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ESG Update

Jun 28, 2021

Speaker 1

Good afternoon and thank you for standing by. And welcome everyone to Ambev's ESG update. Today with us, we have mister Giangelo Isati, Ambev's CEO, Chief Legal and Compliance Officer, Leticia Kina, Chief Sustainability and Procurement Officer, Rodrigo Figueredo and Corporate Affairs and Vice President for Brazil, Ms. Carlos Cripa. For the Q and A session, we'll also have Mr.

Lucas Lira, Ambev's CFO and IRO, Ambev's Corporate Affairs Officer, Ricardo Gonzales Melo, and Ambep's chief people officer, Ricardo Melo. All COVID nineteen prevention protocols were followed as we put together this event and that is why we have presentations which were recorded separately. This event is also being recorded and all participants will be connected in listen only mode during the company's presentation. At the end, we'll have a Q and A session when further instructions will be provided. Questions can be asked in either English or Portuguese at our webcast platform through the link made available at the company's website.

This event is also being broadcast over the Internet and the webcast can be found on our website. Once again, webcast participants will be able to post questions during the presentation to be addressed at the Q and A session. I now would like to turn the conference over to Mr. Giancarisati, who will start the presentation. Please Mr.

Giancarisati, you have the floor. Good afternoon and thank you very much for being with us with us today. I hope you are well and healthy. I am very, very excited to be able to share about what Ambetter has been doing in relation to ESG. I am quite confident this will be an inspiring event for all of us.

Collaboration and resilience translate well what 2020 meant to Ambev even in a scenario affected by the pandemic. We had the chance to reaffirm our purpose to society and with the environment. We join efforts and accelerated projects that we believe to be the right path for our business along with the ecosystem always with a focus on what we call a better world. As you know, ESG is not it's nothing new and it's been very important for the company and it's been around for a long time. Just as ESG criteria, society and its consumption standards have evolved in the past few years.

And it's under that line combined with the digital and cultural transformation we're all going through that we plan to build the company going forward for the next one hundred years and beyond. I'm quite proud to be holding this event. It is our role to be actively involved in building a better future and that's exactly what you've been doing here at Ambev, thinking beyond our walls, beyond our labels and growing in a sustainable manner along with our ecosystem. And of course, in line with The US sustainable development goals. It's also important to say that there is room for improvement and those need to be communicated in a transparent manner.

We also know that we can learn from our partners. So let's use today's opportunity to also listen to what you have to say. This will happen during the Q and A session. I'm not gonna be speaking by myself. I have my team with us and they will show you the main work fronts for each of the letters in ESG.

To start, our compliance and legal officer Leticia Kena will show you what we've been doing under G Governance. After her, we'll have our sustainability VP Rodrigo Figueredo, who'll be talking about E and to close our corporate VP, Carla Cripa, will be addressing the letter S. I'll be back then with them to listen to you and of course address the questions you may have. Thank you for your time and your attention. I'd like to call Letitian to stage.

Thank you, John. I am also very proud to be here today to talk about ESG, But I believe you are wondering now, why are we inverting the acronym starting with G, governance? Because we understand that governance is the main umbrella for all those initiatives. And we have a few pillars under it. Effectivity of our board, clear and direct communication, ethics, including our actions on digital platforms and risk management.

In what relates to the board, we have an annual evaluation from which an action plan is put together, whose implementation becomes targets, which are followed up throughout the years. One of the points which were raised last year, for example, was the importance of increasing diversity at the board level, not only in terms of gender, but also in terms of experience, notably in digital transformation and the new economy and also sustainability. With the change we had last March, we brought Claudia Woods, Fabio Barbosa and Lia Matos, who are well known in those topics and thus can complement the skills of the current board members. They are well known for their expertise in industry, finance, and economics. With the new makeup, we received the women on board certification, an initiative supported by UN Women, which acknowledges the presence of women in our board.

I step forward for sure, but there is a lot to be done. The board's agenda has also moved ahead. On top of meeting all legal requirements, we need to have time to hit to have deeper discussions about learnings, learning from our mistakes, managing the company's main risks, our long term plans, digital transformation, cultural evolution, the impact our businesses on the ecosystem and a consistency across all our actions. Fabio, can you share with us your experience of joining the Board and how do you see our ESG agenda? Was anything a surprise to you?

I joined the board three, four months ago and from early on, was quite impressed with what Ambek does on that front ESG, several initiatives and I met very close to that sector and I didn't know about some of them. What really impressed me was that it's not something happening in parallel to the company's strategy. It is at the core of the company's strategy along with product development, transport, everything's being taken into account as part of the company's strategic view for Ambevy to be connected to this new consumer market. So most importantly is to understand that there is no return in that behavior from young people, be it with products, be it relation with packaging investments, all of that forms a hole which has been affecting the company as it moves toward the future. The bottom line is it's good business.

