Chesf’s corporate governance structure translates into administrative processes guided by transparency and continuous value creation
Chesf’s corporate governance practices aim to guarantee shareholder rights and business sustainability, aligned with accountability to investors and society, and ethical relationships with stakeholders.
Focusing on transparency and maintaining an ethical relationship with all its stakeholders, Chesf’s Governance structure is composed of an Administrative Assembly and a Board of Directors, which, with the assistance of the Executive Board, Fiscal Council, Ombudsman’s Office, and Auditing, is responsible for the main decisions in business management. Administrative management actions are audited by Internal Audit, the Fiscal Council, and by the external control bodies of the Federal Comptroller General (CGU) and the Federal Court of Accounts (TCU).
In 2017, five General Assembly meetings were held, one ordinary and four extraordinary meetings, to discuss various initiatives related to the Company’s business plan. In addition, there were 21 meetings of the Board of Directors, 13 meetings of the Fiscal Council, and 67 meetings of the Executive Board.
> 102-18 >
THE MAIN TOPICS PRESENTED TO THE BOARD OF DIRECTORS WERE:
- > Chesf’s Business Plan - PNG 2017-2021;
- > Cash Flow
- > Organizational Restructuring;
- > Cost of debt service;
- > Contributions to Special Purpose Entities (SPEs);
- > Auditing, Ombudsman, and Ethics Commission
- > Public Consultation 33;
- > Research, Development, and Innovation;
- > Shared Services Center; and
- > Nayr Alves de Souza Hospital (HNAS).
The matters for discussion by the Board of Directors are based on a document “Forwarding Matters to the Board of Directors (EACA - Encaminhamento de Assunto ao Conselho de Administração).” Strategic issues are addressed through presentations and additional documents made available to Board members.
> 102-34 >
GOVERNANCE ACHIEVEMENTS (BOARD) IN 2017
|> AGENDA >||> GOAL >||> STATUS >|
|Updating of the Corporate identity||Streamline processes, reduce operating costs and modernize its organizational structure.||Implemented|
|Updating of the Strategic Map 2017-2021||Corporate Sustainability and Efficiency.||Ongoing|
|Recovery of Cash Flow||Balance Cash Flow by the end of 2017.||Achieved|
|Prioritization of Transmission and Generation Projects||Prioritize projects whose bidding processes have already been approved.||Ongoing|
|Implementation of the Eletrobras 5 Dimensions Program||mprove Integrity Practices in the Corporate Environment.||Ongoing|
|Terms of Cooperation with the National Education and Research Network||Integration and mutual use of telecommunications infrastructure between Chesf and the National Education and Research Network (RNP).||Signed. Under implementation|
* Further details on Chesf’s Governance may be found at chesf.gov.br > A Empresa. chesf.gov.br >
GOVERNANCE AND SUSTAINABILITY
In Chesf’s organizational structure, environmental and social issues are the responsibility of the Department of Expansion Planning and Environment and the Department of Institutional Relations, respectively linked to the Engineering and Construction Department and the Presidency. The other financial and economic topics are distributed among the Department of Planning and Economic and Financial Control, the Department of Economic and Financial Execution, and the Department of Accounting, linked to the Economic and Financial Department.
> 102-20, 102-22, 102-23, 102-31, 102-44 >
The Company’s Strategic Sustainability Guidelines are present in the Business Plan and are considered in short-, medium-, and long-term decisions.
Chesf’s Strategic Sustainability Guidelines
- > Prioritize the production of clean and renewable energy
- > Rational use of resources
- > Operate as an agent toward energy efficiency
- > Commitment to ethics and transparency
- > Respect for human rights
- > Add value to stakeholders
- > Ensure employees adequate working conditions and well-being
Among the actions carried out by the Sustainability Committee in 2017, we have:
- > Execution of sustainability projects included in Chesf’s Business and Management Plan (PNG).
- > Standardization of water, energy and fuel consumption management, and of waste sorting.
- > Campaigns toward energy efficiency.
- > Participation in the definition and prioritization of the Sustainable Development Goals (SDG), in order to integrate the 2030 UN Agenda into the strategies of the Eletrobras Companies’.
