We are pleased to publish our first sustainability report, which represents a milestone in our path and where we have the opportunity to make known, openly and directly the development of our project from the perspective of sustainability.
INDEX
4 8 12
26
36
I. STATEMENT BY THE CHAIRMAN OF THE BOARD Dr. Josﾃｩ Roquette II. STAKEHOLDERS III. THE ESPORﾃグ GROUP Our reason to exist Our Clients Our Products The Governance Structure The companies IV. RESULTS OF THE PERIOD Economic results Financial Results Distribution of Results Achieved Acknowledgements V. EMPLOYEES Characterization Rights and Guarantees Health and Safety at Work Evaluation and training Benefits and wages
46 VI. SUPPLIERS 50 VII. RESOURCE USE Financial support from the State Energy Water 56 VIII. WASTE, EMISSIONS AND OTHER IMPACTS Greenhouse gas emissions Waste generated Habitats and biodiversity Climate change Mitigating the impacts of our products Environmental mitigation investments 68 IX. COMMITMENTS AND OBLIGATIONS General Statements Control the life cycle of our products Communication and ethical promotion 72 X. STATEMENTS TO THE REPORT Structure and scope of the sustainability report Application of the precautionary principle 76
GRI INDEX
STATEMENT BY THE CHAIRMAN OF THE BOARD
01
01. STATEMENT BY THE CHAIRMAN OF THE BOARD
Esporão is a family business, since its founding in 1973. The first two decades of this project tell us a story of struggle, faith, and a vision so strong that clearly marked the modern history of Portuguese wine. The family and generational perspective of this project was decisive and good advisor in the most difficult decisions. We believe that our values have contributed to a culture of responsibility, hard work and excellence, which is reflected in everything we do and most visibly in our products. Now transitioning to the 2nd generation, the challenges are increased by the responsibility of taking on this project so dear to us all, maintaining the essential values that give identity and shape its culture, projecting our visions into the future. The commitment to creating prosperity to our employees, to the communities where we operate, to the environment and, especially, to our customers is unshakable for us. There is thus a vision of continuity, sustainability of our activities in the various axes that constitute Esporão. In recent years we have continued to construct our culture, way of being and doing. Today, being Esporão an unavoidable reference for Portuguese wines and olive oil, we will now renew this reference and continue to define the history of Portuguese wine. This can only be possible by following a responsible path that includes the whole social, environmental and economic context around us, as we hope to be found in this report. After the year 2012, we are able to measure the impact of our actions, either by measuring the emission of greenhouse gases, or by identifying the environmental risks of our business as well as by the strict fulfillment of all our legal obligations. We conducted a set of concrete initiatives of which I highlight the improvement of agricultural practices, the protection of the various ecosystems in which we operate and the effort to be positively closer to the communities. Early on we assumed the calling of internationalization, a will and certainty that our business based on product differentiation and in the unique qualities of Portuguese products, must have a worldwide perspective and projection. Our internationalization strategy allows us to not only economically survive the crisis affecting Portugal and Europe, but also to be a part of the solution, contributing to the development in Portugal of a productive activity that creates jobs and is economically, environmentally and socially viable. We take on the challenge, in 2013, to consolidate ongoing initiatives and contribute decisively to a better outcome for everyone involved with the Esporão group. The next few years will be difficult times. Times of slow economic recovery, in which organizations will tend to change the long-term for the short-term. We will maintain and promote with all our partners and customers a strategy of sustainable growth and development, in which our action will potentiate a positive development and awareness of all its responsibilities.
José Roquette Chairman of the Board
The family and generational perspective of this project was decisive and good advisor in the most difficult decisions.
STAKEHOLDERS
02
ESPORﾃグ SA SUSTAINABILITY REPORT 11/12
10 | 11
We aggregate stakeholders in the following groups: SHAREHOLDERS Committed to creating prosperity, to our employees, to the communities where we operate, to the environment and, especially, to our customers. LOCAL COMMUNITIES As part of the local communities in which we operate, we are intimately connected and interested in establishing deep and narrow ties with our neighbours, local authorities and civil society, integrating ourselves in it and integrating it into our business, offering work to some of its inhabitants, working with local businesses, bringing visitors to the region and creating value from what we produce in the regions where we operate. EMPLOYEES Their alignment with the mission, vision and values is essential, as well as their personal fulfillment in addition to professional achievement. Thus, their contribution is the real driving force for long-term future sustainability.
CUSTOMERS AND PRESCRIBERS They are those who buy or influence the purchase of our products in different countries in which our products are available, closing the supply chain, becoming the base of support of all our project and long-term sustainability. DISTRIBUTORS They are our key partners in the development of brands and presentation of the products we produce in the countries in which they operate, making it possible to be purchased by clients and prescribers. SUPPLIERS A good supply is essential for the development of our productive activity. We establish a healthy and close relationship, based on ethics, integrity and trust with each one of them, based on our own values and years of activity.
02. STAKEHOLDERS
AGENCIES AND ENVIRONMENTAL AND CULTURAL ASSOCIATIONS As active parts and strongly committed to protecting the environment and promoting our cultural identity and heritage, they are sources of knowledge and sharing that will help us to establish an activity, strongly rooted in our origins, in harmony with the principles of sustainability that govern our activity. MEDIA AND SPECIALIZED CRITICS More than ever, sustainability issues are of great importance in close connection with the agricultural products we produce. The media and critics play a critical role in the discovery and promotion of our products and of our project. GOVERNMENT AUTHORITIES (INTERNATIONAL, NATIONAL) The Company is governed by compliance and respect for the rules of the European Union and the laws of the Portuguese Republic, together with the laws of the countries to which we export our products. Hence, the continuous dialogue with the various governmental authorities becomes very important.
Stakeholders were identified as having the following criteria: DEPENDENCE All those who are directly or indirectly affected by our activities. ACTION AND INFLUENCE Those, whose actions and influence facilitate or hinder the achievement of our mission and goals of long-term sustainability. RESPONSIBILITY Those to whom we have or may come to have legal, social, economic or operational responsibilities.
We understand that creating sustainable value requires knowledge, understanding and acceptance of the factors valued by stakeholders. Although at the date of this report we have not been directly questioned by our stakeholders about the sustainability of our project, we intend in a structured and regular way, to implement a process of listening and engagement that will enable us to identify the main themes to be considered priority, as well as conceiving a strategy to involve stakeholders.
THE ESPORﾃグ GROUP
03
ESPORÃO SA SUSTAINABILITY REPORT 11/12
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OUR REASON TO EXIST “Making the best products that the earth provides, in a responsible and inspiring way”
Esporão was born in Alentejo. It was born from the unconditional willingness to make the best wines. This is the motivation that stays at the base of everything we do, now extended to other products and regions. In each territory nature inspires us and helps us to do better. Therefore we respect and protect it, ensuring continuity in an increasingly uncertain future. We believe that Esporão should be at the service of society and not otherwise. We seek therefore to be responsible in how we develop our activity. This responsibility is not just abstract or collective: it is individual, of each one that makes of Esporão part of his/her life. We promote nonconformity and change, try to do better and not necessarily more. We learned that progress depends on restlessness and creativity to find the best solutions, on the knowledge that we develop and apply, on believing and putting our soul in what we do. In this journey, which began in 1973, keeping us true to our values greatly helped to build a company where we are proud to work and where the solid result of that work earned the trust of those who, in the end, matter most: people who buy our products. We know that teamwork, ideas and diversity enrich us, improve the outcome and feed the future. So we thank all who have contributed and are contributing to this project, employees, partners, friends, families, as we look to the future with ambition to be part of the change that the world so desperately needs, a permanent commitment to our customers and quality of our products.
03. THE ESPORÃO GROUP
CLIENTS We are part of a value chain in which we consider our clients as the main end consumers of our products.
Image 1 Structure of Esporão clients
In terms of geographic markets and in the reporting period, we sold our products in 59 countries. The distribution of sales in major markets is presented in the table below. MARKET 2011 Portugal 794 758 Brazil 76 631 Angola 120 519 USA 56 363 Poland 31 751 France 24 427 Belgium 23 848 Switzerland 17 206 Canada 17 095 Luxembourg 17 426 Germany 13 165 Rep. of Cape Verde 12 738 England 10 012 Swaziland 9 110 Mozambique 5 318 China 1 481 Holand 9 906 Ukraine 726 Macau 3 748 Dutty-Free 7 366 Finland 33 Other Markets 18 416 TOTAL
62% 17% 26% 12% 7% 5% 5% 4% 4% 4% 3% 3% 2% 2% 1% 0% 2% 0% 1% 2% 0% 4%
Annual Change 63% 0% 18% 6% 17% -36% 13% 7% 9% 22% 7% 34% 6% 15% 5% 23% 4% -4% 4% -7% 3% -2% 2% -14% 2% 7% 2% 14% 2% 57% 2% 426% 2% -28% 1% 476% 1% 4% 1% -48% 1% 7397% 3% -16%
1 272 042 100% 1 266 807 100%
Table 1 Sales quantity per market
The rubric “Other markets” refers to sales in 30 different countries. We have not received any complaints from our customers on their privacy or their data. From our consultation in 2012 to 50 of our customers, inquiring about their satisfaction, we obtained the results shown in the table below.
2012 797 462 81 524 76 790 60 034 38 814 32 678 27 521 21 248 16 370 16 239 12 901 10 998 10 744 10 355 8 358 7 793 7 163 4 181 3 884 3 822 2 474 15 455
0%
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ESPORÃO SA SUSTAINABILITY REPORT 11/12
EVALUATION CRITERIA
NOT APPLICABLE
VERY WEAK
MEDIUM Nr. answers
VERY GOOD
GOOD Nr. answers
%
Nr. answers
%
Customer service
5
50%
5
50%
Deadline response to consultations
7
70%
3
30%
Orders’ follow up
7
70%
3
30%
Meeting delivery deadlines
5
50%
5
50%
3
30%
2
20%
Quality of delivered product
6
60%
4
40%
Follow up to solving problems
7
70%
3
30%
Answer to complaints
7
70%
3
30%
Global satisfaction with the products/services
6
60%
4
40%
Documents sent promptly
5
%
50%
Table 2 Degree of satisfaction
PRODUCTS The main activity of Esporão Group is production, marketing and export of high quality wines and olive oils, produced from grapes and olives from their olive groves and vineyards, as well as from third parties with whom it keeps contracts for the supply and monitoring of the various stages of agricultural development. This business model allows the application of modern methods and techniques and control over the production process of all products with integrated intervention at all stages of the productive, agricultural, industrial and commercial process.
Herdade do Esporão
Our wines produced in Herdade do Esporão, in Reguengos, Portugal, are represented by the brands: ALANDRA Young and fruity wine with the best Portuguese grape varieties. MONTE VELHO Regional Wine, from Alentejo, emblematic of its region and sales leader. DEFESA Regional Wine, from Alentejo, modern profile and versatile. Created to open up the wine to new experiences and discoveries. ESPORÃO RESERVE Made from grape varieties with Designation of Controlled Origin (DOC), it represents the classic character of the Alentejo region. ESPORÃO PRIVATE SELECTION Alentejo DOC wines with structure, strong personality and complexity, are the result of the selection of the best grapes of our terroir and creativity of our winemakers. They are exclusive wines, made in small quantities. MONO-VARIETALS AND SPECIAL WINES Sparkling, late harvest and fortified wines that defy the laws established for the Alentejo region. The selection of mono-varietals emerges from intense experimentation and collaboration of teams of enology and viticulture of Esporão. It is based on the winemaking of pure small batches of the same variety from different plots.