It's all, it all boils down to good business. Things that will help change the consumer pattern of consumption and embedding has captured this concept very well. Of course, we need to be fast, we need to improve, but more importantly is to have the engagement of all the company. And I was very glad to see last week this intense discussion where this was talked about. The idea was to make everyone aware in a repetitive way about the importance that all this has to the company's future businesses.

So I'm very happy to have just joined the company and witnessed that level of commitment I see at the company level, but what has been done and the clear view that there is something to be covered yet as new people with new ideas join us. That's very reassuring. I can see that Ambedi is connected with its time, with its consumers and with consumer trends. And, of course, social media plays an important role there as well. One of the comments that we heard from new members during our onboarding was that we needed to tell about our sustainability initiatives in a more thorough manner as we move towards reducing carbon emissions and social corporate responsibility.

Carla and Rodrigo will address that and about the way management has been leading a culture evolution and leading with the complexity in the business environment. At the management level, we have been organizing ourselves in multifunctional squads to be able to respond quicker to faster demands as it happened during the pandemic, or be it for us to explore the knowledge, the expertise from different areas and putting together structural agendas, which are monitored by our ethics committee, digital CV committee, and ESG committee. In the ethics committee, we have the CEO, the CFO, chief people officer, corporate affairs officer, and myself, chief legal and compliance officer. We discuss topics such as our respect policies, reported cases to the Bozeman office, and technological advancement also used in monitoring and preventing fraud and also in violation to our code of conduct. The activities of the committee and of the compliance area are regularly reported to the board and to the fiscal council.

At the digital safety board, besides me, we have the CTO, the legal leaders, compliance and technology leaders as well. The committee looks over compliance with privacy and personal protection personal data protection and will discuss event possible flaws or problems with data management initiatives to make people aware of digital ethics. We are also involved at the executive level. We assess our strategy in line with SC. We check the consistency with our materiality matrix.

We define our long and mid run objectives. We follow-up on the results as the ones which we'll share with you with Carla and Rodrigo. Lastly, Embedding has been reported data on a timely and transparent manner. We are constantly seeking to improve our practices and our communication materials. And our communications are now in line with regulatory demands and from comments from our stakeholders.

So we have adopted the best available tools just as GRI, the Global Reporting Initiatives and we are now working to report as per SASB and TCFD. Over to you, Rodrigo. Thank you, Leticia. Today, I'll be talking about three of the several initiatives we have around Bevy and they have to do with all the points addressed by the environmental pillar under ESG. They are in line with the current global scenario and with the most important points in our matrix.

Today's focus is on water, packaging and climate change. Starting with water. Water is our main ingredient and our target here is that by 2025, we'll improve on a measurable way, water availability and water quality across a 100% of our communities where we have water stress and where we have operations and we have water shortage. Water is a critical ingredient for the welfare of our communities. On top of that, as I said, it is our main raw material.

And we've always had a high concern over the use and control of water during our productive process and with of course with long term investments in water management. And we established many partnerships to become a reference around the world in water efficiency. Ten years ago, we looked beyond our operations to increase water safety in the communities surrounding our operations. We produced our beers with the higher or the highest level of water efficiency. For the past eighteen years here in Brazil, we have reduced in more than 55% water consumption in our breweries and we've become a worldwide benchmark.

According to the last global study published in 2019 by Beer Beverage Industry and Environmental Roundtable, companies averages would average 3.4 liters of water for every liter of beer. In Brazil, We have reached a level below 2.5 liters, 2.43 to be more exact. We have reached the target, which was expected for twenty twenty five, five years before time, once again reinforcing our position worldwide. An example of initiative to reach those results is implementation of facilities that export treated effluents to neighboring companies either to irrigate or to other agricultural activities in that area. In the case of breweries located in areas where there's water shortage, our target is even more bold.

We'll reach the level of two liters of water for every liter of beer produced and we want to use increasingly less water in our operations. Lastly, I'd like to show you a video which will explain our basins and forest programs, which completed ten years in 2020 and is present across all watersheds with high water stress across Latin America. Places and forests. Do we all see the value of water and forests? In 2020, the program turned 10.

Today, you have 11 programs in South America, seven in Brazil, three in Bolivia, one in Argentina. The preservation of over 10,000 hectares, over a 800,000 native trees were planted. The program seeks to engage local communities so that we can foster preservation and recover springs and rivers, repairing areas and ensuring both the recharge of aquifers and the balance between quality and availability. We're able to use existing funds to be able to promote the environmental recovery of degraded areas. The program has been very important for our city, such as Lagomas.

