1 Index Introduction ........................................................................................................................3 Message from Management ................................................................................................5 Organizational Profile ..........................................................................................................8 The Company .................................................................................................................9 Awards and Recognition ............................................................................................... 11 Governance ...................................................................................................................... 12 High Standards ............................................................................................................. 13 Consolidated Practices .................................................................................................. 15 Talent Development .......................................................................................................... 20 Training for every challenge .......................................................................................... 21 Access to corporate education ...................................................................................... 24 Investing in the best ..................................................................................................... 25 Socio-Environmental Management .................................................................................... 28 Green Company ............................................................................................................ 29 Control of greenhouse gas emissions............................................................................. 30 Other Initiatives ........................................................................................................... 33 Economic Performance ...................................................................................................... 36 Profitable expansion ..................................................................................................... 37 Financial Results ........................................................................................................... 40 GRI Content ....................................................................................................................... 44 About the Report.......................................................................................................... 45 GRI Index...................................................................................................................... 48 Acknowledgements ....................................................................................................... 56 2 3 We are pleased to present the first sustainability report for Lojas Americanas, S.A., which was developed in accordance with internationally-recognized disclosure guidelines developed by the Global Reporting Initiative (GRI), a nongovernmental organization headquartered in Amsterdam, The Netherlands. The GRI’s mission is to develop and globally disseminate guidelines for the preparation of sustainability reports, which are voluntarily adopted by large companies around the world. This publication presents the economic, social and environmental dimensions of our results, expanding our channels of dialogue with all stakeholders and focusing on the strengthening of sustainability practices in Lojas Americanas business units. 4 5 Sustainability: Engaging all areas of the company is our goal For the past 84 years, Lojas Americanas has been a part of Brazilians’ lives. Bringing more convenience to our customers has always been our main goal. Much has changed over the decades and the company continues to innovate to meet customers’ needs, anytime and anywhere, beating their expectations and offering them the best shopping experience. The results achieved in 2012 demonstrate that Lojas Americanas has managed growth with profitability. We have achieved major advances in our multi-channel strategy. Developments in recent years are in line with the performance of our key operating indicators. In 2007, we created the Green Company with the aim of preparing our organization for sustainable development, as well as engaging all areas of the Company in pursuit of sustainability. As part of these efforts, the Company maintains a Sustainability Committee, a multi-disciplinary body that is active in the social, environmental and economic spheres, thereby improving the dialogue with our stakeholders – shareholders, customers, suppliers, employees and society. Therefore, sustainability is part of our group’s operational strategy, perfectly aligned with our vision of being a socially and environmentally responsible company. In 2010, the Sustainability Committee was formalized by the Board of Directors, raising its prominence within the Company. The following year, environmental responsibilities were included in the formal job descriptions of all positions in the organization. In recent years we have established important partnerships with the Brazilian GHG Protocol Program and the Getulio Vargas Foundation, and we have received training in the emissions accounting methodology developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). This has given us the means to measure greenhouse gas emissions from all our business units and report, annually, on that inventory of greenhouse gases through the Investor Relations section of our Company’s website. In preparing our emissions inventory and calculations, we used the methodology of the Brazilian GHG Protocol Program, of which we have been a member company since 2009. This methodology is the most widely used and internationally recognized by businesses and governments. Using information gathered for the preparation of our GHG emissions inventory, we also participated in the Carbon Disclosure Project (CDP), a nonprofit organization with international scope, whose goal is to create a relationship between shareholders and companies. In 2010, BOVESPA established the Carbon Efficient Index (ICO2), a select group of which we have been a part since its creation. The ICO2 consists of the shares of IBrX50 companies, which have adopted transparent practices with respect to greenhouse gas (GHG) emissions. The index takes into account the degree to which a Company’s revenue is related to GHG emissions. 6 For 2013, to further strengthen our position in relation to sustainability, we are publishing the Company’s first Sustainability Report. This report is based on the GRI’s methodology, which is the most widely used and recognized worldwide. Throughout 2012, we continued to enhance our multi-channel structure. Our ecommerce operation, through our B2W Digital subsidiary, is complementary to our physical, retail operations, as there is low overlap between these channels. Accordingly, we view this complementarity as being our main competitive advantage within the Brazilian retail sector. We are in the final stretch of implementing our Lojas Americanas - 80 Years in 4 - Always More Brazil Expansion Plan. In 2012, we achieved growth in consolidated gross and net revenue, corresponding to 13.9% and 13.6%, respectively, compared to the previous year. For 2013, we are enthusiastically expecting the opening of our 900th store. With our entrance in Roraima, we will be present in all Brazilian states. The achievement of our goals is the result of the dedication of our associates, who are steeped in an organizational culture characterized by a results-oriented meritocracy. We believe in the potential of our team and, therefore, continue to intensify training programs. In 2012, training hours for our associates almost doubled. It is important to note that within our vision “to be the best retailer in Brazil,” we are engaged in efforts such that society will see ours as a socially and environmentally responsible company. THE MANAGEMENT 7 8 The Company In the market for over 80 years, Lojas Americanas is one of Brazil’s most innovative retail industry chains Founded in 1929 in Niterói, Rio de Janeiro, Lojas Americanas operates a network of department stores. Our main feature in this retail model is our guarantee of providing customers the most convenient way to shop. We closed 2012 with 729 stores, present in all regions of the country. Of these, 271 opened in the last three years, as part of the 80 Years in 4 - Always More Brazil Expansion Plan, which was rolled out in late 2009. Headquartered in Rio de Janeiro, the Company has stores in 254 cities spread across 25 states, plus the Federal District. In 2012, we opened 111 stores. In total, we have 462 traditional stores and 267 in our Express line. Each of the traditional stores has an average sales area of 1,400 square meters, daily inventory replenishment, and approximately 60,000 items. The Express model adopts a smaller-store concept with an average size of 400 square meters, “just-in-time” logistics, and a select assortment of approximately 15,000 items, tailored to the location and customer profile of each of these stores. Multichannel Retailer In addition to our brick and mortar stores, Lojas Americanas is the parent company of B2W Digital, an e-commerce leader in Brazil. B2W owns the following brands: Americanas.com, Submarino, Shoptime, MesaExpress.com.br, SouBarato.com.br and BLOCKBUSTER® Online, B2W Viagens, Ingresso.com and Submarino Finance. Thus, we operate a multi-channel service structure, reaching our customers with a wide range of products and services through physical stores and via the Internet, telephone, catalogues, TV and kiosks. 