Environmental Performance

GRI G4 14 | EN1 | EN3 | EN4 | EN15 | EN16 | EN23 | EN27 | EN29 | EN31 – Material issues: Aspects: Materials; Energy

SUSTAINABILITY
IN EVERYDAY
LIFE

We were recognized as a model company in terms
of environmental sustainability by the Exame Sustainability Guide (2013 and 2014).

Sustainability is an important part of our everyday activities since it is one of the five Company values and is aligned with our business strategy. Algar Telecom’s division dedicated to (short, medium and long-term) environmental sustainability planning responds directly to the CEO. It is responsible for approving and managing our environmental sustainability budget; adopting, auditing and promoting the ongoing improvement of the environmental sustainability best practices. We are members of the Sustainability Committee, which is headed by Instituto Algar and is active in our whole operating area, by engaging associates effectively, which helps disseminate our sustainability culture among them.

SUSTAINABILITY COMMITTEE:

Present in 20 cities and towns, the Sustainability Committee is comprised of 40 associates with the skills required by, and a talent for, communications and people management. They monitor the effectiveness of related initiatives, speed up the implementation of the companies’ environmental action plans and recognize the individual and collective contributions.

Environmental Management System

We adopt a management system that allows us to develop and introduce environmentally sustainable policies and goals by taking into account environmental aspects influenced by the organization, as well as others that it may manage. As a result, Algar Telecom has been an ISO 14001 certified company since the 2012. In turn, Algar Tech also is preparing for this certification.

One of the key factors in this process is collecting environmental management information and data systematically; therefore, we use the Online Integrated Management System (OIMS) extensively to monitor relevant environmental laws and regulations in force. Based on information from OIMS, we introduce measures to ensure compliance with legislation and monitoring procedures.

We seek to engage our entire relationship network in this process to manage our business in such a way that helps preserve the environment and the planet’s future. We are aware we can have a positive influence on the community, suppliers, clients or associates. That is why we only select and approve suppliers able to produce proof of environmental compliance. In fact, our standard contract draft contains a specific environmental clause. Our suppliers also have to comply with the Algar Code of Conduct.

We follow the environmental guidelines established by Instituto Algar through the Corporate Environmental Policy and disseminated by the Algar Sustentável Program, with information about using resources efficiently, engaging associates, using cleaner technologies, improving energy efficiency and enhancing initiatives to reduce greenhouse gas (GHG) emissions in operations. We are committed to complying with environmental laws to prevent fines, consent decrees or any other type of sanction. In 2014, we had no incidents of non-compliance with environmental laws and regulations.

Environmental Protection Expenditures and Investments

Algar Telecom’s environmental protection expenditures increased threefold year-over-year in 2014, totaling R$3.6 million. Most of this amount–80%–went to projects with cleaner technologies, such as the LED energy efficiency project and the installation of photovoltaic panels.

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40 INFLUENTIAL
environmental, social and economic projects

Energy Consumption

We monitor data on energy consumption in accordance with our Corporate Environmental Policy, which is improved continuously. We collect data systemically when we produce our annual greenhouse gas (GHG) inventory, which follows the guidelines set forth by the GHG Protocol; the Intergovernmental Panel on Climate Change, the IPCC 2006 Guidelines for National Greenhouse Gas Inventories; and ABNT NBR ISO 14064-1/2006.

In 2014, energy Consumption within the organizations was broken down as follows: 59% from Algar Telecom, 40% from Algar Tech and 1% from Algar Mídia. Algar Telecom’s energy consumption increased by 7% from 2013 to 2014 due to the Company’s expansion to new areas. Despite higher energy consumption, we switched to cleaner energy sources in our vehicle fleet. Consumption of non-renewable fuels (gasoline and diesel oil) fell dramatically by 44%. Renewable fuels accounted for 82% of energy consumption by Algar Telecom’s fleet and generators in 2014, up from 60% in 2013. Overall energy consumption also increased at Algar Tech, by 136% from 2013 to 2014. This increase was largely driven by the incorporation of Engeset’s activities. We undertook initiatives and sought to educate and engage associates to reduce our energy consumption.

In 2014, we replaced air conditioning equipment by new more economical models, low-efficiency direct current sources by more efficient sources that can be remotely controlled, shut off obsolete data transportation equipment and replaced old servers by more modern models at data centers. However, the most important measure was installing 28 solar photovoltaic panels in Uberlândia (state of Minas Gerais), able to supply 60% of the annual consumption of Algar Telecom’s headquarters on average.

We are planning to expand the coverage of emissions inventories and engage the service suppliers in our value chain gradually. The purpose is for other operational activities performed by third parties to be mapped and for their energy consumption to be measured accurately as well.

Emissions

The GHG inventory is our primary tool to manage carbon emissions in the organizations, find opportunities to reduce GHG emissions in our processes and operations, and implement tactical plans and initiatives to reduce and/or offset the Company’s impact in this regard. As explained in the Energy Consumption section, we use internationally recognized methodologies to measure our emissions.

We decided to adopt the operational control approach; therefore, we include in the inventory emissions from all organizations and production units we control, even if jointly with other parties. We have been measuring our GHG emissions since 2011 (base year 2010) through a process that involves from associates in technical functions to executives.

