Braskem S.A. (BRKM5) Earnings Call Transcript & Summary

Good morning. Thank you for waiting. Welcome to ESG Day of Braskem. We have here with us, Roberto Simoes, CEO of Braskem; VP of Finance, Procurement and Corporate Affairs; Pedro Freitas; our Head of Investors Relations, Rosana Avolio; and Head of Sustainable Development, Jorge Soto. We would like to inform you that this event is being recorded [Operator Instructions] We have simultaneous webcast that will be accessed through Braskem's IR website sent by e-mail. [Operator Instructions] I would like now to hand it over to Rosana, who is Investor Relations -- Head of Investor Relations, and we'll start the presentation. Please.

Hi. Thank you. Good morning, everyone. On behalf of Braskem, I would like to thank you all for being here in our first ESG Day. I'm going to start on Slide 3 and here you can see the agenda we've prepared for the day. I'm going to start by making a brief introduction, then Pedro Freitas will share with us the main advances of the company in terms of sustainable growth both by -- after '20. Jorge Soto will tell us about the commitments that we've made for the upcoming decades. And finally, Roberto Simoes will draw his closing remarks, and we will open for the Q&A. Slide 5 now. Let me tell you about the belief and purpose of Braskem. Braskem believes that chemical and plastic make people's lives better being present in our everyday practice in packaging, materials and also health care devices, our home appliances and others. Therefore, Braskem has a purpose to improve people's lives, creating sustainable solutions through chemicals and plastics. And its contribution is offered through a wide diversified portfolio of basic chemicals, specialties, thermoplastic resins, biopolymers and recyclable products. During this specific situation, plastics and chemicals are even more essential as they perform an important role to fight against the pandemic and to leave life in social distancing. Slide 6. Now considering our belief and purpose, Braskem seeks to operate in accordance with sustainable development principles. And it has been so since the beginning of our operations in 2002 when we shared our letter of commitment to a sustainable operation. Since then, the company has made important achievements. In 2008, we had our first external check of greenhouse gases, the first important breakthrough. In 2009, we had the definition of the macro objectives of 2020, whose results we are presenting today. And we also launched our statement on climate change, making commitments to reinforce the contribution of Braskem in reducing green gas -- gases by using renewable raw materials. Along the same lines, in 2010, we started producing green polyethylene made of sugarcane, becoming global leaders in the production of green biopolymers really reinforcing our position. In 2014, thanks to the high level of commitment with sustainable development in global -- UN Global Pact (sic) UN Global Compact, we've become the leader of global pact and we have remained since then. In 2018, we announced the company's position in circular economy, and we also updated our policy of sustainable policy as I'm going to share next. In 2020, we were certified by Brazilian and American authorities on the effectiveness and robustness of our compliance system, meeting all the commitments we've made in the global pact and also everything that we have agreed on carbon O2 circular economy. And finally, today, we are opening the new cycle of commitments of Braskem for sustainable development. The next slide, I'm going to talk about our global sustainable development policy. To meet this purpose and really strengthen our contribution to sustainable growth, in 2018, we've updated our global sustainable development policy. It was reviewed and approved by our Board of Directors. It aligns our -- those missions and inspirations, together with the UN sustainable growth plan. It includes sustainability, processes and the strategic guidance part of having sustainability as part of our decision-making. In implementing this policy, we have a constant monitoring by the Board of Director, which is informed through our CEO, which helps us unfold the policy in the company. Our executives putting to practice these objectives and all team members are ultimately responsible for implementing them. The company defines periodically the material topics to be addressed, considering our risk metrics, defining our strategy and long-term objections. Now into Slide 8, we can see in terms of materiality, as I told you before, Braskem performs a periodical assessment of relevant sustainability themes, all associated with our business operations. Within environment realm, we include: greenhouse gas emission, water and energy consumption, waste generation, use of renewable and fossil raw materials and post-consumption plastic waste. In terms of social realm, the main topics are: people health and safety, process safety, product safety, local development and diversity equity and inclusion. Finally, in terms of the economy, the main topics are related to economic and financial results, transparency, integrity, suppliers engagement and support to client chain. Next slide now. Braskem also assesses sustainability based on corporate risk perspective, always based on its global risk management policy. In 2017, we implemented a cyclic continuous methodology to quantify, understand and respond to risks based on international references, making adaptations, of course, to the Brazilian culture. The methodology is focused on making sure that our decisions are made based on appropriate timely decisions considering the risks we are exposed to, increasing the likelihood of meeting our objectives and reducing the risks at acceptable levels. At the same time, it tries to maintain our tangible and intangible equity, people safety and integrity of the environment of the community. Risk identification is based on a preliminary risk of a list of risks that is called a risk dictionary. It's a database of information that concentrates all the risk description, categories and subcategories. There are operational risks, which are those associated with strategic decisions towards achieving our business goals and are resulting from our lack of goals to get adapted to environmental changes. We also have risks which are resulting from failure to adjust our systems, control process and also problems to deal with our resource and internal [ control ] and frauds, which may harm our activities. There are also financial risks, which are those associated with financial decisions arising from the financial market, credit and liquidity to pay our debts. And finally, regulatory risks, which are associated with the regulatory environment, which arises from failure to comply with laws, financial laws or laws of reputation to comply with laws, regulations, code of conduct or any other guidance. Doing analysis and assessment of risk, our leaders are responsible for appreciating the causes and sources of risk and positive and negative consequences arising from them and the likelihood that they may become a reality and impact our expectations. Finally, we select the risks that require prioritization of all the necessary activities and actions to respond to the main threats we are exposed to. The result of this assessment and likelihood of [ occurrence ] and prioritization leads to risk definition and classification into very high, high, medium or low level risk in the position in our matrix. Into Slide 10, we can see some examples. In 2020, we maintained the implementation of different measures to prevent and mitigate risks which were set as priority, integrated to the corporate risk matrix. The main highlights: plastic waste and the kind of image it has. There is a trend of trying to ban single-use plastic. Climate change also, because of the growing global concern with environment and governmental alignment with Paris Agreement. Social environmental issues related with a number of risks of environment, health and safety, which petrochemical industries are exposed to. And finally, industry cyclicity, which may have a positive or negative impact on company margins. Now if you go into the next slide, 11, we can see that based on materiality of our business and risk assessment, Braskem defined in 2009 in the first long-term cycle which was ended in 2020. There were 10 objectives fully aligned with the principles of the global pact and contributing to the sustainable development goals of UN and the Paris Agreement. And to carry on. I'd like to hand it over to Pedro Freitas, who is going to tell us the main deliverables of this cycle according to the objectives we have defined up to 2020.