9 Mission Fulfill people’s dreams and satisfy their consumption needs, saving them time and money, and exceeding their expectations. Vision To be the best retailer in Brazil. For customers, who believe their best shopping option is with us For shareholders/investors, who regard us as offering them the best returns in this segment For the associates, who consider us as best option for professional development For suppliers, who consider us as their best distribution channel For society, which considers our company to be socially and ecologically responsible Values Having the best people Being a good “business owner” Striving for excellence in operations Focusing on customers Doing more and better every day Being obsessed with delivering results 10 Awards and Recognition We received the RA 1000 Seal from the Reclame Aqui (Complain Here) website and won the Contribuintes (Contributors) and Central-West Alshop Shopkeeper awards In 2012, Lojas Americanas received the RA 1000 Seal from the consumer complaints website forum, Complain Here (Reclame Aqui), for our excellent marks for response times, solutions, and customer evaluations. Of those company-related records on the site, 100% of the cases were attended to immediately and 96% were solved in a convenient manner. In addition, our Company is among Complain Here 20 Best Companies, with an 11th place ranking in their solutions index, an 18th place ranking among those businesses with which customers are most likely to do business again, and a 16th place ranking in the best overall index. Lojas Americanas was also elected the preferred chain in a survey of consumers in the state of Paraná, which was conducted by the Independent Television Group in partnership with the Brazilian Institute of Public Opinion and Statistics (IBOPE); securing, in Department Store category, the 2012 Unparalleled Prize - Preferred Chains and Regional Affinity Index. We won the Taxpayers Award, which recognizes companies that have contributed the most in taxes to the state of Ceará. Also in 2012, for the fifth consecutive year, we won the Central-West Alshop Shopkeeper Award, which saw our firm competing against more than 700 other companies, winning in the Department Stores category. The award recognizes 14 years the performance of large retailers in Brazil’s shopping malls. The B2W subsidiary was champion in three, Complain Here categories for Quality Service. Submarino won in the Virtual Stores, Large Operations and Retail, and Consumer Electronics categories, while Submarino Viagens (Travel) was the winner in the Tourism and Leisure category. In turn, in the shopping websites category, Americanas.com, was voted the favorite brand in Rio de Janeiro, according to the Marca Cariocas study conducted by the newspaper O Globo. 11 12 High standards Board of Directors defines the Company’s business strategy Listed on the BM&FBovespa since 1940, Lojas Americanas S.A. has a shareholder base comprised of preferred (LAME4) shares, and common (LAME3) shares. Our Company is led by its Board of Directors and Board of Executive Officers, and supported by internal committees. The Board of Directors consists of eight members, five appointed by the controllers, one by the minority shareholders and two by the Board itself. Besides electing and removing directors, and determining the distribution of fixed compensation at the General Shareholders Meeting for its members and the officers, it is up to the Board of Directors to orient the general business of the Company, approving guidelines, policies and business objectives for all basic areas in which it is active. Currently, the Board of Executive Officers consists of ten members. According to the provisions of the Bylaws, this body can range from two (2) to twelve (12) directors, one who is designated as the Chief Executive Officer, with all being elected for a period of one year, with the right to reelection. The Board of Executive Officers is responsible for the execution of the business strategy defined by the Board of Directors, the preparation of plans and projects and the operational and financial performance of the Company. Lojas Americanas also has a Fiscal Council, consisting of three members — two appointed by the controlling shareholder and one appointed by the minority shareholders. The Fiscal Council has powers and responsibilities that the law confers upon it to observe legal precepts concerning requirements, impediments, compensation, composition, installation, operation, duties and responsibilities. Specialized committees With an aim of supporting the Board of Directors and the Board of Executive Officers in decision-making, committees or working groups may be created with defined functions. At least three and not more than four members of any given committee may be members of the Board of Directors or others. Currently, Lojas Americanas has three committees. 13 Finance Committee – Advises and assists the Board of Directors regarding all decisions involving the financial policies of the Company, ensuring that it is meeting its obligations. Human Resources and Remuneration Committee – Supports decisions involving human resource policies and remuneration by the Company to ensure that members of the Board of Directors and Board of Executive Officers, and all associates, have incentives to achieve exceptional results. Another function of the Committee is to enable the correct and efficient implementation of our culture, which values constant improvement and meritocracy, as well as the attraction, securing, retention and development of the best professionals and leaders. Sustainability Committee – The main responsibilities of this Committee are the establishment of sustainable practices based on the “triple bottom line” of sustainability (economic, environmental and social) and ensuring the involvement of the entire Company in socio-environmental issues. Members of the Board of Directors: Amaury Guilherme Bier Carlos Alberto da Veiga Sicupira Cecilia Sicupira Giusti Love Goel Miguel Gomes Pereira Sarmiento Gutierrez Paulo Alberto Lemann Roberto Moses Thompson Motta Steven Chad Lojas Americanas’ Board of Executive Officers Miguel Gomes Pereira Sarmiento Gutierrez, CEO Anna Christina Ramos Saicali, Officer Carlos Eduardo Rosalba Padilha, Officer Celso Alves Ferreira Louro, Officer Flávio de Almeida Serapião, Officer José Timotheo de Barros, Officer Márcio Cruz Meirelles, Officer Maria Christina Ferreira Nascimento, Officer Murilo dos Santos Corrêa, Chief Financial and Investor Relations Officer 14 Consolidated practices All shareholders are entitled to equal treatment in the event of a change of control of the Company, among other guarantees. 100% tag along Since 2006, we have maintained a commitment in our Bylaws to grant full (100%) tag along rights to the Company’s common and preferred shares. With this, all shareholders will receive equal treatment in the event of a change of control of Lojas Americanas, which guarantees them the right to sell their shares on the same terms negotiated by the controllers. Dividends policy The Company’s Bylaws, in line with prevailing laws, sets the minimum value of dividends at 25% of net income after the establishment of a 5% legal reserve. In 2012, the distribution to shareholders was R$ 79.9 million, of which R$ 50.9 million were dividends and R$ 29.0 million was interest on equity (before tax withholding), based on net income for fiscal year. Share buyback program Since 2003, the Company has had a shares repurchase program with the objective of holding them in treasury and subsequently cancelled. The current program provides for the buyback of up to 10,788,942 book-entry shares of common stock and 36,505,323 book-entry shares of preferred stock shares. Shares In addition to our preferred (LAME4) shares, which are part of the Ibovespa index, there are the Company’s common shares, which are listed on the Special Tag Along Stock Index (ITAG), which comprises the stock of companies that offer the same conditions to minority shareholders in the case of a change of control. We are also included in other important indices, such as the Brazil Index 50 (IBrX-50), Carbon Efficient Index (ICO2), Consumption Index (ICON), BM&FBovespa Value Index (IVBX-2), the Mid-Large Cap Index (MLCX) and MSCI-Barra. 15 IBRX50 - IBrX-50 is an index which measures the total return on a theoretical portfolio composed by 50 stocks selected among BM&FBOVESPA’s most actively traded securities in terms of liquidity, weighted according to the outstanding shares’ market value. This index was designed to serve as a benchmark for investors and portfolio managers, and also to allow the launching and derivatives (futures, options on futures and options on index). IBrX-50 has the same characteristics of Brazil Index – IBrX, which is composed by 100 stocks, but has the operational advantage of being more easily reproduced by the market. ICO2 - Attentive to the concerns of the world with global warming, the great challenge facing humanity in this century, BM&FBOVESPA and the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social/BNDES) have decided, in a joint initiative, to create a new market index—the Carbon Efficient Index (ICO2).This index comprises the shares of companies participating in the IBrX-50 index that have agreed to join this initiative, by adopting transparent practices with respect to their greenhouse gas emissions (GHGs). The index takes into consideration in its composition, not only the free float of stocks of participating companies, but also the efficiency levels of GHG emissions of these same companies. ICON - The BM&FBOVESPA Consumption Index (ICON) was developed to provide a segmented view of the stock market by measuring the performance of the stocks issued by the companies representative of the cyclical and non-cyclical consumption sectors. Its theoretical portfolio is composed by stocks selected among BM&FBOVESPA’s most actively traded securities in terms of liquidity and are weighted according to the outstanding shares’ market value (free float). IVBX-2 - The Valor BM&FBOVESPA Index - 2nd Tier (IVBX-2) was jointly developed by BM&FBOVESPA and the newspaper Valor Econômico, in the aim of measuring the return on a hypothetical portfolio consisting exclusively of securities issued by companies of excellent image among investors, classified from the 11th position down, both in terms of market value and liquidity of their shares. MLCX - Created by BM&FBOVESPA, the BM&FBOVESPA Mid Large Cap Index (MLCX) and the BM&FBOVESPA Small Cap Index (SMLL) were developed to measure the performance of the companies listed in the Exchange segmenting them by market capitalization: the BM&FBOVESPA Mid Large Cap Index measures the return of a portfolio composed by the large and mid market capitalization companies, whereas the BM&FBOVESPA Small Cap Index measures the return of small capitalization companies. The component stocks are selected among the Exchange's most actively traded securities in terms of liquidity, and are weighted according to the outstanding shares' market value (free float). 