and service communication. [GRI PR7] No environment-related fines or sanctions were effectively executed in. All are currently being contested or awaiting appeal in the administrative or judicial spheres. [GRI EN28] Sustainability governance Brasil Kirin has a history of sustainable actions, programs and initiatives aimed at driving results in the financial and in the social and environmental areas. We are attuned to the growing number of corporations willing to review their practices in order to promote sustainable growth. Year on year, we have intensified our efforts to produce more balanced results, reduce the impacts caused by our operations and generate more benefits for our stakeholders. In addition to measuring the results of the practices identified, which are detailed throughout this in particular the eco-efficiency of our plants, measures to drive human development and the company s partnership with the Fundação SOS Mata Atlântica, we took the first steps towards building a governance structure. This is aimed not only at expanding the range and results of our practices, but also at improving management through the development of strategy and governance that address the priorities identified by our stakeholders, so that will be increasingly incorporated into Brasil Kirin s strategic planning and provide consistent orientation for the way we do business. One of our commitments for 2013 is to consolidate a culture in all company processes. In addition to having an area dedicated to, the company is planning to expand the team and nominate a director, as well as creating a Sustainability Committee. With this more robust structure and dedicated professionals, we intend to further dialog with our stakeholders, driving more consistent results and connecting with new strategic partners, such as NGOs and civil society organizations. Aligned with the transformation occurring in the company, in we initiated a more in-depth mapping and diagnosis of initiatives in place in the company. We also sought to increase our understanding of how company activities affect our stakeholders. 21

23 What is important BRASIL KIRIN SUSTAINABILITY REPORT

24 Our main stakeholders are our employees, consumers, CUSTOMERS, suppliers, the government and COMMUNITIES. See how Brasil Kirin relates TO each one of these groups in the [GRI 4.14] FOLLOWING pages EMPLOYEES Our wish to provide moments of joy is not limited to the consumers of our products. We believe that happiness and self-fulfillment should be part of the daily lives of the people who make Brasil Kirin s existence possible: our employees. We ended with a total of 10,929 employees working in the industrial, commercial and administrative areas. We have 35 directors and 304 apprentices. The company s headcount rose from 10,228 in 2011 to 10,929 in. [GRI LA1] Brasil Kirin believes employees should feel happy and fulfilled. Brasil Kirin has more male than female employees, particularly in the production area and at management and director level. Gender balance is more equitable at the administrative level and among apprentices. All the members of the Board of Directors are men. With respect to other minorities, 12% of the group s employees at the end of declared that they were black, and 2.9% are disabled. [GRI LA13] About the Percentage of men and women, by function Men Women Board 100% 0% Directors 97% 3% Management 89% 11% Administrative 57% 43% Production 94% 6% Apprentices 58% 42% 23

25 Percentage of employees declaring themselves black, by function [GRI LA13] Men Women Total Board 0% 0% 0% Directors 0% 0% 0% About the Management 1% 0% 0.9% Administrative 28% 5% 16.4% Production 49% 88% 68.5% Apprentices 17% 2% 9.5% Percentage of disabled people, by function * [GRI LA13] Men Women Total Management 1% 0% 1% Administrative 15% 8% 23% Production 1% 3% 4% Apprentices 0.6% 0.8% 1.4% * There were no disabled persons on the board or working as director in The company has more male than female employees, ESPECIALLY in production and at MANAGEMENT and director level. Percentage of employees by age group [GRI LA13] Below 30 years Between 30 and 50 years Above 50 years Board 0% 50% 50% Directors 0% 60% 40% Management 3.4% 90.2% 6.4% Administrative 40% 59% 1% 24 Production 35% 60% 5% Apprentices 100% 0% 0%

26 Most of the company s employees work in the South and Southeastern regions a total of 6,520. There are 3,672 employees in the Northeast of Brazil. It should be noted that there is a seasonal effect in the beverages sector in the winter, when the number of fixed-term work contracts is reduced. At the end of, 465 employees were on this type of contract. [GRI LA1] Employees by function* [GRI LA1] Men Women Directors 34 1 Management Heads/coordination Technical/supervision Employees by type of work contract [GRI LA1] Men Women Fixed-term Permanent 9,076 1,388 Total by gender 9,404 1,525 Total 10,929 Employees by employment type [GRI LA1] Men Women Full-time 9,174 1,410 Part-time Total by gender 9,382 1,547 Total 10,929 Most EMPLOYEES work in the south and southeastern regions. Administrative Operational 7, Trainees 0 0 About the Apprentices Interns 0 0 Total by gender 9,404 1,525 Total 10,929 *Third-parties are not included in the tables above or in the following ones. Employees by region [GRI LA1] Men Women Southern Region 1, Southeast Region 4, Central West Region Northeast Region 3, Northern Region Total by gender 9,404 1,525 Total 10,929

27 About the 26 Training and qualification Employee training is one of the pillars of our professional development project. The main vehicle for this proposal is the Brasil Kirin Academy, created in 2002 and until divided into four schools: Commercial, Leadership, Administrative and Industrial. Investment in training in totaled R$ 5.7 million. This resulted in 491 thousand hours of training an average of hours per employee. There are both classroom and online courses. However, e-learning is gaining ground because it offers access to a larger number of people from all our units. By the end of, the Brasil Kirin Academy portal had received 18 thousand enrollments for more than 355 courses. The company invested an additional R$ 601,231 in external courses for 495 employees. [GRI LA10, LA11] Investments in employee development in increased by 15%. The main courses in the year addressed areas related to leadership development, such as assertive people development, and behaviorbased safety. Training in the industrial area was focused on developing the core TPM skill set, occupational safety and the environment. In the Commercial area, educational actions were structured to develop the learning path of employees in the area. Further training addressed, such as the review and dissemination of the Code of Conduct, and awareness for inclusion of the disabled. [GRI LA10] Company training strategy and course contents are always developed in line with business strategy, with a focus on professional and personal development and the attainment of company results. To better align this process and expand academy activities, at the end of the company contracted the University of São Paulo (USP) to undertake corporate education consulting, the objective being to perform a diagnosis of the education system. Average hours training per employee, by gender, discriminated by function Men Women Directors Management Heads/coordination Technical/supervision Administrative Operational Apprentices Total hours training 424, , Total number of employees 9,404 1,525 Total average number of hours The results were excellent in a number of aspects, such as the Industrial area, where the school is fully consolidated and is considered a benchmark in the market. But the survey also showed that the Academy could expand the areas of knowledge covered and increase its potential public. New schools will be created in 2013, including Marketing, which will be directly linked with the company s innovation strategy, and Sustainability. There was no training in human rights in. [GRI HR3] The company provides outplacement services for ex-employees at management level and above at all its business units. [GRI LA11]

28 About the Development and performance The Brasil Kirin Performance Cycle analyzes employee performance based on two criteria: delivery of results in accordance with agreed upon responsibilities and indicators, and alignment with essential company competencies, that is, attitudes expected. This process offers employees a series of advantages, such as a stimulus for self-development, performance information for the employee to manage his/her own career, clarity about the performance the company expects and the company s overall expectations, as well as proximity with the employee s immediate superior. The Performance Cycle tools have been in place since Initially they were applied to the Commercial teams, with all directors and managers being included in This process was extended to all the other areas in, encompassing 99% of the company. The 90 Degree Feedback tool, consisting of self-appraisal and appraisal by the immediate superior is applied up to coordinator level. All employees at management level and above undergo 360 Degree Feedback which, in addition to the processes mentioned above, involves appraisal by peers, teams and client areas. The full cycle consists of four stages to be completed by the employee and superior: Contract, Accompany, Analyze and Feedback. After the results are released, the superior meets individually with the employee, addressing the needs identified and formalizing a set of actions which constitute the employee s Individual Development Plan (PDI in the Portuguese acronym). The performance appraisal cycle is conducted annually based on the company s strategic goals. [GRI LA12] Percentage of employees undergoing performance appraisal, by type Men Women Mission, Responsibilities and Indicators (MRI) 6.32% 5.72% 90º Feedback 80.58% 74.98% 360º Feedback 2.34% 1.53% Values Every two years, the company carries out a Values Survey among its leadership with a view to engaging leaders by linking personal values with company values. Training programs are developed to promote adherence to company values. Values are broken down by competencies, with measures to promote functional competencies by means of a development program, which also serves for leadership assessment. The results of this program are communicated in a Values and Advances in Strategy meeting, which also shows employees how they may contribute to improving company performance and to their own development. In, 449 of these meetings were held at the company s different sites. 99% of employees are appraised in the Performance CYCLE process. EVERY 2years the company carries out a VALUES Survey AMONG leaders. 27