Hi. It's a pleasure to be here in the first ESG day of Braskem to introduce to you our main achievements in the past at. Slide 13, I would like to show you the list of our macro objectives of 2020. They were agreed in the past for the year 2020. We have reached 85% of our goals defined at that time, and we've obtained a very satisfactory result to the cycle, really evolving in safety and health, economic and financial results, post-consumption, renewable resources, climate changes and also strengthening practices. The next slide shows health and safety, people and processes. Braskem has achieved 84% of its goal, and it's measured by the accident rate with and without leave and also process safety in Tier 1. In terms of people safety and accident rate, with or without leave, we closed the cycle with 0.95 per million man-hours worked, 71% below the industry's average. In terms of process safety, we can see that Braskem has achieved consistently the reduction of Tier 1 events, reaching 2020 with 0.07 accidents per million hours man (sic) man-hours worked. Safety is a nonnegotiable value to Braskem. Improvement in our performance has resulted from our Human program, which we have implemented -- the Human Reliability Program implemented in all our plants. Now in terms of climate change in the next slide, we can see we've achieved 94% of our goal, which is measured by intensity of greenhouse gas emissions. Since 2008, we have a third-party assessing our inventory. And we have made an agreement, which is defined against climate change. In 2017, we launched the program of Climate Adaptation Plan, implementing actions to reduce climate risks in our operations, considering stress scenarios in the long term. In 2020, the company has taken a leader position in CDP Climate, Climate Disclosure Project, [ which ] measures emissions and also use of water. In the CDP Climate, we took a leading position for the sixth consecutive time. And in CDP Water, we were also leaders for the fourth consecutive time. In addition, we have contributed with effective actions for climate issue, developing products with a negative carbon footprint, such as Green PE. The average of the 3 is we have reduced CHG (sic) GHG emissions by approximately 17% over 2008, avoiding the emission of 30 million tons of carbon, which is equivalent to planting 200 million trees. And the result has been achieved thanks to energy efficiency projects and the purchase of renewable energy. The next slide shows that we have achieved 100% of our goal in renewable resources, which is measured by the capacity to make you -- produce or manufacture new products by using recyclable items. We have started the use of Green PE in manufacturing in 2020. The total production capacity used to be 200 million tons, and we became global leaders in the production of biopolymers produced out of sugarcane. Green PE is produced of green ethanol produced from sugarcane. In 2020, Green PE celebrated its 10 years in the market. And due to increasing the demand for sustainable products, we've achieved record sales. In addition, we were awarded internationally for our work. ECLAC and Chemical Week have awarded our performance, thanks to our sustainable characteristics of products. Braskem aims at expanding its portfolio of sustainable products and has been working on developing Green MEG and expanding the green ethylene capacity. Green PE keeps the same properties, performance and versatility as traditional resin, but it captures up to 3.09 tons of carbon dioxide per produced ton. The next slide addresses our achievement in the goal of post-consumption. We've achieved 37% of what was our goal of recyclable post product -- post-consumption product. And we have -- get ready to work on circular economy, disposing all the waste using mechanical and chemical recycling and [ involving ] the whole plastic chain. Since then, we have been making partnerships with our clients to conceive new products to expand and facilitate recycling and reuse of plastic package. These initiatives encompass investments to support new technologies, business models and also systems for collection, triage recycling and recovery of materials. In addition, we are founding members of Alliance To End Plastic Waste, AEPW. It's a global entity that aims at eliminating plastic waste discarded in the environment. By doing that, we've seen the expansion of recyclable resins being sold, and we finished the year 2020 by commercializing recyclable plastic in all the regions where we have operations. And we have -- we keep on working to avoid inappropriate disposal of plastic in the environment, leveraging recycling opportunities in our operations and in the value chain worldwide. The next slide shows how we've achieved our economic and financial results by 95 -- 94%, excuse me. This is a measure based on the company's investment risk rating. We've maintained our investment-grade for most of this period even after being -- after Brazil being downgraded, after the sovereign risk has been downgraded. And this has been maintained through our geographical diversification. After so many years, we had a reclassification. We were downgraded because of the uncertainties caused by the COVID-19 pandemic. We continue to be committed to maintaining our financial health. And in order to do that, we've implemented several measures to reduce leverage. 2020 was finished at a leverage based on the net debt-to-EBITDA ratio of 2.94 versus 4.97 (sic) 4.7 at the end of 2019. In the first quarter of 2021, this measurement dropped to 1.8x. With that, our outlook was updated to positive last week by Fitch rating, which reflects our commitment to maintain our strong liquidity position, cost discipline and we're always trying to retake our investment risk grade. The next slide shows how we strengthen practices in our compliance and governance systems. We received a certification from the compliance authorities in Brazil and in the U.S., the U.S. Department of Justice, the Securities and Exchange Commission and the Brazilian Federal Prosecution Office. We implemented all the recommendations for a robust and effective program. As a highlight, we have a higher number of independent members in our Board. We created a Compliance Committee in the bylaws with at least 3 independent members from the Board. We now have a Chief Compliance Officer, who is independent from management and who responds directly to the Board through the Compliance Committee. The compliance team was expanded by 8 times, and it was expanded to all regions. And we also defined compliance targets for all of the company's leaders. And of course, we cannot forget on the next slide about the case of Maceió. This was a very relevant event. And considering the geological phenomenon that took place in Alagoas, it's important to highlight how we advanced in addressing solutions. We had a specific of it about this topic, and we continue to be committed to our communities, safety and well-being. We're focused on supporting the affected families completely and understanding the phenomenon from a technical standpoint. We continue to make progress on the relocation and financial compensation for families there. Until March this year, 11,600 families were relocated. We offered 5,500 proposals, of which 99.6% were approved. And regarding payments made, our disbursement so far has been until March around BRL 713 million. So to deal with this topic, we set a dedicated team to find solutions for the impacted by this phenomenon. And we had transparent talks with the government and with the communities. Finally, to close this chapter, Braskem has made efforts, which have been recognized by several specialist organizations in sustainability. For example, we have been in the RobecoSAM's list or yearbook since 2014. We've been one of the most sustainable companies in the petrochemical sector. We were also listed in the B3 Carbon Efficient Index since it was created in 2012, and this is due to our transparency on our emissions. We've been recognized by ECLAC ever since it began in 2005 and will continue to be part of this process. We received the gold category in the Brazilian GHG Protocol program, which measures greenhouse gas emissions since the first time this inventory was made. I've mentioned CDP, where we have been leaders since 2016. And finally, Braskem is the only leading company in Brazil for the UN Global Compact, which we participated in since 2014. Jorge Soto will continue. He's the Sustainable Development Director at Braskem, and he is the main person in charge of the advances we've had on this topic. He'll present our new commitments for the next decade.