We know that alone we cannot do anything. We need to be together, the public sector, the private sector, especially when we find responsible institutions really concerned about the environment. This is good. We've been working with Nbebe for a long time. And I think there's a very clear strategy as we try to face those challenges.

Water is our main raw material. Protecting the forest is the same as guaranteeing biodiversity. We are responsible for filtering pollutants, recharge and diminish erosion and the occurrence of floods and droughts. Each project takes into account environmental, social and economic aspects, seeking to leverage and direct and allocate resources for the implementation of major based solutions created jointly with society. We engage different users of the basic and other stakeholders such as the private sector, the public sector, NGOs, research centers, universities and the community for each real invested R8 dollars in terms of benefits, in terms of conservation of the environment, capacity building around environmental education is also key because taking care of our water is a mission that is up to all of us.

And I am quite sure that together we'll find the solutions we're looking for.

Speaker 2

This video is beautiful, isn't it? I'm very proud to see how far we've come positively impacting the environment and the strong partnerships we forged throughout this decade. Now switching to the, circularity of our packages and plastic commitment. Our goals are the following, to have a 100% of our products packaged or made from mostly recycled content. Here, specifically in Brazil, in addition to the goal above, we're also committed to ending plastic pollution from our packages.

That's right. To eliminate plastic pollution completely. Among others, we are a benchmark in returnables with 38% of our total beer volume in packages of that type here in Brazil. 64% in Argentina and 57% in Bolivia, which are the largest countries in our region. Here in Brazil, we're actually 20 percentage points better in this indicator than other players in the market.

We're still working toward having over 50% recycled content in our packages. And by the 2022, we expect to have hit that goal. Here at MBEV, we've come a long way in the last few years. And in 2020, we got approximately 47% recycled material in our glass bottles, 33% in our packed bottles, and we maintained a high level above 74% in our metal cans. We have several initiatives to reach that goal.

Among those, I'd like to highlight the partnerships we've had along the way, both with partners and suppliers. A good example is ValpWarp and several other startups that included in our sustainability a 100% plus accelerator program, as is the case of Green Mining, DANK, Plataforma Verde, and so many others. We also invest in other innovation programs, such as the case of what we did with SocialLab, where we developed ideas from citizens who proposed solutions for the issues of making our packages more circular. In addition, we continue to invest heavily in r and d to increase the recycled content of our packages. That's both with our partners and internally with our technology and development team.

Earlier last year, back in 2020, we realized that circular packaging was a goal that did not fully address the plastic problem. As I said, here in Brazil, we decide we decided for an even more challenging goal to eradicate plastic pollution from our packages by 2025. In order to do that, in addition to working on returnable packages, we started a a strong work of recycling and innovating, relying on great collaboration from our team in order to eliminate or replace plaque past plastic from our packages. As an example, we had a partnership with Guernah Antarctica, which launched its first 100% recycled material package ten years ago in in 2011. And this year, to celebrate the one hundred years of the Guarana brand, we will offer a huge gift to consumers to have 100% of Goranah bottles made of 100% recycled material.

That's right. All bottles of Goranah were bottles once before. That will help eliminate plastic pollution from all our packages. Another example is the constant reduction in grammage of our bottles, always respecting the safety and quality of our final product. We already have a great result in this macro indicator reducing plastic pollution.

We've evolved from 23%, which was what we had in 2019, to 35% neutralization in 2020. Another project I'm really proud to mention was the development of an EcoScore together with the Brazilian Packaging Institute, which, is made up of experts in this area. This tool assesses how much we have in our packages such as used use of recycled material, greenhouse gas emissions, the returnability index, among others. This year, we also brought in Bureau Veritas to assess the tool which was highly praised, but we also received suggestions in terms of our next steps such as analyzing the packaging life cycle, which is something we will include in our next cycle. That way, we will address one of the points of improvement we have under our ESG project, which is the environmental impact of our plastic packages.

Moving on now to the last topic. With the urgency of combating climate change, our work to create a low carbon economy has become even more pressing. Our commitment, which we announced in 2018, is to have 100% of the electricity we purchase coming from renewable sources. Also, we want to reduce our emissions by 25% across our value chain until 2025. We are one of the pioneering companies to announce a climate change goal including its entire value chain, which is scopes one, two, and three.

Now before moving forward, I'd like to show you a map of the scopes of our operations. That way, it's clearer how we plan to distribute our operations. Starting with scopes one and two, we have been working very hard in reducing our carbon emissions. For years, since 2003 to be exact, we have been a benchmark. That's when we started changing our energy mix, and we have reduced our emissions by 63%.