29 About the Leadership Engaging our leaders is fundamental for the realization of the company s sustained growth strategy. Brasil Kirin has 1,200 leaders responsible for implementing this strategy, which involves all company areas and levels. In, the Brasil Kirin Academy Leadership School provided 12,047 hours training for leaders. These professionals also have access to the Leadership Portal, which offers a series of specific programs and contents related to the competencies leaders are expected to develop. There are formal modules addressing subjects such as feedback, assertive communication and coaching, as well as content for individual development. Another key aspect of the Brasil Kirin leadership strategy is the company s succession plan, known as the Loyalty Program. This is aimed at identifying, developing and ensuring the loyalty of key people to assume strategic positions in the short, medium and long terms, focused on retaining competencies and driving the sustainable development of the organization. Inclusion and diversity We also value inclusion and diversity. This commitment is explicit in the Efficient Inclusion Program, which creates vacancies for persons with disabilities. The proposal aims to promote effective inclusion. For this reason, it is based on a selection process aligned with Brasil Kirin values and the creation of work posts that truly permit people to be included and grow within the company. In 2013 we will reinforce actions to sensitize managers about effective inclusion and will undertake a new opportunity mapping exercise. The company also has a Young Apprentice program through which students aged 18 years and over may initiate their professional development within the company. The total number of apprentices at the end of was 304. The Efficient Inclusion program WAS created in 2005 TO drive INCLUSION and diversity. The company s main executives also participate in a coaching program, with adhesion standing at 100% in. To drive employee development, the company provides internal training, as well as external programs and courses offered through partnerships with universities, institutions and language schools. All employees are eligible for these programs in line with specific internal company policies and appraisal tools. 28 Focused on developing leaders for the future, the company also has a trainee program. This program did not take place in due to the structural changes undertaken. It will however be resumed in 2013 with a broader scope to cover new areas inside the company. [GRI LA11]

30 About the Climate survey The annual climate survey, Retrate, is designed to measure and understand employee perception of relations with their superiors, their work, the work place and interpersonal relations in general. A total of 94% of the work force participated in, generating 9,125 comments. The survey uses Great Place to Work Institute Brasil methodology, consisting of responses to statements designed to reveal employees perceptions of the company. The questions address five dimensions: Credibility, Respect, Fairness (these three items represent Trust), Pride and Camaraderie. The Organizational Climate Index based on the Great Place To Work dimensions, both in terms of Area Vision and Company Vision, grew two percentage points compared with 2011, reaching 67%. These findings are used to develop both corporate and site-based action plans aimed at promoting continuous improvement in the work environment. In 2011, the main areas for improvement identified were recognition and celebration between areas and leadership development. These were worked on throughout. In the survey, employees recognized that the company provides an environment that stimulates learning. The opportunities for improvement included review and communication of the Code of Conduct, partnerships with universities, study grants and Leadership School activities, among others. Remuneration and benefits The company provides employees with remuneration compatible with their functions and aligned with best market practice. Remuneration is defined using Hay Group methodology in accordance with national corporate policy, with adjustments for local markets as required. In, the lowest salary at Brasil Kirin was 3.39% higher than the national minimum salary for men and 14.15% higher for women. We consider the minimum salary for positions involving a monthly workload of 220 hours. Apprentices, who do not work full-time, are excluded from the calculation. [GRI EC5] Salary differences in entry positions may occur due to base salaries determined in collective agreements, depending on the region and union. All other positions are governed by regional salary scales, which are updated annually based on market research. All employees participate in the Profit Share Plan (PPR in the Portuguese acronym). In, we produced a manual to clarify how this benefit works. It explains each point of the plan in a straightforward, instructive manner: what it is, how it breaks down, what the rules, time frame and scope are, how approvals work and general information on payment frequency, rounding out of amounts, the advance payable in June, the closing date in December, as well as the payment dates. BENEFITS Employees are entitled to a series of benefits, the main ones being: medical assistance subsidized medications loans at differentiated interest rates food hamper minicase (company products in hamper) life insurance funeral allowance transportation vouchers or company bus canteen or meal vouchers dental assistance [GRI LA3] Throughout the company implanted climate committees to promote action plans and communicate improvements to each area of the company. 29

31 About the The company s variable remuneration model takes into account both group results (Ebitda) and specific location results (Local Strategic Map). The combination of these two factors may result in a payment of up 200% of the employee s monthly salary. The sales area has a commission-based salary complement. In, 366 Brasil Kirin employees took maternity/paternity leave; this benefited 301 men and 65 women. All those taking leave returned to work at the end of the leave. After 12 months, 240 men and 50 women continued as employees constituting a retention rate of 79.73% for men and 76.92% for women. The discharge of these employees occurred for a number of reasons: resignation, termination of work contract, dismissal without due cause (in function of performance) and dismissal with due cause. [GRI LA15] In, minicase (company products in hamper) distribution was extended to the distribution units. Hiring local labor Brasil Kirin does not have a specific policy for hiring local residents. Even so, statistics show a high frequency of residents from communities within an 80 km radius of the operations. In, almost 88% of employees came from local communities. For senior management (managers, directors, vice presidents and the president), the percentage coming from the local community drops to 58%, since these are strategic positions which are more difficult to fill. [GRI EC7] Union relations We respect each employee s right to be represented by his/her respective union. Our employees are represented by a number of unions, most of which associated with the foods and beverage, wholesale and transportation sectors. All are covered by agreements, either through collective convention (negotiation between the employee union and the employer category association) or through collective agreement (direct bargaining between the company and the employee union). This is the reason the company has a union relations area to manage relations and the negotiation of labor agreements and conventions. [GRI LA4] Brasil Kirin maintains relations with 86 unions in the distribution, sales, commercial and transportation areas and in the foods and beverages industry. We do not have operations or significant suppliers who violate or present a risk to freedom of association and collective bargaining. The company considers that its operations do not present risks to its employees right to freedom of association, for which reason no measures are in place to promote free association. [GRI HR5] 30 All our employees TAKE part in the profit share program.

32 About the Health and safety Company investments in occupational health and safety totaled more than R$ 14 million in. All our units have clinics for employees manned by health professionals. These clinics are available even in operations where they are not mandatory under SESMET (Serviço Especializado de Segurança e Medicina do Trabalho) rules. Kirin Brasil conducts a series of annual preventive campaigns based on a needs assessment undertaken at each location. These consist of messaging related to health care on occasions such as Carnival and International Women s Day, among others. Other initiatives include a Health Attention Program, aimed at controlling chronic diseases, and a program for employees on medical leave. The Safety, Health and Environment area (SSMA in the Portuguese acronym) is responsible for preventing accidents, occupational diseases and environmental impacts, based on standards such as ISO and OHSAS Health and safety indicators for company employees Injury rate (includes small injuries requiring first aid) Total days lost 6,660 * Absenteeism rate ** Total number of fatalities in period 1 The injury rates in this are not comparable to those in previous s due to a change in the parameters employed. Brasil Kirin does not measure third-party health and safety data. Calculation of injury rate (frequency rate): n of accidents x 1,000,000/man-hours worked + overtime. * Days lost are calculated by summing the consecutive days lost through accidents, starting from the first day after the occurrence of the accident. The rules for recording and ing accident statistics follow ILO recommendations. ** To calculate absenteeism, a monthly average was taken for (taking into account only health-related absences). Absenteeism for previous years was not ed because the data included all types of absences. Data on occupational diseases are not available for. More than R$ 14 million WAS invested in health and safety IN. In, an employee at Guarulhos was killed in an accident while delivering products to a customer. He was run over when a forklift operator lost control of the vehicle. [GRI LA7] 31 An important work front in was the creation of a Behavior-Based Safety Program. This consists of four stages: diagnosis of the current state of work safety culture, a workshop to present the results of the diagnosis by location, training in risk perception and control, and presentation of the principles of Behavior-Based Safety. In this first year, the initiative was focused on corporate and factory leaders at all levels, for later communication to the rest of the company. A total of 570 leaders were involved in this process. The dissemination phase will be initiated in The first and second stages will be implanted at the company s own distribution units in It should be noted that the second stage consists of practical observation of behaviors.

33 At Brasil Kirin, no employees are involved in occupational activities entailing a high risk of specific diseases. Even so, the company promotes preventive measures designed to decrease absenteeism and promote healthfulness among the work force. [GRI LA8] Percentage of employee representatives on formal health and safety committees* About the The Occupational Health Medical Control Program (PCMSO in the Portuguese acronym) consists of a package of measures for employees, some of which are extended to family members. These include educational actions according to the specific needs of each location, such as talks on sexually transmitted diseases, Aids, smoking and alcoholism, breast cancer and prostate cancer; counseling on the treatment of diabetes, hypertension, kidney diseases and dengue; preventive measures, such as immunization against tetanus, diphtheria, and hepatitis, the distribution of condoms and examinations to detect cervical cancer; as well as monitoring of chronic and acute diseases. [GRI LA8] All employees are represented by formal health and safety committees at all locations. Committee members are drawn from different areas and functions, and each committee has a representative from the Safety, Health and Environment area. The company has an Internal Accident Prevention Commission (CIPA in the Portuguese acronym), an Emergency Brigade, an Ergonomics Committee, and a Safety, Health and Environment Committee. [GRI LA6] 1% safety, Health and Environment 10% Emergency Brigade 0.5% Ergonomics Committee 1% Accident Prevention Committee 32 Agreements established with unions cover a series of health and safety questions, such as the maintenance of ambulances on plant sites. However, in practice Brasil Kirin policy and legal requirements fully cover the demands in union agreements, such as the use of personal protective equipment and the creation of health and safety committees, among others. [GRI LA9] *All Brasil Kirin employees are represented by these committees.