16 MSCI - The MSCI Global Equity Indices are widely tracked global equity benchmarks and serve as the basis for over 500 exchanged traded funds* throughout the world. The indices provide exhaustive equity market coverage for over 70 countries in the Developed, Emerging and Frontier Markets, applying a consistent index construction and maintenance methodology. This methodology allows for meaningful global views and cross regional comparisons across all market capitalization size, sector and style segments and combinations. Independent auditors Pursuant to CVM Instruction No. 381, we state that, during the fiscal year ended December 31, 2012, the independent auditors have not been paid for services other than those related to the external audit. The Company’s policy on contracting services unrelated to external auditing from its independent auditors ensures that there are no conflicts of interest, nor any loss of objectivity of the part of the independent auditors. IR: Precise dialogue Lojas Americanas has an Investor Relations (IR) division that is responsible for establishing an accurate and transparent dialogue with the market (analysts and investors or shareholders). In this same regard, the Company maintains a bilingual website (Portuguese and English) as a communications channel that contains updated information, as well as providing customer service via e-mail and telephone. Each quarter, the division holds conference calls to disseminate results with analysts, investors and those who are interested in the affairs of the Company. Among other assignments in the IR division, included are the coordination of the production and publication of annual and quarterly reports, as well as those that are required by law. It is also responsible for the dissemination of market communications and relevant facts. Code of ethics and conduct Our relations with associates and society are based on respect for individual differences and a constant concern for social responsibility, especially as it regards environmental issues, and health and safety in business management. Thus, our Code of Ethics and Conduct contains values and commitments to be shared by all members of the Company in relations with other stakeholders (shareholders, customers, suppliers, service providers, government and society). 17 On the first day an associate enters at the company, they participate in an orientation program in the form of a company-presented training session, in which our culture, vision, mission, principles, values and Code of Ethics and Conduct are presented. Thereafter, associates sign the Code Agreement, pledging to ensure the implementation of the rules and principles contained therein. In the document, the Company reiterates the following commitments: Respect for laws Access to education and development activities Health and safety Eradication of all forms of forced labor Eradication of child labor Harassment prevention Combating sexual exploitation of children and teens Combating the practice of discrimination in all its forms Valuing diversity Respect for freedom of association and the right to collective bargaining Best practices Customer satisfaction We want to be the first choice of our customers when they make purchases and we make every effort and investments so that their expectations are always exceeded. We provide customer service channels, which can be accessed by e-mail, telephone or via social media. All complaints are resolved with a maximum period of 72 hours. With regard to in-store customer service, 60% of the comments from our customers are in the form of questions or suggestions. To reduce the number of complaints, corrective measures are taken to adjust our customer service and we also carry out internal training programs. In 2013, we will expand our channels of communication and develop new research tools to measure the satisfaction of our customers. (PR5) Our customers also expressed their satisfaction in their relationships with the Company through the use of the Reclame Aqui (Complain Here) website (www.reclameaqui.com.br), which also allows customers to receive feedback about their complaints. The site takes into account the following indicators: response index, solution index, index of customers who continue to do business with the company (in 18 2012, our rating was over 80%), an average score provided by customers and the average response time. The score created, based on complaints received, shows that the average response resolution time is five hours. In 2012, all complaints were answered. In 2012, Lojas Americanas was awarded the RA 1000 Seal for its excellent response, complaint resolution and customer evaluation ratings. Records from the site show that 100% of the complaints received an immediate response and 96% were resolved to the satisfaction of the customer. Supplier relationships Our relationships with our suppliers are based on partnership and trust. We want to provide them with excellent distribution channels, allowing them to grow with us. Our suppliers must comply with the Company’s internal policies, conducting their businesses ethically and in accordance with the contracts signed with our organization. These contracts contain clauses that, among other things, refer to compliance with laws and regulations, respect for employees and respect for the environment. Besides complying with the internal policies of the Company and the contracts that have been signed, suppliers must also satisfy the requirements of current laws and regulations regarding the supply and use of products and services, and they are fully responsible for the labeling on the packaging of the products that the Company sells. In this regard, we have had no reports of mislabeling, nor any subsequent inquiries related to this particular matter. Society Lojas Americanas contributes to economic growth and community development in all regions where it operates. Year after year, the Company has grown to generate direct and indirect jobs and tax. 19 20 Training for every challenge Training programs, as well as our principles are based on three pillars: people methods and results Based on a system of meritocracy and a commitment to a long-term vision, through training programs and personal development, we invest in the professional advancement of our associates. Our training is strategically focused, in which various initiatives are adopted to promote skills, such as leadership, results orientation and strategic vision. Similar to the Company’s principles, the personnel development programs at Lojas Americanas are structured on three pillars: people, methods and results. For every challenge an associate tackles, there is a training program available to continuously increase his/her level of knowledge and development to achieve ever improved results. People Pillar People’s pillar, due to its complexity, importance and coverage is subdivided in the fronts of culture, leadership practice and relation with society. In Culture, our goal is to disseminate the Company’s Culture, Values and Principles, therefore strengthening attitudes and behaviors that are the “background” of our Management System and help us achieve our DREAM. In Leadership Practice, we seek to form the Company’s leaders in way they can achieve results through their teams, always confidents that “Lead is to consistently exceed goals, with the team and doing what’s right”. In the front of Society Relation, we share and engage our associates in the practices of sustainable development of the Company, so we can be increasingly recognized by society as a social and ecologically responsible enterprise. Methods Pillar The Methods pillar has as it’s main goal to disseminate and incorporate, on the every level associates’ day-to-day, Management practices and tools, therefore systematizing our way to solve problems and achieve goals and also improving our analysis capability and decision-making based on facts and data. 21 Results Pillar The purpose of the Results pillar is to achieve performance improvement of all areas (Commercial/Marketing, Operations and Support Areas), throughout the qualification of the associates in the patterns of process and activities executions and the development of the competence required for each function. Our principles People A large and challenging dream causes everyone to row in the same direction. Good people, working as a team, growing as their talent permits and being compensated for this, represent the company’s greatest asset. Choosing people who are better than themselves, training them, challenging them and retaining them is management’s main job. Leadership by personal example is vital, both in the heroic attitudes, as well as the small gestures of day-to-day life. Methods Staying focused is essential. It is not possible to be excellent and everything; it is necessary to concentrate on what is essential. Everything must have an owner who is responsible and authoritative. Debate is good but at the end of the day somebody must make a decision. Common sense is as good as great knowledge. What is simple is better than what is complicated. Results To be obsessive about costs and expenses (which are the only variables under our control) helps maintain long-term survival. Understand that speed, urgency and zero complacency are long-lasting competitive advantages. Ethics, hard work and consistency are the basis for our Company’s growth. 