Energy efficiency is one of our chief concerns on the environmental arena. We have an Internal Energy Conservation Committee (IECC) and a platform for managing energy bills in our sites to monitor electricity consumption more efficiently. This allows us to measure consumption accurately and set specific goals and targets, such as keeping the increase in electricity consumption below the Company’s growth rate or assessing the results of our measures to reduce energy consumption. In 2014, our energy efficiency initiatives focused mainly on our vehicle fleets, by replacing part of the fleet by more modern, economical models. We also optimized our travel policy and improved our fuel consumption management systems. We have been instructing associates to fill up with ethanol only, thus reducing GHG emissions from consuming fossil fuels, such as gasoline.

About 90% of GHG emissions from stationary sources are connected with Algar Tech’s generators, which accounted for much of the increase in emissions of stationary sources in 2014. Given increased activity, the Campinas unit’s generator accounted for most of that rise in absolute terms in 2014.

Algar Tech’s vehicle fleet accounted for about 58% of the companies’ emissions from mobile sources in 2014 due to the incorporation of Engeset’s fleet. Algar Telecom’s fleet comprised 39% of emissions from mobile sources. In fact, the parameters set for the exclusive use of ethanol led to a sharp increase in the share of renewable fuels in energy consumption, contributing to a drop of about 42% of the Company’s direct emissions. On the other hand, biogenic emissions, resulting from burning of biomass from renewable sources and, therefore, considered “carbon neutral”, rose by 72% due to increased use of ethanol by the fleet. The other companies, Algar Tech and Algar Mídia, also recorded significant decreases in emissions from their fleets–not considering Engeset’s fleet incorporated by Algar Tech–, of 71% and 33% respectively. The Algar group is working hard to increase the share of renewable energy sources in Algar Telecom’s, Algar Mídia’s and Algar Tech’s energy mix. These initiatives have been producing tangible benefits for both the Company and society due not only to the fall in the companies’ direct GHG emissions, but also to the contribution to a more sustainable planet and a more environmentally-aware society.

All the companies recorded a year-over-year increase in energy purchased in 2014, up 2% at Algar Telecom, 5% at Algar Mídia and 14% at Algar Tech. However, GHG emissions from electricity consumption did not increased proportionally in the same period. In fact, they rose by 42%, 48% and 59% respectively. The companies are not responsible for this increase, which reflects the greater share of fossil-fuel power plants in Brazil’s total power generation in 2014 due to lower reservoir levels in the country. Hydropower plants could not cope with energy demand; therefore, thermal plants had to be activated, leading to an increase in the Interconnected National System’s emission factor. In other words, GHG emissions for the same amount of electric power consumed were higher in 2014 than in 2013.

Use of Materials

We are committed to improving the efficiency of our production processes by managing resources more effectively, eliminating input waste and offering products with as little environmental impact as possible. To reduce paper consumption for administrative purposes, we raise awareness of associates from different departments and positions. We have introduced an internal system at Algar Telecom, PCounter, to produce reports about all printouts by Result Center. Each department is notified about its paper use. We also request from third parties, mainly advertising agencies, a monthly report about paper use to measure their paper consumption.

In 2014, our paper consumption increased by 94% year-over-year. This increase occurred because Algar Mídia insourced the printing of newspapers and guides. We believe that this change will allow greater control over the process, mainly in the environmental aspect. We also encourage the reduction of paper use for administrative and marketing purposes through internal awareness campaigns and improved sustainability governance, by monitoring strategic and operational indicators. Many clients also chose to receive their bills electronically and received minute bonuses, with an environmental gain.

¹ Dados for inputs used to print newspapers and phone books at Algar Mídia for the period between January 1 to December 31, 2014, and 2013 for comparison purposes.

Waste

The National Policy on Solid Waste came into effect in 2014, but we already had procedures for waste management and proper waste disposal in accordance with the Algar Sustentável Program and the Corporate Environmental Policy.

The waste generated by our operations is collected at specific collection points installed in all Algar companies’ regional units and sorted for treatment and proper disposal by specialized contractors. These companies weigh the waste collected and send reports with information used to prepare the GHG inventory–indirect emissions from waste treatment/disposal. The regional units also collect fluorescent bulbs and batteries for proper disposal since they are considered hazardous by the National Policy on Solid Waste.

Over five tonnes of hazardous waste has been collected, thus preventing damage to public health or environmental quality. Recicle na Linha [Recycle on the Line] is an interesting waste project developed independently by Algar Telecom. It involves recycling pay phone domes, which become different items, such as feeding troughs for cattle and other animals, chairs and decorative objects, among others. As previously mentioned, the company also encourages clients to receive their bills electronically, thus helping us reduce paper consumption. The project has allowed us to reduce paper consumption by over 1.5 tonnes, and involves over 100 thousand clients.

The Não ao Uso do Copo Descartável [Say No to Disposable Cups] and Coleta Seletiva [Selective Waste Collection] campaigns, both in place, are intended to reduce waste generated by replacing porcelain mugs for disposable cups and increasing waste recycling through selective waste collection.

The amount of waste generated by Algar Tech sent to landfills in Uberlândia, in the state of Minas Gerais, fell from 20 tonnes per month in 2013 to 14 tonnes per month in 2014 after the waste sorting campaigns began.

NA–Data Not Available

Main Environmental Initiatives

Energy Efficiency Program

The program started in 2010 and involves energy efficiency awareness campaigns and projects to reduce costs and increase operational efficiency, as well as preserve natural resources and the environment. Some of its highlights are optimizing equipment, upgrading our technology park and introducing alternative sources of energy.