Thank you, Pedro, and good morning, everyone. Good afternoon if you're listening from abroad. As you heard, our first improvement cycle has already taken place. And now I'm going to talk to you about our second long-term improvement cycle, which starts now, and I'll define our goals for 2030 and 2050. First, we're going to watch a brief video on what we're launching today. [Presentation]

Well, that's a summary that shows how we're renewing our commitments in sustainable development. It shows all the global challenges that we are facing collectively. As you know, this was approved by our Board. The commitments have been made last year after long internal discussions and 27 workshops involving several leaders. We talked about our corporate risk assessments. We made an internal review of the materiality matrix. We benchmarked with peers and we also considered the requirements from the main ESG indexes. And of course, we also used external references for sustainable development, as we mentioned, the Paris Agreement and sustainable goal of -- the sustainable development goals. So we've made 7 dimensions to promote sustainable development with our long-term commitments. This is shown on the next slide, Slide 24. The 7 dimensions intend to extend our positive impact and mitigate risks in Braskem's path, creating value for our business through our focus on innovation and sustainability. The 7 topics are health and safety, economic and financial results, eliminating plastic waste, fighting climate change, operational eco efficiency, social responsibility and human rights and sustainable innovation. The 7 topics cover all of the ESG dimensions. And you can see how it's represented in colors. But they definitely also apply to more than 1 dimension. It's important for you to know that 4 -- 2 of them, as you saw in our launch last year, we decided to have a very strong public commitment for the long term, associated to what we call the carbon neutral circular economy. These commitments were taken at the end of last year, and I'm going to mention some of the information on this again. So let's start with the first, health and safety topic. As Pedro said, safety is a nonnegotiable value for Braskem. Obviously, this is how we deal with safety. This includes all of our employees, third parties, surrounding communities and everyone involved in the process. This is a key topic so that we can continue our operations. And we understand that Braskem, due to its size and importance plays a protagonist role in this theme when we have indicators which we have been following up on for a long time. And we're among the best in the global chemical industry. We intend to keep this between -- until 2030. And our ideal level is to have 0 accidents with people, occupational safety and process safety. As you can see here, our goal is 0.5, but our ultimate goal is always 0. Our ongoing projects. We have been focusing on human reliability and it includes education, knowledge management, updating field practices with attitudes that will reduce people's risk at work. We have many contractors with us, and we could not leave them out. So contractor safety is also 1 of our main points, and we want to improve this standard to global levels. Also health program, which includes all of our employees and everyone at Braskem. We're looking at COVID and how important it is. So it considers aspects that go beyond just the occupational hazards that we have. We're focusing on the emotional and social aspects of all human beings involved. And also digital transformation, which helps us to use tools that we developed in our Digital Center and with the 4.0 industry to further improve how we manage operations and how we reduce risks. So these are the main projects for health and safety. The next slide, Slide 27 shows what we want to achieve in economic and financial results. Of course, we want to create value sustainably. And that means creating value for shareholders on the long term, so that we can meet the growing trend of incorporating ESG criteria into this decision-making of the financial market, along with their perspective. Braskem has been making a relevant contribution to sustainable development. And as Pedro said, we've incorporated sustainability into our business strategy as a lever for the long term. And in 2030, we want to be recognized as a leading company for our contribution to sustainable development. Our objectives are to maintain the company's financial health, our discipline and capital allocation focused on creating value, as I mentioned, and strengthening our relationship with market based on ESG requirements. The indicators are shown here on the slide. We want to be among the first quartile of shareholder returns, that is our total shareholder return. We also want to be among the best companies in the world in the Dow Jones Sustainability Index. And we also aim to improve our governance and compliance processes in accordance with the best level practices according to the ISS quality score. And finally, we also have to include client satisfaction, so that we can achieve an excellent reputation level with them. So what have we done on this topic. This is shown on Slide 28. As Pedro said, we've seen how our compliance and governance practices program has improved and will continue to improve without a doubt. Pedro has personally joined a selective group of CFOs, who are working towards the UN Global Compact, defining the best practices and integrating them to the company's financial management. We're also unifying our report, which you will soon see. It's an integrated report with the main reporting standards in sustainability, which complies to requirements from the investors and is linked to GRE (sic) GRI, IIRC standards and so on. Executives with ESG goals is not a new practice for Braskem, and that's why we've reached 85% of the goals we defined in 2009 until 2020, but we will definitely strengthen this requirement. And finally, financial discipline and creating ESG value through financial health and discipline in creating value and strengthening our relationship with the market based on ESG values. These are our ongoing projects to reach the goals we mentioned in the previous slide. Slide 29 discusses our focus on eliminating plastic waste. As I said, this is 1 of the topics where we want to be seen as a part of the solution. In 2020, we've announced our goals, and we know very clearly that we are moving towards these circular economy, so that we can address all the issues related to waste. Of course, this is a movement that requires investments in technologies, so that the solution does take place. So that we can collect