22 Profile of our associates Our associates are our greatest asset, and we invest in education and training to provide growth opportunities for everyone. We rely on the commitment, dedication and efforts of our associates to support our plans for expansion. We value people who consistently exceed their goals, who act like owners, who are always seeking out the greatest challenges, and who strive to exceed our customers’ expectations. At the close of 2012, Lojas Americanas had a total of 17,180 associates. They all work full-time and have open-ended work contracts. B2W Digital does not have associates in the Center-West or North regions of Brazil. [LA1] Number of associates by function: Function Executive officers Managers Coordinators Technical/Supervisory Administrative Operational Apprentices Trainees By gender Total 2011 Men Women 7 2 483 438 22 24 739 1.141 120 144 4.975 7.027 164 218 40 52 6.550 9.046 15.596 2012 Men Women 8 2 506 552 33 20 1.088 1.486 127 168 5.018 7.702 207 211 24 28 7.011 10.169 17.180 * The above figures were calculated as of 31/12/12. Since we hire temporary employees only during the Easter and Christmas periods, these are not counted as of year-end 2012. Concerned about the welfare of its stakeholders, when hiring new associates, Lojas Americanas gives priority to local residents who live in the surrounding regions of its facilities. In 2012, most of top management (officers and managers) were from their respective regions. [EC7] 23 Access to corporate education Through our internally-developed educational structure, we guide the training of our associates For continued, sustainable growth, we that know we need to make the best use of the talents of our associates. Accordingly, we invest in the education, training and development of our associates. This is why created the Americanas Development Center (CDA) in 2005, which is an exclusive space for course work and training that can be accessed through video conferencing or e-learning. Our internal educational system is designed to align our strategies with the culture, values and skills of each professional, always striving to keep our knowledge in various fields of business management current. Besides internally-developed materials, we seek the best universities in Brazil and the world, such as Harvard, Stanford, and others, for training courses for our executives to allow them the opportunity to continually raise their level of knowledge and contribute to value generation at the Company. Our corporate university is located in Rio de Janeiro, with facilities in São Paulo and in eight other Brazilian states. To support the Company’s expansion plan and to train our associates, in 2012, new complexes began to be developed with structures designed exclusively for training. The professional development programs conducted in 2012 were focused on improving skills in the areas of commercial operations and leadership. The Company offered a total of 116,677,000 work hours of training. For 2013, we are committed to increasing the number of associates who are trained and the quantity of training sessions offered. [LA10] Annually, all associates in management positions who have been with the Company for more than six months undergo a performance evaluation review. This assessment assures our associates effective management of their performance through individual feedback. The evaluation process has been fully computerized since 2010 and is executed through the PeopleSoft system. [LA12] Focus on sales The Focus on Sales course is designed to provide associates in our stores with information about new product releases, items considered to be best bets for sales and leveraging the Company’s results. The courses are given both in person and via videoconferencing. The audience consists of purchasing managers, store managers, buyers and store supervisors. Conducted seasonally, these courses feature speakers from the Company and, often, well-known guest speakers. Examples of the latter include television host, Xuxa Meneghel, and actress, Giovanna Antonelli, who participated in 2012 courses. These 24 artists were sponsored by suppliers as a means of motivating associates and preparing our team for even greater sales. On-the-job accreditation To give an associate a professional path to improvement, we developed a career training plan, which offers a training opportunity toward on-the-job accreditation. The courses are given in-person and via e-learning. The initiative is designed to increase the levels of training for operators, supervisors, sales and other managers, allowing them to improve their job performance, especially in the area of customer service. In 2013, we will expand this training to associates in working in sales areas of Lojas Americanas, which will give them the opportunity to become better trained and prepared employees. Investing in the best We recruit university students and recent graduates from the best universities in Brazil with the potential to grow within the Company Our strategy of recruitment, selection and retention has been continuously improved throughout our history. The investments we make in building our team only makes sense, as we seek out people who are aligned with our values and principles, and have a strong desire to grow and build a successful career with us from the start of the selection process onward. Our policy is to train our in-house talent, which has made a difference in our business over the years. We have recruited university students and recent graduates from the best universities in Brazil and abroad through internship, trainee and new talent programs. They all undergo training focused on the retail sector and the organizational culture of the Company. Internship program Our national internship program is focused on training college students with the potential to become future leaders of our Company. The program lasts six months to two years, with a workload of 30 hours per week. During this period, trainees learn about the day-to-day operations of stores, headquarters, distribution centers and other business units. Throughout the program, training modules are also developed 25 through which young people are able to become better acquainted with our vision, mission and corporate values, as well as acquire the technical resources necessary to carry out work within their areas of expertise. At the end of the program, opportunities for advancement is great for those who do well. New retail talent program Created in 2011, the program is designed to educate and train future leaders of the Company, at an accelerated rate, so that everyone can participate in the growth of the companies in our group. At the time they are hired as professionals, they are assigned to business divisions, gaining immediate contact with the activities of each sector. In the first six months, a new associate attends lectures by the Company’s managers and visits stores, distribution centers, Customer Service Centers and other business units. Trainee program Every year, we hold an open registration for the Lojas Americanas Trainee Program. As fast and dynamic as is the retail sector itself, the program provides 12 months of intensive training for young people with the profile to fill future management positions in the Company. The steps in the selection process include: registration, online training, skills laboratory, HR interview, final assessment and contracting. During the first six months, trainees are familiarized with the entire operations of the Company and they go through several corporate training programs. In the second stage of the trainee program, participants are sent to a business division, where they acquire on-the-job training and are given the opportunity to develop a challenging final project. Persons with disabilities program Lojas Americanas seeks to promote the effective inclusion and training of persons with disabilities in the workplace. The company offers positions, through which associates have the opportunity to learn the routines of the retail environment and develop new skills. Attracting candidates is accomplished through partnerships with municipal agencies and specialized consultants, which recommend candidates to fill vacancies in stores and distribution centers throughout the Brazil. Furthermore, in Rio de Janeiro and São Paulo, the Company participates in the “Special Opportunities” project, where large companies offer positions to persons with disabilities, through the use of specialized and accessible stands. 26 Designed to inform and encourage our managers regarding the importance of the inclusion of professionals with disabilities at Lojas Americanas, in 2012, the Personnel and Management Department, in partnership with Rio de Janeiro’s Municipal Department for Persons with Disabilities and a specialized consulting firm, organized training on important subjects, such as the fundamental aspects of hiring professionals with disabilities. The goal of this activity was to strengthen inclusion activities that B2W has been conducting to bolster diversity by making the Company increasingly more accessible and inclusive. As a result, we were proud that, in 2012, there were no judgments against us in the courts that were based on the practice of discrimination. [HR4] Young apprenticeship project Always with an eye toward preparing students for the labor market, in partnership with the National Commercial Apprenticeship Service (SENAC) or equivalent entities in the cities where our business units are located, the Young Apprentice Project prepares students to enter our job market. Work contracts are for a fixed term and, in exchange, these young persons make a commitment to enroll in and attend primary or junior high school. Benefits Beyond benefits required by law, to provide our associates with more and better benefits, all receive a health plan, life insurance and a restaurant or meal voucher, as well as discounts at Americanas.com, Submarino and Shoptime. For purchases at Lojas Americanas stores, associates can also take advantage of discounts at all locations. Our concern about the quality of life, welfare and training of our associates has always been a priority in the management of our people. As a result, we also negotiate special agreements with health spas, restaurants, and language courses at universities – all in an effort to improve the performance of our team. Regardless of contract type, all associates are entitled to the same benefits. [LA3] For associates that have growth potential and above average results, the Company has a program called School of Retail which aims to help those associates to complete college and therefore grow further in their career. Members can apply for the program after completing two years at the Company. 