Chesf’s strategic sustainability guidelines are present in its’ Business Plan
TRANSPARENCY AND ETHICS
> 102-17, 102-25, 103-2 >
Throughout its history, Chesf has consolidated ethics and excellence in conduct in its activities as organizational values. All employees receive the Code of Ethics and Conduct when they join the Company, which is constantly disseminated by the Ethics Commission, managers, and the Human Resources area.
The Company also ensures that there is no conflict of interest, determining that members of the Board of Directors and Fiscal Council, as well as the Directors, respond to questionnaires defined by the Brazilian Securities and Exchange Commission (CVM) and the Public Ethics Commission (CEP). In addition, all employees have access, through Chesf’s intranet or electronic portal, to the Electronic System to Prevent Conflict of Interest (SECI) of the Federal Comptroller General (CGU).
It is worth noting that, in addition to committing to adhering to the Code of Ethics and Conduct and to the Integrity Program by signing specific documents, members of the Governance structure sponsor and monitor the Program’s actions, created by Eletrobras and conducted at Chesf by the Compliance and Risk Management Advisory. Reports related to the Anti-Corruption Law and other cases concerning violation of the Code of Ethics and Conduct are received through a single Whistleblowing Channel for the Eletrobras companies and are handled by the System Integrity Committee (CSI), formed by representatives of Eletrobras and all companies in the group. The Company also has an Ethics Commission, which may receive on its channel reports of violations of ethical conduct, and an Ombudsman’s Office, to handle other types of reports received from internal and external audiences.
In 2017, Eletrobras initiated a training cycle titled “Governance, Integrity, and Capital Markets,” in partnership with the Brazilian Institute of Corporate Management (IBGC), geared toward the board members and directors of the Eletrobras companies. The training schedule will be completed in 2018.
> 102-27, 103-3 >
The campaign called “Ética em Tudo para Tod@s” (“Ethics in Everything for Everyone”), which aims to strengthen the topic through internal newsletters, committee meetings, the Ombudsman’s Office, CIPA events, and even digital signatures, also continued and was strengthened at the XIII Seminar of the National Forum on Ethics Management in State-owned Companies, hosted by Chesf. The event was broadcast to all regional offices and was attended by the Company’s senior management. Also related to Ethics, the Holding’s Compliance Department organized an event in 2017, at all Eletrobras companies, to highlight the main projects in progress under the Integrity Program (Compliance), as well as the actions required for SOX Certification. (102-17)
> 102-17 >
Eletrobras 5 Dimensions Program
> 102-17, 103-2 >
In 2017, Chesf continued the “Eletrobras 5 Dimensions Program,” created in 2016 aiming to improve the Integrity Program already in place at the Eletrobras companies. The Compliance and Risk Management Advisory implemented new procedures in order to strengthen corporate integrity practices, highlighting some actions, such as beginning the background checks of board members appointed by Chesf to join the Boards of Directors and Departments of SPEs (Special Purpose Entities). The Advisory also initiated a pilot Due Diligence project and critical supplier risk assessment, a process that will be consolidated in 2018.
The program is based on the model proposed by the Federal Comptroller General (CGU) and the guidelines of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and foresees the implementation of actions and projects based on five dimensions, listed below:
1. Development of the management environment of the integrity program.
2. Periodic risk assessment.
3. Structuring and implementing policies and procedures of the integrity program.
4. Communication and training.
5. Monitoring the program, remediation measures, and application of penalties.
Based on the Risk Management Policy of the Eletrobras Companies, Chesf has a Risk Matrix, based on the Risk Matrix of the Eletrobras companies, which classifies and characterizes the risks associated with its business. The Matrix contains four pillars - Strategic, Financial, Operational, and Compliance - that include the following categories: Business Model, Market Strategy, Image and Reputation, Investments, Liquidity, Generation and Marketing, Social and Environmental, People Management, Legislation and Standards, and others. These categories are broken down into potential risk events, which are analyzed according to probability and impacts, based on the COSO ERM and COSO 2013 methodology and on the ABNT NBR ISO 31000:2009 and ABNT ISO GUIA 73:2009 standards.