and sort better. So this is very important, and we understand that this can leverage our business. We hope that we can do this through partnerships. And it is for that reason that we understand that we need to continue to reinforce partnerships and develop new initiatives and projects as well as develop technology, both for mechanical and chemical recycling, which means transforming plastic waste into a chemical product that can be reutilized in the chain. By 2030, we want to be globally recognized as a company that develops the recycling value chain in the regions where we work. And we want to reach the position of a leader in this team in the Americas. We hope that until 2030, we can recover 1.5 million tons of post consumption plastic per year and we want to reach 1 million tons a year by 2030. And that will help us recover all of the plastic waste that is now being discarded in the environment. So we hope to strengthen this movement. Some ongoing projects are shown on Slide 30 and also on Slide 31. With mechanical recycling, you might have seen a recent announcement where we started partnerships with Valoren and Tecipar. We've -- we have the capacity to provide 2,000 tons a year. So this increases our participation in treating plastic waste. The same is taking place in Mexico and in the U.S., in Mexico with Alcamare, one of the biggest recycler of the region and in the U.S. with Cyclyx and other players. They aim at developing innovative recycling solutions for all types of plastic waste. To address chemical recycling, this is still a technological development issue. In Brazil, along with SENAI and the Federal University of Rio de Janeiro, we started a partnership to develop catalysts to improve our performance in mechanical -- excuse me, in chemical (sic) mechanical recycling. In the U.S., we started a partnership with Encina. Slide 31 now. You can see here different sector alliances. We don't think we are going to deal with all of that on our own. And this is why we have to have global alliances, such as AEPW, and we also have local alliances. One of them called Blue Keepers here with a Global Pact, an initiative launch -- announced last month to understand the source of plastic waste that goes into aquatic environment. And by doing that, we can define the best solutions to deal with the problem. In the U.S., we are also a member of the PP Recycling Coalition. Socially speaking, it's also important to know, and in many countries, such as in Brazil, for example, waste management is very much related with social inclusion. And this is why since 2013, we have 2 programs, one called Ser+, be more for workers that work in [ recycling ], waste collector, operators in cooperative of recycling waste. And Edukato, with a second program that teaches young people about conscious consumption, because we know the participation of the community is essential to make sure that secularity can be implemented. So these are the 2 social projects we have. But there are others in Mexico and other programs that we are offering to promote further education. Now let's go to Slide 32. Here, we have a -- it's part of our public commitment for 2020. It's something really strong and compelling. Our focus is to reduce and neutralize greenhouse gas emissions. We want to rank among the best companies in dealing with greenhouse gas emissions and be an active player in collecting those emissions using renewable energies. When they are used to produce stable chemicals, they reduce CO2 from the atmosphere. Almost 3 tons are excluded from the atmosphere when we use renewable polyethylene. And the same logic has been evolved. So we have made a commitment, which is to reduce by 15%, the absolute GHG emissions within our plans at Braskem, what we call Scope 1 and 2. And because of energy efficiency and purchase of renewable energy, we want to reduce by 15% in absolute values, these reductions. And by 2050, we will reach carbon neutrality. So this kind of initiative of energy efficiency, purchase of renewable energy and also by developing new products and implementing new plants based on renewable energy. And also on technology development, making investments in new plants that can also capture CO2 from the atmosphere, manufacturing stable chemical products. So these are our goals for 2030 and 2050 concerning climate change. To reach that, we are moving ahead. And here, you can see some of our projects in the next slide. Energy efficiency. I've mentioned a number of them. There is another one here in Greater São Paulo is a program for energy efficiency to reduce by 90 million tons per year. In renewable energy, we've announced a number of partnerships. For example, this year, a partnership with Casa dos Ventos to reduce 700,000 tons of greenhouse effects during the contract. These are partnerships and agreements that really helps us avoid 1.5 million tons of CO2 throughout the period. In terms of carbon offset, probably you've seen that we've announced the expansion of our capacity of green ethylene. It has increased by 60 kilotons or -- and an investment of $61 million. It's 1 project, and there are a number of other projects being analyzed. Innovation is essential so that we can offer more to fight climate change. We have a very developed program of Green MEG, which is used for PET production. And this is a partnership with, Haldor Topsoe, a Danish company, that will help us develop MEG from sugarcane. It may be produced of different sources here, we are working on sugarcane. There is a pilot production already in operation, and we've announced that our pilot plant has been producing very good results. Next slide shows us our initiatives for operational eco efficiency. Our homework, what we have to do in our industrial plants. We work continuously to improve the efficiency of our plants, especially involving energy water because these 2 topics are extremely relevant for all the other kinds of impact and efficiency. By 2030, we want to rank among the main in operational efficiency in petrochemical industry. Our focus comprises carbon efficiency and energy efficiency. And it's also related with climate change because it involves water security. We want to increase by 100% water security, having access to safe sources, which are not subject to water stress in the areas where we have our industrial plants. We are currently running at 83%, and we want to achieve 100% of Water Security Index by 2030. Next slide, we hear about energy efficiency. I've mentioned some of them but we have furnaces that really need a lot of energy, but we are working on reducing those cracker furnaces and how much they need of energy. We are going to