27 28 Green Company The Sustainability Committee is active in the areas of social, environmental and economic development, seeking dialogue with our stakeholders In 2007, we decided to take the critical step of engaging all areas of Lojas Americanas in our efforts toward sustainability, developing the “Green Company”. The initiative was implemented in our management through the formation of a multidisciplinary committee, which operates in the areas of social, environmental and economic development, seeking dialogue with the Company’s stakeholders (shareholders, customers, suppliers, associates and society). The committee meets weekly to discuss and plan “Green Company” activities, which are designed to promote the sustainable development of Lojas Americanas. For this, we encourage consumer awareness, improvements in waste reduction and the development of environmental projects applicable to the day-to-day realities of our business, among other initiatives in line with our mission. As a result of the inclusion of sustainability as part of the Company’s operating strategy, the committee was formalized in 2010 by our Board of Directors and, a year later, we began including environmental responsibilities in all of the organization’s formal job descriptions. Communicate to educate In 2010, the Sustainability Committee launched the Green Company hotsite within the Investor Relations website, which was designed to offer a direct means of communication with all of our stakeholders (shareholders, customers, suppliers, associates and society). Through this space, we also present the objectives of the committee, the Company’s environmental policy and its carbon inventory. On this hotsite, we publicize an exclusive e-mail address, which functions as a direct communications channel for individuals to direct their questions and suggestions regarding the Company’s environmental practices. To publish information, the Committee uses a variety of communication channels, such as Isto é LASA (This is LASA), the quarterly corporate newspaper that is distributed to of all our associates, in which “Green Company” is a regular column; a closed-circuit television system in the company’s elevators; pop-up computer messaging; and booklets distributed in our stores. Our main purpose is to encourage associates to be concerned about the environment in their day-to-day activities. 29 After the creation of the Sustainability Committee, the Associates Handbook (distributed at the time that new hires are incorporated into the stores) underwent a makeover, acquiring a Green Company section. Through this educational activity, new employees come into immediate contact with the group’s sustainability culture. In addition, the Committee created the Green Primer for distribution to associates. The publication contains ten initiatives that can be taken daily to contribute to the preservation of natural resources. Flyers promoting store products are also used by the Sustainability Committee to promote the Green Company’s activities to all customers. Distribution in our stores throughout Brazil allows us the opportunity to directly reach our various stakeholders. Control of greenhouse gas emissions Accounting for emissions from all our business units through the GHG Protocol methodology Lojas Americanas has been a member of the Brazilian GHG Protocol Program since 2009. Its methodology is used internationally by businesses and governments to conduct inventories of greenhouse gases (GHG). The information obtained can be applied to annual reports and as responses to questionnaires from other initiatives, such as the Carbon Disclosure Project (CDP) and the Carbon Efficient Index (ICO2). We have also established a partnership with the Brazilian GHG Protocol Program and the Getulio Vargas Foundation, and have been trained in the emission accounting methodology developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). We use this methodology to measure the emissions of greenhouse gases from all of our business units. In 2010, the ICO2 was introduced by Bovespa and, since that time, we have been a member of this select group. To participate in this index (whose methodology assesses how much of a company’s revenue is dependent on GHG emissions), it is necessary to be among the 50 most liquid companies on the stock exchange (IbrX-50). Though this participation, we have adopted more transparent practices with respect to GHG emissions. 30 GHG Emissions In 2012, our direct emissions of greenhouse gases, which are derived from stationary and mobile sources, such as distribution center forklifts and other vehicles, among others, were approximately 1,000 tons of CO2 equivalent (tCO2eq). This means that, compared to 2011, we increased the amount of our emissions in proportion to our growth, as our 2011 emissions came to 841 tons of CO2 equivalent. In 2012, Brazil experienced difficulties in relation to power generation, as the country’s hydroelectric reservoirs were running very low due to a prolonged drought during the year. To make up the shortfall in supply to the Brazilian grid, known as the National Interconnected System (SIN), the use of thermoelectric power plants was required. Accordingly, the conversion factor of kWh to tCO2eq saw a very significant increase in the generation of emissions from all sectors of the market. However, compared to the previous year, based on electric power consumption, we managed to reduce consumption by 13%. [EN5] All our business facilities have smart systems for turning off air-conditioning units to reduce waste. This system is programmed to automatically shut down after working hours. Other indirect emissions that we have calculated since 2010 show the amount of emissions generated by associates’ business travel and the use of plastic bags, as these are very relevant emission sources for our business. In 2011, we also calculated the amount of indirect emissions generated in the transportation and distribution of goods. We understand that logistics is critical to our business and, therefore, is a source of emissions that must be monitored so we can act in an effective manner. Thus, in 2012 the total emissions computed for the transportation of products was 17,716 tCO2eq. [EN17] 31 Emissions inventory Emissions (tCO2eq) Scope 1 * Scope 2 ** Scope 3 ***(¹) 2011 841 5.035 16.622 2012 1.002 9.789 17.922 Total direct and indirect emissions 22.499 28.713 Notes: Scope 1*: Direct emissions of greenhouse gases: According to the GHG Protocol methodology, these are from stationary and mobile sources, which are owned or controlled by the Company, such as forklifts in distribution centers, vehicles, among others. Scope 2**: Indirect emissions of greenhouse gases: Those from power consumption. Scope 3***: All other indirect emissions resulting from the Company’s activities, but which occur from sources that do not belong to or are not controlled by the Company, such as business travel, outsourced fleets, among others. (¹)The variation in the scope 2 emissions is due to the conversion factor from kWh to tCO2, which was changed from 0.0292 in 2011 to 0.0653 in 2012. Our consumption in kWh was 172.441.454kWh in 2011 and 149.816.947kWh in 2012. 32 Other initiatives Distribution Centers are being upgraded to improved energy efficiency standards, while new stores already feature more efficient lighting Energy efficiency To adapt to new energy efficiency standards, our Distribution Centers have undergone several changes since 2009, including improvements in air circulation and the supply of water, and 100% installation of timed flow taps. We opened 200 new stores between 2011 and 2012, all under the energy efficient model, to reduce water and energy consumption. With regard to older stores, modifications are being planned and will include the upgrading of air conditioners and lighting systems. Currently, in-store air conditioning units are programmed to turn off automatically at closing time. For 2013, one of our goals is to upgrade our administrative headquarters in Rio de Janeiro to conform to Leadership in Energy and Environmental Design (LEED) certification guidelines, the principal certification for sustainable construction in the world. We believe that with this attitude we will provide a better and more pleasant environment for our associates, while reducing our environmental impacts. To control what is spent weekly for water and energy, as measured in m³ and kWh, respectively, our engineering department has prepared an internal application for store systems. The manager responsible for point-of-sales collects information on a monthly basis and sends this to the Sustainability Committee, which consolidates all data received. In some stores, this data is already being collected automatically, by means of electronic metering.