ENGIE Brasil Energia’s stakeholders

During 2016, the Company hired a total of 76 and terminated 167. Total terminations exceeded the average for previous years due largely to the Voluntary Severance Plan (PDV), under which there were 138 terminations in the period. Some of these terminations were personnel at the decommissioned Charqueadas Thermoelectric Plant. Management of human resources in respect to the plant closure process was conducted with total transparency and respect for the employees in an effort to minimize the impact on both professionals and their families. Of the workforce of 72 at the plant, five opted to rescind their contracts, 30 signed up to the Voluntary Severance Plan (PDV) proposed by the Company and 37 were approved in a selection process to work at the Pampa Sul Thermoelectric Power Plant - under construction in the municipal district of Candiota.

Diversity

Respect for diversity features in the guidelines of both the Company’s Code of Ethics and also its Human Resources Policy. These documents state that ENGIE Brasil Energia will not tolerate discrimination with respect to ethnicity, religion, gender, party political preferences, age, social status, physical restrictions and any other form of prejudice.

Although the Company’s workforce is predominantly male, ENGIE is seeking to increase the number of positions held by women. This trend is already reflecting in leadership posts. In 2016, women held 13% of all managerial jobs. GRI G4-LA12

The inclusion of people with special needs is also a Company focus. At the end of 2016, 36 employees were in this category – 3% in managerial positions. GRI G4-10; G4-LA12

Compensation and benefits

In addition to fair compensation compatible with the local and sector markets, the Company offers its employees a comprehensive benefits plan, which includes: GRI G4-LA2

• Life insurance (with coverage for permanent total or partial invalidity due to accident or illness);

• Healthcare plan (encompassing medical/hospital assistance, odontological and drugstore expenses; psycho-therapy, physiotherapy and specialized reeducation treatments; eye glasses and ophthalmological lenses; hearing aids and orthopedic devices);

• Disability and invalidity coverage (for dependents there is a Program for Assistance of Dependents with Special Needs);

• Extended maternity leave;

• Child daycare facilities;

• Agreements with fitness centers;

• Parent company stock ownership plan (although in 2016 no shares were acquired); and

• Food/meal and transportation vouchers.

In addition, ENGIE Brasil Energia subsidizes 80% of drug prescription charges for employees and their dependents, 60% of the monthly tuition fees for language courses and 50% of the monthly fees for university graduation or post-graduation programs.

Outsourced workers also are entitled to a benefits program on a permanent basis, consisting of food vouchers and medical and dental care plans. The cost of these benefits is incorporated in the contracts signed with the companies supplying goods and services to ENGIE Brasil Energia.

Training

Among the cardinal features of the Company’s Human Resources Policy is the promotion of employee development through systematic training and skills upgrading. In 2016 alone, the Company offered its employees approximately 43.2 thousand training hours, an average of 41.4 hours per employee. Total investment in training in 2016 was R$ 4.9 million, a year-on-year decline of 5.8%. GRI G4-LA9

Occupational Health and Safety Indicators (OHS)

1) TF = number of work-related accidents occurring for every million hours of exposure to risk
2) TG = number of lost days due to work-related accidents for every million hours of exposure to risk

100% of the collective labor agreements between ENGIE Brasil Energia and the labor unions have specific OHS clauses, including the training and education of first aid personnel and members of the CIPAS. For outsourced personnel, Occupational Safety Integration Training is offered, which covers the basic principles of OHS for performing emergency services in the Company’s units. GRI G4-LA8

Culture of Safety

In the first half of 2016, ENGIE Brasil Energia prepared a Safety Culture Diagnosis for identifying behavioral aspects influencing OHS initiatives. The methodology involved the use of questionnaires - for which replies were received from about 75% of the workforce - as well as interviews and focus groups with stakeholders that are parties to the daily routine of the Company. The results of this work raised several points for improvement, consequently providing a basis for action plans, which will contribute to consolidating a more effective culture of safety among direct employees and outsourced personnel.

Satisfaction survey

ENGIE Brasil Energia runs an organizational climate survey every two years to gauge the impact of its people management programs on employee satisfaction. The 2016 version of the survey revealed a favorability level of 73% among the workforce. In all, 78% of the employees answered the survey. Of this total:

• 95% would recommend ENGIE Brasil Energia as a good place to work;

• 97% believe fully in the products and services supplied by the Company;

• 96% 96% believe that ENGIE Brasil Energia is a responsible company in relation to the environment; and

• 95% believe that the Company is socially responsible. 

ENGIE Brasil Energia is preparing specific action plans based on the findings of the survey, the focus being on the continuous improvement in its policies and practices for managing the organization climate.

Clients

Throughout the year 2016, ENGIE Brasil had agreements with 228 industrial, commercial and service clients, corresponding to 592 consumer units. The Company’s relationship with these clients, whether in the regulated or free market is based on trust and the creation of value for both parties. In addition to the conventional service channels, the Company collates stakeholder opinions on its activities through periodic satisfaction surveys - the last of which was run in 2014 and recorded a favorability ratio of 95%.