34 Consumers and customers About the Internal communication Brasil Kirin has diverse internal communication channels. In addition to the notice boards, located at strategic points on company premises and updated regularly, we produce a monthly magazine Novas, which is distributed to all employees. The company sent out more than 500 s communicating subjects of interest in. There is also the President s Blog, a channel open to everyone in the company. There were 28 posts on the blog in, and these received 289 comments. Brasil Kirin products are distributed nationwide. We offer consumers a broad, diversified portfolio of alcoholic and non-alcoholic products. The company operates in the four main beverages categories: beer, soft drinks, water and juices, as well as in the mixed beverages segment (Skinka line). Worthy of note in the area of partnerships with customers is the backhaul system. Implemented between Brasil Kirin and customers such as Pão de Açúcar, Walmart and Carrefour, the initiative enables fleet sharing in order to reduce costs and greenhouse gas emissions. Under the backhaul system, a truck carrying a load to the Northeast region does not return empty. Instead it carries a partner s cargo. A total of 58 thousand kilometers were covered under this initiative, which together with cabotage (see more in investment and logistics), was equivalent to removing 30 trucks per month from the highways. [GRI EN29] Listening to the consumer is an essential part of building a respectful relationship with everyone who uses Brasil Kirin products. The main communication channel is the Brasil Kirin Relationship Center, which receives contacts via and toll-free telephone from all over the country. In, the center received approximately 60 thousand calls, 80% of which were dealt with in the initial contact. Most of the calls are commercial in nature, such as people interested in partnerships and in selling company products. Questions related to quality and marketing come next. [GRI PR5] 33 In, Brasil Kirin received approximately 60 thousand CALLS, 80% of which were DEALT with in the initial contact. In a constant effort to improve quality, this channel was restructured in to streamline interactions between the relationship center and internal company areas in order to improve service levels. All internal processes were also reviewed with a focus on information quality, resulting in an accentuated reduction in the recurrence of problems.

35 In conjunction with the initiatives above, training for the attendants was reinforced, with constant information recycling on specific characteristics of Brasil Kirin products, for example, the harmonization of special beers, plant visits, and other actions. With a focus on best market practice, the area also participates in a series of committees and events. As a result of this work, the number of calls decreased by around 60% a month from April. When a consumer complains about product quality or non-conformance, a logistics operator collects the product in question from the consumer s home, providing a replacement at the same time. All Brasil Kirin brands have communication channels on the social networks and demands in this virtual environment are also monitored and serviced. Around 60% of product-related contacts in addressed quality or non-conformance. This generated around 2 thousand product replacements, averaging approximately 160 a month nationwide. [GRI PR1] Brasil Kirin sponsors diverse events. About the Another way of listening to consumers is through two types of research: control surveys and exploratory surveys. Control surveys are used to monitor and measure questions such as brand image, market share and household panels. Exploratory research, which will be expanded in 2013, is aimed at identifying new business opportunities, market trends and emerging consumer needs and behaviors. [GRI PR5] Increasing the scope and depth of these surveys not only helps to identify current consumer needs and desires, but also permits the company to anticipate future trends, constituting a fundamental input for innovation process. [GRI PR5] 34 Throughout the year, the company promoted a series of activities and events to strengthen its market presence. In addition to strong exposure at points of sale and in diverse media, we organized a large number of events on a regional and national level, worthy of note being the sponsorship of festivals such as Carnival and São João.

36 We also organize visits to the Baden Baden brewery located in Campos do Jordão, in which more than 31 thousand people participated in. About the 35 The guided tour takes PLACE during the week and lasts on average three hours. We also use specific platforms such as support for sporting events, in particular road running, which is backed by our Água Schin brand. Events supported in the year included the 88 th São Silvestre street race in São Paulo, and Formula 1, which was sponsored by the Nova Schin brand. Another important focus in building quality relations is our customers, the 600 thousand points of sale at which Brasil Kirin products are commercialized nationwide and the more than 300 retail chains with which we work. In this area, our strategy encompasses specific campaigns, brand promotion actions and meeting specific channel demands. The Brasil Kirin Tour is a journey to the world of our beverages. The plant visit program organized at the Itu unit in São Paulo state provides visitors with a first-hand experience of the company s product manufacturing processes. The guided tour takes place during the week and lasts on average three hours. In, 6,625 people visited the plant. New products Another major focus in was innovation. Brasil Kirin has a dedicated team working with innovation funnel methodology. This entails analyzing diverse proposals and submitting ones considered promising to an internal committee for evaluation. All approved innovations must necessarily be aligned with company targets and Vision. In this internal diagnostic process, all our products received a more closely defined market positioning and strategy. In, the process was applied to the complete product portfolio and resulted in the discontinuation of around 25% of existing products and the launch of some important novelties, such as the beer Schin No Grau, distributed exclusively in the North and Northeast of Brazil. Surveys conducted by Brasil Kirin indicated that consumers in the Northeast wanted a more refreshing, smoother beer that could be drunk more slowly, would last longer, and would not provoke a sensation of satiety. The name was also determined based on research and studies. In the North and Northeast, consumers have the habit of entering a bar and asking for a beer no grau (that is just right). Another major launch in the year was the beer Devassa by Playboy, produced using special hops to confer a more refreshing flavor. The longneck bottle version of the beer is inspired by the outline of the female body.

37 Life cycle Brasil Kirin is concerned about health and safety throughout the lifecycle of all its products. Each phase of the product life cycle is subject to specific actions, shown as follows. [GRI PR1] In, there were no significant cases of non-compliance with regulations and voluntary codes related to product and service impacts on health and safety. [GRI PR2] About the Product concept development New product development entails the involvement of different areas in the innovation funnel process, from the conception of the idea through to the post-launch phase. In a stage-gate process aimed at improving ideas and progressively reducing risks, decisions are overseen by an executive committee. A cross-functional group executes the process from the beginning. Specialists from the Innovation and Product Development areas seek to incorporate international quality concepts from globally recognized institutions, such as the Codex Alimentarius, into the raw materials and products. Research and development New product development and improvements to existing products are based fundamentally on consumer expectations and concepts of quality. Product life cycles are designed to minimize impacts for the consumer. Every aspect is subject to testing: packaging, sensorial, physical-chemical, microbiological characteristics are all tested to ensure the consumer receives a quality product which is safe for consumption. Sensorial analysis surveys are conducted with consumers to check their perception of the product and to ensure that Brasil Kirin is offering precisely what the market wants. Certification To guarantee product quality and safety, Brasil Kirin works with established certification standards: ISO , at the Manaus unit, for concentrate production; IBD (Instituto Biodinâmico) certification, at the Blumenau unit, for Eisenbahn Natural production. Manufacture and production Brasil Kirin has robust quality assurance and product safety mechanisms in place for its production processes. The quality assurance process encompasses the receipt of raw materials, packaging, manufacture, storage and distribution to the end consumer. This results in products that are fully compliant with all legislation and safe for consumption. The production units operate in alignment with strict manufacturing best practice, set forth in a series of documents in use at all the operations and reinforced by periodic training. Best manufacturing practice is backed by controls at every stage of the process to ensure product quality and safety. All the process and product controls and requirements are listed in operating manuals and in the working instructions used on a daily basis by operators and support areas. 36

38 About the Marketing and promotion All company advertising and labeling is compliant with the legislation in force and the commitments assumed by the sector. Alcoholic product communication incorporates the legal requirement of cautionary phrases such as Product for over-18s, Appreciate with respect and moderation, Sale and consumption of alcoholic beverages prohibited for minors under 18 years of age. Since 2009 we have been signatories to the Pledge, a voluntary commitment to responsible marketing in food and drink advertising aimed at children. Sstorage, distribution and supply Brasil Kirin has strict rules for the handling and storage of its products. These are enforced by a team responsible for ensuring that storage quality and safety requirements are observed, overseen by a Quality Assurance professional responsible for handling, storage, loading, distribution and supply. Use and service Brasil Kirin has a Relationship Center to receive contacts from consumers via or toll-free telephone. The company also handles contacts via relationship networks, as described previously. Ddisposal, reuse or recycling In, a project was undertaken to reduce the volume of packaging material and the weight of caps used for non-alcoholic products. At company events, instructions and/or processes are in place to channel packaging to recycling operators. The selective disposal seal, an industry commitment, is displayed on our packaging. 37 Itu plant.