That is due to the implementation of several programs such as the use of biomass in vegetable oil to generate heat. Also, the use of biogas micro turbines for cogeneration in our plants. Our use of CO two plants to recover our, plants and a lot of efficiency in managing all of our units. We had an excellent result and we are very proud of that. Now a little bit more detail about scope two.

We are migrating all our energy to renewable energy. And by 2025, we plan to operate with 100% renewable energy in every country we operate. We now have a 100% implemented in Chile and Argentina within that goal with solar energy in Chile and Argentina and hydropower in other countries. And here in Brazil, we already have PPA contracts for 35% of the, volume, a 100% for Boatweiser, and we aim to reach to a value that's high above that. We also have several initiatives for scope three.

For example, here at our CDDs, our direct distribution centers, we are investing in partnerships to build 48 solar power plants that will supply a 100% of our distribution centers. We've come a long way in our Green Logistics platform. We always implement more efficient and effective, ways. We started a very interesting plan to share transport with other market players. More recently, we've also added a few electric trucks to our fleet.

And later this year, we should have the biggest fleet of electric vehicles of over 200. Our goal is to have, by 2025, at least half of our dedicated fleet made up of electric vehicles. And the better thing is that these vehicles will come from distribution centers in that project I mentioned. We are also investing in energy efficiency with our points of sale and sales and partners. In order to do that, we're investing in Lemon, a solar energy startup.

And through that company, we're connecting those points of sale with the energy generation renewable energy generation points in a very technological way that's connected to our platform and our ecosystem. Today, we already have nearly a thousand facilities receiving renewable energy and we hope to have 10,000 connected by the end of the year. With this initiative, we were able to combine reduced emissions in our scope three with higher profitability from our partners and consumers. So it's a gain, gain situation. As you can see here, we have several initiatives that have resulted in reduced carbon emissions across all scopes.

We haven't gone into details with all of them, but it's important to stress that our work in regenerating, energy started in Argentina in 02/2019. Also, these consume half the energy compared with the ordinary sources. In addition to the fact that the gas we use do not impact the ozone layer. Also, our free save h and save e platforms where we share our best practices in water and energy efficiency in the entire ecosystem. Also, a big deal, we should comment that we were the first beverage and food company in Brazil to commit to the science based targets.

We're also working even close more closely with our value chain to engage players to invest and implement innovations that address reducing carbon emissions in their respective operations. Among the many forms of engagement, we joined CDP to participate in the CDP supply chain this year, and we still have a long way to go with a lot of improvements to make, especially with regard to fighting climate change. Therefore, among other actions, as Leticia commented, we will start to include in our financial results an assessment of how carbon emissions could impact our operations in line with the TCFD criteria. That's important from the perspective of assessing risks as well as opportunities. We're working together with the ABI Global team and a prestigious consultancy to build new net zero carbon emissions.

Our idea is to announce we're going to have a road map and how we're going to achieve that huge challenge. We always say that sustainability is not part of our business, but rather is our business. And we will continue on this journey of growing together with our ecosystem and making a positive impact for a better world. Now before closing, I've called Carlos Pereira, executive secretary of the UN Global Compact here in Brazil, to tell you how he sees our ESG agenda. Hello.

I'm Carlos Pereira, executive director of the Global Compact here in Brazil. It's a pleasure to record this video for MBEF to talk about sustainability. Unquestionably, MBEF, as its purpose says, together for a better world, meets by example. It takes on the role of a major market leader in order to pave the way for sustainability. The sustainability platform MBav has built is exactly what we need for companies and the market in general.

This is a clear platform on topics that are material for the business, such as water, climate, sustainable agriculture, and circular economy. It has ambitious goals. So this is the recipe. This is the model we need to take to the market as a whole. That was it.

Thank you very much. Thank you for your attention. We're here to talk more about the topic. Always available. This is a great passion of mine, and it will be a pleasure to connect with all of you who are interested and wanna dig a little bit deeper.

So now I'd like to turn the floor back to Carla who will talk about the initiatives related to the letter s. Good afternoon to everyone, and it's great to be here to talk about our initiatives on the social front. My name is Carla Cripa. I'm the VP of corporate relationships at BU Brazil. Now I'd like to start by saying that on the social front, we have we're talking about the impact we make on people's lives, whether they're employees, partners, or the communities around us.

Our purpose is to bring people together for a better world. And in the year 2020, because of the pandemic and with people having to stay away from one another, we've had to resignify our goal. Our purpose since the beginning of the pandemic has been to identify real problems in society and to use our capacity, our teams, our operations, our supplies, and to adapt with a lot of innovations to make a social impact and to help people. We're a Brazilian company, and we're committed to our country. We've developed and donated over 3,000,000 units of hand sanitizers to the social to the health care, system, built 100 hospitals in record time, thirty six days.