03. THE ESPORÃO GROUP
The wines produced at Quinta dos Murças (est. 1756) in the Douro region, the oldest demarcated wine region in the world, take to our clients what represents the best of this noble region:
Quinta dos Murças
ASSOBIO Douro DOC wine with the grape varieties Touriga Nacional, Tinta Roriz and Touriga Franca, in which about 20% of the batch aged for 6 months in new and used French and American oak barrels. QUINTA DOS MURÇAS RESERVE Douro DOC Reserve wine was born in our old vines on schist soils, respecting nature and following sustainable agriculture. Aged for 12 months in oak barrels and one year in bottle. QUINTA DOS MURÇAS PORTO 10 ANOS TAWNY Port wine produced with grapes of superior quality (letter A), harvested from vines with an average age of 20 years. Aged in barrels for a period of 10 years on average.
Our olive oils produced in Serpa, in the region of Moura, Alentejo are structured as follows: SELEÇÃO EXTRA VIRGIN OLIVE OIL Produced from the varieties Galega, Cordovil, Cobrançosa and Verdeal. It was obtained from the selection of small lots with exceptional aromatic characteristics, cold-extracted and unfiltered. DOP MOURA EXTRA VIRGIN OLIVE OIL PDO olive oil produced from the varieties Galega, Cordovil and Verdeal. GALEGA EXTRA VIRGIN OLIVE OIL Produced from olives of the variety Galega. Reveals a peculiar fruity aroma, which brings out notes of green apple. It is fresh, mildly bitter and not very spicy. CORDOVIL EXTRA VIRGIN OLIVE OIL Produced from the natural juice of the olive variety Cordovil. It is fresh, somewhat bitter and slightly spicy. EXTRA VIRGIN OLIVE OIL Produced from the varieties Galega, Cordovil, Cobrançosa and Verdeal. It is suitable for salads, starters, toasts and even grills. VIRGIN OLIVE OIL Their structural composition and oxidation resistance allows it to withstand boiling and frying temperatures around 200ºC. VINEGAR Produced from pure red wine, it was valued by ageing in American oak barrels. Hence it became soft and velvety. Resulting from a partnership with Quinta do Rol, property of Carlos Melo Ribeiro, we launched the product Magistra, a brandy XO (Extra Old) from the demarcated region of Lourinhã, therefore dignifying the Portuguese tradition of producing spirits. Lourinhã and the regions of Cognac and Armagnac in France are the only three regions in the world with their own denominations for the production of such drinks.
Serpa, Moura - Alentejo
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ESPORÃO SA SUSTAINABILITY REPORT 11/12
ALANDRA WHITE / RED / ROSE
PÉ WHITE / RED
VINHA DA DEFESA WHITE / RED / ROSE
MONO-VARIETALS WHITE (VERDELHO)
ESPORÃO RESERVE WHITE / RED
ESPORÃO PRIVATE SELECTION WHITE / RED
OLIVE OILS HE SELECÇÃO / GALEGA / CORDOVIL / DOP MOURA / EXTRA VIRGIN
ARCO WHITE / RED
MONTE VELHO WHITE / RED
2 VARIETALS E 4 VARIETALS WHITE / RED
TORRE RED
VINEGAR HE RED
SPARKLING WHITE
MONO-VARIETALS RED (ARAGONEZ; ALICANTE BOUSCHET; SYRAH; TOURIGA NACIONAL)
LATE HARVEST
MAGISTRA AGED BRANDY
QUINTA DOS MURÇAS ASSOBIO / RESERVE / PORT 10 YEARS TAWNY
03. THE ESPORÃO GROUP
THE GOVERNANCE STRUCTURE THE SHAREHOLDER The Esporão Group is part of a group of companies whose sole shareholder is the the Roquette family. Nowadays there is a governance model common to all those companies.
FAMILY COUNCIL/ SHAREHOLDERS
> Governing body of the Family/Shareholders > Composed by a representative of each family branch > Mission: Follows the issues related to Family and business, ensuring decisions that, by their nature or importance should be reserved for Family. > It may appoint, from among its members or members of the extended family, elements to committees for specific purposes: oversees its scope.
BOARD OF DIRECTORS JHR
> Governing body of the Holding of José Roquette Group > Composition: 5 Directors and at least one is not a family member. They are nominated by the Family Council for predefined mandates. > Mission: Board of a Holding (SGPS): - To represent and look after the interests of shareholders - Define business strategies (based on the guidelines of the Family Council) - Nominate/Oversee the Boards of the subsidiaries on which exercises a controlling position.
BOARD OF THE SUBSIDIARIES
> Governing bodies of the relevant subsidiaries > Mission: Operational and strategic management of the Companies, in accordance with the guidelines of the Board of JHR – SGPS > Answer and report to the Board fo JHR-SGPS
Image 2 JHR Governance Structure and held companies
It is important to identify the board of JHR SGPS since it represents the sole shareholder of the Esporão group. The Directors are: CHAIRMAN OF THE BOARD José Roquette Shareholder and leader of the group. It represents the Group institutionally. DIRECTOR AND EXECUTIVE DIRECTOR João Saldanha Combines the functions of Executive Director. It is the only executive member of this Board and is responsible for coordinating, together with the respective directors, the files defined in the plan.1 NON-EXECUTIVE DIRECTOR Segismundo Pinto Basto He is most directly responsible for legal issues and governance. NON-EXECUTIVE DIRECTOR João Roquette He is most directly responsible for issues related to strategy and governance. Accumulates functions as Managing Director of Esporão Group. CONSULTANT João Alves Functions as CEO of E&Y in Portugal do not allow him to be director of other companies. He is most directly responsible for financial and tax issues. However his reality and professional experience make his various competencies available to the Board. All Directors are remunerated. The Esporão Group is the most relevant and complex subsidiary of this group of companies and as such, has its own governance structure Between 2011 and 2012, there were no significant changes of capital in any of the companies of Esporão Group, thus remaining unchanged the participation of JHR SGPS as sole shareholder of Esporão, SA. 1 At the date of this report, in 2013, this function is not carried out by João Saldanha.
ESPORÃO SA SUSTAINABILITY REPORT 11/12
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THE BOARD OF DIRECTORS The hierarchically higher forum is the board of directors of Esporão SA (Mother Company) who reports directly to the board of directors of JHR, SGPS. All boards of directors and management of the subsidiaries report to the board of directors of Esporão SA (as structure below). The existing subsidiaries are required to the strategic development of the business, from the field of agricultural production to processing, marketing and distribution. Esporão also has a General Meeting of Shareholders and an Auditor that evaluates and certifies the accounts of the Group.
Image 3 Companies of the group in the value chain
The Board of Directors of Esporão works for terms of three years and following a three-year strategic plan presented to and ratified by JHR SGPS. The current board has five directors, two executive and three non-executive directors: CHAIRMAN OF THE BOARD José Roquette, 76 anos. Leads the Board of Directors and reports to the Board of Directors of JHR SGPS, where he also presides over the Board of Directors. CEO João Roquette, 39 anos. Reports directly to the Board of Directors. Responsible for leadership and company’s strategy, accumulates the administration of the areas of production, processing, sales, marketing and distribution. CFO Diogo Correa Mendes, 49 anos. eports directly to the Board of Directors. Responsible for leading the financial, administrative and human resources, information systems and continuous improvement. NON-EXECUTIVE DIRECTOR João Dotti, 52 anos.2 Former managing director between 1992-2006. NON-EXECUTIVE DIRECTOR José Pedro Roquette, 52 anos. Accumulates the functions of Purchasing Manager. All directors are remunerated except for Pedro José Roquette that accumulates as Purchasing Manager, for which he is paid. The representation of the interests of Esporão SA on the boards of directors or management of subsidiaries is done directly by the Chairman of the Board and by the executive directors of Esporão SA. 2 At the date of this report, in 2013, this function is not carried out by João Dotti.
03. THE ESPORÃO GROUP
Each of the subsidiaries has a management body, where different directors are responsible for the respective business areas. There is also a governing board that assiduously assembles executive directors and all directors, to monitor, discuss and decide on the company’s executive strategic issues. The activity of Esporão Group has no significant risks of conflicts of interest with other activities and is therefore not implemented a formal mechanism for checking conflicts of interest to the constituents of the governing bodies. The method of selection of these constituents is prerogative of JHR, SGPS and Chairman of the Board. There are no restrictions of any kind, positive or negative, on gender, ethnicity or religion.
THE ROLE OF THE CHAIRMAN OF THE BOARD The Chairman of the Board of Esporão SA, Dr. José Roquette, is both its shareholder and founder. Despite the constant and decisive role it has in the life and culture of the company, the President does not have executive responsibilities. From his participation we highlight: • Conducting the boards of directors of the company, that assembles at least four times a year (at the end of each quarter). • Participation in the annual meeting of staff where we do a review of the previous year and present the budget and goals for the following year • Institutional and public representation of Esporão among clients, journalists, public entities. There is a close relationship (family) between the Chairman and the Managing Director that allows communication and prompt constant alignment of certain everyday company issues. However, all strategic decisions are taken by the Board and put on record.
close relationship
ESPORÃO SA SUSTAINABILITY REPORT 11/12
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COMMUNICATION WITH STAKEHOLDERS Several instruments of communication are used between Esporão group and its stakeholders. E-LETTER Electronic release only. Mainly oriented to clients but also with internal distribution. COMPANY’S WEBSITE Internet website where we centralize all institutional and product information, addressed to all stakeholders.
INTRANET Website where all the internal information is centralized. It is a central tool of the entire company because it is in this platform that many of the processes, procedures and information can be found. BOARD REPORTING Document prepared at the end of each semester to present to the board of directors of Esporão and JHR SGPS. It is emailed to the family council / shareholders.
03. THE ESPORÃO GROUP
STAFF MEETING Annual meeting with administrators, directors and managers in all areas, where you summarize the past year, present the budget and build on the objectives set for the following year. OPEN DISCUSSION Annual meeting between the administrator of each area and the whole team, where you promote the approach and alignment between the hierarchies, speaking of the vision and strategy and business objectives. In this way the administrator knows best the work on the ground and collects recommendations, suggestions and ideas to improve the business. BOARD MEETINGS Forum that gathers twice a month managers and directors of each area and where you exchange information on the implementation of the plan and annual goals. PERFORMANCE NOTEBOOK Monthly made. Reports the main activity of each area as well as the economic and financial performance of the company. Made available in digital format to all employees and the board of directors, by being published on the company’s intranet. ESPORÃO NEWSPAPER Made twice a year. Its mission is to internally and externally divulge information to clients and partners of the main activity of the company. It includes a message from the managing director, an interview with an employee and a partner. MANAGEMENT REVIEW Annually, a report that monitors the performance of our quality and environmental system is prepared and revised by management. STRATEGIC SCOREBOARD A set of indicators on a strategic scoreboard approach, that are measured and reported every six months to the board of Esporão Group, is defined. These indicators are structured in a sequence of cause and effect and grouped in employees, community and environment, clients and shareholders. ANNUAL REPORT AND ACCOUNTS Official document prepared annually detailing the company’s business and its financial results. SUSTAINABILITY REPORT This same document. MEETINGS WITH LOCAL ENTITIES Several annual meetings involving local entities in Reguengos de Monsaraz and Covelinhas are promoted, for the purpose of promotion and participation in various activities described in this report. COMPLAINTS AND SUGGESTIONS Multiple channels are available for any interested party to contact our organization. There is a formal process for analyzing and responding to these requests. EVENTS To the various events with the community, conducted throughout the period, activities of active gathering of opinions among the participants were included, as well as disclosed several aspects of our organization. These means of communication also serve the purpose of monitoring our performance.