39 About the The company is in strict COMPLIANCE with all legislation governing the SECTOR. Transparency A key value for Brasil Kirin is ethical conduct and respect for the consumer. The company seeks to provide transparent information in a clear, accurate manner that does not mislead, confuse or deceive consumers. This is ensured by strict compliance with the legislation and regulations issued by the regulatory bodies governing the sector: the Ministry of Agriculture; the sanitary agency Anvisa/Ministry of Health; the Ministry of Justice; the industrial measurement, standardization and quality body Inmetro; and DNPM (Departamento Nacional de Produtos Minerais), the mineral products department. To guarantee compliance with these different legislations, the company has a labeling approval system that follows well defined and organized procedures. All mandatory information required by the regulatory authorities is included on product labeling for all our products. This encompasses: indication of quantity, product name, brand, identification of company (name/address/company number), Ministry of Agriculture registration (except for mineral water, which comes under Anvisa/Ministry of Health), list of ingredients, nutritional table, identification of origin, batch, expiry date, instructions on product use and handling, alcohol content, warning about alcohol consumption and restriction of sale to persons aged over 18 years (for beers and draft beers), warning about presence or not of gluten, use of flavoring, artificial coloring, use of phenylalanine, Relationship Center contacts and organic seal, among others. [GRI PR3] Some of the company s products are bottled by third-parties, and this information is included on the labeling of these products as required. Plastic packaging (PET), disposable glass bottles and cans carry symbols indicating the proper disposal of the pack. Bottles and cans also provide information on the materials used in their manufacture. 38

40 Suppliers About the Secondary packaging contains symbols indicating that the material is recyclable. For disposable bottles, the recycling symbol is on the 6-pack paperboard cartons (secondary packaging). The returnable 600 ml and 1 liter bottles of mainstream beer are commercialized in plastic crates that are also returnable. Currently all disposable packaging (cans/pet/glass/secondary) is being altered to include the selective waste disposal symbol in accordance with the Brazilian packaging association standard, which is aligned with the Ministry of the Environment Sustainable Production and Consumption Plan. The updating of the art work for all the products will be concluded by December [GRI PR3] Brasil Kirin provides constant training for employees involved in product labeling development and participates in meetings promoted by industry associations and regulatory authorities to remain abreast of the legislation. The company has a labeling development system that follows well defined and organized procedures, ensuring that final approval is only concluded after analysis by all responsible areas: Regulatory Affairs, Legal, Marketing and Packaging. As a result of this training and these procedures Brasil Kirin has not been subject to any sanctions related to labeling non-compliance. [GRI PR4] Suppliers play a fundamental role in our business operations. We have 6,900 active partners, divided into three major groups: direct suppliers, who mainly provide raw materials and packaging; indirect suppliers, responsible for transportation and other services and materials; and our media, marketing and trade partners, who are an essential component of our commercial strategy. The Supplies area has an intelligence gathering unit which carries out a series of market and commodity scenario studies which are fundamental for company planning. Our operation depends on a number of domestic and imported inputs which are essential in beverage manufacture. Brasil Kirin supplier contracts ensure conduct aligned with company values. These contracts contain a human rights clause stipulating equality of treatment and non-discrimination in function of origin, gender, race, philosophical or political convictions, religious belief or age. Moreover, they require the non-utilization of slave or child labor and any other type of degrading working conditions (such as forced labor, illegal recruitment practices or maintenance of workers in slave-like conditions). The contracts also address questions of environmental care, with requirements such as the use of certified inputs. [GRI HR1, HR2] We are, however, aware that we need to go further in our relationships with suppliers. For the coming years we have assumed the commitment to create a supplier audit system and mechanisms to drive more in-depth dialog and collaboration with these stakeholders. In 2013, a supplier development and approval sector will be set up in the Brasil Kirin Supplies area, with the responsibility of assessing human rights-related questions involving suppliers. [GRI HR2] 6,900 partners supply the company. 39

41 Brasil Kirin does not currently have a specific policy or practice related to contracting local suppliers, neither does the company measure its spending on local suppliers compared with suppliers from other regions. [GRI EC6] In, Brasil Kirin invested more than R$ 3 million in socio- ENVIRONMENTAL and cultural PROJECTS and other actions benefiting the public. Community About the Brasil Kirin understands that the wealth created by its business should not remain within company boundaries. We want to generate positive impacts on the communities around our operations, helping to drive their development. For this reason, we invest in and support a number of projects in which company strategy and community interests are aligned. Upon creating a social project, the company carries out an informal consultation in the community aimed at assessing local needs, after which specific measures are developed. In, Brasil Kirin invested more than R$ 3 million in socioenvironmental and cultural projects and other types of action benefiting the public. Examples of projects sponsored via ICMS (Imposto sobre Circulação de Mercadorias e Serviços) tax incentives are the event Rei e Rainha da Praia, held in February, and the Chemical Music Festival, sponsored with incentives from but scheduled to take place in Both events are organized in Rio de Janeiro. 40 The company engages in specific projects in the communities around its operations. For example, it donated food hampers and Brasil Kirin products, and participated in Ação Global campaigns promoting citizenship (involving health, education, personal hygiene actions and social and legal support etc.). Support for these projects is based on the demand from the local community and public partners.

42 In, the company also made an investment in public benefit in the city of Recife, where we restored the embankment of a landfill to guarantee its stability. [GRI EC8] in the state may channel up to 3% of their ICMS tax payable to sports projects. With an initial Brasil Kirin investment of R$ 283,000 in 2011, the project benefited more than 50 young people aged on average 26 years. About the 41 In partnership with the national industrial learning service SENAI, we created the Qualifica Project, aimed at promoting learning and the employability of the local population and setting up a talent bank to help project participants find work. The Qualifica project was initiated in at the company s Caxias manufacturing unit in Maranhão. It provided short courses in the industrial production area for a total of 103 people, 40 of whom were employees and 63 members of the surrounding community. There were nine courses lasting up to five months, with the content determined in conjunction with the community. The total course load was 800 hours; participants completing the course received a SENAI certificate. After the conclusion of this pilot project, Brasil Kirin proposes to introduce it gradually into other company units. Another project worthy of note is Athletes of the Future, which has been in place in Recife since 2008 and is run in partnership with the industry social service (SESI). The program aims to promote the development of children and adolescents aged from 8 and 15 years through sporting activities. [GRI SO1] There follows a list of other community initiatives and partnerships. Karatê-DO Project As part of the Efficient Inclusion Program, since 2011 Brasil Kirin has been a partner in the Karatê-DO, Steps to Inclusion project, run by the Instituto Olga Kos de Inclusão Cultural in the city of São Paulo. The project teaches the martial art to students with Down Syndrome and intellectual disabilities. The company s support occurs through the São Paulo state sport incentive law, whereby companies Obras Sociais Irmã Dulce In, the company made a series of donations to the charity Obras Sociais Irmã Dulce located in Salvador, Bahia. These consisted of hampers, invoice tax donations and personal hygiene products for hospitals for the elderly and non-alcoholic drinks for carnival parties organized for children interned in hospitals. Brasil Kirin also bought panettones produced by the institution for the Christmas hamper the company gives to its more than ten thousand employees. All the proceeds from the purchase of the panettones were employed in the charity s education and social inclusion program. Partnerships with cooperatives We have partnered with the scavenger cooperative Cooperativa de Catadores e Recicladores de Alagoinhas (Coral) in Bahia for seven years, helping to improve the scavengers working conditions through the donation of selective collection carts and recycling materials. The partnership enabled the cooperative to expand its activities and create 20 additional jobs. Barracoop In partnership with the Barracoop cooperative, residents in the Jacarepaguá area of Rio de Janeiro exchange recyclable materials for food. Since 2004, Brasil Kirin has donated the equivalent of 11,880 basic hampers to Barracoop. There are 400 participants registered in the project, which had collected 52 metric tons of recyclable material by the end of. 103 people took the COURSES in the Industrial area. 63 of these were members of the COMMUNITY around the CAXIAS plant in MARANHÃO.

43 About the Institutional relations Brasil Kirin is engaged in the development of the sectors in which it operates, as well as in the development of the country. In, through active participation in industry associations such as Abir, the Brazilian soft drink and non-alcoholic beverage drink association, Abrabe, the Brazilian beverages association, CervBrasil, the Brazilian beer industry association, we were involved in diverse partnerships and negotiations with the Brazilian government, both at federal and state level. Examples include beverage sector participation in the Federal Government s Brasil Maior plan and in discussions on the country s national solid waste policy. In, we were FORMALLY represented in ten industry associations and ORGANIzations, which are listed below in [gri 4.13] ALPHABETICAL order. Organization ABA ABERJE ABIA ABINAM ABIR ABRABE Associação Brasileira de Anunciantes (Advertisers association) Associação Brasileira de Comunicação Empresarial (Business communication association) Associação Brasileira das Indústrias da Alimentação (Food industry association) Associação Brasileira da Indústria de Águas Minerais (Mineral water industry association) Associação Brasileira das Indústrias de Refrigerantes e de Bebidas Não Alcoólicas (Soft and non-alcoholic beverages association) Associação Brasileira de Bebidas (Beverages association) Member since ADIAL Associação Pró-Desenvolvimento Industrial do Estado de Goiás (Goiás industrial development association) 2010 AFICAM Associação dos Fabricantes de Componentes da Amazônia (Amazonas component manufacturing association) 2011 CEMPRE Compromisso Empresarial para Reciclagem (Business commitment to recycling) 2010 CERVBRASIL Associação Brasileira da Indústria da Cerveja (Beer industry association) CONAR Conselho Nacional de Autorregulamentação Publicitária (Advertising self-regulatory council) 2010 IBGC Instituto Brasileiro de Governança Corporativa (Corporate governance institute)

44 Striving for efficiency BRASIL KIRIN SUSTAINABILITY REPORT

45 TPM Pillar Growing responsibly, striving TO boost positive impacts and reduce NEGATIVE ones, is an integral part of business development tpm About the Autonomous maintenance Planned maintenance Specific improvement Education and training Initial control Quality maintenance TPM in the administrative areas P Q C D S M E* * Productivity, Quality, Cost, Delivery, Safety, Health and Environment, Morale and Eco/sustainable. Safety, health and environment Brasil Kirin strives to continuously increase efficiency. We believe that it is possible to do more with less, to eliminate waste, to boost the positive impacts and reduce the negative ones caused by our operations. To make this happen, the company has a series of programs and initiatives governing its production processes and driving the sustainable development of the business. The main driver of best practice is Total Performance Management (TPM) methodology, a manufacturing management philosophy created by the Japanese Institute of Plant Maintenance (JIPM), which has been in place in the company since This is underpinned by extensive employee training and autonomy, the employment of best practices, and the dissemination of knowledge. The methodology also encompasses employee safety and health in manufacturing activities and the environment. 44 Considered a mature process in the company, TPM is in full use in the company s large plants. These participate in an annual contest under the Plant Management Program (PGF in the Portuguese acronym), a healthy competition aimed not only at recognizing the units that get the best results, but also the level to which the methodology is applied. Accordingly, the units are audited twice a year based on TPM guidelines.