3,000,000 face shields using plastic from our packaging were, donated as well as 2,500,000 breads made from our raw materials. We've adapted a brewery to become an oxygen plant in Riberon Plateau and other initiatives. We are proud to say that we are part of a coalition of companies to help with the two main vaccine initiatives against COVID nineteen in our country. All these initiatives during the pandemic made us the only Brazilian company recognized by the FAST company for innovation with social impact. We also won the UN Solidarity Seal in 2020 during the pandemic.

We have a consistent platform for social impact programs addressing our communities. One example being VOA, our corporate volunteers program, where our leaders mentor NGOs across Brazil to help them with their best management tools and knowledge tools to help them increase their positive impact in the world. We have more than 6,000,000 people that have benefited by BOA and our volunteer programs in Argentina and Chile, as well as over 500 NGOs that have transformed their management. I also wanted to tell you about another program. In 2017, we launched AMA in partnership with the Eunice corporate, tank, an initiative of professor Muhammad Eunice, winner of the Nobel Peace Prize.

AMA was the first social business of a large Brazilian company to revert a 100% of the company's sales profits to the project. Our goal is to bring access to safe water to 1,000,000 Brazilians by 2025. You can access our website and monitor in real time our profit meter, which is, what we call it, with those benefiting from the project as well as all projects that we have and all profit we make from selling that water. We have already helped 223,000 people, and we project to end the year having helped over 300 people. 300,000,000 people.

Sorry. Another important thing is the responsible consumption of alcoholic beverages. We have no interest in profiting from improper consumption of our products. This is a platform that's been around for over fifteen years. With both local commitments and global goals we expect to achieve by 2025 with the major goal of reducing harmful alcohol consumption by twin 10%.

Responsible consumption is that made by people over age, not associated with, driving and also in moderation. In 2013, we built a road safety program to bring more data and better management of traffic so as we could save lives. We know that beer is part of a problem that has multiple causes. But most importantly, we are trying to be part of the solution, which is exactly what we did. We started a partnership with the government of Sao Paulo and developed a statistical management system called the Sao Paulo Traffic Safety Movement.

Then in 2016, we took the Brasilia Vida Segura program to the federal district that has contributed to saving over 579 lives in traffic. With those two programs, we worked to build the first national integrated traffic data system in Brazil, providing monthly standardized information to help decision making by public managers. Previously, it took up to four years for them to access that information. And I'm very proud to tell you that we've launched the Rinaeste platform in the May come together with the Ministry of Infrastructure. That program has now become a public policy, making all our effort from the past few years to become really sustainable.

Another initiative is our beers made with regional ingredients such as Magnifica, which is made of cassava in the state of Mariel. These are authentic democratic brands which are redefining the entire production logic of the country's several regions and helping micro farmers in highly vulnerable regions. Even though this is a recent program, we've impacted over 6,000 people and have been recognized by Fast Company with the World Changing Award this year. This is a true example of shared growth that's shared with our ecosystem. The letter s of the ESG acronym involves our employees' diversity, training, engagement, and also both physical and mental health.

Last year, MBEV pioneered by launching a board that's focused on the mental health of its employees. Speaking of diversity, we are very focused on our journey towards racial equity. In 2020, we took a very significant step and made a commitment creating our external diversity and inclusion committee, which was initially focused on the racial chapter. We have four experts working on the racial agenda who helped us put together an ambitious plan with the overall objective of having more black leaders training our employees and partners and help to positively influence our ecosystem of customers and suppliers. If you wanna know more about our goals, you can access the MBEV website or our annual ESG report.

Now I'd like to invite Ilada Herta, cofounder of Vale do Dende, a Brazilian Northeast accelerator focused on diversity and also founder of DiversePoint dot SA Force, which fosters impact in North and Northeast. Is also a member of our external diversity and inclusion committee. Hi. I'm Idola Herta. I'm a social entrepreneur.

I know you you're on a very special date today, and I hope it's a very productive meeting. I was also invited to be a member of MBEF's racial equity committee, which is a committee I'm very proud of. I feel very pleased to be involved for a number of reasons, but especially because I understand it's still something that I always like to bring to this agenda of equity, diversity, and inclusion, which is the word engagement. We're talking about courage. Right?

Not just making those decisions, making that engagement, but becoming a positive example to also impact other companies, which is what we see happening with this committee. So it goes beyond the MBEV ecosystem. I know there are many challenges ahead of us. We're not talking about romance. We're talking also about, charity, but especially about opportunity.