In the document “Relationship of the Roquette Family with the business”, prepared by the shareholders, is defined that when there are recommendations to make on topics related to the business, these issues should be passed formally to the board of the holding that controls the business, so that after reflecting together, is subsequently passed to the Board of the subsidiary that should respond or follow up.
ESPORÃO SA SUSTAINABILITY REPORT 11/12
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THE COMPANIES With main activity in Portugal, the group led by Esporão, SA is a limited company under Portuguese law, with capital of € 5,000,000.00 (five million euros), founded in September 1973, registered at the Commercial Registry of Reguengos de Monsaraz under the number 500116377. In order to develop their activities and supported by the management structure of ESPORÃO, SA, were established three subsidiaries: •M URÇAS, SA, public limited company with capital of € 110,000.00 (one hundred and ten thousand euros), registered at the Commercial Registry of Peso da Régua under the number 500569401. •E SPORÃO AZEITES, LDA., limited liability company with capital of € 250,000.00 (two hundred and fifty thousand euros), registered at the Commercial Registry of Serpa under the number 504021036. •E SPORÃO VENDAS E MARKETING, SA., public limited company, with capital de € 10.000.000,00 (ten million euros), registered at the Commercial Registry of Reguengos de Monsaraz under the number 500254869. Esporão, SA is headquartered in Herdade do Esporão in Reguengos de Monsaraz, where it concentrates its agricultural and industrial activities, and has offices in Lisbon, at Avenida Restelo, 44, where the departments of trade, marketing, financial, administrative, continuous improvement, information systems and management are. In Reguengos de Monsaraz owns a farm with 1700 hectares of which approximately 600 hectares are planted with vineyards, 80 hectares with olive trees and the rest with holm oaks and other traditional trees from Alentejo. It also has 11 hectares of vineyards in Portalegre. Esporão Azeites Lda. owns an oil mill in Serpa, in the region of olive oil with Designation of Controlled Origin (DOC), in Moura, in Beja district. Murças, SA holds a farm with 150 hectares in Covelinhas, municipality of Peso da Ruler in the Demarcated Douro Region. Esporão Vendas e Marketing, SA is located in Reguengos de Monsaraz. It manages the wine tourism facilities and two warehouses of finished product.
03. THE ESPORÃO GROUP
The marketing and distribution in the Portuguese market are not held by Esporão group, but by its subsidiary Primedrinks, SA., non-majority and of independent management, therefore not considered in this report. In addition to operations in Portugal, the Esporão group has direct operations through fully owned subsidiaries in three countries: Angola, Brazil and the United States of America. Both in these and in other markets we maintain active partnerships with importers and local distributors. In Brazil, through our subsidiary Qualimpor, we conduct the import, marketing and distribution of our products, operating primarily in the region of São Paulo. In Angola, in the market of Luanda, direct operations of commercialization and marketing of our products are taking place.
Angola, Brazil and USA
In the United States of America operates our subsidiary Esporão Wines & Olive Oils, where we act based on a perspective of business development in the several states, in partnership with our importer for this market. We also carry out marketing activities in this market to support our products.
In 2012 a new company, Esporão Agricultura Biológica SA and fully owned by Esporão group, was established. Its goal will be to focus and develop all the agricultural production activities of the group, based on the principles and methodologies of organic farming. This company will begin operations in 2013 and has no recorded activity for 2012 and is therefore not included in this report.
Esporão Agricultura Biológica SA
RESULTS OF THE PERIOD
04
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ESPORÃO SA SUSTAINABILITY REPORT 11/12
ECONOMIC RESULTS The presented financial and economic results consolidate our subsidiary Qualimpor in accordance with the accounting and tax criteria currently adopted by Esporão group.
The turnover of Esporão group3 grew by 6% in the four year period of 2009 to 2012, reaching a level close to 40 million euros per year, which reflects some stability in the markets where it operates. This overall performance is verified with some reduction in domestic market and a sharper increase in external markets, as shown in the following table:
Turnover
Image 4 Sales value in 2011 and 2012
GVA (gross value added) represents the value of the increment of value that the company included in the products and services provided to markets, either as a result of the production process, either as a result of commercial and administrative processes, and presents an average growth of around 3 % per year between the years 2009 to 2011, remaining stable in 2012, according to the following table:
Table 3 Annual change in gross value added
EVALUATION CRITERIA
2009
2010
2011
2012
GVA
13.588
13.909
14.332
14.394
2,4%
3,0%
0,4%
%
As a result of the activity and the means used in Esporão operations, it reported an operating income of 8,139 million euros in 2012, an increase of 8% in the period.
Table 4 Annual change of activity indicators
3 The values presented in this chapter include the company Qualimpor.
INDICATOR 2009 Economic Data Sales Value 37.320 Box sales – unit 1.209.993 EBITDA 7.552 Net Profit 1.299 Cash flow 6.787
37.226 -0,25% 1.241.217 2,58% 8.069 6,85% 2.456 5.677 -16,35%
38.630 3,77% 1.279.722 3,10% 7.742 -4,05% 1.677 5.495 -3,21%
39.910 3,31% 1.292.308 0,98% 8.139 5,13% 1.359 6.619 20,45%
Financial Data Total assets Share Capital Equity Capital (EV) Net Debt (ND) Investment
136.849 5.000 56.669 44.835 4.025
140.046 5.000 57.885 37.119 4.322
148.691 5.000 60.731 40.774 2.576
EV/ND
139.190 5.000 53.275 32.647 3.386 0,61
2010
0,79
2011
0,64
2012
0,67
04. RESULTS OF THE PERIOD
Gross margin in sales
Image 5 Annual change in gross margin
We should mention this year’s decline in agricultural production (as a result of natural conditions less favorable than the previous year, with a 20% reduction in production), which directly influences the results from agricultural production. The overall operating costs present the reduction of sales% as in the following table:
Operating costs
Image 6 Annual evolution of operating costs
Note that the activity of the company was developed in a widespread economic and social crisis in Portugal, with many limitations in accessing financial markets and with increased costs incurred by most economic agents. Still, it was possible to show improvements in various economic and financial indicators, as seen in the table presented below, showing the evolution of EBITDA, EBIT and results:
Results
Image 7 Annual evolution of results
The net income decreased by comparison to 2011, due to an increase in interest rates and consequent financial costs (increase by about 1.3 million euros of these expenses).
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ESPORÃO SA SUSTAINABILITY REPORT 11/12
FINANCIAL RESULTS ASSETS The assets of the Group amount to approximately 149 million euros, with a structure of applications and financing relatively stable as shown in the following charts.
Assets
Image 8 Assets evolution
Resources
Image 9 Structure of financial resources spent
The volume of tangible assets is stable reflecting the amortization policy and investments made. In terms of financing sources there has been a slight increase in general bank debt by Esporão Group in about 3 million euros, largely the result of investment in tangible assets, with the increase of current assets financed by its own means (equity capital) and operating liabilities. It should be also noted the state support through the programs PRODER and QREN and VITIS, given to investment projects by Esporão Group, namely the renovation projects of the cellars of Esporão and Murças, Wine Tourism reconstruction and renovation of the vineyards of Esporão and Murças.
INVESTMENTS INVESTMENT Cellars and Wineries Sustainability and Biodiversity Agricultural Production Wine Tourism Others TOTAL
ESPORÃO 297.355 42.485 62.650 68.601 471.091
Table 5 Investments per company
MURÇAS 34.961 13.780 28.746 77.487
COMPANY EVM 1.931.332 14.669 1.946.001
OLIVE OILS 3.750 3.750
TOTAL 332.316 56.265 62.650 1.931.332 115.766 2.498.329
2011 2.603.000 0 160.000 1.425.000 134.335 4.322.335
04. RESULTS OF THE PERIOD
Espor達o Group is in the final stage of a period of heavy investment, either in modernizing its productive structure (vineyard and winery and filling pavilion), and administrative (modernization of information systems), either by expanding to other demarcated regions for wine production and is therefore natural a decrease in investment values. Of the investments made we would like to highlight the investment in the remodeling and expansion of the wine tourism. This space was designed with a new concept of architecture and design, thereby resulting in an overall image realignment, with positive sales still in this year. Associated with the undertaking was also the reconversion of the access to the building, with the construction of a new road network and exterior improvements that surround the building. Note also the completion of the remodeling / renovation project of the cellar of Mur巽as, with the construction of a new structure for winemaking, which had been ongoing since 2010. A modern structure was created for working in the best conditions, but at the same time harmoniously in its surroundings and simultaneously on the recovery of the spaces outside the cellar. The main investments in Herdade do Espor達o were the renewal of the barrels and new equipment for compressed air treatment, water and electricity consumption. With these investments a return on consumption is expected, for the purpose of cost reduction and reduced environmental impact.
DISTRIBUTION OF RESULTS SHAREHOLDER In the last two decades the Espor達o group has failed the distribution of results to shareholders, having always opted for reinvesting in the organization.
100% reinvestment
ESPORÃO SA SUSTAINABILITY REPORT 11/12
32 | 33
EMPLOYEES
Meritocracy
The Esporão Group has a remuneration model that responds to concerns related to the framework of the individual profile with the market value of the functions, ensuring internal equity. This model predicts the growth and recognition in accordance with the development and acquisition of new skills, the reward according to the fulfillment of goals and individual challenges aligned with the organization’s strategy. Most functions are evaluated annually at the level of skills associated with the nature of the function, and at the level of results through the level of goals’ achievement. Employees with management responsibilities are evaluated annually through a 360º methodology. This process is centered on the Performance Management System (SGD) to where every year the goals of each area and each employee are loaded and managed. We make two assessments per year in each end of the semester. Qualitative and quantitative objectives are evaluated as well as a skills assessment.
Additionally, we annually make the 360º review that allows you to analyze the performance of each employee giving a comprehensive perspective of their skills and areas for improvement. Every 3 years we do a more thorough assessment on certain cultural aspects of the company. The process of the board of directors’ assessment follows exactly the same process of evaluation of the remaining bodies of the company. The goals of the executive directors are common among themselves, except for skills assessment and 360º. The goals are defined by a strategic map where we have identified a number of key performance indicators (KPI). Once a year, the Chairman of the Board meets with the directors to assess their performance.
COMMUNITY Several interventions were made concerning green spaces and roads. We highlight the widening of the access to Covelinhas, near Quinta dos Murças, with improved people’s security due to the construction of a wall that supports the road itself. In Herdade do Esporão existing roads were rehabilitated by enlarging the existing circulation platforms, giving neighboring owners passage to their properties. In the access to the estate, within the city of Reguengos, a landscape arrangement was made in the rundabout, by planting ash trees and olive trees and improving the framing of the infrastructure. It is important to emphasize the role played by private institutions of social solidarity for their work in supporting populations, which with reduced means are able to join efforts in order to carry out very important duties to minimize the social problems associated with poverty and disease. The Esporão Group has been supporting some of these institutions with financial subsidies, given completely free of charge and without any material counterpart, except what is in accordance with the legislation that supports social patronage.