> 102-11; 102-18 >
The Risk Committee is responsible for prioritizing the risks that will be analyzed and for monitoring the results, as well as contributing to updating the Risk Policy and Matrix of the Eletrobras companies and defining the matters to be submitted for approval of the Executive Board and the Board of Directors.
With respect to internal controls, Chesf participates annually in the SOX Certification process to ensure compliance with the requirements of the Sarbanes-Oxley Act. The certification includes the stages of annual review of the documentation related to business and governance processes, previously defined in the scope, and tests the effectiveness of internal controls, carried out by both the administration, under the responsibility of Chesf Internal Audit, and by an independent auditor. All companies in the group participate in the certification process as Eletrobras subsidiaries, in order for the Holding to continue trading its shares on the New York Stock Exchange (NYSE).
> 102-18 >
In 2017, Chesf had five committees to support business management and streamline analysis and decision-making processes.
Corporate Sustainability Committee:responsible for consolidating proposals for management improvement and monitoring the results of action plans. It also deliberates on the Company’s Sustainability Policy, under the approval of the Executive Board, and coordinates the collection of information for Annual Reports. Twelve ordinary meetings were held in 2017.
Risk Committee:responsible for defining, understanding, and monitoring the internal and external risks that may affect the Company’s business. It is composed of a multidisciplinary team with representatives from all Departments. Five meetings were held in 2017.
Corporate Planning Committee: responsible for evaluating, monitoring, and updating the Company’s Strategic Planning, proposing follow-up indicators aligned with best practices in the market. It is also responsible for disseminating the planning and tracking the progress of the goals. One meeting was held in 2017.
Management Committee of the Chesf Research & Development + Innovation Program: responsible for developing and managing the Chesf Research Program. This Committee is also responsible for establishing relationships with external entities and annually reviewing the activities of the program. Two meetings were held in 2017.
> 102-43, 103-2, 103-3 >
One of Chesf’s principle is respect for people, and the company practices this through mechanisms that meet the expectations of stakeholders in relation to the business. Thus, every two years, the Company conducts the Eletrobras Integrated Survey to measure customer satisfaction, and the most recent survey was conducted in the 2016/2017 biennium. The Survey was geared toward the following audiences, by business:
- Generation: free consumers, potentially free consumers, traders, and distributors.
- Transmission: distributors, free consumers, potentially free consumers, and generators.
The result of the survey, based on the methodology called “Janela do Cliente,” (“Client Window”), showed a good level of satisfaction with Chesf, with a correlation between satisfaction and importance levels
> 102-40; 102-43 >
RESULTS OF CHESF IN THE 2ND ELETROBRAS INTEGRATED SURVEY
In 2017, Chesf also conducted a satisfaction survey with Distribution Agents in order to evaluate the operation services provided by the Company. The result was an average of 8.2 points on a scale of 0 to 10.
The survey is part of the process of meeting the Requirements of the System that Manages the Quality of Chesf’s Operation, in which all bodies of the Company’s System and Facilities Operation are certified in Standard ISO 9001:2008. Among the established procedures are the annual meetings with Clients (Energy Distributors). During the year, 10 face-to-face meetings were held (one per Distributor) with the Distribution Agents.
The Ombudsman’s Office is another management mechanism used by the Company to become closer to its stakeholders. The most important issues mentioned in 2017 (about 80%) were: Human Resources, Right of Way, Economic and Financial Situation, Operation and Maintenance, General Services, Corporate Communication, Environment, Generation Expansion, and Senior Management. The Ethics Committee and the Contact Us channel (0800 9793 090) are other tools that facilitate Chesf’s relationship with its stakeholders.
Based on reports received, Chesf implemented several actions, such as making information available on rainfall volume (in mm) in the Sobradinho reservoir area and hydrological data obtained at the Remanso hydrometric station - average reservoir level (m) and precipitation (mm) - on the Corporate Portal. This opportunity to improve the provision of information was identified by the Ombudsman, in conjunction with the Operations Department.