keep on emphasizing this point. Reducing water consumption and working in energy efficiency. We always have projects involving that to reduce the amount of water needed in our cooling towers. This year, for example, we already have managed to save 300 million liters of water, resulting from initiatives like that in Bahia. In terms of water stress and security, we are constantly looking for new sources, especially in areas where there is water stress. In Brazil, in São Paulo, it's a reality. And this is why in 2012, we had invested in the project Aquapolo, the largest project of reused water in the South Hemisphere. So we are planning to have the same in Rio de Janeiro using safer sources to constantly have water availability to our operations. And finally, as I've mentioned, water reuse, which is closely related with water stress. This is the kind of initiative we want to put in place. So these are the main projects of operational eco-efficiency. The next slide shows us, Slide 36. We see what we are going to do in social responsibility and human rights. Braskem by 2050, wants to be recognized as a company focused on people because we respect and promote human rights throughout the whole chain. Always fostering local development for the communities surrounding our operations. These are some of the initiatives we are working on: gender, race, human rights and benefits provided to people around our plants. We want to have more women taking leadership roles. We want to have more black people working in our operations in Brazil and in the U.S. We want to manage the risk regardless of their level involving human rights and also increase the number of people benefit by our social benefits and donations. So these are the objectives for 2030. The next slide brings some of the ongoing projects involving diversity, equity and inclusion. We have an internship program which provided flexibilization of criteria for selecting people. So we have underrepresented groups. For example, English is no longer a requirement. We believe that this is something that can be learned once we have the young people working with us. So 40% of our openings no longer require knowledge of English. We also have what we call blind CV analysis. Last year, we've also made a commitment, which is the CEO Pledge of Diversity, the Global Pact, a number of commitments to actions that promote a diverse and inclusive environment for team members. Surrounding communities. Pedro mentioned about the case in Maceió. It is to keep on offering a fair and safe way of having financial compensation and reallocation program for people, always analyzing the situation of the region and stability of our different regions. Since last year, we've all paid close attention to what's happening with COVID. Last year, we donated BRL 11 million in PPE and also food, making donations to the different communities that are around our operations and also in partnership with our clients. We've reached nearly all states in Brazil. We are constantly announcing new actions focusing continuously on the economic challenge. The situation of hunger. The fact that people are experiencing difficulty -- financial difficulties do not -- can no longer afford to have decent meals. We want to continue and expand our program of local development in different communities. These are programs that amount to 237,000 people benefit and donations, not only involving COVID situation, but also different social projects. They have amounted to BRL 25 million in 2020. Finally, the last topic that has guided our macro objective, our sustainable innovation. This is something that is cross section. It involves all the other 4 objectives. Through innovation, we want to deliver to the society, solutions which are transformative. By 2030, Braskem wants to be perceived and wants to keep on accelerating the perception of a partnership that offers sustainable innovative solutions for consumers and for the society at large. We've created an index to measure to what extent the projects bring contributions to sustainability. It contributes what we do to water, chemical safety, energy, climate change and also circularity. In 2020, we've reached 80% of our portfolio, fully aligned with the Sustainability Index. By 2025, we'll be reaching 85% and by 2030, 90%. The next slide brings our reorganization of our platforms to encompass sustainable innovation. There are 5 key focus points. New generation of processes, so technologies for existing assets, improving carbon and energy efficiency and also creating differentiation in recycling and performance. We want to make an impact by relying on our existing assets. In recycling, we've been focusing on conversion of plastic waste into added value products. It involves technology and process. In chemical and mechanical recycling, conversion of CO2 to chemicals in the future may become necessary to strengthen our contributions. It may become an opportunity indeed. So we've also invested in it. The fourth pillar and probably one of the main contributions right now in terms of innovation is conversion of biomass into chemicals. We are the largest manufacturer of biopolymers. And we want to keep our leadership, investing in MEG Green and others, all based on conversion of biomass into chemicals and value-added products. Finally, we also work on material replacement, delivering better solutions to the society at large, because the society also has to move together towards a carbon-neutral economy, which does not depend on inappropriate items. With that, I come to the closing remarks of my presentation. But all the goals shown on Slide 40, reinforce our commitment with governance. And this is why we have a Global Sustainability Committee. It's like a marathon. It's really important for you to understand. We now have a full set committee. It meets monthly, and the Global Sustainability Committee is led by all the executives of our company, reporting the progression of our strategy to the Board of Directors. The Global Sustainability Committee encompasses our C-suite and all the leaders of all the different macro objectives. All the different VPs have taken over as their main focus, one of these objectives. Pedro, for example, who is here with us, he is the leader in the macro objective of economic and financial results, but we have all VPs involved. We are also supported by a strategy PMO group, which is part of the transformable value, which helps us generate long-term value to the company and also sustainable development team, of which I am the leader. With that, I would like to hand it over to Roberto Simoes, our CEO, for his closing remarks. Thank you all very much.