04. RESULTS OF THE PERIOD
support to the community
Annual subsidies were delivered to the following institutions: INSTITUTION
2011
A.P.A.D - Associação Portuguesa de Apoio aos Desprotegidos ACREDITAR - Pais Crianças Cancro Ajuda de Berço
2012 FRAMEWORK 800.00 Social support institution
3,200.00
3,200.00 Medical assistance
800.00
800.00 Childhood support
Ajuda e Colo - Associação Solidariedade
500.00 Childhood support
Aldeias de Crianças SOS Portugal
500.00
500.00 Childhood support
AMI - Assistência Médica Internacional
500.00
500.00 Childhood support
ANCAP - Associação Nacional de Combate à Pobreza
500.00
500.00 Social support institution
APATI - Associação Promotora de Apoio à Terceira Idade
500.00
500.00 Social support in older age
Associação Paralisia Cerebral Évora (APCE)
640.00
600.00 Social support in disease
Associação Promotora de Emprego de Deficientes Visuais- APEDV
400.00
400.00 Social support institution
Associação Fernandinhos e Companhia Associação Pais Amigos Cr. Defic. Profundos (APADP) Associação "Os Romeiros de Vila Boim" - infantário
300.00
Social support institution
3,200.00
2,500.00 Social support in disease
500.00
1,000.00 Childhood support
Associação Bagos D' Ouro
750.00 Childhood support
Associação BTT
250.00 Sports Institution
Associação Dias Renovados (solidariedade social)
500.00
500.00 Social support institution
Associação Estrela Guia IPSS
500.00
500.00 Social support institution
Associação Gestos de Boa Vontade
500.00
500.00 Social support institution
ATT - Associação Trat. Toxicodependentes
2,000.00
2,000.00 Medical assistance
Banco Alimentar Contra Fome
2,000.00
2,000.00 Food support
BIPP - Banco de Informação de Pais para Pais
1,600.00
Bombeiros Voluntários Reguengos Monsaraz
500.00
BUS - Bens de Utilidade Social
640.00
1,000.00 Childhood support 1,500.00 Social support institution 500.00 Social support in older age
Câmara Municipal de Reguengos de Monsaraz
300.00
Casa Prot. Amp. Stº. António
400.00
400.00 Social support in older age
Centro Social da Musgueira
500.00
500.00 Social support institution
Centro Social e Paroquial Lamas
500.00
500.00 Social support institution
Centro Social e Paroquial do Sagrado Coração de Jesus do Campinho
500.00
500.00 Religious Institution
Comunidade Vida e Paz
300.00
500.00 Social support institution
Convento Cristo Rei
6,000.00 Religious Institution
Corpo Nacional Escutas - Agrupamento 1085
1,000.00
COTTOLENGO Padre Alegre
2,400.00
Fábrica da Igreja Paroquial dos Santos Reis Magos
1,000.00 Sports Institution 2,000.00 Social support in older age 2,000.00 Religious Institution
Fundação D. Bosco - Projecto Vida Fundaço Ernesto Roma
Government
800.00 Childhood support 3,200.00
3,000.00 Medical assistance
Irmazinhas - Residência de Velhinhos
500.00
500.00 Social support in older age
Lar de S. Martinho
500.00
500.00 Social support in older age
Lar Santa Helena Leões de Portugal
500.00 Social support in older age 1,300.00
Sports Institution
Liga Portuguesa Contra Cancro
500.00
500.00 Medical assistance
Missionários Combonianos
400.00
400.00 Religious Institution
Ombro Amigo - apoio à deficiência
500.00
500.00 Social support institution
Pão e Paz Associação de Solidariedade Sc Paróquia de Reguengos
500.00
500.00 Social support institution
1,500.00
1,500.00 Religious Institution
Paróquia de Sta. Mª. Belém
800.00
600.00 Religious Institution
Renascer - Liga Nac. Criança Esperança
500.00
Social Kids - Associação de Apoio Social
500.00 Childhood support 500.00 Childhood support
CAOS - Coragem Acima de Outras Situações
500.00 Social support institution
UNICEF
500.00
Social support institution
Viagem de Volta
500.00
500.00 Social support institution
TOTAL
36,380.00
46,000.00
Table 6 Financial support to the community
34 | 35
ESPORÃO SA SUSTAINABILITY REPORT 11/12
ACHIEVED ACKNOWLEDGEMENTS PRODUCT
HARVEST
MAGAZINE/ORGANIZATION
AWARD
YEAR NOTES
ARAGONEZ
2007
Wine Enthusiast
91 points
2011
ESPORÃO RESERVE
2011
Revista de Vinhos
Good Buy Award
2011
2010
San Franscisco Wine Competition
Bronze
2011
2010
San Franscisco Wine Competition
Silver
2011
2011
Revista de Vinhos
The best of Portugal
2011
2009
Wine Enthusiast
92 points
2011
Editor´s Choice
2007
Wine & Spirits
91 points
2011
Years best
2007
Wine Enthusiast
93 points
2011
Cellar Selection
2008
Revista de vinhos
18 points
2011
2008
Essência do Vinho
18,5 points
2011
2009
International Wines & Spirits Competition
Silver
2011
RESERVE WHITE
2009
Wine Enthusiast
91 points
2011
RESERVE WHITE
2009
Concour Mondial Bruxelles
Silver
2011
RESERVE RED
2008
Wine & Spirits
90 points
2011
RESERVE RED
2008
Concour Mondial Bruxelles
Gold
2011
TOURIGA NACIONAL
2008
Revista de Vinhos
The best of Portugal
2011
TOURIGA NACIONAL
2007
Wine Enthusiast
90 points
2011
2 CASTAS
2011
Revista de Vinhos
Best buy
2012
4 CASTAS
2010
Concour Mondial Bruxelles
Silver
2012
4 CASTAS
2010
Revista de Vinhos
Best buy
2012
ALANDRA WHITE
2011
Sabor do Ano
ALANDRA RED
2011
Revista de Vinhos
ALANDRA RED
2011
Sabor do Ano
ALICANTE
2007
Wine Enthusiast
90
2012
2010
Concour Mondial Bruxelles
Silver
2012
2008
Concour Mondial Bruxelles
Gold
2012
2011
Revista de Vinhos
Best buy
2012
PETITE VERDOT
2008
Wine Enthusiast
92
2012
SYRAH
2008
Wine Enthusiast
93
2012
2008
Wine Enthusiast
94
2012
Cellar Selection
WHITE MONTE VELHO WHITE MONTE VELHO RED PRIVATE SELECTION WHITE PRIVATE SELECTION WHITE PRIVATE SELECTION RED PRIVATE SELECTION RED PRIVATE SELECTION RED PRIVATE SELECTION
Prémio excellency
RED QUINTA DOS MURÇAS RESERVE
Editor´s Choice
Years best
2012 Best buy
2012 2012
BOUSCHET ESPORÃO PRIVATE SELECTION WHITE ESPORÃO PRIVATE SELECTION RED ESPORÃO RESERVE WHITE
TOURIGA NACIONAL
Table 7 Awards and distinctions of wine
Cellar Selection
04. RESULTS OF THE PERIOD
OLIVE OIL
HARVEST
COMPETITION
SELECÇÃO
AWARD
YEAR
2012
TERRA OLIVO 2012
SELECÇÃO
2012
ARMONIA - TROFEU ALMA
PREMIO DI PRODOTTO
2012
SELECÇÃO
2012
TERRA OLIVO 2012
GRAN PRESTIGE GOLD
2012
DOP MOURA
2012
TERRA OLIVO 2012
PRESTIGE GOLD
2012
SELECÇÃO
2012
CINVE 2012
GOLD MEDAL
2012
DOP MOURA
2012
OLIVE JAPAN 2012
SILVER MEDAL
2012
EXTRA VIRGIN
2012
OLIVE JAPAN 2012
SILVER MEDAL
2012
GALEGA
2012
OIL CHINA 2012
GRAND MENTION
2012
EXTRA VIRGIN
2012
MONDE SELECTION
SILVER MEDAL
2012
EXTRA VIRGIN
2012
CONCURSO NACIONAL AZEITES FNA SANTAREM
BRONZE MEDAL
2012
2012
Table 8 Awards and distinctions of olive oil
EMPLOYEES
05
ESPORﾃグ SA SUSTAINABILITY REPORT 11/12
CHARACTERIZATION TOTAL NUMBER OF EMPLOYEES AND RESPECTIVE RATE TURNOVER BY AGE GROUP, GENDER AND REGION:
Employees
Image 10 Evolution of the number of employees
Ages
Image 11 Age distribution of employees
Turnover
Image 12 Turnover rate by gender and by company
38 | 39
05. EMPLOYEES
Distribution employees
Image 13 Employees by region and by gender
The calculations exclude workers hired specifically to work the harvest, whose duration of collaboration varies between 2 and 8 weeks.
GENDER DISTRIBUTION
Distribution gender 11
Distribution gender 12
Images 14 e 15 Distribution of employees by gender and qualification in 2011 and 2012
ESPORﾃグ SA SUSTAINABILITY REPORT 11/12
40 | 41
Functions
Image 16 Distribution of functions by gender and wage ratio in 2012
CONTRACTUAL BONDS
Contractual bond
Image 17 Distribution of employees by gender and contractual link in 2012
MINORITIES AND DIVERSITY We do not keep any record of our employees regarding their cultural origin religious, racial or other that may be considered discriminatory. No decision or action taken by Esporﾃ｣o uses or is supported by this type of information.
05. EMPLOYEES
RIGHTS AND GUARANTEES According to Portuguese legislation all employees are covered by collective bargaining agreements, either through membership of the company either through ordinances. The hiring of permanent employees is carried out using the support of local institutions, the Institute of Employment and the Office of Professional Integration of the Municipality of Reguengos. The demand for professionals always starts in coordination with these local structures. Only after this phase the search is extended at a national level. Hiring temporarily or seasonally is mostly made using individuals from the local community, with the exception of national and international trainees that we receive annually at harvest time, given the universality of academic institutions involved.
Local community
Local roots The vast majority of management positions are occupied by employees who joined the organization still very young, many of them as interns. At that time local supply of qualified professionals was very scarce. Currently 16% of the managers are from the local community in the operating units of Esporão and Quinta dos Murças. However, many of these managers have integrated into local communities and are now part of these. All deadlines for legal notification to employees of any change in their condition of employment are respected, as defined in the collective bargaining agreement. There is no known case of discrimination across Esporão group. All maternity leaves are fulfilled in accordance with the law and there is no negative correlation between enjoying these licenses and the rate of employee retention. There is no impediment of any kind to freedom of association of our employees to their employer or others. There is not and it is not authorized or legal any kind of child labor, slave or forced labor in any of the locations in which we operate. Given the activity of Esporão, there is no need for training our employees on issues related to human rights. There is no training on policies or practices of corruption. Esporão is not aware of any cases of active or passive corruption involving their employees. In Portugal there are no indigenous people. Therefore no such incidents are registered.
42 | 43
ESPORÃO SA SUSTAINABILITY REPORT 11/12
HEALTH AND SAFETY AT WORK WORK ACCIDENTS The table below quantifies the accidents observed during the reported period, per company. Lost days are working days. There were no occupational diseases or deaths resulting from our activity. WORK ACCIDENT
Nº OF WORK ACCIDENTS
LOST DAYS
% LOST DAYS
Data to December 31
2011
2012
2011
2012
2011
2012
ESPORÃO SA
6
9
193
1163
0,45%
0,40%
ESPORÃO VENDAS E MARKETING SA
0
1
0
2
0,00%
0,03%
ESPORÃO AZEITES LDA
0
0
0
0
0,00%
0,00%
MURÇAS SA
4
3
55
89
1,43%
2,90%
TOTAL
10
13
248
254
0,44%
0,47%
Table 9 Absences in hours per work accidents
Esporão Group has developed a program for prevention of accidents at work and occupational diseases, specifically designed for each of the professional groups and includes a manual and a training program. This program is reviewed annually. We have no knowledge of the existence of chronic professional diseases among our employees. Our processes and procedures for health and safety at work are annually audited by an external entity. There is not a formal committee of employees regarding safety and health. The organic structure of Esporão has internal entities responsible for compliance with applicable legislation and monitoring the safety of all employees.