In 2017, Chesf launched an independent whistleblowing channel. The process, which had been carried out by the Ombudsman’s Office through an internal system, is now carried out by an external company, emphasizing the commitment to secrecy and impartiality when handling cases. When the Channel was launched, the Integrity System Committee (CSI) was also created, formed by representatives of Eletrobras and its subsidiaries, to monitor and escalate reports in a standardized manner.
In 2017, the Consequences Policy was also launched, which aims to establish corporate commitments to combating corruption, anticompetitive practices, conflicts of interest, and other infractions. In addition, the Policy seeks to guide the application of consequences to actions and conduct that do not comply with the Code of Ethics and Conduct of the Eletrobras companies, with the Eletrobras Integrity Program, and with internal and legal standards.
The Ombudsman’s and other relationship channels may be contacted by email (ouvidoria@ chesf.gov.br) or the Contact Us portal (www.chesf. gov.br/page/faleconosco).
Chesf is committed to analyzing and responding to all reports obtained through its formal relationship mechanisms. There are formal channels for the external audience (email, Contact Us, Public Relations, Press, Innovation, and Ombudsman) and for the internal audience (Ethics Committee and internal newsletter “Chesf Hoje” [“Chesf Today”]). All information recorded is verified by Chesf. Demands specifically from the Press channel are sent to the news clipping, where they are addressed and responded by the Department of Institutional Relations through the Company’s communication channels or releases.
> 102-40, 102-41 >
In 2017, the Company recorded 616 demands on its formal channels, 592 of which were posted in the Ombudsman’s Office and 24 on the Eletrobras Whistleblowing Chanel.
> 102-44 >
Chesf has as a principle respect for people and therefore works to meet the expectations of its stakeholders
SEE THE TOPICS OF THE REPORTS RECORDED IN 2017:
|OMBUDSMAN’S CHANNEL||ETHICS COMMISSION||CONTACT US (0800 979 3090 AND/ OR MEIOAMBIENTE@ CHESF.GOV.BR)”||“PUBLIC RELATIONS (RP@CHESF.GOV.BR)”|
|Human Resources||Issues related to item 2.2.3 of the Code of Ethics: Discrimination, Prejudice, Verbal Abuse, Humiliation and Embarrassment.||Xingó Forest Nursery (request for seedlings).||Technical Visits (lectures on Generation, Transmission and the Environment).|
|Right of Way||Request for Technical Visits.|
|Economic and Financial||Report of intrusion of Transmission Line Right of Way|
|Operation and Maintenance||Request for information on activities developed by Chesf.|
|Adaptive Reclosing of Single-Phase and Three-Phase Transmission Lines||External: Inauguration of Projects; Energization of Substations; Water Shortage; Financial Balance.|
|Development of Optical Multimeter||Internal: Employee Health; Safety; Gender Campaign; Compliance; Volunteering.|
|Distributed energy storage and its impacts on increasing safety and quality in the transmission system||Report of intrusion of Transmission Line Right of Way.|
|Wind turbines: improvements in the energy conversion process.|
|Water quality in the São Francisco River reservoir.|
|Biotechnology against golden mussel infestation.|
|Monitoring of HPP dams .|
|Integrated management of vegetation in Transmission Lines, Substations and HPP yards|
|Identification of overhead power lines through image recognition|
|Bathymetry of the bottom of the reservoirs and studies on their water flow|
IN 2017, THE COMPANY INCORPORATED TO ITS LINE OF RESEARCH NINE TOPICS SUGGESTED BY PEOPLE THROUGH THE RELATIONSHIP CHANNEL CALLED INNOVATION:
- > Development of an optical multimeter. .
- > Distributed storage of energy and its impacts on increasing safety and quality in the transmission system.
- > Improvements in the wind turbine energy conversion process.
- > Water quality in the São Francisco river reservoir.
- > Biotechnology against golden mussel infestation. 7.
- > Monitoring of HPP dams.
- > Integrated management of vegetation in transmission lines, substations, and HPP yards.
- > Identification of overhead power lines through image recognition.
- > Bathymetry 8 of the bottom of the reservoirs and studies on their water flow.
8 Measurement of the depth of bodies of water (oceans, seas, lakes, etc.) to determine the topography of the botton.