[EN26] The only type of energy that Lojas Americanas consumes is electric. From 2011 to 2012, the Company reduced its electricity consumption by raising the awareness of associates and implementing some general measures, such as switching to energyefficient light bulbs. [EN4] 33 Selective waste collection (trash recycling) and the use of plastic bags With the goal of eliminating waste and sending to the most appropriate destinations for disposal, we are currently practicing selective collection at our Headquarters, in our Laranjeiras and Passeio offices in Rio de Janeiro, at our Administrative Center, as well as in all of our Distribution Centers. We have adopted the practice of reducing the use of plastic bags in our stores, with a script for cashiers to use to ask customers if they will need a bag prior to packing up their products. This decision was made because many purchases are small and/or immediate consumption items, which generally do not need a bag. In addition, we keep reusable bags on the sales floor, on permanent display and at the checkout lines. To comply with Municipal Law 7008, in Joinville, Santa Catarina, and State Law 5502, in Rio de Janeiro, Lojas Americanas has adopted a variety of measures, including: A point-of-sales (POS) customer discount of R$ 0.03 for every five (5) items purchased for which a plastic bag is not used (an alternative option is to exchange 50 bags per 1 kg of food); Displaying, in visible areas and in wide circulation throughout our stores, customer awareness posters regarding the improper disposal of plastic bags; Providing plastic bag collectors at our stores for customers who wish to return them; Sending collected plastic bags for recycling; In cities, such as Belo Horizonte, where the law requires the use of biodegradable bags, Lojas Americanas offers these to customers free-of-charge. Since 2010, we have sold over 3 million reusable bags and, each year, these sales are increasing. To make further progress on our environmental performance, we understand it is vital to keep track on the Company’s consumption of materials. In 2012 B2W Digital’s consumption of materials reached 3.657 tons of which 1 is wood, 608 are paper, 2.902 are plastic and 146 are steel. [EN1] 34 Proper lamp disposal certificate In 2012, Lojas Americanas headquarters received a certificate from the Institute for Environmental and Technological Development for the decontamination of 1,100 mercury-vapor lamps, through the unique Operação Papa-lâmpadas da Naturalis Brasil method. The waste generated during the process was collected for the institute’s operations center, such that the lamps could be deactivated and disposed of according to current regulations. The initiative has been recognized by Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) and the Rio de Janeiro State Environmental Institute (INEA). Logistics Optimization We are always looking for opportunities for improvement in our logistics network to produce greater efficiency in our operations and reduce costs. With the objective of optimizing the transportation of cargo, reducing the number of vehicles in circulation and, consequently, diminishing environmental impacts, Lojas Americanas uses a loads consolidation strategy. In this way, trucks are only cleared to leave our distribution centers when they are fully loaded. It is common for nearby stores to share space on these trucks.[EN29] 35 36 Profitable expansion Positive results in 2012 are in line with investments made under the Company’s “Sempre Mais Brasil” (Always More Brazil) program In a competitive environment, such as the Brazilian retail market, our goal is to profitably grow, providing customers with wide range of products and services. In 2012, retail sales increased by 8,4% in sales volume, according to the Brazilian Institute of Geography and Statistics (IBGE). The Company reached R$ 11.33 billion in net revenue, equivalent to a growth of 13.6% over the previous year. Of this total, R$ 6.850 million relates to the performance of the parent company (physical stores), which sold 13,3% more than in 2011. The growth of Lojas Americanas, in terms of the same number of stores, i.e. counting sales only from stores that have been in operation for more than one year, compared to accumulated net sales in 2012 was 8% above inflation. These results are in line with the Company’s organic expansion plan, which, since 2010, has seen 271 new stores open across the country. Sempre Mais Brasil In late 2009, the Company introduced its expansion plan, Lojas Americanas – 80 Years in 4 – Always More Brazil, in which it pledged to open 400 new stores in four years; 70% traditional stores (average selling area between 1,300 m 2 and 1,500 m2) and another 30% in the Americanas Express format (average selling area of 300 m 2 and 500 m2 ). In 2010, 70 stores were opened, followed by another 90 in 2011. In 2012, another 111 stores debuted. For 2013, the latest forecast suggests that 130 openings are on their way, helping to complete the expansion program, which will have increased the number of Lojas Americanas stores in Brazil from 476 (in 2009) to approximately 900. The projected growth of the Company shows a positive vision of the potential of Brazil. At the end of 2012, Lojas Americanas had 729 stores, including 462 traditional stores and 267 Express stores. In 2012, the Company invested R$ 524.6 million focused on organic growth, store network renovation and technology upgrades. 37 Investments in 2012 (R$MM) Opening/improvement projects Technology/Logistics/Operations Rental and other Total 434,7 51,4 38,5 524,6 New stores, new cities Following the expansion plan initiated in 2010, Lojas Americanas has increasingly been opening stores in new cities. At the end of 2012, the Company had stores in 254 municipalities, and 110 more welcomed their first Lojas Americanas store during the organic expansion plan, Sempre Mais Brasil. These included various cities in Brazil that are outside of major urban centers. In some cities, there are less than 100,000 inhabitants, such as Sirinhaém, Pernambuco; Andradina, São Paulo; Guarabira, Paraíba; Caldas Novas, Goiânia; Gurupi, Tocantins; Paracatu, Minas Gerais; and Erechim, Rio Grande do Sul. When opening a new store, Lojas Americanas takes into consideration not only a given city’s economy, but also that of the surrounding areas. Expansion within Brazil promotes economic growth, improving the chances for regional development. Our results reaffirm the Company’s confidence in the development of Brazil. Stores in new cities are usually in the traditional format, as they are farther from the distribution centers in Rio de Janeiro, São Paulo and Recife. At the close of 2012, stores were located in 25 states, plus the Federal District, with their distribution being 61.0% in Brazil’s Southeast region, 17.7% in the South and Center-West, and 21.3% in the North and Northeast. Technology platform Investments in technology are an important pillar of Lojas Americanas. Continuous investment contributes to improvements in the management of the Company and the shopping experience of our customers. In 2012, we invested approximately R$51.4 million in upgrading the technological platform. The German-based, SAP ERP integrated software solution for business management is the main software system used by Lojas Americanas. When it was 38 introduced into its operations in 1999, Lojas Americanas became the first retailer in Brazil to migrate to this model. The software allows for tight inventory control at each distribution center and in all stores. Sales can be tracked with a five minute delay from each of the Company’s points-of-sale of the Company, identifying what customers are buying and what form of payment she or he is using. Distribution centers (DC) In addition to its Distribution Centers (DCs) in Rio de Janeiro, Recife and São Paulo, in February 2012, Lojas Americanas announced the creation of the Uberlândia, Minas Gerais DC; scheduled to open in the second half of 2013, it will ensure greater agility in supplying the stores in Minas Gerais and the Center-West and North regions of the country. Subsidiary investment The B2W subsidiary invested over R$1 million in the Mobile Digital Inclusion Center (CID Móvel) social project to meet the needs of the municipality of Osasco, São Paulo. The Center will open in 2013. [EC8] The project extends those digital inclusion social services being offered and is composed of two fully-refurbished and equipped trailers, which have been exclusively customized, complete with computers and internet access, for this purpose. The project will offer a variety of professional, information technology (IT) courses and free Internet access to the local population. CID Móvel’s flexibility expands the scope of services available to the entire region’s community. 39 Financial Results The 2012 results showed a positive variation for both the parent company and the consolidated. The figures continue the trends of the last six years, with growth that totaled 17.3%, since 2006, in the parent company’s net income. Lojas Americanas seeks economic growth and improved performance every year. In 2010, there were 541 physical stores. This number increased to 621 at the end of 2011 and to 729 in 2012, Accordingly, the Company has grown and contributed to improving the quality of life of society as a whole through taxes, benefits and contributions. [EC1] Revenue Compared to 2011, net revenue growth of the parent company was 13.3%, reaching R$ 6.85 billion. Consolidated net income for Lojas Americanas and its subsidiaries was R$ 11.33 billion, a growth of 13.6%. In the fourth quarter, net revenues for the parent company grew by 9% compared to 4Q11. Same stores Analyzing the same stores from one year to another, given that the opening of new outlets influence the Company’s financial results, the increase in net revenue in 2012 was 8%, in comparison to the same period last year. 40 Gross Profit/Gross Margin Year-to-date gross profit of the parent company was 32.8% of net revenue, an increase of 0.9 percentage points compared to a gross margin of 31.9%, which was posted in 2011. Sales, general and administrative expenses In 2012, the parent company’s sales, general and administrative expenses reached R$ 1.01 billion, or 14.8% of net revenue, representing a variation of -0.1 percentage points (pp), in comparison to 2011. On a consolidated basis, the variation was +0.7 pp, or 16.1% of net revenues, totaling R$ 1.82 billion. EBITDA For the year, the Company’s Adjusted EBITDA reached R$ 1,234.6 million, equivalent to 20.0% growth over 2011. The Adjusted EBITDA margin of the Company for the period was 18.0%, 1.0 pp higher than the margin achieved in 2011. Consolidated Adjusted EBITDA totaled R$ 1,572.4 million in 2012, an improvement of 8.8% over the previous year. The consolidated Adjusted EBITDA margin in 2012 amounted to 13.9% of net revenue, a variation of -0.6 pp compared to the previous year. Financial income and net income The parent company’s accumulated net financial expense in 2012 was R$ 396.4 million, up 0.5% over the previous year. On a consolidated basis, this amount was R$ 786.6 million, with growth of 8.8%. The Company’s accumulated net income for the last twelve months was R$ 391.7 million and the consolidated amount was R$ 410.2 million, an increase of 22.6% and 20.5%, respectively, compared to the previous year. Indebtedness Lojas Americanas’ cash generation prioritizes investments that generate the best returns to shareholders. Short and long term consolidated loans and debentures, at the end of the year were R$ 6.25 billion. However, by eliminating the cash position of R$ 4.63 billion (including cash, investments and credit/debit card receivables) of total loans, net debt is R$ 1.6 billion, equivalent to 1.0x the EBITDA of the last 12 months. The average maturity of the debt is 35 months. 