Good morning, everyone. It is a great pleasure to be here with you for our ESG day. The presentations made by Jorge can really show you the history of Braskem and our commitment with all topics that concern ESG since the very generation of the company. I would like to make a quick summary of everything that we've said, trying not to be repetitive, of course. Slide 42 brings our 6 points for common -- since our creation. Our sustainable development has been an important focus, being recognized not only in Brazil, but also globally, thanks to its very advanced position we have taken over. As such, we have continuously incorporated all the principles of sustainable development in all decision-making process throughout the 2 decades of existence of our company. Risk assessment, materiality of risk and observation of international guidelines has always been part of our process and decision-making in some situations. And throughout the years, I've been working with Braskem, I've been noticing that the decisions have been made regardless of legal requirements or external determinations to the company. To the contrary, we are constantly paying attention to that regardless of what the external obligations require of us. By 2020, all the significant progress we've presented and shared by Jorge and Pedro have been really significant, reaching 85% of all the established goals we have set, leveraging a number of possibilities. Now looking ahead to the future, fully aligned with our shareholders. We have goals for 2030 and 2050. It renews our strategy to strengthen our contribution to the planet where we live. Improving all the governance mechanisms that the company has embraced. And we understand that this is a part of our survival for the company, a basic requirement for our constant expansion of our businesses. We are fully committed with sustainable development, always focusing on creating value from the transition to carbon neutral circular economy by using renewable and circular raw materials. In the next slide, we can see all the priorities of Braskem for 2021. The 2 main priorities are focused on topics, which are not part of strategy or future. In fact, they address 2 key problems we have to focus, which are a circumstance. One is the geological phenomenon in Alagoas. And it's been addressed, thanks to very important breakthroughs, and we expect to have it all completed very shortly. Secondly, we want to have reliable ethane supply to Braskem Idesa. Another point that we expect to have fully solved shortly. We have a number of actions ongoing. Another constant concern is capital allocation and financial health of the company and the guarantee of financial health for our company is really important. And the results, as you have seen and been monitoring closely, have been really positive. And the last 3 points are focused on the future. The first one is to strengthen Braskem's image. Much of what we've said, and Jorge has emphasized a number of those issues. We really want to strengthen the image of our company, not only our different team members but also clients, suppliers, investors and the society at large. In addition, as another important point, innovation, digital transformation, and there are a number of opportunities that we can really address, complexity of all the operations. Really, we can expand our efficacy in terms of innovation, speeding up digital transformation with main investments. And this year, we have the highest budget dedicated to innovation. We really have to invest our budget in a very smart way focusing on the future of our company. And finally, we have ESG position of the company. It has been beautifully shown by everyone before me. And please bear in mind that safety in our operations, safe performance is always our main focus in all our operations. And as we said and keep on emphasizing is a perpetual nonnegotiable value in our strategy. With that, I would like to thank you all. And now I would like to open for your questions. Thank you.