We know that diversity is still seen as a problem, but, thankfully, we have a safe space to see diversity as a solution and not a problem. I think this is the way we can make the best use of our talent, and we can manage not to waste that talent and also make people feel healthier, included, and a lot more productive even within a corporate environment. We can bring innovative, an innovative perspective because we can no longer go back. Thinking of this corporate initiative makes us make fewer mistakes and makes us get it right faster and makes us be more coherent and consistent in the decisions we make. So I'd like to wish you an excellent meeting and actually put my make myself available to all of you and leave it on the record that I'm very honored to be part of this, which I think will change the vision for the future and our new decade or next era, of perspective over Brazil about diversity and also about business.

My best to you.

Speaker 1

Thank you, Italy. You've been a great help for us along the journey, but we do have other fronts when we talk about diversity and inclusion, all of them based on respect. I'm gonna talk about gender now. We can discuss the other fronts when we come to the q and a LGBTQ plus handicap people. We started our journey in 2016 when we created the first female affinity group, Vice.

Since then, we have moved a long way, but still haven't reached the level of representation of women we'd like to have in leading positions. It's a long way, but we are evolving quite consistently. Over the past five years, the number of women and our board has grown considerably. Last year alone, it grew 16% reaching the level of 20% of women. We have delved deep in the problem to understand where the main gaps are.

Just as an example, we saw that salary was not an issue because statistically there is no difference in compensation between men and women at MBEF. But we know that there are still many hidden obstacles and unconscious biases in our assessment process. For us to achieve this representative mass, we define that plan with affirmative actions such as policies associated with maternity, extension of maternity leave, review of mobility and flexibility in work routines. We also set up the goal of having 50% of women mapped out as movers, which is what we call it or call those who have potential to be promoted to leading positions. And we also have the commitment that all board members will have at least mapped out in their succession plan by 2025.

We have also launched the Allied Man program. The idea is to making men aware of their role within this journey for gender equity. We have had a 93% NPS among men who took part in the ally program. It's a very high level and we hope that from those programs, actions will emerge to change attitudes, behaviors so that you'll have an increasingly inclusive environment. Our commitment goes beyond our walls with external actions to fight violence against women, training network for support to women who have been the subject of aggression were also part of the coalition to fight violence against women and girls.

Another key point within this social pillar is our employees' safety. We do have a very effective control process and have been making our environment increasingly safer in 2019 and 2020. We had no fatal accidents. All those projects and results make us very proud because we know that the ESG platform does bring positive results for the company and also for people's lives. Everybody gains the ecosystem of partners and collaborators also grow with us.

That's why I'm quite confident that we are on the right track to bring people together for a better world. And it is with this feeling that I wrap up my presentation and we go gather now to address questions that you may have. Thank you very much. Thank you. We will now start the Q and A session.

Questions sent through our webcast platform will be selected by a monitor and will be directed to one of the speakers in an order that they arrive. Questions will be answered as they arrive on our side. Please submit your question, only once. And please wait now as we poll for questions. First question.

Good afternoon. When we'll have the net carbon zero plan communicated, do they include decarbonization targets as well under scope number three? I'll address that one. Thank you for your question. We have been working on that new definition of a commitment towards net zero along with the whole company across the world, our global ABI team.

We're going to communicate that new target until the end of this year. I do believe in Q4, that's when we should be communicating that. And it does fall under scope three, just as we did when we pioneered back in 2017, our goal of reducing carbon emissions across the whole chain, across our own ecosystem, including Scope three. That's the first step we took. We've moved a long way.

We're going to reach that goal. And very soon we'll have that commitment communicated to the market. Next, where does ESG come into the cultural transformation and or the company's strategy? Well, ESG is quite present throughout our cultural transformation. It's part of our purpose to gather people towards a better future.

It is a fundamental pillar of our strategy. I've been talking about it and we see ourselves as more than a company. We see ourselves as part of an ecosystem including the farmer planting barley all the way to the waiters and consumers including our associates, clients, partners. And as we expand that field to encompass a whole ecosystem that does expand our culture as well. And that will include active listening, collaboration and work relations, both inside and outside the company with the companies, with the communities rather that surround us.

And with that, we are able to cause positive impact across the ecosystem. And this places us along the right track on the ESG journey. Last year, just to give an example, we put together the principles of our culture. So our leaders now before this, they were assessed by their results and quality of their teams. Now they're assessed based on results, on quality and based on diversity of their teams.

All our focus is on the clients and the clients of course are at the center of this cultural transformation. And that also connects us with ESG, the S for social speaks volumes about our quality of service. Also transparency in the way we show that we are held accountable for what we do before society. For example, this event today with investors, that's an example of good governance. So our business strategy also takes into account the interests of shareholders, but also of other stakeholders and partners.

All of that has to do with ESG. ESG is a fundamental piece of our long term strategy and of our cultural transformation. Next, How and when will board members and top executives have their compensation linked to green targets? Thank you for your question. Well, that's already in place.