41 Absence of exchange rate exposure Lojas Americanas’ foreign currency debts are protected against exchange rate fluctuations through derivatives transactions (swaps), which substitute the exchange risk for the variation in Brazil’s base interest rate (CDI). Sales by means of payment The Company’s cash sales experienced a variation of +2 pp in the twelve months of 2012 compared to the previous year, reaching 60% for the Company. Variations in the consolidated results were up +3 pp, reaching 50%. The remaining 40% from the parent company and 50% from the consolidated company were from the credit cards, which encompasses third-party cards and Company-branded cards provided through Financeira Americanas Itaú and Submarino Finance. Net working capital At the end of the fourth quarter of 2012, the net working capital of the parent company was in the negative by 20 days, which represents an increase of two days compared to the negative 18 days that were registered at the end of the previous year. Subsidiaries B2W Digital [All comparisons refer to the fourth quarter of 2011 and 2012] Gross revenue In 4Q12, consolidated gross revenue totaled R$ 1.8 billion, an increase of 38.0% Net earnings In 4Q12, net revenues of the consolidated company were R$ 1.59 billion, an increase of 35.0% Gross profit In 4Q12, consolidated gross profit totaled R$ 362.3 million, up 32.4% 42 Ebitda In 4Q12, consolidated Adjusted EBITDA was R$ 109.6 million, an increase of 7.8% Opening of four new distribution centers In line with the strategy of being closer to the customer, in October 2012, B2W opened four new distribution centers, located in the states of São Paulo, Rio de Janeiro, Minas Gerais and Pernambuco. Evolution of the PROCON-SP Complaints Index In 2012, the number of complaints registered with São Paulo Consumer Defense and Protection agency (PROCON-SP), showed a significant reduction, of 59%, compared to the previous year. 43 44 About the Report This first Lojas Americanas Sustainability Report has been produced in adherence to the international model of the Global Reporting Initiative (GRI), version G3. Information contained in the report refers to the main activities of all business units of the Company, including headquarters, stores and distribution centers for the period January 1 to December 31, 2012. To provide content included in this report, the Company involved all areas of its operations. We worked to strengthen all channels of communication with our stakeholders and this Report, which will be prepared on an annual basis, is an example of our commitment to the public interest. To contact the Company and get more clarification regarding the content of this publication, please contact us by e-mail at: [email protected]. Application level Lojas Americanas adheres to Level B of the GRI reporting process, self-declared, by which the Company reports on 34 indicators. To achieve this level, the report must satisfy all profile items, providing information on the Company’s management type and, at least, 20 performance indicators, which include economic, environmental, human rights, labor, society and product responsibility areas. The first step to materiality One of the most important guidelines published by organizations that are current references on the subject of sustainability – the GRI and AccountAbility (AA 1000) – relates to the principle of materiality. The goal of materiality is to identify those issues that are most relevant to a company in relation to economic, social and environmental dimensions and the impacts these have upon the audiences with whom a company interacts. The definition of these critical issues is crucial to the preparation of a Sustainability Report, as well as for communications about and the management of sustainability at a company. Considered are the main positive and negative impacts of an organization’s operations, products and services. In 2012, Lojas Americanas selected specialists from among its priority stakeholders, with the intention of understanding and analyzing what the market is saying about industry trends. We are aware that this is an initial step toward developing a materiality process that will be ever more consistent in the future; one that will include an expansion of our listening to external audiences about the Company’s vision regarding the sustainability in the marketplace. 45 Based on this first consultation, we will seek consultations that will allow us to acquire further information to achieve the following: improve the consistency of the reporting process; allow us to better understand the retail sector’s socioenvironmental landscape; generate inputs to help guide the development of Lojas Americanas management for the short- and medium-term; in anticipation of business risks, identify specific issues, which the Company needs to place before the market; and generate inputs for the development of a strengthened materiality process. The 2012 consultation process included interviews with four industry experts, among other representatives who are consultants in the area of consumption, from the Akatu Institute, the São Paulo Supermarket Association (APAS), and the Getulio Vargas Foundation’s Retail Excellence Center (GVcev). Our goal was to reveal the perceptions of experts about the positive and negative impacts of the sector in social, environmental and economic terms; which of these impacts are already being addressed by management within the sector in Brazil; and which are still challenges for many companies in the industry. The experts discussed over 30 issues. At the conclusion of the process, by consensus of the management, among other respondents, we highlighted 10 as being the most relevant: 1. High impact on job creation. 2. Establishment of a collection of household appliances. 3. Supplier development. 4. Consumer education: Communication and consciousness-raising regarding the production and use of more sustainable products. 5. Ensuring those rights guaranteed in the Consumer Protection Code. 6. Reverse logistics for products and packaging (Brazilian National Policy on Solid Waste - PNRS). 7. Emissions monitoring and reduction in the logistics process. 8. After sales service quality in the absence of physical stores. 9. Supply chain mapping to guarantee product origins. 10. Information mapping on product descriptions. 46 In addition to those 10 items on which there was consensus among the experts, another 5 were the focus of discussion during the interviews, which highlighted key issues for retail in general: 1. Alliance between retail, industry and government. 2. Financing ecopoints through partnerships with authorized dealers and product repair shops. 3. Encourage the reduction of planned obsolescence. 4. Improvement of working conditions by investing in employee development and career opportunities. 5. New business solutions through a focus on service offerings. Lojas Americanas evaluates and discusses the issues internally, always seeking prioritize them for action in the short- and medium-term, so that this correlation is aligned with its strategic plan, its culture, and its capacity to respond to or further elaborate upon each. For the next reporting cycle, the Company will seek to address other indicators related to the topics with most impact on its business. 47 GRI INDEX (Profile 3.12) Lojas Americanas’ GRI Sustainability Report meets the requirements for Level B, selfdeclared GRI application, according to the parameters shown on the following table: Profile Information Strategy and Analysis Indicator Description Page/PDF Online 48 1.1 President’s Message Message from Management Description of principal impacts, risks and opportunities Message from Management 1.2 Environmental management/Green Company Organizational Profile Indicator Description Page/PDF Online 2.1 Name of organization Organizational Profile/The Company 2.2 Primary brands, products and/or services Organizational Profile/The Company 2.3 Operational structure of the organization Organizational Profile/The Company 2.4 Location of organization's headquarters Organizational Profile/The Company 2.5 Countries in which the organization operates and where its main operations are located Organizational Profile/The Company 2.6 Type and legal nature of property Organizational Profile/The Company 2.7 Markets served Organizational Profile/The Company 2.8 Size of organization Organizational Profile/The Company 2.9 Main changes during the reporting period Management Message 2.10 Awards received during the reporting period Organizational Profile/Awards and recognitions Report Parameters Indicator Description Page/PDF Online 3.1 Reporting period for information provided GRI Content/About the report 3.2 Date of most recent previous report GRI Content/About the report 3.3 Reporting cycle GRI Content/About the report 3.4 Contact data in case of questions regarding the report or its contents GRI Content/About the report 3.5 Process for defining report contents GRI Content/About the report 3.6 Limits of the report GRI Content/About the report 3.7 Statement on any specific limitations as to the scope or extent of the report GRI Content/About the report 3.8 Basis for preparation of the report GRI Content/About the report 3.9 Data measurement techniques and basis for calculation The bases of calculation were based on the method used by GRI and the GHG Protocol for calculating of emissions of atmospheric gases 3.10 Restatements of information As this is the first reporting cycle, there were no provided in earlier reports reformulations of data. 49 3.11 Significant changes in scope, limits, or measurement methods applied in the report As this is the first reporting cycle, there is no comparability with previous reports for changes in scope, limits or measurement methods. 