EVALUATION AND TRAINING EXTERNAL INTERNSHIPS In 2012 the following internship programs were developed in collaboration with various governmental and / or academic entities: • Four internships integrated in Degrees or Masters in the field of food industry; • Five internships integrated into professional training. Of these, three internships were professional, five curricular and one came via InovContacto in the United States, through our subsidiary Esporão Wine & Olive Oils. In terms of duration, three were nine months, 1 was 6 months and the remaining 5 were two and a half months each, for a total of 6,160 hours of internship. We believe that this internship program is very relevant, with a major advantage for us: our participation in the training of a competitive and renewed labour market, thus contributing to the sustainable development of the regions where we operate.
05. EMPLOYEES
TRAINING In general terms 28 training initiatives were conducted, involving 406 students in a total of 1,379 hours of training. The Espor達o Group is developing a program of training and certification, with the seal of the Wine & Spirit Education Trust, covering the areas of Commercial, Marketing and Wine Tourism, to ensure internal recognition and national and international appreciation of our professionals. There is also a training program / internal internships that promote learning processes and internal activities and greater integration of teams. Annually programs are developed according to the individual needs and the guidelines of the organization.
Training programs for employees in transition to retirement are not developed. We also do not develop training programs or policies related to human rights as it is not an issue in Portugal.
PERFORMANCE EVALUATION Performance reviews are conducted every six months for management functions and annually for the remaining ones. The system is implemented since 2007, and has since been expanded and improved in contents and format. All employees are covered by this process, and there is no distinction by gender. All reviews are permanently available for consultation by the covered employees, digitally and online. The universe of performance analysis by this process includes all employees except those involved in the activities of the vineyard. Employees of the vine are subject to weekly performance analysis based on a set of productivity indicators related to the activities in the vineyard. This analysis is shared and discussed with the whole team and plans for improvement are outlined whenever necessary and applicable.
ESPORÃO SA SUSTAINABILITY REPORT 11/12
44 | 45
BENEFITS AND WAGES WAGE RATIOS
Internal and external equity
Internal and external equity is the goal of our policy of human resource management, combined with a constant concern for the working conditions of employees. The following facts are observed in Esporão: • There is no employee with wages below the Portuguese minimum wage, according to the legislation in force. • The lowest salary earned in the administrative function is 30% higher than the minimum wage. • The food allowance is 41% higher than the minimum required by law for the sector.
wages
Image 18 Wage distribution of all employees between 2011 and 2012
05. EMPLOYEES
BENEFITS ATTRIBUTED TO EMPLOYEES AND EVENTUAL WORKERS Temporary and seasonal workers enjoy most of the benefits and working conditions granted to full-time employees, that includes transportation, food allowance, medical services at work and safety training in the workplace. The major distinction is made in terms of functional or hierarchical development and growth, which is not accessible when the duration of the contracts is short. The Esporão Group grants tolerance for missing work in some days that are not national holidays, such as Carnival Day and December 24th. To each of the permanent employees, on their birthday, the board offers a box of wine and congratulations. Public transport is available to the employees of the vineyard, the winery, production and logistics in Herdade do Esporão. There are several cafeterias available for employees, located next to the various workplaces. An event celebrating Children’s Day is usually held and employees and their respective families participate. This space is also used to promote a culture of sustainability among employees.
SUPPLIERS
06
ESPORÃO SA SUSTAINABILITY REPORT 11/12
48 | 49
SUPPLIERS The Esporão Group defines the term “local” at two levels. The first is the country in which each company operates. The second level applies to companies based in Portugal and reports to the municipality in which has its headquarters and all adjacent municipalities.
home country
Image 19 Distribution of purchases by the supplier’s country of origin
local purchases per company
Image 20 Distribution of purchases to local suppliers
PURCHASES IN THE HOME COUNTRY
06. SUPPLIERS
PORTUGAL
EUROPE
N. AMERICA
S. AMERICA
ASIA
EMPRESA
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
ESPORÃO, SA
94%
96%
6%
4%
ESPORÃO VENDAS E MARKETING, SA
82%
81%
2%
3%
6%
8%
2%
4%
0%
0%
8%
5%
ESPORÃO AZEITES, SA
79%
103%
21%
-3%
MURÇAS, SA
99%
96%
1%
3%
0%
1%
DBRANDS
2%
26%
98%
74%
ESPWINE
68%
44%
0%
2%
32%
54%
TOTAL
85%
86%
5%
3%
2%
4%
7%
6%
1%
1%
0%
AFRICA
0%
Table 10 Distribution of purchases by the supplier’s region
In addition to proximity criteria, the Esporão Group implements a policy of requirements to suppliers that depends on the type of services or raw materials that they provide: • Olive and grape suppliers should provide only raw materials from the region in which the buying company operates. Additionally, there are food safety requirements and environmental conditions that are required on these suppliers, in order to provide Esporão. There is a manual available to these suppliers that details all selection requirements and the method of evaluation. • Wine suppliers are also specifically evaluated by Esporão, based on very specific controls for each delivery such as contaminants, pesticides, origin, among others. • There is also a specific manual for our components suppliers that in addition to identifying and detailing the form of evaluation and selection of these providers, indicates a preference or need for food and environmental certifications. • Suppliers of food products to the wine tourism are also subject to specific selection and evaluation. • All other suppliers are evaluated globally as to its quality by those responsible for buying their products. We highlight and give preference to all suppliers that demonstrate sustainability concerns, whether through environmental certifications and others or as demonstrated by concrete practices. We also act proactively with our suppliers to adopt practices in line with our policies, such as organic farming. We do not conduct any analysis or evaluation of our suppliers in terms of human rights, since given the countries in which our suppliers operate, the risks of infringement of those rights is practically null. For the same reason, we do not formalize with our suppliers contracts containing specific clauses on human rights safeguard. Our manuals of suppliers of grapes, olives and related components refer as required conduct, and in a generic way, a set of rights that should be granted to employees of those organizations.
RESOURCE USE
07
52 | 53
ESPORÃO SA SUSTAINABILITY REPORT 11/12
FINANCIAL SUPPORT FROM THE STATE During 2011 and 2012 were assigned to Esporão Group a set of incentives to their activity: VITIS Support system for the conversion, replant or vineyards relocation and other improvements to the vineyard. PRODER Rural development program. OCM Promotion on third-country markets. QREN National Strategic Reference Framework. Except for OCM, all these incentives are oriented to the creation of long term assets and require an investment effort, using their own resources.
Table 11 Financial support received per program
COMPANY
PROGRAM
2011
2012
ESPORÃO
PRODER
€ 216 923
€ 257 871
VITIS
€ 183 017
€ 199 663
MURÇAS
PRODER
€ 83 991
EVM
QREN
€ 170 152
€ 750 368
OCM
€ 91 350
€ 612 406
€ 745 433
€ 1 820 308
TOTAL
ENERGY
07. RESOURCE USE
DIRECT ENERGY CONSUMPTION CONSUMPTIONS
FUEL
LOCATION
FARM DIESEL FUEL
ESPORÃO, S. A.
FARM DIESEL FUEL
MURÇAS
REGULAR DIESEL FUEL REGULAR DIESEL FUEL REGULAR DIESEL FUEL
MURÇAS
2011
2012
65 500 L
71 500 L
2 530 L
2 357 L
ESPORÃO, S. A.
45 058 L
55 000 L
ESPORÃO AZEITES
12 064 L
9 997 L
4 596 L
2 935 L
GASOLIN
MURÇAS
PROPANE
ESPORÃO, S. A.
OLIVE PIT
ESPORÃO AZEITES
1 026 L
783 L
1 489 KG
1 399 KG 19 600 KG
Table 12 Direct energy consumption by type
The burning of olive pit that comes from the extraction process of olive oil, allows the use of a natural resource inside the production unit itself. Thus, in the Esporão Azeites we climatize the main nave through a boiler that processes the olive pit. In the building of Wine Tourism water heating through solar panels was introduced. It replaced the boilers that consumed propane and gave an estimated annual savings of 5779 kWh.
INDIRECT ENERGY CONSUMPTION The table below shows the consumption of electric power per company, although the values of Esporão, SA accumulate the values of the locations in Lisbon and in Herdade do Esporão, thus considering the consumptions of Esporão Vendas e Marketing, SA as null.
LOCATION
CONSUMPTION UNITS 2011
2012
2 361 769
2 429 530
kWh
ESPORÃO AZEITES
152 052
108 827
kWh
MURÇAS
108 246
116 779
kWh
ESPORÃO, S. A.
Table 13 Indirect energy consumptions
54 | 55
ESPORÃO SA SUSTAINABILITY REPORT 11/12
There is an ongoing energy audit in the cellar of Herdade do Esporão that aims to create conditions and measures for the effective reduction of electricity consumption. They will be implemented after the completion of the audit within three years. In 2011 and 2012 direct actions to reduce indirect energy consumption were not performed. Actions to optimize energy are planned for the future. We will conduct in 2013 and 2014 the building of two photovoltaic solar parks for the production of electrical power, one in the cellar with 250 Kw and another in the dam of the estate with 100 kW, corresponding to 45% of contracted power of 776 Kw in this location.
WATER In the cellar of Esporão a project was implemented to reduce water consumption in order to spend 1 L of water to produce 1 liter of bottled wine. In a first approach it moved from a consumption of 30.000.000L to 20.000.000L, ie 33% of consumption. The ratio of water / wine is now at 1,65. This water comes from an artesian hole, and the project was focused only on the production and bottling of wine at the cellar.
4 In 2011 an error was detected in the measurement equipment which invalidated the data. For the calculation we assumed the value of 2012 and according to the technical team of Esporão this value is close to reality. 5 The water distribution company EPAL presented wrong measurement numbers, once it used a method of estimating consumption. Upon request by Esporão it began performing direct measurements and corrected this effect, resulting in lower consumption in 2012. 6 By sold liter we consider the total volume of net sales of wine and olive oil in the reported period.
Table 14 Water consumption in cubic meters
LOCAL
In the case of Herdade do Esporão after treating the effluent it is sent to the existing dam on the property for storage. Later it will allow irrigation of the vineyards of the estate and maintain a minimum flow for that habitat. Indirectly the water that is used in the production process and then sent to the WWTP’s installed in various locations of the Group, with effluent, is reused, representing approximately 10% reuse.