46 About the By the end of, four Brasil Kirin plants had received the JIPM TPM Excellence Award. This is the first in a series and is followed by the Consistent TPM Commitment, the Special TPM Achievement and the World Class TPM Achievement Awards. The awards assess activities based on eight pillars Specific Improvements, Autonomous Maintenance, Planned Maintenance, Quality Maintenance, Initial Control, Education and Training and TPM in the Administrative, Safety, Health and Environment areas in addition to full employee involvement in promoting improvements and good results Investments and logistics In, Brasil Kirin inaugurated a new production line at the Igrejinha unit in Rio Grande do Sul, duplicating canned beverage production capacity. The new line has a production capacity of 90 thousand cans per hour. The expansion of the Alagoinhas plant was also concluded, involving a total investment of around R$ 400 million. With the plant expansion, the Alagoinhas unit now has a production capacity of around 900 million liters of beer and 400 million liters of soft drinks per year. The project also included environmental improvements, such as the enlargement of the waste treatment plant, the construction of a waste storage center and the installation of a closed circuit water circulation system in the pasteurizers. Diverse studies were conducted during the year focused on the company s projected growth, which will require additional production capacity expansion. The Alagoinhas plant, which has a beer production capacity of 900 million liters per YEAR. 45 Investments in the Igrejinha plant in Rio Grande do Sul more than doubled CANNED beverage production: 90 thousand units per hour.

47 New investments in logistics, a fundamental part of our business, totaled approximately R$ 10 million in. To streamline commercial and logistics processes, the company created Advanced Distribution Points, strategically located in Itajaí (Santa Catarina), Osasco (São Paulo) and Sacomã, in the southeast of the city of São Paulo (São Paulo). These are designed to shorten distances to points of sale and consumers, speeding up deliveries. The logistics operation currently involves a company-owned fleet of 700 trucks, in addition to smaller vehicles and third-party freight services. One initiative underway is the introduction of cabotage, alternating road and water transportation, thus reducing CO 2 atmospheric emissions as well as freight costs. Waterway transportation already accounts for 16% of company logistics. [GRI EN29] Etraf MandALA Loading and delivery standards Quality in people About the Transportation quality standards Controlled Operation and admiration of Brasil Kirin customer Safety 46 In August, Brasil Kirin introduced its Transportation and Fleet Excellence program (Etraf in the Portuguese acronym). Managed by the Transportation & Fleet area, it is designed to drive quality in the execution of third-party transportation contracts and management. The program also aims to establish partnerships with these logistics operators with a view to promoting continuous improvement in their operations and in the Transportation area as a whole through periodic assessments and orientation. Sustainability Service level

48 Environment About the The company s growth plan is underpinned by our commitment to finding increasingly effective ways of reducing the impacts caused on nature by our businesses, in partnership with our stakeholders. This process was begun four years ago when we initiated a diagnosis of our main impacts, such as water, energy and fuel consumption, and an in-depth study of important questions such as solid waste and effluent generation. We have achieved significant results. Since 2008, relative energy consumption has been reduced by 17%; water, by 12%; and fuel, by 10%. We currently recycle 92% of production waste and effluents. This has been made possible by implanting environmental management procedures at all our units, using the Integrated Safety, Health and Environmental System, a TPM pillar. We also use the General Sustainability Index, comprising the following environmental indicators: compliance with legal requirements; compliance with operational license requirements; recyclable materials; greenhouse gas emissions; brewery waste and compliance with treated effluent parameters. All of these are measured as percentages with targets of 100%; the results are part of the company s Strategic Map and, consequently, affect employees variable remuneration. Relative WATER consumption has decreased 12% since Seven of Brasil Kirin s manufacturing units are within biodiversity protection areas and part of the Itu unit is in a protection area. The area totals approximately 10,000 hectares in regions with high levels of surface and ground water, an essential raw material for the company. These properties belong to and are preserved by Brasil Kirin. [GRI EN11, EN13] 47

49 However, Brasil Kirin has not surveyed the direct and indirect impacts its activities have on biodiversity both in and outside protected areas. The Environment team is studying this question, which will be addressed in future s. [GRI EN12] A number of initiatives were undertaken in to minimize the impact of our products and services. In terms of material use, the weight of our PET bottle was reduced, generating a decrease of approximately 2,800 metric tons in the use of resin. water and wastewater Our main raw material is water, which is vital and strategic for the business. We continually invest both in reducing the use of water and in reusing and returning it to nature. The major part of company withdrawal is from surface and ground sources. A small part is purchased from utilities. In, we reduced relative water consumption by approximately 4%, beating our 3% reduction target. Ground water consumption, which represents 66.34% of the group s total consumption, increased by 2.5 percentage points in. [GRI EN8] 100% of our plants have industrial WASTEWATER treatment PLANTS. About the Regarding water consumption, we undertook a number of water reutilization initiatives in the pasteurization process, introduced the use of treated wastewater for irrigation and also started to harvest and use rainwater. Although we are unable to estimate the reduction generated by each initiative, the company did achieve a 4% decrease in relative water consumption in. Brasil Kirin also adapted and expanded its industrial wastewater treatment plants (WWTP) at the Recife and Igrejinha manufacturing units, in addition to continually developing new alternatives for the disposal of waste which was previously disposed of in landfills (sludge used in composting). [GRI EN26] The Horizonte unit has a system in place for reusing treated wastewater to irrigate the gardens. The Horizonte plant also harvests all rainwater, which is used in production* after processing in the water treatment plant, thus avoiding consumption from other sources. The company has not yet quantified the volumes involved. [GRI EN10] All Brasil Kirin production units have industrial wastewater treatment plants (WWTP), for treating effluents before returning them to nature. The wastewater receiving biological treatment (anaerobic and aerobic) in was discharged into water bodies in the vicinity of the manufacturing units. The absolute volume of treated wastewater increased compared with 2011 in function of the higher production volume during the year. We did, however, reduce wastewater volume in relation to the volume of beverages bottled from one year to the other. The wastewater is not reused by other organizations. The absolute volume is considered strategic for the company and therefore is not disclosed. [GRI EN21] 48 Our main raw material is WATER. We invest continually in reducing WATER use and in reusing and returning WATER to NATURE. * The harvested rainwater is not used in product formulation.

50 Water consumption reduction best practices are applied at all units in accordance with an Integrated Safety, Health and Environment System standard ( F-SSMA-055 Industrial Process Water Consumption Reduction Checklist ). [GRI EN9] About the Wastewater discharge by quality and destination * Volume (hl effluent discharged/ hl beverage produced) 2.4 Water withdrawal by source* Surface water (rivers, lakes, wetlands, oceans) 28.62% Ground water 66.34% External sources 5.04% Total Quality BOD 1 removal above 96% Destination Water bodies (1) BOD (biochemical oxygen demand). *Scope: Alagoinhas, Alexânia, Benevides, Caxias, Horizonte, Igarassu, Igrejinha, Itu, Cachoeiras de Macacu, Recife. Wastewater from the Campos de Jordão and Blumenau plants is treated externally. The Manaus plant is located in an industrial area and its wastewater is discharged into the area s collection network. 3.61hl water /hl beverage produced WATER consumption REDUCTION best practices are applied at all our plants. *The rainwater harvested by Brasil Kirin is not yet quantified. 49