The promotion of the rational use of electric energy in its value chain is one of the commitments assumed in the Climate Change Policy and executed through the ENGIE Brasil Energia Energy Efficiency Diagnosis. Since 2004, the Program has been offered free of charge to the free market client portfolio, more particularly companies in the industrial sector in an effort to help them identify the potential for reducing energy consumption in their productive processes. Among the actions suggested are changes in equipment and modifications to manufacturing processes and the organizational culture. Any decision on implementing proposals put forward by ENGIE however is entirely at the client’s discretion.

In 2016, the Company carried out a diagnosis at three clients. Potential electric energy savings of 8,385 MWh were identified. Since the beginning of the Program, 44 diagnoses have been conducted at major plants in a range of different sectors, such as automobile manufacture, mining, chemicals, cosmetics and industrial gases as well as retailers. If all participating clients are taken together, energy savings arising from implementation of the proposed actions would have been in the order of 500,000 MWh annually. GRI DMA Sectoral

Among important initiatives for reaching out to both current and potential clients is the Visiting Program. This allows visitors to see some of the Company’s plants and obtain a better understanding of the operations as well as in the context of the socio-environmental programs. In 2016, two visits were organized: one to the Itá Hydroelectric Power Plant with 17 guests and the other to the Jorge Lacerda Thermoelectric Complex with 13 invitees.

Suppliers

ENGIE Brasil Energia’s supply chain incorporates companies of different sizes, sectors and regions of Brazil and abroad, providing goods and services, which contribute to the development of the Company’s activities. In 2016, the Company enjoyed commercial agreements with 1,908 suppliers. ENGIE Brasil Energia is conscious of the potential of its supply chain and disseminates good sustainability practices among the companies it engages. GRI G4-12

Suppliers are selected with a focus on ensuring legal compliance and execution of socio-environmental commitments that are assumed. In this respect, the Company performs periodic evaluations of suppliers to plants already in operation¹. Evaluations consider aspects relating to quality of services; occupational safety, medicine and hygiene; the environment and legal and administrative issues. Should the average of this evaluation be less than 70%, the supplier is required to submit a plan of improvements for the approval of the Company and subsequent monitoring. In 2016, 12 suppliers (0.6% of the total) reported non-compliance with labor practices. With all the companies evaluated, ENGIE agreed various aspects for adjustment and improvement, in no case contractual rescission being necessary.

As part of its sustainability strategy, the Company prioritizes the hiring of local suppliers, that is those situated within the geographical region of its operations or its head office². In 2016, these suppliers received about R$ 1.04 billion in payments, corresponding to 80% of all resources destined to companies contracted by ENGIE Brasil Energia during the year³. GRI G4-EC9

1  Evaluations of suppliers to power plants under construction use a different methodology, which includes compliance relating to the nature of the activities executed as well as the risks involved.
2 There is no distinction as to the significance of the Company’s operations such that all operational units are deemed important.
3 In 2016, agreements with local suppliers represented 50% of total contracted.

Project installation work often makes heavy demands on human resources, more especially functions involving civil construction, stonemasons, carpenters and riggers, among others. In partnership with teaching institutions, the Company endeavors to encourage the hiring of local labor by running professional initiation and skills training courses for qualifying members of the local community to occupy job positions on offer.

In the case of Pampa Sul Thermoelectric Plant for example, partnerships were established with the National Service for Industrial Training (Senai), Fundação Gaúcha do Trabalho e Ação Social (FGTAS) and the local governments of Candiota and Hulha Negra, municipalities which are in the project’s sphere of influence. The aim of the partnerships is to offer professional training courses to the local community. Between June 2015 and May 2016, 16 courses were run, distributed among 29 groups totaling 564 participants, of which 417 successfully completed the courses. DMA Sectoral

In spite of the priority given to local hiring, insufficient numbers of companies and services for satisfying demand locally means that manpower is attracted from other regions to the municipalities surrounding the projects. While on the one hand this contributes to stimulating the local economy, on the other, the population influx overloads public services. When such impacts are detected, the Company adopts a series of mitigating and compensatory measures, which include investments in the areas of health, safety, leisure and sanitation. Other initiatives are taken to assist local government in structuring its actions such as the preparation of master and waste management plans.

Projects in operation

One of the principal relationship initiatives with the communities in which the Company operates are the Sustainability and Cultural Centers. Installed with the support of ENGIE Brasil Energia since 2011, these spaces make a significant contribution to the sustainable development of small population centers.

The main objectives of these centers are to:

• encourage the appreciation and dissemination of local customs and traditions in the communities in which ENGIE Brasil Energia operates;

• stimulate young people to seek knowledge through social and digital inclusion, contributing to the creation of jobs, income and the reduction in rural depopulation;

• provide various spaces for enhancing intra-community relationships for all and any type of cultural manifestation, such as the performing arts, plastic arts, dance presentations, musical shows and cinematographic exhibitions; and

• make Sustainability and Cultural Center operations economically viable with a structured program, which both generates income and controls costs.