ORIGIN
USE
HERDADE DO ESPORÃO
GROUNDWATER
CELLAR, FILLING, WINE TOURISM, OFFICES
HERDADE DO ESPORÃO
ALQUEVA DAM
AGRICULTURAL IRRIGATION
SERPA
GROUNDWATER
CELLAR, FILLING, WINE TOURISM
MURÇAS
DOURO RIVER
RESTELO
EPAL MUNICIPAL DISTRIBUTION
TOTAL LITERS PER SOLD LITER6
2011
2012
20 320
19 318
367 5004
367 500
1 046
4 471
AGRICULTURAL IRRIGATION
3 151
1 426
OFFICES
848
5
298
392 865
393 013
2 780
2 792
07. RESOURCE USE
No studies have been conducted to measure the impact of these consumptions since in Quinta dos Murças the water used is taken from the Douro River, being its volume insignificant compared to the flow of the River and therefore we do not expect any impact. The large volume of water consumption comes from the Alqueva dam, representing 94% of the total consumption in 2011 by Esporão. This consumption is regulated by EDIA7 and its sustainability is globally managed, in the region of Herdade do Esporão, by the Portuguese State through this entitie. All wastewater generated in our business is subject to recovery. LOCAL
DESTINATION
HERDADE
DISCHARGE IN BARRANCO (LAGOA)
MURÇAS
DISCHARGE IN DOURO RIVER
2011
2012
9 003
8 351
08
124
Table 15 Discharges of treated wastewater in WWTPs in cubic meters
Composed analyses of the quality of the water in all its WWTP are performed monthly, ensuring that it is within the legal and elegible parameters, so that these discharges have no impact on the environment. Additionally, discharges are performed in the urban system of sewage from the office areas in Lisbon, treated by the municipality of Lisbon, and for which we have no measurements. The water that exists in pits, in several locations and in the evaporation lagoon from the mill of Serpa is managed as waste and subject to proper treatment.
7 EDIA – Companhia de Desenvolvimento e Infraestruturas do Alqueva, S.A, publicly owned and whose mission is to manage water resources in the region where Herdade do Esporão is located. It published a sustainability report for 2009-2011, which can be consulted at www.edia.pt. 8 No discharges were performed in Murças in 2011.
WASTE, EMISSIONS AND OTHER IMPACTS
08
58 | 59
ESPORÃO SA SUSTAINABILITY REPORT 11/12
GREENHOUSE GAS EMISSIONS We are measuring our emissions of greenhouse gases since 2011, and this work is carried out internally by the team of Esporão Group, without external certification. As a reference, we use the International Wine Carbon Calculator 1.2 Protocol of July 20089. To define the scope of our emissions we use the methodology developed in “A corporate Accounting and Reporting Standard Revised Edition”10. For the determination of coefficients of emission of greenhouse gases used in the calculations we use the following sources:
9 This protocol is sponsored by several national and regional agencies: The Wine Institute of California, New Zealand Winegrowers, Integrated Production of Wine South Africa, Winemakers Federation of Australia. 10 This methodology is defined by the World Business Council for Sustainable Development together with the World Resources Institute.
• 2006 IPCC Guidelines for National Greenhouse Gas Inventories • 2012 Guidelines to Defra / DECC’s GHG Conversion Factors for Company Reporting • Official Journal of the EU, Comission Decision of 18 July 2007 • Endesa • BioGrace - List of Additional Standard Values, 2011 “NPK 15-15-15” • Waste Reduction Model (WARM), February 2012 • “How to calculate your business’s carbon footprint”, Uniquest Consider all locations in Portugal.
CO2eq PER SALES TONS CO2eq EMISSIONS
g/Boxes 9L
g/Bottle (0,75L)
2011
2012
VAR.
2011
2012
17 080
16 754
-1,5%
13 427
2 997
4 062
4,9%
2 356
ELECTRICITY
951
959
0,0%
FOSSIL FUELS
383
417
PACKAGING BOUGHT RAW MATERIALS
VAR.
2011
2012
13 226
-1,5%
1 119
1 102
3 207
36,1%
196
267
747
757
1,3%
62
63
0,2%
301
329
9,2%
25
27
WASTE
161
385
1,0%
127
304
139,8%
11
25
STATIONARY COMBUSTION
67
58
0,0%
52
46
-11,8%
4
4
SECONDARY MATERIALS
52
54
0,0%
41
42
4,1%
3
4
11
11
0,0%
9
9
0,4%
1
1
-
-
0,0%
-
-
0,0%
-
-
21 702 22 700
4,6%
17 061
17 919
5,0%
1 422
1 493
EMISSIONS
2011
2012
SCOPE 1 – DIRECT
450
475
FOSSIL FUELS
384
421
66
54
0
0
951
959
HIRED EQUIPMENTS EMISSIONS LEAKAGE TOTAL
Table 16 CO2 equivalent emissions by type in tons
STATIONARY COMBUSTION EMISSIONS LEAKAGE SCOPE 2 – ELETRICIDADE
951
959
SCOPE 3 – INDIRECT
ELECTRICITY
20 302
21 266
PACKAGING
17 080
16 754
BOUGHT RAW MATERIALS
2 997
4 062
WASTE
161
385
SECONDARY MATERIALS
52
54
HIRED EQUIPMENTS Table 17 CO2 equivalent emissions tons per scope
GRAND TOTAL
11
11
21 702
22 700
08. WASTE, EMISSIONS AND OTHER IMPACTS
In 2012 new glass bottles were introduced in some of our products and resulted in a reduction of 1.5% of total direct and indirect measured emissions. The glass is otherwise the most important contributor to carbon emissions per sold bottle. The variation of emissions related to our purchases of grapes and olives come from a lower production per hectare verified in 2012 compared to 2011, primarily due to climatic factors. The growth seen in emissions from waste derives from an increase of glass breaks resulting of the implemented quality control processes. The secondary materials that consist of all products used in the farming operation, such as fertilizers, and in the cellar, did not register substantial growth, despite the difficult year of 2012 in climatic terms. The emissions leakage is measured by recording the quantities of refills during maintenance of all equipments with gas. We maintain an inventory of all equipment with a risk of leakage of greenhouse gases and / or destroyers of the ozone layer. In the measured periods, no equipment showed values of refills. Emissions of NOx and SOx originate from biological processes of the vineyard and / or fermentation, which are considered naturally balanced in accordance with “International Wine Carbon Calculator Protocol 1.2”. By the very nature of the activity performed, we do not produce significant harmful emissions. All sources of gaseous emissions are inventoried, comply with legal requirements and analyzes are carried out in accordance with European legislation, not having up to date failed to fulfill any controlled parameter.
CO2 SITE EMISSIONS HERDADE DO ESPORÃO SERPA MURÇAS LISBOA GRAND TOTAL
2011
2011
DIST. 2012
19 825
20 598
91%
1 725
1 920
8%
130
163
1%
23
19
0%
21 702
22 700
100%
Table 18 CO2 equivalent emissions tons per location for all scopes
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ESPORÃO SA SUSTAINABILITY REPORT 11/12
WASTE GENERATED We follow a policy of waste management, based on the national waste management system in Portugal, that implements all the guidelines of the European Union. Waste is thus delivered to third parties licensed to treat, transport and further processing each type of waste. Internally, we proceed to a rigorous separation and classification of the various types of waste, with records of all quantities produced, to which entities were delivered for treatment and their respective operating licenses.
WASTE IN Kg
LOCATION
DESTINY
2011
2012
CARDBOARD
HERDADE
PLASTIC
HERDADE
RECYCLING
45 962
72 582
RECYCLING
18 342
12 064
GLASS
HERDADE
RECYCLING
16 900
46 440
METAL
HERDADE
RECYCLING
MUD
HERDADE
LANDFILL
OILS
HERDADE
REFINEMENT
OIL FILTER
HERDADE
RECYCLING
SOLVENT WASTE
HERDADE
RECYCLING
LABORATORY CHEMICALS
HERDADE
ELIMINATION
193
COOKING OILS
HERDADE
VALORIZATION
172
WOOD
HERDADE
RECYCLING
-
2 770
CONTAMINATED SAND
HERDADE
LANDFILL
-
509
SEWAGE CLEANING
HERDADE
RECYCLING
-
2 500
CONSTRUCTION AND DEMOLITION WASTE
HERDADE
LANDFILL
-
720
USED TYRES WASTE
HERDADE
LANDFILL
-
2 200
PLASTIC WASTE
HERDADE
LANDFILL
-
17 560
CONTAMINATED PACKAGING WASTE
HERDADE
LANDFILL
-
790
CARDBOARD
MURÇAS
RECYCLING
280
280
PLASTIC
MURÇAS
RECYCLING
170
170
GLASS
MURÇAS
RECYCLING
1 500
1 500
CONTAMINATED PACKAGING WASTE
MURÇAS
RECYCLING
-
82
CARDBOARD
SERPA
RECYCLING
1 180
2 280
PLASTIC
SERPA
RECYCLING
660
960
GLASS
SERPA
RECYCLING
-
1 000
METAL
SERPA
RECYCLING
800
20
OILS
SERPA
REFINEMENT
-
356
142 938
217 118
TOTAL
-
6 560
56 180
43 994
534
1 513
- 65
110 65 - 93
Table 19 Destination of waste generated by type in Kg
We do not produce, transport, import or export any waste deemed hazardous under the Basel Convention. COMPONENTS ANTIQUE GLASS BOTTLES WHITE GLASS BOTTLES
2011
% RECYCLED MAT.
14.182.300 70% A 80% 157.600
15%
NATURAL CORKS
9.689.900
0%
MICRO GRANULATED CORKS
4.650.000 100%
CARD BOXES
2.514.500 88%
Table 20 Components consumed in production and quantity originated in recycling
2012
NOTE
99% OF THE BOTTLES HAVE A CONTENT 138.150 OF 70-80% OF RECYCLED MATERIAL
12.593.000
1.498.600 88% OF THE CORKS ARE MICRO GRANU11.592.900 LATED PRODUCED FROM SUBPRODUCTS 2.352.600
LANDFILL
08. WASTE, EMISSIONS AND OTHER IMPACTS
There was not any kind of significant spill, planned or accidental. No transport activity of our raw materials, components, products and employees managed by us, had any impact beyond the associated emissions or waste already reported. We maintain an updated analysis of environmental impacts and risks of all activity, with reference to ISO14001 requirement 4.3.1. The recycling of the products sold in Portugal, is managed through the Green Dot11 system, where we assume the role of Packaging Company. As such, we do not directly recover packaging waste or other potential waste derived from their products and pay this company a value proportional to these potentials, according to the table below.
YEAR GREEN DOT COST IN THE PORTUGUESE MARKET 2011
117 258,52 €
2012
82 840,67 €
Table 21 Cost of recycling packaging of our product in Portugal
HABITATS AND BIODIVERSITY In 2007 we joined the initiative “Business & Biodiversity” and “Countdown 2010”, committing to a strategy of preservation and promotion of biodiversity in Herdade do Esporão. Our agricultural lands are not situated in nature reserves or areas of special protection. There were not identified species at risk of extinction that might be affected by our activities in the areas where we operate.
AGRICULTURAL PRACTICES We perform a regular measurement of the biological level in areas with crops. In Herdade do Esporão we have 70ha of vineyards and 80ha of olive groves in the process of organic certification. The remaining area is in integrated production. The 14ha of our vineyard in Portalegre (Alentejo) are also in organic production. At Quinta dos Murças we have 7ha in organic production and the remaining 50ha in integrated production. 11 Sociedade Ponto Verde, at http://www.pontoverde.pt/1_2_ como_funciona.php
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ESPORÃO SA RELATÓRIO DE SUSTENTABILIDADE 11/12
Preparation and beginning of implementation of a landscaping plan for the vineyard in Esporão, by creating vegetation corridors that help fixing natural enemies of insects and fungi, protecting from the hot wind of summer, preventing soil erosion and plant dehydration and promoting the appearance of riverine galleries, typical of this region’s ecosystem, that develops in the water lines and shelters mammals and workers in the vines and has an important role in water biological filtration. We changed the method of plantation of the vineyards and olive groves, abandoning geometric plots (Roman grid), planting now due to the natural course of the water lines, allowing water to not accumulate in the vineyards, avoiding root asphyxia and disease outbreaks. It also allows the appearance of riparian corridors and improvement of the quality of the water that reaches the dam. We avoid the mobilization of soils, by planting vegetation that helps to fertilize and decompression, preventing erosion. We substantially reduced the use of herbicides in the vineyard, and began to use brush cutters to control the weed vegetation. We virtually abandoned the use of synthetic fungicides and insecticides, and started using the products allowed in organic farming.
