Decision-making process

The appetite and approval purviews are defined by the Board of Directors. The Board of Directors delegates to the Executive Board purview to address and operationalize economic, environmental, and social aspects, within the boundaries set out by the statute, involving the Board of Directors in matters that require the official evaluation and approval by the company's highest governance body. In addition, there are economic, social, and environmental issues that are evaluated by the advisory Committees, which recommend strategic guidelines to the Board of Directors. Additionally, the Department of Governance, Risks, and Compliance (DGRC) is a link between the strategies and policies defined by the Board of Directors and the Committees and the activities carried out by the business areas, under the responsibility of the Executive Offices and general management.

Responsibility for economic, social, and environmental aspects

The economic, environmental, and social aspects are a responsibility of all company directors. All of them report to the CEO, who, in turn, reports to the Board of Directors. The company also has a Sustainability and Corporate Relations Department.

Processes to consult stakeholders

Evaluation and feedback surveys are regularly presented to the Board of Directors, involving the opinions from several audiences, such as investors, clients, and communities. In addition, meetings are held between stakeholders, the company's Executive Board, and members of the Sustainability Committee, including the Chairman of the Board of Directors. The company's Executive Office is responsible for the consultation processes used by Fibria.

Governance Composition

Selection Criteria

The selection process begins with the Chairman of the Board of Directors and with coordinators from the committees, depending on the job opening to be filled. The names of the applicants are submitted for evaluation by the Board of Directors, which is responsible for recommending new members of the Board to the General Assembly or approving new members of the Advisory Committees. Subsequently, the new members of the Board of Directors are elected at the General Meeting.

Diversity is taken into account in the list of possible applicants, but there is no positive induction or preference given to any minority, gender, or race. The company aims to include names that can contribute to diversity.

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

Knowledge and experience related to economic, environmental, and social aspects

Composition of the Board of Directors values competence in business, financial, legal, and innovation areas. Experience as former CEOs in international business of companies that deal with the three pillars of economic-financial, environmental, and social areas are important for independent Board members.

 There is no direct involvement of stakeholders in the Board of Directors. In the composition of the Sustainability Committee, diversity of members was considered, as well as experience in critical aspects, such as climate change, biodiversity, and social issues.

Role in Defining Policies and Goals

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

Prevention of Conflicts of Interest

Information is available on  Reference Form: items 12.9 and 12.10. In 2013, the Related Party Transactions Policy was also prepared with the purpose of establishing procedures that must be observed in carrying out transactions with related parties and in situations where there is potential conflict of interest. This policy ensures that negotiations are conducted in accordance with market conditions and accurately and fully disclosed in Fibria's reports.

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

Improvement Measures

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

Self-Assessment Processes

Self-assessment of performance is carried out annually and conducted by an independent external consultant. This assessment is done individually, and personal interviews with each member of the Board of Directors are conducted by evaluating the action plan from the previous year.

In addition, the Board conducts an assessment of each committee, and the results of this assessment are submitted to the committees. Independent external advisers also undergo a self-assessment process.

Based on this information, an action plan is created by the independent consultant and the Chairman of the Board of Directors. The results of the assessment and proposal of the action plan are presented, which are then discussed by the Board members.

The Chairman of the Board of Directors, in the cycle closing meeting, proposes the adjusted version of the action plan to address gaps identified in the processes, which is approved by the Board members. Improvement measures are suggested, involving the creation of emergency response and training plans for dealing with critical events to improvement of the Board's processes and transparency.

Responsibility for Implementation of Policies

The Department of Governance, Risks, and Compliance (GRC) annually reports on issues related to compliance, including risks, and the Statutory Audit Committee (CAE) reports quarterly on internal controls and risk management it supervises.

Analysis of Risk Management Processes

On a quarterly basis, the Statutory Audit Committee oversees the company's risk management activities, analyzes the organization's risk matrix, assesses adherence to action plans, and monitors risk indicators related to economic, environmental, and social aspects.

On a quarterly basis, the Board of Directors examines a top risk from its risk matrix, according to criticality and priority. The issues are discussed with Board members in the presence of the Risk Management department and Risk Owners, analyzing the diagnosis of the situation, as well as the status of the initiatives and controls defined to address a given risk.

Analysis of Impacts, Risks, and Opportunities

In 2016, issues concerning impacts, risks, and opportunities on economic, environmental, and social aspects were analyzed during the eight regular meetings of the Board of Directors.

Consultations with Stakeholders on Remuneration

The Board requests the support and analysis of the People and Remuneration Committee, which relies on advice from specialized consulting companies that conduct annual surveys to identify market parameters. The CEO's remuneration is compared with a panel of hundreds of CEOs of companies operating in Brazil.

The Executive Board is evaluated by a panel of sectors and sizes similar to Fibria, involving approximately 30 companies. The fees of members of the Board and of the committees are compared with a selected panel of 20 companies listed on BM&FBOVESPA. This survey is evaluated by the People and Remuneration Committee, which annually presents it to the Board of Directors to approve any recommended changes.

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

Critical Communications

Follow-up items are submitted to the Board of Directors by the Executive Board or by the Board members themselves. They involve critical aspects that have a potential impact on the company's results and do not have a short-term solution. Currently, there are six aspects treated as follow-up items.

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