At the end of 2016, five centers were in operation: Centro de Cultura de Entre Rios do Sul (SC), Centro de Cultura de Alto Bela Vista (SC), Centro de Cultura e Sustentabilidade de Capivari de Baixo (SC), Centro de Cultura de Quedas do Iguaçu (PR) and Centro de Cultura de Concórdia (SC), installed in partnership with the local city government. In 2017, a further center will be opened in Minaçu (GO).

The Company also supported the creation of REDE. This is an organization for managers of sustainability and cultural centers already in operation and in the process of installation. The aim is that through jointly promoting the exchange of good practices and the interchange of cultural activities, relations with public and private entities can be strengthened to achieve the sustainability of the enterprises. REDE’s first meeting was held in September 2016 at the Capivari de Baixo Sustainability and Cultural Center.

Capacitar

The Company launched the Capacitar Program in 2016, its focus being on socio-cultural exchanges for improving the quality of life of the communities surrounding the plants. The program provides skills upgrading for leaders and community agents involving the management of projects made feasible through tax breaks granted under federal government schemes such as the Culture Incentive Law (Lei Rouanet), the Sport Incentive Law, the Infancy and Adolescence Fund, the Fund for the Elderly, the National Support Program for Oncological Care (Pronon) and the National Health Care Support Program for People with Special Needs (Pronas/PCD).

The program works along three principal axes: upgrading of skills through the distribution of printed material, onsite meetings and online courses. More information on this project can be found by accessing www.capacitar.vc. During 2016, three onsite meetings were held in Capivari de Baixo (SC), Minaçu (GO) and Florianópolis (SC).

Investments in social Responsibility (in thousands of R$) GRI - G4-EC1

Royalties and leasing income

In addition to investments in socio-environmental initiatives, the local economy of the regions in which the plants are located is also driven by royalty payments in the form of Financial Compensation for the Use of Water Resources (Compensação Financeira pela Utilização de Recursos Hídricos - CFURH). The legislation requires that income from these resources should be shared 45% each between the municipalities and states and the remaining 10% to the Federal Government. The percentage area flooded in each municipality is the basis for the ratio for prorating payments among the three beneficiaries. In 2016, the Company paid out R$ 196.8 million in royalties.

The other significant economic impact arising from the activities of ENGIE Brasil Energia is the leasing of areas for installation of and contiguous to the wind farm complexes. Owners of these areas normally receive 0.5% of net revenues from the project in rental payments. Consequently, direct and indirect income is generated and circulates in the surrounding region among landowners, traders and the local economy as a whole, driving the growth of the municipalities and states as a result of the increased tax take. In 2016, ENGIE Brasil Energia paid out R$ 14.4 million in rents.

• Brazilian Association for Electric Energy Generating Companies (Abrage);

• Brazilian Association of Wind Energy (ABEEólica)

• Brazilian Mineral Coal Association (ABCM);

• Brazilian Association of Risk Management (ABGR);

• Brazilian Maintenance Association (Abraman);

• Brazilian Electric Energy Trader Agents Association (Abracel);

• Brazilian Association of Electric Energy Sector Accountants – (Abraconee);

• Brazilian Association of Independent Electric Energy Producers (Apine);

• Capivari de Baixo Commercial and Industrial Association (Acicap);

• Florianópolis Commercial and Industrial Association (Acif);

• Lages Commercial and Industrial Association (Acil);

• Tuberão Commercial and Industrial Association (Acit);

• Healthcare Association (Elosaúde);

• Energy Co-Generation Industry of São Paulo (Cogen);

• Apuaê-Inhadava Hydrographic Basin;

• State of Rio Grande do Sul Energy Planning Committee (Copergs);

• Cantuquiriguaçu Territory Development Council (Condetec)

• National Water Resources Council (CNRH);

• Santa Catarina State Water Resources Council for Santa Catarina (CERH-SC);

• Paraná State Water Resources Council (CERH-PR);

• Environment Council of the National Confederation of Industry (CNI);

• Industries Federation of the State of Santa Catarina (Fiesc);

• Confederation and Center of Industries for the State of Rio Grande do Sul (Fiergs);

• Business Management Foundation Committee (Funcoge);

• Eletrosul Social Security Foundation (Elos);

• Santa Catarina Leaders Group (LIDE-SC);

• Acende Brasil Institute;

• Brazilian Investor Relations Institute (Ibri);

• Internal Auditors of Brazil Institute (Audibra);

• International Hydropower Association (IHA).

ENGIE Brasil Energia also adheres to the Sustainable Development Goals (SDGs) through the Santa Catarina We Can Movement, which it also supports. Indirectly through the parent company ENGIE, the Company is signatory to the Carbon Disclosure Program (CDP) and the United Nations Global Compact. ENGIE Brasil Energia is also involved in the Brazilian Business Pact for Integrity and Against Corruption. All are voluntary initiatives.