[Operator Instructions] The first question will be asked by Ricardo Rezende from JPMorgan.

It was very informative. A very interesting discussion. I have a couple of questions. My first question is about a point that Jorge mentioned during his presentation. We were talking about increased recycling. He mentioned the difference between chemical and mechanical recycling. How are you seeing chemical recycling developing? Do you believe that this is something for the medium term? Do you think it will reach commercial scale? What are your plans? And is chemical recycling getting a bigger slice of your plans than in the past? If you -- also, if you could tell us a bit about how clients have been accepting this kind of product? It is quite unique, right? There's a matter of feedstock that is important to understand because it is not fossil feedstock. So how has it been accepted? How is it being priced? What is Braskem's capacity? And what will it be for the long term?

Ricardo, thank you for your questions. So let me answer your question on how chemical and mechanical recycling are evolving. And then Pedro will discuss your question on the economic side of things. From the technology development point of view, mechanical recycling -- well, and chemical recycling, both of them deserve our efforts. From mechanical recycling, usually, waste is contaminated and it's very difficult to separate them, which gets in the way of its quality. So we've been investing in projects that allow these products to be separated better. For example, we have roller grade. It would be a way of identifying them through visual aspects and separate them or sort them automatically. And that would facilitate things. But we're also working on odor, so that the quality of recycled products can be better, at least with mechanical recycling. We understand that this will be developed faster than chemical recycling, although we have tested chemical recycling in last year. For the first time, we included a product from -- that was the result of a process called pyrolysis in our plants. Of course, still in a small amount, but it was a test that has shown that this is a process that can be promising. It still needs to be improved. This is something that all players in the world are working on. Most of the petrochemical players in the world are working on the solution. So that it has a future because we know that we need both kinds of recycling, right? Although we have processes that sort plastics very well, there's always going to be something that will require more treatment, right, or a more powerful treatment. And we understand that this will be done through chemical recycling. And Pedro will talk about this -- your second question.

Thank you, Ricardo. So Green PE has been highly accepted. Braskem is now sold out. All of it, our production has been sold. As I mentioned, we have 200,000 tons in production capacity and we've approved earlier this year a 30% expansion of that capacity. It was a 61,000 -- excuse me, $61 million dollar investment and we hope that in the future, we can continue that expansion. And we're confident that the product will not have any trouble being used in the market. Also, when you ask about returns, we believe that the returns from this expansion will be quite attractive. We're still assessing new projects related to green polyethylene. Because this market is growing, and Braskem is by far the biggest player in this niche. So we see that our clients are very interested around the world on getting additional volumes of it. And we believe that justifies additional investments into this market. We're continuing the expansion project we had announced, but we're also looking at new fronts, whether in Brazil or other regions so that we can continue to expand the segment.

Great. And if I could ask another question. Today, the main hurdle for developing this, well, what would it be? Are we being conservative? Or is it access to raw materials? What is preventing you from accelerating this even more?

Ricardo, there really is no specific hurdle here. When we talk about capital allocation, we decided to invest on removing bottlenecks from the green ethane plant. That's the quickest investment we can make that will provide returns very shortly. But we continue to assess other projects and other opportunities. As a reminder, an investment like that takes longer. You need to buy ethanol, so you need to have certified ethanol where you're sure of its origins and you have guarantees, then you also need to invest in green ethane, which is what we're investing on and polyethylene. We already have some polyethylene plants in Rio Grande do Sul that have some capacity available. So that's the logic we're following. Our next investment would need to include a new green ethane plant. So depending on the configuration, we could have to invest in polyethylene and also purchasing ethanol. So we may expand quicker because, while this was an investment that was easier to make on the short term, but we are looking at opportunities to invest, as I said, at a new plant, and a new site. Looking at the long term, of course, we're not looking at investments only for the market demand that we will receive in the next years. We're also analyzing the next 10 years. We expect this segment to grow significantly. Moreover, we mentioned this earlier. But as a reminder, we are also investing in other renewable lines. The clearest example that we have is at REMADE, which is still a tech development. It's doing well. And if it works on an industrial scale, it can be a very good line that's very competitive for the future.

The next question will be asked by Gabriel Prado from Citibank.

It's always great to hear about ESG initiatives. I'd like to ask you about 2 specific topics. First, carbon emission reductions and also renewables. If you could give us some more color on that. We know that there's a market for it in Brazil.

Excuse me, Gabriel. Excuse me, Gabriel. Sorry to interrupt but your connection seems to be very poor. We heard that you were asking about carbon emissions, but we can't understand your specific questions.

Is it better now?

No. The sound quality is really poor.

All right. I'll try it again.

Right. We're going to continue with the next question, and then we'll come back to you. The next question will be asked by [ Matheos Sergi ] from UBS.

Congratulations on this initiative. My question is a bit more generic about the Maceió issue. Now that you disclosed this information and now that we've heard about the impact out there, I'd just like to know what kind of lessons the company learned after this event. How did this impact your internal processes? And what strategies is the company implementing so that this does not happen again in the future?