3.12 Table identifying the location of information in the report GRI Content/GRI Index 3.13 Policy and current practice with regard to seeking external verification of the report. This first reporting cycle meets self-declared, Level B requirements. Accordingly, no external verification is necessary. Governance, commitment and engagement Indicator Description Page/PDF Online 4.1 Structure of governance of the organization, including committees of the highest governance body Corporate governance/Highest level guidelines 4.2 Chairperson of the highest governance body Corporate governance/Highest level guidelines 4.3 Independent or nonexecutive members of the highest governance body Corporate governance/Highest level guidelines 4.4 Mechanisms for shareholders and employees Corporate governance/Consolidated practices to offer recommendations 4.5 Relationship between compensation and the organization's performance (including social and environmental) 4.6 Processes to ensure conflicts Corporate governance/Highest level guidelines of interest are avoided 4.7 Qualifications of members of the highest governance body 4.8 Statements of mission or values, codes of conduct and Organizational Profile relevant internal principles 4.9 Responsibilities for the implementation of economic, environmental and social policies Corporate governance/Highest level guidelines 4.10 Processes for self-evaluation of the performance of the highest governance body Lojas Americanas has a process for self-assessment of performance of the highest governance body, but does not describe or make public how this is accomplished. Lojas Americanas maintains guidelines with regard to this issue, but it does not describe or make public the basis of remuneration for this performance. Corporate governance/Highest level guidelines 50 4.11 Explanation of whether and how the organization applies the precautionary principle Lojas Americanas works in alignment with the sustainable development of the Company and understands the importance of preserving and properly making use of resources today, such that they will not be limited for future generations. Accordingly, various initiatives are being developed to encourage changes in consumption patterns and the use of natural resources. The actions already taken and their goals, in relation to the subject, are in this report. 4.12 Charters, principles or other initiatives developed externally The Company's goal for 2013 is to sign pacts and principles that encourage the adoption of socioenvironmental practices. 4.13 In early 2013, the Company became a member of the Memberships in associations Retail Development Institute (IDV), with the purpose and/or domestic or of tracking industry discussions and the development international organizations of best practices. 4.14 List of stakeholder groups engaged by the organization. GRI Content/About the report 4.15 Basis for the identification and selection of stakeholders with which to engage GRI Content/About the report 4.16 Approaches to stakeholder engagement GRI Content/About the report 4.17 Key topics and concerns raised through stakeholder engagement GRI Content/About the report Performance Indicators ECONOMIC PERFORMANCE Indicator Description Page/PDF Online Economic Performance EC1 Direct economic value generated and distributed Economic Performance/Financial Results Market presence EC5 Variation in the proportion of the lowest salary in comparison to the local minimum wage in major operating units The lowest salary paid by Lojas Americanas in 2012 was equivalent to the national minimum wage. The salary schedule that we use is established based on the salary structure for workers in that category, as established in a collective bargaining agreement, and signed by the employer’s industry association and the employees' labor union. EC6 Policies, practices and proportion of spending with local suppliers Corporate governance/Consolidated practices EC7 Local hiring Personnel development/Training for every challenge 51 Indirect Economic Impacts EC8 EC9 Impact of investments in infrastructure provided for public benefit Economic performance/Expansion with profitability Description of significant indirect economic impacts Lojas Americanas understands that indirect economic impacts are generated by the opening of new stores and the development, by its subsidiary B2W, of the Mobile Digital Inclusion Center (CID Móvel). In 2012, Lojas Americanas generated R$ 1,055,863,000.00 in taxes, an increase of 8.41% compared to 2011. In addition, the company is concerned with the generation of new jobs. For 2013, the goal is to increase the number of new stores and to invest in social projects. ENVIRONMENTAL PERFORMANCE Indicator Description Page/PDF Online Materials EN1 Materials used by weight or volume Environmental management/Other positive initiatives Energy EN4 Indirect energy consumption Environmental management/Other positive broken down by primary initiatives source EN5 Energy saved due to conservation and efficiency improvements Environmental management/Other positive initiatives Emissions, Effluents and Waste EN16 Total direct and indirect emissions of greenhouse gases Environmental management/Control of GHG emissions EN17 Other relevant indirect emissions of greenhouse gases Environmental management/Control of GHG emissions EN19 Emissions of substances that The Company does not emit substances that destroy destroy the ozone layer the ozone layer. Products and Services EN26 Initiatives to mitigate environmental impacts Environmental management/Other positive initiatives Compliance EN28 Amount of significant fines and total number of Em 2012, there were no fines for sanctions for nonenvironmental non-compliance. compliance with laws Logistics EN29 Environmental impacts of transporting products and workers Environmental management/Other positive initiatives SOCIAL PERFORMANCE - DECENT WORK 52 Indicator Description Page/PDF Online Employment LA1 Total workforce by type of employment, employment contract and region. Personnel development/Training for every challenge LA3 Benefits provided to fulltime employees that are not provided to temporary or part-time employees. Personnel development/Valuing in-house talent Relationship Between entre workers and Governance Percentage of employees covered by collective bargaining agreements LA4 All of our employees continue to be covered by collective bargaining agreements. Occupational Health and Safety Percentage of total workforce represented in formal health and safety committees LA6 All of our employees continue to be represented on health and safety committees. Education and Training Percentage of employees who receive regular reviews of their performance and career development. LA12 Personnel development/Access to corporate education Diversity and Equality of Opportunities Wage ratio between women and men by employee category. LA14 For men and women, there is no difference in the base salary established for any of the Company’s heirarchicallevels. SOCIAL PERFORMANCE - HUMAN RIGHTS Indicador Description Page/PDF Online Purchasing process Non-discrimination HR4 Total number of incidents of discrimination and actions taken Personnel development/Valuing in-house talent Freedom of Association HR5 Instances in which the right to exercise freedom of association and collective bargaining may have been violated, and actions taken to support these rights. We stress the right of our employees to freedom of association through internal dissemination of the Company’s Code of Conduct and we do not have units at significant risk because of the activities and services provided by the Company. Safety Practices HR8 Percentage of security personnel trained in human rights The Company does not provide training focused on human rights for its security team. All security services are outsourced. 53 SOCIAL PERFORMANCE - SOCIETY Indicator Description Page/PDF Online Corruption SO3 SO4 Percentage of employees trained in anti-corruption policies and procedures Regarding the issue of corruption, our concerns are expressed in the Company’s Code of Ethics and Conduct. Although there is no specific training in this area, upon entering the Company, all associates participate in an orientation program where they are advised about standards of conduct to be followed, in addition to having access to the Code of Ethics. Actions taken in response to corruption cases Lojas Americanas provides an anonymous communication channel through which associates can register complaints, which are analyzed by the department responsible for appropriate action. In 2012, there were no reported cases related to a violation of the Code of Ethics and Conduct. Public Policies SO6 Policies regarding financial contributions to political parties, politicians or institutions SO7 Number of lawsuits In 2012, there were no unfair competition, anti-trust regarding unfair competition or monopoly lawsuits filed against the Company. In 2012, the Company made no donations or financial transfers to political parties or candidates. SOCIAL PERFORMANCE - PRODUCT RESPONSIBILITY Indicator Description Page/PDF Online Labeling of Products and Services PR3 Type of information on products and services required by procedures Corporate governance/Consolidated practices PR4 Nonconformities related to the labeling of products and services Corporate governance/Consolidated practices PR5 Practices related to customer satisfaction, including results of surveys Corporate governance/Consolidated practices Communications and Marketing PR6 Programs for adherence to laws, standards and voluntary codes Lojas Americanas is in compliance with the standards of Brazil’s National Advertising Self-Regulation Council (CONAR) and maintains, on a permanent basis, an internal committee focused on customer relations governance. 54 PR7 Cases of non-compliance related to communications regarding products and services In 2012, there were no reported cases of noncompliance with the regulations and voluntary codes related to communications. PR8 Complaints regarding breaches of customer privacy In 2012, Lojas Americanas had no registered cases concerning violations of privacy or losses of customer data. 55 Acknowledgements Coordination Institutional Relations Sustainability Management Investor Relations Management GRI consulting, writing and editing Report Sustentabilidade Review Assertiva Produções Editoriais Graphic Design and Layout Report Sustentabilidade Photography Leonardo Wen Corporate Information Lojas Americanas (Sede) Adress: Rua Sacadura Cabral,102, Saúde, Rio de Janeiro – RJ CEP: 20081-902 56