Most of our executives and top positions do have ESG linked targets. Of course, we'd focus on their respective areas. On top of our targets expressed by Rodrigo Figueredo just now and those targets are related to global sustainability targets. Our industrial VP, Maurice Sultan has targets related to water quality and climate change. Our people officer has targets around inclusion and diversity.

As Jean said, all leaders are assessed by diversity in their teams. I have targets around compliance and ethics and the board also does. They have governance targets which involve the implementation of self assessment on an annual basis and the guarantee of consistency in executing the company's long term plan. Just as a definition and monitoring of the executives targets, which are also linked to ESG. Next.

What are the main sources of scope three emissions? What programs do you have in place to reduce them and how did each fund contribute to achieve the goal of reducing carbon emissions by 25% by 2025? Let me check Carlos' computer because mine is frozen, crashed. As for scope three, we do have a long chain. So when we talk about packaging suppliers, that's an important point for us to address.

We also have agriculture. We use natural products, barley or hops, barna. All of that comes from a very large agricultural network. We also focus on logistics, which has always been important for scope three and also our eco coolers are very interesting addition. We've been reducing with emissions reduction.

We're now working with renewable energy at our points of sales in addition to all the development around our compressors. We've been working hard across all those fronts and now with this new net zero commitment, we'll be increasingly engaging our ecosystem suppliers to continue not only to do our homework inside internally, but also so that we can share all the knowledge we have amassed throughout decades of water efficiency, technological efficiency, innovation, the different transportation modes that we have access to today, shared logistics. In other words, we're going to be sharing our trucks with other companies. All of that combined will allow us to take our consumers a better program under Scope three in what relates to packaging. Specifically about agriculture, we've been working hard to develop regenerative agriculture.

We have a very nice pilot program in Argentina, which is starting in 2019. We have been able to double our implementation area for more sustainable agricultural practices. I am quite sure all those actions will help us in this long journey towards net zero. Next, in the current material matrix, there seems to be a very low weight for climate change or air emissions. We see that competitors seem to be giving more weight to this factor.

Are there discussions, Ed and Beth, to reevaluate the importance of this aspect, especially given the fact that the company has signed the business ambition for 1.5C? I think that materiality matrix, of course, is relevant. It may not be the most relevant, but it is relevant for sure. And in our report, we zoom in on the most critical points of the matrix and that issue is in our radar. We've been working for decades as I said on that journey.

We started in house. We're now taking it beyond our walls to affect the ecosystem. I do believe that Ambevy is actually leading that agenda. We were one of the first, if not the first company in Brazil and the food and beverage industry to commit to specific scope three emissions reductions. We will reach that target very soon with this new net zero target.

We were awarded by different programs, the exam, sustainability guide is one. We have also advanced in collaboration agenda developing national local technologies. A good example is our partnership with Volkswagen to build an electric truck. That's a project that has been in place for two years. We have just received the first electric truck last year, the first of 100 electric trucks we are about to receive.

So once again, we are leading on a positive agenda in Brazil and I do believe that all actions around renewable energy at the breweries, at the distribution centers and with our trucks, our fleet. Our commitments to have half of our fleet run on electric trucks and they use renewable energy at our DCs. And now our plan is to take renewable energy to our points of sale to feed our coolers. So that shows the leading role that MBEV is playing in this respect. And it's not may not be the most important point as I said, but it is quite relevant.

And we are also leading that in Brazil as well.

Speaker 2

Next question. Do you plan to disclose your the group's ESG metrics beyond Brazil and SAZ? We noticed that you did not disclose for CAC, and in Canada's case, you disclosed only, GHG emissions. Thank you for your question. Granted, this year's report focused more on Brazil, but we do have metrics, and we monitor MBEF's structure across the globe.

In every nearly every country, we have a project to recover, water basins. In the state of Parana, we're migrating all of our units to 100% solar power. In Canada, we have a target, and we're migrate migrating to 100% renewable energy by 2023. In The Dominican Republic, we introduced a project to recover all plastic we put on the market, and we were awarded the LATAM 2020, positive environmental impact, category. We also plan to give more details about other regions in our next report.

Next question. Do you feel that MBEV's ESG initiatives are already reflecting in the financial universe? Was there an increase in demand to the company for ESG funds in the last twelve months? Thank you for your question. Yes.

We have seen an increased interest in our from our current and potential investors about ESG. And I would go one step further. Since last year, we've decided not to wait, whether on my side or a self side to come to us or show interest in talking about ESG with the company. We've decided to be proactive, and we've started a dialogue with, international and Brazilian funds that care about ESG as much as the company does. And ever since, we have shared with us or shared with them what we have been doing in that sense.