Matheos, thank you for your question. I think, well, first, we at Braskem have always carried risks from working in the petrochemical industry, right? There are inherent risks. So we've always had a very good crisis management area. This was a crisis in our governance. And it was different because it was not an industrial event. It was the mitigation of social environmental risk. So from that standpoint, I think we learned a lot about how to manage a crisis of that nature. As we said before, we placed a very strong team to manage the event in Maceió. I'd say that we have many of the best professionals in Braskem focused on managing this process. So we took people, who are very competent and put them in this group to be a part of this management. We learned quite a bit about how we run a process of this sort. Another relevant advance we had was in the enterprise risk management process. Braskem has always had a risk -- has always had a risk management process. But I'd say that this was an important step forward in advancing best practices, in identifying and assessing risks and also in defining contractors. So if I were to mention the 2 main examples, I'd say it were those. So crisis management and the enterprise crisis management, right, are the evolution of risks. Also, one important lesson was how we can operate things differently. First, in the Alagoas plant and now working with imported salts, which has different specs from what we need in the plant, and that required important investments so that we could operate with it. So Matheos, I'd say that this is a summary of what lessons we learned.

[Operator Instructions]

I'm not sure if our listener from UBS is still here, but I understand a bit of his question. Excuse me, our friend from Citibank. Do we have him yet?

No. Gabriel has not returned to the queue yet.

So what do you think should I continue? Well, I'll pass it over to you, Rosana.

Excuse me, Gabriel [ Prado ] from Citibank is back. Mr. Gabriel, you can continue.

Hi. Can you hear me now?

Sort of, but we can try.

Sorry, can you hear me?

Yes, we can try to hear you.

Great. I apologize for my connection. So I'd just like to ask you on environmental issues. There's a credit -- a carbon credit market in Brazil now. So I'd like to ask you a bit about your company and with the average price of carbon credits. If you understand what the company's emission figures are. It would be about BRL 300 million per year or $50 million. And today, it's possible to reach this value in the company. It's possible to calculate it. So my question is, how do you see this in the short term? Would it be possible to generate these carbon credits first? And what would be the potential gains for the company in terms of amounts, if you've ever had any studies on that? My second question is about governance. It's clear that the Brazilian market, a process that aims to -- for Petrobras to sell a part of its company to Braskem. And how do you perceive that? What would be the impact on governance for you? So those are my questions.

Okay. I'm glad that you were able to ask your question. I think I understood it. As a reminder, our strategy to cut emissions is based on 3 pillars. First, to really reduce them, as we've done since 2008, and as Pedro commented and mentioned in our results. We understand that there's still some room to reduce our emissions. And that's we -- why we are committed to cutting it by 15% by 2030. This will happen. This is our first pillar. And the second pillar is on offsetting our emissions, which can be done through -- well, instead of creating a cost, this is a quality that Braskem has in technological investments. We can have positive impacts on that because we're taking to the market a product that captures CO2 from the atmosphere. So we understand that this is an important way of offsetting what we emit through our products. And this is a strategy that we should have in our aims. So that's why the second pillar is so important. And the third pillar is developing technologies to use CO2 as a raw material, as a source. And that can also be, again, used to create new products. So this would also be a part of our strategy. Regarding carbon credits, well, the credit market is growing, and we understand that it is an alternative. It's something that should always be in our minds from an economic standpoint. But at the same time, we understand that to reach a carbon-neutral society, we need to physically reduce how much is issued, right? Credits will also -- always be a part of economic possibility so that we can comply with any commitment that Braskem has made or is required to make. For now, it's a voluntary commitment. So we understand that this will be a step towards a real reduction. So we don't believe that carbon credits are the right strategy right now, because it's still voluntary, but we understand that we need to offset it with renewables or with CO2 captures as a raw material. So this is what I can say for now. Pedro, I'll pass it on to you.

Okay. Thank you, Jorge. And thank you, Gabriel. Regarding sales and governance. Well, I'd like to highlight that the sales process that we announced is selling through Novonor, our controlling company. Now the decision that Petrobras will -- may take, we don't know. But I'd like to highlight that through selling shares, Braskem has in its bylaws, 100% for all minority shareholders. So this would trigger that [ tag along ] if Novonor is sold. And this is available to all shareholders to read. And this is a good governance practice, but it's at Level 1 and B3. And this is non -- the [ tag along ] is not mandatory for level 1. But nonetheless, Braskem adopted this practice a number of years ago. And besides that, well, I can't tell you what governance will be like after the sale. What I can say is that our governance today is world-class. As you've seen, there are a number of independent Board members. We have a very strong governance system in the company now, and we expect to keep it or to even reinforce it. But of course, this will depend on the sales process and how things are at the end of the process. It will be a point for us to pay attention and to discuss with the company if we are invited into this process in the future. Of course, we want to understand it and influence it according to the best practices in the market.

Well, thank you very much. If there are no more questions. I would like to thank you all for being here for our ESG Day at Braskem. And I would like to take this opportunity to thank you that the path to a sustainable way means a constant attention, and we are fully committed. We are committed to go on in this journey. Thank you all very much, and have a great day.

Well, thank you all, ESG Day for Braskem is finished now. Thank you very much. You can disconnect now, and have a good day.