2008
2009
2010
2011
2012
HERBICIDES
AREA (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. (Kg e L)
RESIDUAL
200
1001
82
408
0
0
0
0
0
0
-100%
SYSTEMIC
100
500
245
1.222
352
1.759
290
1.452
20
100
-80%
CONTACT
0
0
0
0
0
0
50
248
0
0
0%
TOTAL
300
1501
327
1.630
352
1.759
340
1.701
20
100
-93%
FUNGICIDES
AREA (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. AREA (Kg e L) (ha)
QUANT. (Kg e L)
SYSTEMIC
3.262
5582
2.463
4.644
2.815
5.383
2.237
2.620
333
200
-96%
ORGANIC
362
127
352
1.759
0
0
397
1.242
1.405
4506
3451%
3.625
5.709
2.815
6.404
2.815
5.383
2.634
3.862
1.738
4.706
FARMING TOTAL
Table 22 Annual evolution of weed control by type
We planted an ampelographic field with 188 grape varieties in order to preserve and promote the heritage of national grape varieties but also to test their behavior in context of climate change and different ways of production. We started using the stalks of the grapes (subproduct of wineries) to make mulching12.
12 Coverage of the lines of the vine avoiding using herbicide and introducing organic matter in the soil.
08. WASTE, EMISSIONS AND OTHER IMPACTS
In 3 comparable plots of vineyard, we vary the mode of production between organic and integrated production, aiming to test biological and organoleptically the quality of wines. We want to prove if like tomatoes, lettuce, fruit, etc.. that we produce in our garden, the grapes produced organically are better, as well as the resulting wines.
PROTECTION AND HABITAT CREATION We installed 20 shelters for bats in order to establish “corridors” and promote their fixation. Bats are a great help in the vineyard, eating about half their body weight in insects per day. We redesigned the Forest Management Plan of Herdade do Esporão suspending predator control to restore populations of carnivores. We installed holm oaks by planting 6,000 holm oaks on 100ha, proceeding to the thinning of the pine forest with a maximum of 250 pine trees per hectare. Therefore we guarantee greater diversity in our forest and the balance of native species therein.
We proceeded to the correction of firebreaks to better fire protection. The stream of Caridade, which runs through Herdade do Esporão, as well as the existing reservoir, were the targets of the following actions concerning its preservation as an ecosystem: • We decided not to plant 150ha of olive grove previously planned for the surroundings of the dam, so that we would not harm the inherent biodiversity. • We introduced rules of “minimum ecological flow” downstream of the reservoir, controlling the discharge levels of the dam that exists there.
Creating biological diversity
ESPORÃO SA SUSTAINABILITY REPORT 11/12
64 | 65
• Decommissioning a landfill at the entrance of the dam and construction of a small lagoon of bio filtration. • Construction of a pumping station from the river Degebe to the stream of Caridade, allowing maintaining the highest and constant quotas during the year. • Monitoring the quality of the water in different points of this system. • To promote improvements to the WWTP of Caridade and Perolivas with the Câmara Municipal of Reguengos. • Mobilization of the users of the stream of Caridade to create rules for water use. We mapped the biodiversity hot spots and made a photographic study at different times of the year, photographing more than 70 species of birds and 10 species of mammals. We also participated in the 1st European night watching butterflies, and organized this event in Herdade do Esporão.
CLIMATE CHANGE We proceeded continuously to assess all environmental aspects and its implications for the future of our business. The Esporão group includes in its strategy several sustainability axes of which result concrete actions of analysis, monitoring and intervention at the level of climate change. One of the main risks identified is the desertification of Alentejo region and the increased thermal amplitude variation that our vineyards and olive groves are subject to. If something happens without a proper management of the Esporão Group, it can even lead to the end of our activity. As a strategy to mitigate potential risks associated with climate change, we proceeded to create an ampelographic field of various grape varieties, performing tests and analysis of their behavior in the face of climate change. (an ampelographic field is a sample of several grape varieties in the same space, with the specific objective of studying and draw scientific conclusions that serve our business and viticulture in general) This information will enable us to choose the varieties more in line with the climatic changes that may occur, and, for us, one of the main applications of a defense of biodiversity.
08. WASTE, EMISSIONS AND OTHER IMPACTS
Climate change in the production region of Alentejo also presents high risks of variation in the availability of water resources, essential for irrigation of our crops. Due to that risk we proceeded to building a dam inside Esporão with water retention capacity capable of meeting irrigation needs for two years of extreme drought. The diversification of our viticulture is ongoing in areas of different climatic parameters, to monitor the comparative evolution of these productions with production performed in Reguengos. The recent acquisition of a vineyard in Portalegre, located further north and at a higher altitude than our current vineyards in Alentejo, is already a measure resulting from this policy. Being energy generation one of the main originators of climate change, it is natural that its use and rationalization will be targeted in the near future to extensive regulation. Our energy needs are particularly striking in pumping water for irrigation, in the various agricultural activities and activities of filling. Therefore we have planned and it is in execution a vast program of energy efficiency and phased replacement of non-renewable energy by renewable. There are still risks associated with our carbon emissions and to possible future costs that may be created, such as fees and charges for emissions. The current policy also aims to reduce the potential risk of margin reduction, or even unviable business, faced with these potential future costs. For the Esporão Group, mitigation and response to various environmental and climatic risks is a key component of differentiation and competition, in which not only our customers can distinguish our products by our responsible practice, but also we ensure future ability to maintain our business and react quickly and meet regulatory changes that force organizations to act responsibly.
Environmental differentiation
MITIGATING THE IMPACTS OF OUR PRODUCTS We carried out the following initiatives aimed at reducing the associated impact directly to our products: • We started using micro granulated corks (obtained by milling of high quality cork and disinfected by spraying system) in 100% of bottles of Monte Velho and Arco (6.656 million corks).
microgranulated corks
• We changed all the capsules of Esporão Reserve from Tin to Aluminium (775,000 capsules), thereby reducing the amount of our impact on our activity both in terms of materials used as in the emissions associated with the manufacture of these components.
aluminium capsules
ESPORÃO SA SUSTAINABILITY REPORT 11/12
less cardboard...
... and water! FSC
66 | 67
• We abdicated the use of 320,000 cardboard dividers in the boxes of 6 units in 2011, due to the use of bottles with label protection. In 2012 that number rose to 450,000 deleted partitions, thus reducing the consumption of paper in our products. • We installed a tank of recirculation in the rinser of bottles, in one of the lines, in order to reduce water consumption, achieving a saving of 517,000 liters of water. • The products produced at Quinta dos Murças started using only FSC13 corks. • We started to buy recovered white pallets (second-hand), thus promoting their reuse and avoiding the production of new pallets. • We eliminated boxing in wooden of part of the production of the White Esporão Private Selection, reaching a reduction of 2670 wooden boxes of 6 units. • We eliminated the plastic handles in Bag-in-box, a total of 265,000 handles.
no plastic
• We changed the printing of boxes Alandra Red and White (700,000 boxes) from High quality to flexo-normal, thus reducing the number of colors used with impact on emissions and waste generation.
• Reduction of 2 layers of paper in the boxes of Monte Velho Red (0.75l) (800,000 boxes), by using the system pre-print - plain corrugated cardboard. In this way, we reduce paper usage associated with our products. • We give back to our suppliers of capsules the “waste” of capsules for later re-use.
13 Forest Stewardship Council - set of rules that ensures the sustainable use of forests.
08. WASTE, EMISSIONS AND OTHER IMPACTS
ENVIRONMENTAL MITIGATION INVESTMENTS ENVIRONMENTAL EXPENSES
2011
2012
TOTAL
WASTE TREATMENT
3 300 €
2 700 €
6 000 €
ANALYTICAL WATER CONTROL
4 500 €
4 100 €
8 600 €
25 900 €
25 900 €
7 500 €
22 500 €
OPTIMIZATION OF WATER RESOURCES AMPELOGRAPHIC FIELD (200 ENDEMIC VARIETIES)
15 000 €
CONSTRUCTION OF WWTP IN MURÇAS
52 600 €
52 60 € 21 500 €
CONSTRUCTION OF WWTP IN HERDADE DO ESPORÃO
21 500 €
LANDSCAPING IN MURÇAS
35 100 €
21 120 €
56 220 €
LANDSCAPING IN HERDADE DO ESPORÃO
51 640 €
25 400 €
77 040 €
IMPROVEMENT IN WATER LINE IN MURÇAS
38 396 €
ENERGY EFFICIENCY SUSTAINABLE EQUIPMENT FOR THE VINEYARD TOTAL
202 547 €
38 396 € 2 630 €
2 630 €
3 700 €
3 700 €
114 55 €
317 097 €
Table 23 Investments to mitigate or eliminate environmental impacts
COMMITMENTS AND OBLIGATIONS
09
ESPORÃO SA SUSTAINABILITY REPORT 11/12
70 | 71
GENERAL STATEMENTS ESPORÃO STATES: • Not having conducted direct contacts or pressures to any governmental entity. All actions related to our economic sector, either by sharing information or by stimulating institutional dialogue with the government and other institutions operating in the economic, financial and social policy areas, are carried out by the various organizations representing our industry, namely: > Viniportugal Interprofessional Association of Wine Sector. > ACIBEV Association of Traders and industrials of Spirits and Wines. > ALABE Association of Enology Laboratory. > BCSD Business Council for Sustainable Development. > House of Olive Oil Portugal. • Not having performed risk assessments of corruption in the locations where Esporão operates. • Not having developed, promoted or sponsored any activity or political entity, internal or external. • Not being subjected to any kind of legal action due to unfair competition, monopolistic practice or other related. • Not having been subject to sanctions and / or fines for non-compliance with environmental laws and regulations14. • Not having been subject to sanctions and / or fines for non-compliance with laws and regulations relating to our products. • Not considering necessary to conduct a formal review in our locations on human rights. In Portugal there are guarantees, both legislative, judicial and social, to ensure the observance of human rights in our locations. • Not having received any complaint from any part on the violation of human rights in the course of our business. • Not having done any relocation of our activity, or created new locations, so there was no need for studies of the impact of these actions on local communities, and thus no such damage exists.
CONTROL THE LIFE CYCLE OF OUR PRODUCTS
14 In 2012 an administrative infraction proceeding, under the number CO/000281/12, was brought by the Sea Agriculture, Environment and Spatial Planning of the Portuguese State Inspectorate. This process, which accuses Esporão of exceeding analytical parameters regarding the auto-control of its WWTP in Herdade do Esporão, is under investigation at the time of this report and therefore the outcome remains unknown. This accusation is totally refuted by Esporão and proper defense has been presented in the appropriate fora.