51 About the Energy, fuel and emissions The Brasil Kirin manufacturing units use energy from natural gas, LPG (liquefied petroleum gas) and bunker oil. Alexânia and Caxias also use biomass as a renewable energy source. The Caxias unit burns bamboo and babassu husks and, at the Alexânia plant, the biofuels used are cane bagasse and wood chips from reforestation projects. The company also purchases electricity from utilities. Fuel oil consumption was reduced by 38% between 2011 and as a result of the biomass-powered boilers. We also use the methane gas generated by the WWTPs, reducing natural gas consumption. This system is currently available in five units, reducing biogas atmospheric emissions by 1,816,248 m³. Excess gases are burned off via flare. With the system, the company managed to reduce natural gas demand by around 5%, generating environmental gains and annual savings of around R$ 2 million. The reuse of biogas enabled a reduction in consumption of approximately 197 thousand gigajoules (GJ). [GRI EN5] All the plants except those using bunker oil use economizers that capture hot gases from the chimneys to heat the water fed into the boilers, thus reducing fuel consumption. The Alagoinhas plant also has equipment which reuses thermal energy in the brewery s kitchen. In, Brasil Kirin measured its greenhouse gas emissions for the first time. Direct and indirect emissions (scopes 1 and 2) totaled 150,426 tons of CO 2 equivalent. [GRI EN16] Fuel oil consumption WAS reduced BY 38% FROM 2011 TO as a result of the BIOMASS-powered boilers. The biogas and biomass projects permitted Brasil Kirin to reduce CO 2 fuel emissions by 22%. Investment in the two projects totaled around R$ 9.5 million. The company has other initiatives in place to increase energy efficiency, one being the optimization of refrigeration compressors in the manufacturing processes at the Itu (São Paulo) and Alagoinhas (Bahia) units, initiated around three years ago. Total energy consumption was optimized by 7 % in the Itu plant and by 4% in Alagoinhas. 50

52 About the Emissions from product transportation by the company fleet in totaled 8,805 tons of CO 2 equivalent. Although the company does not measure the impact of employee transportation, initiatives are in place to mitigate these emissions. Brasil Kirin provides buses for employees at all its plants as a means of reducing the use of individual transportation and minimizing CO 2 emissions. [GRI EN17, EN29] Although Brasil Kirin employs measures to reduce its atmospheric greenhouse gas emissions, work on climate change has not yet been systematized. In, a feasibility study for the implementation of a wind energy park was undertaken. This should be brought to fruition in Direct and indirect greenhouse gas emissions (GEE)* (1) Direct emissions (CO 2 tons equivalent) Electricity, heat or steam generation 104,498 Material, product and waste transportation 8,805 Vehicle fleet 25,559 Indirect emissions (CO 2 tons equivalent) Purchased electricity, heat or steam generation 20,034 Total 170,197 (1) In line with GHG Protocol criteria, emissions from renewable sources, such as the CO 2 produced by the beer fermentation process, are not counted because the primary sources are barley malt and corn, which are renewable. For the inventory, emissions from WWTP biogas (reused or burned) are considered to be zero, in line with the reasoning applied for CO 2 from the fermentation process. * Scope: Alagoinhas, Alexânia, Baden, Benevides, Caxias, Horizonte, Igarassu, Igrejinha, Itu, Cachoeiras de Macacu and Recife. Direct and indirect energy consumption* Non-renewable sources (GJ) % Natural gas 1,267, Bunker oil 430, Liquefied petroleum gas 935, Renewable sources (GJ) % Biomass 201,210 5 Electricity 903, Electricity purchased from market 157,700 4 Biogas 66,900 2 Total energy consumed 3,961, * Scope: Alagoinhas, Alexânia, Benevides, Campos do Jordão, Caxias, Eisenbahn, Igarassu, Igrejinha, Itu, Cachoeiras de Macacu and Recife. 51

53 Brasil Kirin energy matrix [GRI EN3, EN4] About the % non-renewable Sources 34% renewable Sources 32% natural Gas 2% Biogas 12% BUNKER OIL 25% Liquefied petroleum gas 24% Electricity 5% biomass

54 About the Use of materials In Brasil Kirin used 407,611 tons of materials. These consisted of raw material and inputs, packaging, paper, cardboard and plastics, the most significant consumption items being raw materials and inputs. [GRI EN1] With respect to the reuse of materials, all the glass from bottles broken in the bottling process is recycled equivalent to a 6% reuse rate for all bottling materials (a total of 0.28 kg/hl beverage produced). All the packaging the company uses is recyclable, but the corresponding data are not monitored. [GRI EN2, EN27] Material consumption in tons * Type of material (t) % Raw materials and inputs (malt, yeast, corn grits, hops, sugar, soft drink concentrate, fruit juice) Additives, coloring agents, flavorings and manufacturing materials 388, , Packaging 4, Wood (pallets) 6, Paper and cardboard 2, Plastic (except packaging) 1, Plastic drums and containers Mixed plastic scrap total 407,611 * Scope: Alagoinhas, Alexânia, Baden, Benevides, Caxias, Eisenbahn, Igarassu, Igrejinha, Itu, Cachoeiras de Macacu and Recife. Waste generation All company units have solid waste selective collection, recycling and disposal programs in place. Brasil Kirin reduced the quantity of non-hazardous waste generated by 21% in, in comparison with 2011, through increased management efficiency. Management of hazardous waste was improved in with the introduction of more rigorous classification criteria and a more efficient recording system. This permitted greater control over the generation of such waste and improvements in disposal through the introduction of co-processing, which was not in place in Waste is disposed off directly by Brasil Kirin or by third-parties (in which case, disposal must by be authorized by Brasil Kirin). The company recycled or reused (including incorporation into the soil) 92% of its waste in, not reaching the established target of 94% for the year. This led to reflection upon the importance of this indicator for the company s results and the creation of a specific indicator for this factor in the Industrial area s Strategic Map. The purpose of this indicator is to encourage the units to improve selective collection and recycling, seeking new alternatives for the disposal of industrial waste. [GRI EN22] 53

55 About the Disposal of non-hazardous waste (1) * (kg/hl beverage produced) (t) Composting Reuse ,982 Recycling ,858 Incineration (mass burning) ,642 Sanitary and industrial landfills ,177 Incorporation into the soil ,051 Total ,371 (1) No on site recovery or storage of non-hazardous waste. Disposal of hazardous waste (2) * (kg/hl beverage produced) (t) Recycling Incineration (mass burning) Industrial landfills , Co-processing Total , (2) No on site composting, reuse, recovery, injection into the soil and storage of hazardous waste. * Scope: Alexânia, Alagoinhas, Baden, Benevides, Caxias, Igarassu, Itu, Igrejinha, Cachoeiras de Macacu and Recife. In partnership with other organizations and associations representing the beverages sector, we engaged in the Coalizão Empresarial or Business Coalition, an initiative led by the business recycling entity CEMPRE (Compromisso Empresarial pela Reciclagem) aimed at meeting the requirements of the country s national solid waste policy, which determines the implantation of reverse logistics for post-consumption products. Another important initiative in, enabling not only a reduction in post-consumption waste volume but also a decrease in raw material consumption, was the Short Cap project. The size of the plastic caps used in our water and soft drink bottles was reduced by 25%. The implantation of the project, which was finalized in, enabled a 3,600 ton reduction in consumption of plastic packaging. Another important alteration was the reduction in the weight of PET packaging, driving a reduction in total raw material consumption and, by extension, in waste disposal (approximately 2,800 metric ton reduction in resin, mentioned on page 48). 25% reduction in the size of the plastic caps used in our WATER and soft drink bottles. 54

56 The Aprendendo com a MATA Atlântica PROJECT promotes activities in the school community, seeking TO raise ENVIRONMENTAL awareness among STUDENTS, TEACHERS and others. Results until : 720 thousand trees planted at the Experimental Center; approximately 2 million native seedlings produced; more than 110 different plant species; restoration of an area of more than 700 hectares rehabilitation of 19 water sources Partnership with SOS Mata Atlântica We have partnered with the Fundação SOS Mata Atlântica since In conjunction with the NGO, we created the SOS Mata Atlântica Brasil Kirin Forestry Experimental Center, installed on a farm owned by the company in the municipality of Itu. A total of 384 of the farm s 526 hectares were allocated for the cultivation of native plant seedlings for the rehabilitation of degraded areas. The center has a nursery with an annual production capacity of 700 thousand seedlings. By, the nursery had produced around 2 million seedlings of native Atlantic Rainforest plants. These were used for the rehabilitation of the farm itself and public and private areas in diverse municipalities in the state of São Paulo, enabling the restoration of a total area in excess of 700 hectares. Activities at the center also include forestry research and experiments, professional training and the promotion of environmental education and public awareness. About the The environmental education project undertaken at the Experimental Center, Aprendendo com a Mata Atlântica, promotes activities among the school community, seeking to raise awareness among students, teachers and others, engaging their interest in environmental issues. In the two years it has been in place, the project has received more than 16 thousand visitors and organized courses for public school teachers in the region. The company is also active in the Viva a Mata event promoted by the Fundação SOS Mata Atlântica to commemorate National Atlantic Rainforest Day on May 27 th. In, the event, held in São Paulo s Ibirapuera Park, was attended by more than 100 thousand people. 55