And we've also been hearing from these funds and receiving feedback from them about what we should be paying more attention to or what we should be doing to help build our ESG journey moving forward. So it's a real interest, and we have tried to be more proactive as opposed to waiting for the market to bring those agendas. This is, something we are embracing, and we're trying to be more transparent about that in our relationship with the market. Next question. How does MBEV ensures or, oversees what, their that their suppliers are in line with the company's responsibility, culture, and policy.

Okay. Can you guys hear me? Alright. Let's go. So the question about our suppliers and how we oversee their practices, as I said earlier, we have a huge value chain with over 5,000 suppliers, and our suppliers must absolutely share our same ethics and integrity policies we adhere to here at the company.

And that's very clear in our contracts, but not only that. Also, in our skills building and training sessions we have across our ecosystem, that's made very clear. And over the years, we've learned that we have to reinforce that, very often. So at least once a year, we reinforce that during training and pass that along to our suppliers. We monitor that using technology, which not only oversees but also, guides our suppliers from the most basic issues regarding, slave life work or a child labor and every, labor contracts that we adopt, even talking now about, mental health safety.

I mean, the pandemic has taught us a lot about that, and we are sharing all of that knowledge that we've acquired over the the years and also within our operations with them. And we are now developing a number of programs to take that in a more comprehensive way, making even more sure that our suppliers are adhering to all of them. We have also been conducting more audits and checks both virtually and in person, conducting, in person audits with most of our suppliers. We have this commitment to take everything that we've learned to our suppliers and ensure that they embrace them as well. This is no simple feat.

It's a huge number of locations and a huge number of suppliers. We have a footprint in a number of countries. So it goes from logistics to, civil construction, agriculture, or small, medium, and large sized packaging provider suppliers. And so I believe MBEV is learning as years go by. And everything we learn, we incorporate into a policy, and that, is unfolded into our chain of suppliers.

Next question. Could you give us more details about the rationale behind the change in the board? Of course. Thank you for the question. So our board conducts an annual review, as I said earlier.

And with that review, they assess both the makeup of the board and the strategic decisions that are made for the company. With regard to the makeup of the board, one opportunity that had already been looked over by the board itself would be to add to their skills with, ESG technology and new economy. So once the opportunity presented itself earlier this year, those skills were addressed. Next question. What steps has the company been taking to increase its share of returnable bottles and reduce the, aluminum consumption?

That's a great question. This is an issue we've been working on for several years. The first major initiative we have is to adapt the size of the bottle to different consumption, opportunities. A few years ago, if you're a bit earlier, you know that the 600, milliliter bottle was the only one we had. So first, we developed the one liter bottle and then the 300 millimeter bottle to cater to different consumption moments.

And with new partnerships, we have been creating something that's easier for our consumers to take those products home. We have been developing partnerships with points of sale so that the a customer doesn't have to go far to take, the bottle crate to the store, but actually can acquire the product in a an easier and more sustainable way. And that also makes it easier for him to purchase because it becomes more affordable. So we have developed a number of initiatives with our marketing and suppliers. We are about to to release a new long neck, bottle, which is a sustainable one that you can return and creates a benefit for consumers.

It's no easy feat. It's a trend for us to have everything disposable, but with the purpose of sustainability in mind and with innovation and technology at our disposal, we're developing a lot of new ideas. And we have even come up with discounts for consumers whenever they return those bottles. So we are putting those incentives in line and creating, this trend for the market to migrate to more sustainable bottles, which helps everyone. It's better in terms of sustainability.

It's better for customers, and it's better for our market share. Bearing in mind that our market share in this, line of bottles is a lot better than that of the competition, and we want to increase that gap even more. Thank you. So now we end our question and answer session. The questions that remain unanswered live will be answered subsequently via email.

I will now turn the floor over to Gianjeri Sati for his final remarks. Well, I believe this concludes our session. I would like to thank my team for keeping up with all of these ESG initiatives and conducting them. I'd like to thank for all of the analysts that were that participated in this call. I believe we are on the right path.

We are very much on the same page in terms of our ESG pillars. This is part of our strategy. It's part of our cultural transformation, not only here in Brazil, but also in our international operations. These are continuous changes, and they take time. They also never end.

We stay, steady on our path despite the challenging times we have lived during this pandemic. Even throughout this process, it became clear for us that we were able to slow down the pace that we had been keeping in becoming, an ESG, aligned company and a responsible company. Thank you for, your time, and you can count on us for anything you may need and other, events and other earnings calls. This is an issue that will be increasingly more important to us. So thank you to everyone.

Thank you. MBev's ESG update has now concluded. Please disconnect your lines, and have a great afternoon.

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