The life cycle of the products of Esporão Group takes into account all legal considerations in the various markets in which it operates and strictly complies all safety provisions. Special attention is given to all labels, back labels and different shipping boxes, so that they contain all the indications and inscriptions relating to the various markets in which it operates. It is reviewed annually for each crop. During production, both in the vineyard as in the winery and in filling, several control procedures are established that ensure compliance with the criteria of food and environmental security. Analyses are performed for contaminants and pesticides, evidence of dangerous or prohibited substances, elimination of risks
09. COMMITMENTS AND OBLIGATIONS
resulting from glass breakage or other bodies, following the methodology of HACCP. Records with full traceability are kept, including the components supplied by external entities and their respective food certificates whenever applicable. Corks are tested for their mechanical properties to ensure a correct and easy extraction at the time of use. All components are marked with symbols indicating the type of separation and recycling to be done. The logistical requirements are also analysed, with special attention to the correct packing and preparation of cargo for transport. The pallets are reused throughout the transport chain, the strapping tapes that we use on pallets are of the lowest possible weight and the number of turns of each pallet is studied and controlled to achieve a balance between the necessary security packing, using minimum materials. The ratio between the gross weight of the various logistical transport units and the net weight of the final product is also controlled, in order to reduce the environmental impact of the distribution of our products throughout the supply chain. During the reporting period no incidents related to our products referring to legal requirements that have resulted in significant environmental impacts or any incident of food-natured in every market that we operate were recorded.
COMMUNICATION AND ETHICAL PROMOTION The Marketing communications of Esporão Group (including advertising, promotion and sponsorship), obey the laws and principles of responsible communication in the different countries where we operate, either directly (affiliated distributors) or indirectly in partnership with local partners for distribution of our products. We did not perform any activity in markets where products with alcohol are prohibited. Our marketing activities are decided together with distributors that measure and decide, together with us, what can and must be done in accordance with the laws of each market. All our internal and external communications are based on our ethical principles of objectivity and respect for the integrity of our communication, without leading to deception those who may be impacted by it, contributing to responsible consumption. The Esporão Group, as an active member of the programs”Wine in moderation” and “Beba com Cabeça”, defends and promotes that being the wine an alcoholic beverage should be enjoyed in moderation, and that its excessive consumption can be detrimental to health and a balanced life. In parallel, it has been actively involved in initiatives that contribute to ethical and responsible communication, being a member of APAN (Portuguese Association of Advertisers) and having been part of the advisory group for self-regulation and responsible communication promoted by ACIBEV (Traders Association of Spirits and Wines). The Esporão Group had no reported incidents related to marketing communications for the period in question, either in Portugal or in other countries, and there is no record of any incident in the past. Similarly, there was no claim related to breach of privacy or personal information of our clients’ data trail.
Wine in Moderation
STATEMENTS TO THE REPORT
10
ESPORÃO SA SUSTAINABILITY REPORT 11/12
74 | 75
STRUCTURE AND SCOPE OF THE SUSTAINABILITY REPORT With this first report the Esporão group starts the commitment to disclose its activity in a perspective of sustainability, according to strict criteria and standards, and to this end adopted the Sustainability Reporting Guidelines 3.1 as a guide to their development, stating the level A. The table of contents for the various requirements of the GRI Reporting Guidelines 3.1 is presented at the end of this report. After analyzing the period 2011 and 2012, we will publish a new report biannually for each subsequent period. Any questions about this report may be addressed by email to esporao@esporao.com or by mail to the following address. Esporão > Av do Restelo 44, 1400-315 Lisboa Portugal The content was defined using the principles outlined by the GRI Reporting Framework and targeting all stakeholders in our business. Its structure is therefore well oriented for each of these parts, and the information was grouped according to their particular interests. To prepare this first report, we did not formally consult our stakeholders. We decided not to include the full information concerning our businesses Qualimpor, DBrands and Esporão Wines & Olive Oils. However, whenever possible, information regarding these companies is given, although these cases have to be explicitly identified. We assume the future commitment to include these companies comprehensively in the report. The reported data were collected directly from official and commercial documents, from the records generated directly from our quality and environment management system, by other documents generated internally or by third parties for related activities. Whenever it was necessary to convert data or calculations on existing data, coefficients, formulas and / or methodologies generally accepted and recognized entities were used.
APPLICATION OF THE PRECAUTIONARY PRINCIPLE According to the formulation of the precautionary principle written in the 15th paragraph of the Conference on Environment and Development in Rio de Janeiro in 1992, our activities and our products do not ignore or embody significant environmental risks and refuse to use the impossibility of demonstration of impact as justification. We ensure the scrupulous and verified compliance of all European and Portuguese legislation applicable to our activities, with special focus on the environment and public health, with legislation in line with the precautionary principle. For this purpose we have implemented and documented management tools with this explicit resolution. We also keep a risk assessment of environmental impacts of all our activities, including a mitigation plan based on actual measurements of relevant environmental parameters. Any action or new product that Esporão Group decides to launch is evaluated in accordance with this methodology.
GRI INDEX
GRI INDEX
ASPECT: PUBLIC POLICY 1.1 Statement from the Chairman of the Board 1.2 Description of key impacts, risks, and opportunities ORGANIZATIONAL PROFILE 2.1 Name of the organization 2.2 Primary brands, products, and/or services 2.3 Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures 2.4 Location of organization’s headquarters 2.5 Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report 2.6 Nature of ownership and legal form 2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries) 2.8 Scale of the reporting organization 2.9 Significant changes during the reporting period regarding size, structure, or ownership 2.10 Awards received in the reporting period REPORT PARAMETERS 3.1 Reporting period for information provided 3.2 3.3 3.4 3.5 3.6 3.7 3.8
Date of most recent previous report Reporting cycle Contact point for questions regarding the report or its contents Process for defining report content Boundary of the report State any specific limitations on the scope or boundary of the report Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations 3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report 3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement 3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report 3.12 GRI Content Index 3.13 External assurance GOVERNANCE, COMMITMENTS, AND ENGAGEMENT 4.1 Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight 4.2 Role of the Chairman 4.3 Number and gender of members of the highest governance body that are independent and/or non-executive members 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body 4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance) 4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided 4.7 Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity 4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation 4.9
4.10
Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles
Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance COMMITMENTS TO EXTERNAL INITIATIVES 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization 4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses 4.13 Memberships in associations (such as industry associations) and/or national/international
7 7 24 16 24 24 25 24 15 24 74 34 74 74 74 74 74 74 74 24 74 74 74 74 74 19 21 20 20 44
20 20 14 21
43
74 70 70
>
ESPORÃO SA SUSTAINABILITY REPORT 11/12
STAKEHOLDER ENGAGEMENT 4.14 List of stakeholder groups engaged by the organization 4.15 Basis for identification and selection of stakeholders with whom to engage 4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group 4.17
Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting MANAGEMENT APPROACH AND PERFORMANCE INDICATORS ASPECT: ECONOMIC PERFORMANCE EC1 Direct economic value generated and distributed EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change EC3 Coverage of the organization’s defined benefit plan obligations EC4 Significant financial assistance received from government ASPECT: MARKET PRESENCE EC5 Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation EC7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation ASPECT: INDIRECT ECONOMIC IMPACTS EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, inkind, or pro bono engagement EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts LABOR PRACTICES AND DECENT WORK ASPECT: EMPLOYMENT LA1 Total workforce by employment type, employment contract, and region, broken down by gender LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and region LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation ASPECT: LABOR/MANAGEMENT RELATIONS LA4 Percentage of employees covered by collective bargaining agreements LA5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements ASPECT: OCCUPATIONAL HEALTH AND SAFETY LA6 Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety programs LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of workrelated fatalities by region and by gender LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases LA9 Health and safety topics covered in formal agreements with trade unions ASPECT: TRAINING AND EDUCATION LA10 Average hours of training per year per employee by gender, and by employee category LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings LA12 Percentage of employees receiving regular performance and career development reviews, by gender ASPECT: DIVERSITY AND EQUAL OPPORTUNITY LA13 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity LA14 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation LA15 Return to work and retention rates after parental leave, by gender SOCIAL PERFORMANCE INDICATORS HUMAN RIGHTS ASPECT: INVESTMENT AND PROCUREMENT PRACTICES HR1 Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening HR2 Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained
78 | 79
10 10 10 22 10
28 64 45 52 44 49 41
32 32
39 38 45
41 41
42 42 42 42 43 43 44 40 41 41
49 49 43
GRI INDEX
ASPECT: NON-DISCRIMINATION HR4 Total number of incidents of discrimination and corrective actions taken ASPECT: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING HR5 Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be voilated or at significant risk, and actions taken to support these rights ASPECT: CHILD LABOR HR6 Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor ASPECT: FORCED AND COMPULSORY LABOR HR7 Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor ASPECT: SECURITY PRACTICES HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations ASPECT INDIGENOUS RIGHTS HR9 Total number of incidents of violations involving rights of indigenous people and actions taken HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments HR11 Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms SOCIAL PERFORMANCE INDICATORS SOCIETY ASPECT: COMMUNITY SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs. ASPECT: CORRUPTION SO2 Percentage and total number of business units analyzed for risks related to corruption SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures SO4 Actions taken in response to incidents of corruption ASPECT: PUBLIC POLICY SO5 Public policy positions and participation in public policy development and lobbying SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country ASPECT: ANTI-COMPETITIVE BEHAVIOR SO7 Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes ASPECT: COMPLIANCE SO8 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations SOCIAL PERFORMANCE INDICATORS PRODUCT RESPONSIBILITY ASPECT: CUSTOMER HEALTH AND SAFETY PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes ASPECT: PRODUCT AND SERVICE LABELING PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction ASPECT: MARKETING COMMUNICATIONS PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes ASPECT: CUSTOMER PRIVACY PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data
70 41
41
41
43
41 70 70
70 32
70 43 41 70 70
70
70
70 71
70 71 15 71 71
71
>
ESPORÃO SA SUSTAINABILITY REPORT 11/12
ASPECT: COMPLIANCE PR9 Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services ENVIRONMENTAL PERFORMANCE INDICATORS ASPECT: MATERIALS EN1 Materials used by weight or volume EN2 Percentage of materials used that are recycled input materials ASPECT: ENERGY EN3 Direct energy consumption by primary energy source EN4 Indirect energy consumption by primary source EN5 Energy saved due to conservation and efficiency improvements EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives EN7 Initiatives to reduce indirect energy consumption and reductions achieved ASPECT: WATER EN8 Total water withdrawal by source EN9 Water sources significantly affected by withdrawal of water EN10 Percentage and total volume of water recycled and reused ASPECT: BIODIVERSITY EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas EN13 Habitats protected or restored EN14 Strategies, current actions, and future plans for managing impacts on biodiversity EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk ASPECT: EMISSIONS, EFFLUENTS, AND WASTE EN16 Total direct and indirect greenhouse gas emissions by weight EN17 Other relevant indirect greenhouse gas emissions by weight EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved EN19 Emissions of ozone-depleting substances by weight EN20 NO, SO, and other significant air emissions by type and weight EN21 Total water discharge by quality and destination EN22 Total weight of waste by type and disposal method EN23 Total number and volume of significant spills EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff ASPECT: PRODUCTS AND SERVICES EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation EN27 Percentage of products sold and their packaging materials that are reclaimed by category ASPECT: COMPLIANCE EN 28 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations ASPECT: TRANSPORT EN29 Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce ASPECT: OVERALL EN30 Total environmental protection expenditures and investments by type
80
70
60 60 53 53 53 53 53 54 54 55 61 61 63 62 64
58 58 59 59 59 55 60 60 60 63
65 60 70
61
67