57 Awards and Recognitions in [2.10] About the Make Award Most Admired Knowledge Enterprise, a national benchmark in knowledge management. Learning and Performance Brazil for the second time running ( /2011-) Brasil Kirin won this award, which is granted to companies achieving high performance through the implantation of best distance learning practices. tpm Excellence Award Itu, Cachoeiras de Macacu and Alexânia units. Top of mind Estadão RH Brasil Kirin came among the top five companies in the category Companies with the Best Corporate Education/E-learning practices. Palladium Balanced Scorecard Hall of Fame for Executing Strategy the most important global strategy management award. Abre Award promoted by the packaging industry association Associação Brasileira de Embalagem. The holographic paperboard carton for the 269 ml can of Devassa Bem Loura won three Gold awards in the Packaging, Structural Design and Special (Open Choice) categories. The Planeta Atlântida Glow in the Dark can received the Bronze prize in the Material Technology and Conversion category. Chico Mendes Socio-Environmental Award for constant efforts to reduce environmental impacts. Sister Company Seal from the charity Obras Sociais Irmã Dulce (Osid). WorldStar Packaging Award winner in the Beverage category with the Devassa 10-pack Holographic Paperboard Carton. Australian International Beer Awards (Aiba) for the products: Baden Baden Weiss bronze medal in the Best Wheat Beer German Style Hefe Packaged category; Baden Baden Stout bronze medal in the Best Stout Dry Packaged category; Devassa Bem Loura silver medal in the Best International Lager American Style Lager Packaged category; Eisenbahn Dunkel bronze medal in the Best Amber/Dark Lager German Style Schwarzbier category; Eisenbahn Lust silver medal in the Best Belgian & French Style Ale Other Packaged category rd Folha do Estado da Bahia Award for investments in the modernization of the Camaçari/Alagoinhas manufacturing unit in, and leadership in the water, soft drink and beer markets in the Bahia market. South Beer Cup, with awards for the following products: Eisenbahn Dunkel silver medal; Eisenbahn Kölsch honorable mention.

58 About the About the This first Brasil Kirin covers the period from January 1 st to December 31 st and includes all the company s units in the country. From this publication, the company will on an annual basis. [GRI 3.1, 3.2, 3.3, 3.8] For us, the, in addition to informing our stakeholders about the company s activities, is a diagnosis that will guide governance of at Brasil Kirin. The determination of the matters addressed in this document was based on the perceptions of the Sustainability team. In the next ing cycle, these will be determined in accordance with a materiality matrix built upon consultation and engagement of external and internal stakeholders and an analysis of the most relevant indicators for the sector. [GRI 3.5, 4.17] The data on the company s economic performance in this cover 2011 when it was acquired by the Kirin Group and. However, the social and environmental performance indicators refer only to the new company, Brasil Kirin. Comparability of social and environmental performance will be enabled from the next. [GRI 3.11] We welcome any comments, criticisms and suggestions via the [email protected]. [GRI 3.4, 4.4] 57 The Sustainability team identified and selected the stakeholders included in this taking into account the audiences to whom the company relates directly. These are: customers, consumers, suppliers, industry associations, associations representing the food and beverage sector, employees and non-governmental organizations. This year we did not engage with any of our external stakeholders. [GRI 4.15, 4.16]

59 GRI Index APPLICATION LEVEL The Brasil Kirin GRI Sustainability Report meets the requirements of GRI application level B, in accordance with the parameters set forth in the following table: G3 C C+ B B+ A A+ Respond to items: 1.1; ; ; ; ; All profile and governance indicators: All profile and governance indicators: About the Report Content G3 Form of management G3.1 Performance indicators & sector supplement performance indicators Not required Minimum of 10 performance indicators (essential or additional), including at least one from each dimension: economic, environmental and social. If available, sector indicators may be ed, as long as seven are not from the sector. With External Verification Information about management form for each aspect of indicator Minimum of 20 performance indicators (essential or additional) including at least one in each dimension. If available, sector indicators may be ed, as long as 14 are not sector indicators. With External Verification Management form disclosed for each aspect of indicator Report of sector indicators mandatory one year after the launch of the final version of the supplement. With External Verification 58

60 GRI Remissive Index Information About the Strategy and analysis Item Description Reported Page/Response 1.1 Message from president, pages 2 and Description of main impacts, risks and opportunities, pages 2 and 3 Organizational profile Item Description Reported Page/Response 2.1 Name of the organization Brasil Kirin, page Primary brands, products and/or services 2.3 Operational structure, page Location of organization's headquarters, page 5 Brasil Kirin manufactures its products. Distribution is executed by Brasil Kirin and third-parties. We have company owned and 3 rd party franchises., pages 5 and Countries in which organization and its main operations are located Brazil 2.6 Nature of ownership and legal form Brasil Kirin Indústrias de Bebidas S.A. 2.7 Markets served, page Scale of the ing organization, page Significant changes during ing period No significant changes 2.10 Awards received in the ing period, page Indicator responded in full Indicator responded partially Indicator not ed

61 Report parameters Item Description Reported Page/Response About the 3.1 Reporting period 3.2 Date of most recent previous 3.3 Reporting cycle 3.4 Contact information for questions about or its content January 1 st to December 31 st, 2013, page 1 This is Brasil Kirin s first, page 1 From this on, Brasil Kirin will produce annual s, page 1 [email protected], page 1 and About the, page Process for defining content About the, page Report boundaries Brazil 3.7 Limitations on the 's scope or boundary Based on the materiality process which will be undertaken in the next, it will be possible to be more precise about whether the indicators responded cover all the organization's economic, environmental and social impacts as assessed internally and by external stakeholders. 3.8 Basis for elaborating The covers all the Brasil Kirin units 3.9 Data measurement techniques and bases for calculations The tools set forth in the GRI 3.1 guidelines were used 3.10 Reformulation of information from previous s This is Brasil Kirin's first 3.11 Significant changes from previous ing periods in the scope, boundary or measurement methods About the, page Table identifying location of information in the, pages 59 to Current policy and practice regarding external verification of This was not subject to external verification 60 Indicator responded in full Indicator responded partially Indicator not ed

62 , Commitments and Engagement Item Description Reported Page/Response 4.1 structure of the organization, including highest governance body committees, page 16 About the 4.2 Presidency of highest governance body, page Independent or non-executive members of highest governance body, page Mechanisms for shareholder and employee consultation, pages 16 and 19, and About the, page Relationship between remuneration and organization's performance (including social and environmental), page Processes to avoid conflicts of interest, page Qualifications of members of highest governance body, page Declarations of mission and values, codes of conduct and relevant internal principles, page 10, and, pages 16, 17 and Responsibilities for implementation of economic, environmental and social policies In the Board of Directors was not specifically engaged in. The company plans to implant a Sustainability Committee in 2013., pages 16 and Self-appraisal processes for highest governance body There are no self-appraisal processes for the highest governance body 4.11 Explanation of whether and how the organization applies the precautionary principle 4.12 Charters, principles or other externally developed initiatives All Brasil Kirin beverage production is compliant with Brazilian food and beverage regulations Kirin Holdings, the owner of Brasil Kirin, has been a signatory to the Global Pact since 2005 and has been working on aligning the operations it controls with the 10 pact principles Participation in national/international associations and/or organisms, page List of stakeholder groups engaged by organization, page 19 and, page Basis for identification of stakeholders to be engaged About the, page Approaches to stakeholder engagement About the, page Main matters and concerns raised through stakeholder engagement About the, page Indicator responded in full Indicator responded partially Indicator not ed

63 Information on management approach Dimension Aspects Reported Page/Response Pages 12 and 13 Dimension Aspects Reported Page/Response Procurement process Pages 26 and 39 Non-discrimination Page 19 EC Market presence Pages 29, 30 and 40 Indirect economic impacts Page 41 Materials Page 53 HR Freedom of association Page 30 Child labor Page 18 Forced/slave labor Page 18 Energy Pages 50 and 52 Water Pages 48 and 49 Safety practices Indigenous people's rights EN Biodiversity Pages 47 and 48 Emissions, effluents and waste Pages 48, 50, 51 and 53 Products and services Pages 48 and 53 Compliance Page 21 Assessment Remediation Page 19 Community Page 41 Corruption Pages 18 and 20 About the Transportation Pages 33, 46 and 51 General SO Public policies Unfair competition Page 20 LA Employment Relations between labor and governance Pages 23, 25, 29 and 30 Page 30 Occupational health and safety Pages 31 and 32 Training and education Pages 26 to 28 Diversity and equality of opportunity Pages 23 and 24 PR Compliance Page 21 Customer health and safety Pages 34 and 36 Product and service labeling Pages 21, 33, 34, 38 and 39 Communication and marketing Pages 20 and 21 Customer privacy Equal remuneration for men and women 62 Indicator responded in full Indicator responded partially Indicator not ed

64 PERFORMANCE INDICAtors ECONOMIC PERFORMANCE Item Description Reported Page/Response About the EC1 Direct economic value generated and distributed Page 13 EC4 Significant financial assistance received from government Page 12 Market presence EC5 Variation in proportion of lowest salary, discriminated by gender, compared with local minimum salary in important operating units EC6 Policies, practices and proportion of spending on local suppliers Page 40 EC7 Local hiring Page 30 Indirect economic impacts EC8 Impact of infrastructure investments benefiting public Page 41 ENVIRONMENTAL PERFORMANCE Item Description Reported Page/Response Materiais Page 29 EN1 Materials used, by weight and volume Page 53 EN2 Percentage of recycled materials used Page 53 Energia EN3 Direct energy consumption discriminated by primary energy source Page 52 EN4 Indirect energy consumption discriminated by primary source Page 52 EN5 Energy saved due to conservation and efficiency improvements Page 50 Água EN8 Total water withdrawn, by source Page 48 EN9 Water sources affected significantly by withdrawal Page 49 EN10 Percentage and total volume of water recycled and reused Page Indicator responded in full Indicator responded partially Indicator not ed

65 Item Description Reported Page/Response Biodiversity EN11 Location and size of area owned Page 47 About the EN12 Significant impacts of activities, products and services on biodiversity Page 48 EN13 Habitats protected or restored Page 47 Emissions, effluents and waste EN16 Total direct and indirect greenhouse gas emissions Page 50 EN17 Other relevant indirect greenhouse gas emissions Page 51 EN21 Total water discharge, by quality and destination Page 48 EN22 Total weight of waste, by type and disposal method Page 53 Products and services EN26 Initiatives to mitigate environmental impacts Page 48 EN27 Percentage of products and packs recovered, by product category Page 53 Compliance EN28 Monetary value of significant fines and total number of sanctions resulting from non-compliance with legislation Page 21 Transportation EN29 Significant environmental impacts resulting from the transportation of products and workers Pages 33, 46 and 51 Employment LA1 Total number of workers, by type of employment, work contract and region, discriminated by gender Pages 23 and 25 LA3 Comparison of benefits offered to full-time and temporary or half-time employees, by significant operating unit Pages 29 LA15 Return to work and retention rates after maternity/paternity leave, by gender Pages Indicator responded in full Indicator responded partially Indicator not ed

66 Item Description Reported Page/Response Relations between labor and governance LA4 Percentage of employees covered by collective bargaining agreements Page 30 LA5 Minimum notice period and procedures regarding operational changes Occupational health and safety There are no provisions in Collective Agreements or Conventions for minimum notice periods regarding changes in Brasil Kirin operations. About the LA6 Percentage of employees represented on formal health and safety committees Page 32 LA7 Injury, occupational illness, lost days, absenteeism and mortality rates, by region Page 31 LA8 Educational and risk prevention and control programs Page 32 LA9 Safety and health matters covered by formal union agreements Page 32 Training and education LA10 Average hours training per year, per employee, by gender, discriminated by functional category Page 26 LA11 Competency management and continuous learning programs Pages 26 and 28 LA12 Percentage of employees receiving regular performance and career development appraisals, by gender Page 27 Diversity and equality of opportunity LA13 Composition of groups responsible for corporate governance and discrimination of employees by functional category, gender, age group, minority group and other diversity indicators Pages 23 and 24 Purchasing process HR1 HR2 HR3 Percentage and total number of investment agreements and contracts including human rights-related clauses or submitted to human rights-related assessments. Percentage of contracted companies, significant suppliers and other business partners submitted to human rights-related assessments and measures taken. Number of hours training for employees in human rights-related policies and procedures, including percentage of employees trained Page 39 Page 39 Page Indicator responded in full Indicator responded partially Indicator not ed

67 Item Description Reported Page/Response Non-discrimination HR4 Total number of cases of discrimination and measures taken to correct these and mitigate new cases Page 19 About the Freedom of Association HR5 Child Labor HR6 Forced/Slave Labor HR7 Remediation HR11 Community SO1 Corruption Operations or significant suppliers identified in which the right to freedom of association and collective bargaining might have been violated or put at significant risk, and the measures taken to support this right Operations or significant suppliers identified as presenting significant risk of occurrence of child labor, and the measures taken to help eliminate child labor Operations or significant suppliers identified as presenting significant risk of occurrence of forced or slave labor, and the measures taken to help eliminate all forms of forced or mandatory labor Number of human rights-related complaints filed, dealt with and resolved through formal complaint mechanisms Percentage of operations with impact assessment, development and engagement programs implemented in the local community Page 30 Page 18 Page 18 Page 19 Page 41 SO2 Units submitted to corruption-related risk assessments Page 18 SO3 Percentage of employees trained in anti-corruption policies and procedures Page 20 SO4 Measures taken in response to cases of corruption Page 20 Unfair competition SO7 Number of judicial cases related to unfair competition Page Indicator responded in full Indicator responded partially Indicator not ed

68 Item Description Reported Page/Response Compliance SO8 Description of significant fines and total number of non-monetary sanctions Page 21 About the Customer Health and Safety PR1 Assessment of health and safety impacts throughout product and service life cycle Pages 34 and 36 PR2 Non-conformance related to impacts caused by products and services Page 36 Product and Service Labeling PR3 Type of product and service information required by labeling procedures Pages 38 and 39 PR4 Non-conformance related to product and service labeling Pages 21 and 39 PR5 Practices related to customer satisfaction, including research results Pages 33 and 34 Communication and Marketing PR6 Programs for adhesion to laws, standards and voluntary codes Page 20 PR7 Cases of non-compliance related to product and service communication Page Indicator responded in full Indicator responded partially Indicator not ed

69 contributions to the About the 68 Abednego dos Santos Rosa Aby Modesto do Nascimento Adriana de Araújo Metidier Adriana de Bonis Gerbach Adriano C. de Freitas Albertina Rodrigues Bueno Alessandra Andrade Alexandre Moreno Sanchez (E.D.) Aline Antoneli Álvaro Farias Galassi Amanda Galdini Americo Garbuio Jr. (E.D.) Ana Carolina Steinbruch Morais Ana Paula Piloto Cardoso Ana Paula Sombini Anderson Ims de Camargo Anderson Machado Andrea Bregola Andressa S. Vivancos Ariane Felippe Padoveze Batista Ceratti Júnior Bianca de Sousa Teles Almeida Breno Oliveira Bruno Eduardo Barro de Araújo Camila Chagas Navarro Camilo Nogueira Carem Alcântara Carlos Alberto Martineli Carolina Veríssimo Cesar Endrigo Alves Bardelin Cristina Alves de Oliveira Cristina Araujo Damasco Domingos da Silva Daniel Souza Costa Danilo Ruwin F. Gawendo Diego Lima Campos Bernardelli Eduardo Gomes de Abreu Neto Eduardo Tadeu Rosario Eliana C. Silva Gaspar Elivagner José de Sales Ellen Dayane da Silva Eric Hueara Erica Aparecida Zanini Fabiane Rossi Tigre Fábio Marchiori Gama (E.D.) Felipe Passarini Fernanda Elisabete Costa Fernanda Soliani Pereira Fernando Engelberg Fernando Schoedler Flavio R. Villar Silva Gabriela Infanger Gabrielle Pereira Augusto Geovane Borba (E.D.) Gino Di Domenico (E.D.) Guilherme Fialho Helena Gonçalves Ataide Homero Guercia Humberto Cristofoletti Neto Jackes Teixeira de Oliveira Jemima A. M. Guarnieri João Gardenal Jose Assis Carvalho (E.D.) José Carlos de Queiroz Kloske José Domingos Francischinelli (E.D.) Juliana Cristina Grizotto Jussara Varela Calife Karen C. de Avelar Pscheidt Karen Daniela Martins Lauro José Giacheti Leandro Drigo Ambiel Leonardo Pereira Spinola Lucas Carceres Parlatto Lucas Tadeu de Melo Câmara Luciana Di Lelo Luis Baracal Lygia Fernanda Archangelo Marcelo Antonio Padua Oliveira Marcelo Dantas de A. Silva Márcio Quartarolli Marco A. Y. Fukuda Marcos V. Miranda Rossi Maria Flavia Borges Siqueira Maria Inez Murad (E.D.) Mariana de Oliveira Orsolon Mariana Helena Lemes Mariana W. Penariolli Marília de Moraes Navarro Marlene Aparecida H. Gallardo Mayara Bácaro Miriam Viviane S. Silva Noemi Shigetomi Osvaldo Nakandakare Paula Lario Rafael Cardoso Rafael S. Lui Renata Fornari Ricardo José Di Prieto Roberval Doria Robson Bexiga Rogério Lima Rodrigues Ronaldo de Andrade Junior Sandra Valeria G. Prenstteter Sandro Norberto do Nascimento Sharlene Irente Saito Silvia Regina Gonçalves Pereira Sueli Ferrari Susan M. Cavalin Brito Suzania Cristina Paulino Talita Andrade Tatiana Lonardo Thiago Andrietta Thiago Gentile Thiago Monteiro Valdir Scavacini Valter Gomes Novais Vanessa Cristina Schiavinato Victor Chimenez Victor Terraz Viviane Cristina Braga Muhlstedt Viviane Genonadio Yara Francisco da Silva (E.D.) Executive Director

70 About the SUSTAINABILITY TEAM Juliana Nunes (E.D.) Natalia Buchwitz Valéria Guimarães Warley Militão (E.D.) Executive Director photography Brasil Kirin Archive CREDITS GRI consulting, copy and editing Report Sustentabilidade Revision Assertiva Produções Editoriais Graphic design, layout Report Sustentabilidade Typeface Myriad Pro, Robert Slimbach Carol Twombly, 1992 Friz Quadrata, Ernst Friz, Victor Caruso, 1973 contact 69